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Miracle on the Hudson; AirTran Flight Reports Nose Gear Problems; Hostage to Bad Mortgages? Your Money, Your Views; Hertz to Cut 4,000 Jobs; Miracle on the Hudson; $350 Billion More Released; Obama's Plans to Boost Economy
Aired January 16, 2009 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: Hello, everyone. I'm Tony Harris, and you are in the CNN NEWSROOM.
Here are the headlines from CNN for this Friday, the 16th day of January, 2009.
Passengers give the pilot of Flight 1549 credit for saving their lives. This hour, I'm talking live with a friend of Sully Sullenberger.
And Bank of America comes back for a second helping of taxpayer cash. I will talk to Professor and former Labor Secretary Robert Reich about the federal bailout program right here in the CNN NEWSROOM.
Heroism on the Hudson. Lots of praise today for the US Airways crew and first responders whose fast actions saved the lives of all 155 people aboard a flight that crash-landed in New York's Hudson River. The pilot, Chesley B. "Sully" Sullenberger III, being hailed as a hero. He is not speaking publicly yet, but just a few moments ago we heard from his proud wife, Lorrie.
(BEGIN VIDEO CLIP)
LORRIE SULLENBERGER, WIFE OF US AIRWAYS PILOT: Just suffice it to say that, you know, it was a shock, like it was to everyone. It was really a shock yesterday.
The one comment that I made yesterday that I will repeat is that my husband has said over the years that it's highly unlikely for any pilot to ever have an incident in his career, let alone something like this. So I'm not afraid, it never crosses my mind, and like everyone else, I was stunned when he called and said there's been an incident. And even then, I assumed it was a tug that maybe had bumped the airplane. I had -- you know, your mind just never goes to something like this.
(END VIDEO CLIP)
HARRIS: There you have the wife of Chesley B. "Sully" Sullenberger III.
Survivors are telling incredible stories. Our Brian Todd has that. (BEGIN VIDEOTAPE)
BRIAN TODD, CNN CORRESPONDENT (voice-over): Only about three minutes into the air, passengers say, and they heard a loud bang. The plane shook and the pilot gave them a warning.
JEFF KOLODJAY, PASSENGER: The engine blew about three minutes into the flight. Smoke came out everywhere. A couple minutes later, the captain came on and said, "We're going to dump this plane, brace for impact. And probably brace pretty hard."
ALBERTO PANERO, PASSENGER: And we just hit, and somehow the plane, you know, stayed afloat and we all were able to get on the raft. And it's just incredible right now that everybody's still alive.
TODD: Passengers say once the Airbus jet hit the Hudson River, there was initial panic.
KOLODJAY: There was a lady with her baby I remember on my left- hand shoulder. And she was trying to crawl over the seats. And I just remember saying, you know, "Women and children first."
TODD: Incredibly, all of the more than 150 passengers and crewmembers were reported to have made it out safely.
Passengers have high praise for the pilot.
FRED BARRETTA, PASSENGER: And I just want to say to that pilot, thank you. It was just an incredible execution. He was very calm and made a great landing.
KOLODJAY: Kudos to him, man. He did a great job. You know?
UNIDENTIFIED FEMALE: How did you get out?
KOLODJAY: Just luck of God, man. I don't know.
TODD: US Airways Flight 1549 was headed to Charlotte, North Carolina, but based on preliminary reports, officials tell CNN, shortly after takeoff from LaGuardia airport, the plane likely hit a bird or a flock of birds. Experts say that's a significant problem at New York-area airports, where proximity to water means seagulls, geese and other birds are everywhere.
Brian Todd, CNN, Washington.
(END VIDEOTAPE)
HARRIS: OK. We expect to learn more about the US Airways crash from the NTSB. They're planning a news conference in New York this afternoon, 4:00 p.m. Eastern Time. And CNN, of course, will bring it to you live.
Chad Myers now in the severe weather center.
Chad, how cold was that water yesterday when that pilot was negotiating that crash landing?
CHAD MYERS, CNN METEOROLOGIST: Well, it depends on what you think, because we had the water temperatures from Albany down to Schenectady at 32.5 degrees. And then we looked at a couple of buoys that were just down by Lady Liberty at about 40 degrees. That's because there was a little bit of an ocean influence coming in, little bit of a tide coming in, bringing in some of that warmer ocean water, compared to that water.
What I noticed, Tony, a big thing. I think maybe one of the bigger untold stories of yesterday. There wasn't any ice on that river.
HARRIS: Yes.
MYERS: Had we had icebergs -- literally, if that plane had to hit something very hard, like ice, we would have had that bottom of the plane breaking apart, breaking up. The aluminum skin on that fuselage would have broken in pieces. That would have been like a boat without a bottom, and we would have probably had that plane go down so much faster, where we had literally hours -- that plane is kind of still floating, but it floated for so long that that really allowed all those people to get out safely.
Amazing.
HARRIS: Wow. Hey, Chad, and we're just getting some news in of another aircraft experiencing some difficulties. Want to bring this to you right now.
An AirTran flight apparently is returning to Thurgood Marshall Baltimore/Washington International Airport with reported nose gear problems. We have watched pilots handle this particular situation, handling a plane, trying to land a plane with nose gear problems. We have watched on the air live pilots masterfully handle this particular situation, but it is a situation that is going on right now. An AirTran flight, we understand, is returning to Thurgood Marshall Baltimore/Washington International Airport right now because the aircraft is experiencing problems with its nose gear.
And Chad, I know you've got some additional information on this, but as I mentioned just a moment ago, we have watched on the air, probably together, pilots really do a masterful job of handling this particular situation.
MYERS: Right. And probably all we have is, with the typical nose gear issue, a light didn't go on or didn't go off, because that just means that it is completely closed, the nose gear's locked, it's closed.
HARRIS: Yes.
MYERS: This plane was going from BWI to Miami, it's AirTran Flight 149. Here's the track.
It's just kind of flying around right now. It is a 737. It is at 3,000 feet, 3,000 feet in the sky, doing 159 knots. And this purple line is showing what it's doing, just kind of basically flying around, although now getting closer to the BWI airport and now descending, now at 2,600 feet.
But you have to realize this is delayed just a little bit by Flight Tracker and by the federal government, because they don't want us to know exactly where this plane is.
HARRIS: I see.
MYERS: They don't want us to know where any of the planes are exactly, you know, with a GPS coordinate. So this may actually even be a little bit lower.
We will watch to see what happens with this plane though. Typically what happens, the pilot will come down, land on the main gear, keep the nose in the air as long as possible...
HARRIS: That's right.
MYERS: ... let the plane slow down as much as it can, and then bring it down on the nose. And we'll see whether that nose gear holds up or not. He may actually do a couple of fly-bys, too, so that other planes or maybe even the control tower can see, what does that front wheel look like, what does that landing gear truly look like, does it look like it is all the way down or is it not?
HARRIS: Yes. And is this possibly a situation as well, Chad, where the pilot is circling also to burn off a little bit more of that jet fuel?
MYERS: No question about it. If you're going from BWI to Miami, you have a full load of fuel.
HARRIS: Yes.
MYERS: Plus another probably 60 to 90 minutes' worth of reserve. So your plane is very heavy.
You don't want to try to land that plane with a full load, because now all of a sudden, your plane is going to hit those back wheels with an awful lot of weight. And when it comes down on the front wheel, there's going to be more stress on that wheel itself. So that's why they do try to go out there and burn off fuel or, if you can, some planes can dump fuel.
You know, we hear about, oh, we're dumping fuel. Most planes actually can't do that.
HARRIS: Hey, Chad, I'm just getting word that this flight has landed safely.
MYERS: There you go. All right. Perfect.
HARRIS: A spokesman from BWI telling us just moments ago that the plane has landed safely. MYERS: Outstanding. See how far behind we are?
HARRIS: Yes.
MYERS: We are probably six minutes behind. It still has it at 1,800 feet, going 140, but clearly descending. And great news that it got on the ground.
HARRIS: Yes. A run of really good fortune for us.
All right, Chad. Appreciate it. Thank you.
MYERS: OK. You bet.
HARRIS: Let's get back to 1549 now. Investigators focusing today on retrieving the flight data recorders and interviewing the crew.
Let's go live now to CNN Senior Correspondent Allan Chernoff in New York.
And again, Allan, just amazing -- we were talking about it last hour -- how many things went right for the pilot and the crew here.
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Yes, absolutely. Really a spectacular story, as you've said.
The plane took off from LaGuardia airport, and a minute after taking off, both engines went out. And the captain was able to land in the Hudson River, right behind me, and making a left turn pretty much just above the George Washington Bridge. It was 900 feet above, and then came in for a very smooth landing on the Hudson River.
I mean, that's a nice, wide river, but let me tell you, it's no runway. But certainly, it came in beautifully. And the plane, as you can see, is behind me. You can see at least one of the wings sticking out of the water.
Now, there are 25 members of the National Transportation Safety Board on site here. They are hoping to get that plane up and get it onto a barge so that they can bring it to a secure airfield where they can then go through the entire aircraft, get the black boxes, get everything that they need. For now though, today, they've been interviewing the crew.
(BEGIN VIDEO CLIP)
KITTY HIGGINS, NTSB BOARD MEMBER: Our priorities for today are to interview the pilots, the cabin crew, the air traffic controllers, any other eyewitnesses that may have seen what happened, and also to begin to -- to find the black boxes, the voice recorder, the data recorder, and to begin the recovery of the plane.
(END VIDEO CLIP)
CHERNOFF: Earlier today, the mayor of New York, Michael Bloomberg, held a press conference where he handed out some awards to many of the first responders. And also, the chief executive of US Airways was extremely thankful.
Let's have a listen to him.
(BEGIN VIDEO CLIP)
DOUG PARKER, CEO, US AIRWAYS: Now I, like the rest of you, am extremely proud of our crew for their quick and heroic actions. Today, they are safe and doing well, and along with many other members of the US Airways team, are assisting with the official investigation.
Our crew members also, though, want to extend their thanks to all the organizations that are represented here that I've just mentioned. And I'm just honored to, on their behalf, thank all of you for what you did for our crews and for our passengers and all their families. It's truly a remarkable effort, as the mayor just said.
(END VIDEO CLIP)
CHERNOFF: So a very, very happy ending to what could have been just a horrible catastrophe.
Tony, from a lighter side, as a New Yorker, you know, there's only one question that many of us here in New York have -- why would so many of those passengers have run down to Charlotte? Hey, they could have stayed over a few nights. You know? I wouldn't have gotten back on a plane.
HARRIS: And some, apparently -- T.J. Holmes was talking to someone who was making flight arrangements even before he got back on dry land. It's just -- it is just amazing.
CHERNOFF: Unbelievable.
HARRIS: All right. Allan Chernoff for us.
CHERNOFF: The only thing I can think of, it is just so cold here, that you'd want to go south.
HARRIS: Oh, good point. Good point. All right, Allan. Appreciate it. Thank you.
You know, we expect to learn more about the US Airways crash from NTSB officials. They're planning a news conference in New York this afternoon, 4:00 p.m. Eastern Time. And CNN will, of course, bring it to you live.
Let's get to issue #1 now, the economy. And here are the headlines.
Inflation for all of 2008 came in today at just .1 of a percent. That is the lowest annual rate since 1954. For December, prices fell .7 of a percent. Economists remain concerned the economy could slip into deflation. And this startling news. Electronics retailer Circuit City is asking a bankruptcy judge to liquidate its assets. The company says it was unable to reach a deal with creditors and lenders in bankruptcy. That means about 30,000 Circuit City employees are out of a job. When? Today.
President-elect Obama gets his way with the Senate. He will get the remaining $350 billion in federal bailout money.
Obama pledges to spend up to $100 billion of that to help homeowners facing foreclosure. Coming up in the next half-hour, we will talk live with former Labor Secretary Robert Reich. He has some strong views about the Troubled Asset Relief Program, also known as TARP.
Bank of America is dipping into the bailout kitty a second time. It is getting another $20 billion to help it absorb greater-than- expected losses at Merrill Lynch.
Bank of America agreed to buy Merrill last fall, you'll recall, under pressure from the Bush administration. Another ingredient in today's Bank of America's deal, the government will guarantee losses -- listen to this part of the deal -- on $118 billion in bad mortgages, otherwise known as illiquid or troubled assets.
Does that sound familiar?
CNN's Christine Romans joining us now live from the New York business desk.
And so, Christine, Merrill lost I guess about $15 billion in the fourth quarter.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: It was ugly.
HARRIS: Was Treasury obligated to backstop this Merrill deal since Treasury and the Bush administration essentially pushed Bank of America or encouraged Bank of America to enter into this deal?
ROMANS: It sounds like the government...
HARRIS: It does.
ROMANS: It sounds like the government -- and this is what Ken Lewis, on a conference call with investors -- he is the CEO of Bank of America. He said the government was under the view that walking away from that Merrill deal when it became clear that it was going to be very painful for Bank of America and very expensive, and they might not be able to absorb those losses, the government was under the view that walking away would cause significant concerns and serious systemic harm to the financial markets.
That's the kind of thing that people are so concerned about the health of the banking system, that the United States government is willing to go in and backstop losses going forward, willing to pay another $20 billion from the bailout money. And, you know, the U.S. government is going to get preferred shares that pay 8 percent, so there could be a return there.
But Tony, I want to be really clear here that, all of the people who I talked to who are watching this say that they have got to fix the banking sector and get it operating properly, or that stimulus that we're talking about, the president-elect's new stimulus, the $800 and some-billion, it won't work, it will just be throwing money away. That we're back to the fall with these fundamental issues that we're trying to deal with here -- Tony.
HARRIS: Well, Christine, wait a minute. We're talking about backstopping these future losses for Bank of America. That sounds to me like insuring these illiquid assets.
Isn't that part of what we remember as being the pitch for the TARP program in the very beginning?
ROMANS: I know, it changes and it stays the same, and then we're back to the beginning, and then we're trying something new. I mean, look, they're clearly making decisions here on the fly as the conditions are changing.
I talked to one very noted chief economist who actually was the first person who told me, Tony, that we were going to have to recapitalize the banks. So everyone else was talking about buying off the troubled assets, and he thinks a lot more money is going to have to go in to recapitalizing these banks.
But that because -- you know, talking about insuring losses going forward, that means that there is going to be a lot more pain for these banks, and they're going to be using capital from us to fill up those holes. It doesn't necessarily mean that they're going to start lending either. And, you know, the big joke around here is that now it really is Bank of America. I mean, it's Bank of America.
HARRIS: Think about that for a second. Yes. Yes.
ROMANS: I mean, we are the largest shareholder in this bank. And this is -- there are all of these arguments about, shouldn't we have just nationalized the banks in the first place? You know, did the government, by kind of going in and not completely taking control, did they make it worse in the end? I mean, it's nuts.
But when I was talking to a couple other people who said -- I said, well, should -- "What should Bank of America do now with the Merrill unit?" Should they try to like separate out their -- it's a question you actually posed me. Should they try to be like Citigroup and separate out their different units?
HARRIS: Yes. Yes.
ROMANS: And he said -- this is a source who is following all this stuff -- he said it's unknowable. And he thinks the people at these institutions, it's not even knowable to them what's the best thing to do right now.
HARRIS: You know, former House Speaker Newt Gingrich said not too long ago you can't have capitalism on the way up and socialism on the way down. A lot of people agree with that point of view.
Christine, appreciate it. Thanks for your help, as always.
ROMANS: Sure.
HARRIS: And stay with us.
Some of those who took part in the rescue when that US Air jet crashed in the Hudson will share their stories with us. That's coming up next.
(COMMERCIAL BREAK)
HARRIS: Fresh from his victory on the bailout billions, President-elect Barack Obama goes on the road to promote his massive economic stimulus plan. Obama speaks at a factory in northern Ohio next hour.
White House Correspondent Suzanne Malveaux joining us live with details.
And Suzanne, the president-elect I believe is in Bedford Heights, Ohio. That's a little south, one of the suburbs of Cleveland.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: That's right. And that's where he's actually going to be selling this huge economic recovery plan.
You know that this was one of the places, Ohio, obviously, the Midwest, industrial Midwest, hit particularly hard by the recession. We spent so many visits out there in Ohio. It's a state that has really suffered as a result of this economic crisis, and it's one that Barack Obama won. But now he's got to win over the people, he's got to win over lawmakers who are not necessarily convinced that all of this money, throwing all of this money, which is essentially borrowed money, is going to fix the economic situation.
So what we're going to hear from Barack Obama later today, he's going to be touring that turbine wind factory, and he's going to be talking about the $825 billion bill, this legislation bill, this economic package, that he believes will allow for tax cuts, will allow for jobs creation, up to four million jobs, the kinds of things that these workers are looking for, answers. They want those kinds of answers.
I want you to listen, Tony, to Barack Obama. This is an interview with "The Washington Post," and he's explaining the sense of urgency, why this is important.
(BEGIN AUDIO CLIP)
BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES: The credit markets are still very weak, that banks now are fully caught up in a downward spiral where they have now affected the real economy. The real economy is now affecting their balance sheets. And so we're going to have to intelligently and strategically infuse some additional capital into the financial system. That's why I requested the triggering of the second round of TARP.
(END AUDIO CLIP)
MALVEAUX: So he's talking about two things here -- the economic stimulus package. As you know, that was a big victory for Barack Obama. House Democrats introducing that legislation yesterday. But the other big victory obviously was the Senate Democrats who cleared the way for that second half of that bailout money to be released.
It was really a situation where Barack Obama put a lot of the personal and political capital that he has so far, even before becoming president, when he went to lawmakers behind closed doors, met with them and said, look, this is what I need to get this job done, to get my agenda done. And a lot of -- a little bit of arm twisting, if you will, and some personal appeal to try to get them on board here.
It was a close vote. He got the Democrats on board. The big question, Tony, is he going to get that huge economic stimulus package that has already been presented, that's already put out there. And is any of this going to work?
HARRIS: There you go.
MALVEAUX: Lawmakers not necessarily convinced, American people not necessarily convinced. That's why he's at that factory today, trying to sell this thing -- Tony.
HARRIS: Boy, we've got some new polling from Bill Schneider coming up on that very question of what the American people think of all of this spending from TARP and the stimulus proposals.
All right. Suzanne Malveaux for us from the White House.
Suzanne, great to see you. Thank you.
MALVEAUX: Thanks.
HARRIS: And CNN will have live coverage of President-elect Obama's speech during the next hour, 1:00 p.m. Eastern. Then our John King has a one-on-one interview with the incoming president, and you can see John's interview with Barack Obama 6:00 p.m. Eastern in "THE SITUATION ROOM."
You know, it had all the makings of a catastrophe. Instead, it is being called a miracle. Survivors from the US Airways plane that crash-landed in the Hudson River sharing their amazing stories.
(BEGIN VIDEO CLIP)
VINCE SPERA, PASSENGER: Have you ever been in like a speedboat and it hits some wake? That's what it felt like, when you go over the wake and you hit the water again. So it wasn't a hard impact. Maybe adrenaline flowing, I don't know. But it wasn't that bad of an impact, which was strange.
UNIDENTIFIED MALE: The pilots saved our lives. And if anybody knows this guy...
The pilot was incredible, because when it parked (ph), we figured that it's impossible to have two engines blow. And we figured this guy's turning, going to LaGuardia.
UNIDENTIFIED MALE: And then we said, oh, my God, this guy is following the river. And all of a sudden, we're at 1,000 feet, 500 feet...
UNIDENTIFIED MALE: It came quick.
UNIDENTIFIED MALE: ... 250 feet.
UNIDENTIFIED MALE: And the last thing we heard was, "Brace for impact."
UNIDENTIFIED MALE: And we're following the river. And he said...
UNIDENTIFIED MALE: "Brace for impact."
(END VIDEO CLIP)
HARRIS: Wow. The pilot praised by passengers for getting the plane down. We will talk with a friend of the pilot coming up in about 15 minutes.
So, what do you really think about the bailout? We will share the latest opinions you're sharing with us.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
JOE HART, RESCUED PASSENGER: That's really where people started to panic. Inside the plane, there were only one or two that were really kind of not knowing what to do. It's when we got outside in the cold water -- and I mean the water was cold. Within seconds, my legs were numb standing in the water.
So I'm guessing it was 30, 40 degrees. It was ugly.
(END VIDEO CLIP)
HARRIS: Boy, ugly, indeed, and dangerously cold. Hypothermia can hit in minutes.
Are you ready for this? Right now we're going to talk to one of the first responders.
Joining me from New York, Brian McLoughlin of the New York City Fire Department.
Brian, good to see you.
BRIAN MCLOUGHLIN, NEW YORK CITY FIRE DEPARTMENT: Good to see you, Tony.
HARRIS: Hey, Brian, you have to talk to me about what this was like for you yesterday. OK, you've been trained. I get that. You've got the training, you know what to do.
But physically, what were you going through? Mentally, what were you going through? And what was it like for you to roll up on the scene and realize that you've got people in real danger, in need of a rescue, from a plane that is in the Hudson River?
MCLOUGHLIN: Well, Tony, I mean, basically we start out, the ticker comes over the box. I was the chauffeur of the tour, and we were heading downtown.
We hit 42nd Street and 12th Avenue. Our ticker came in on 50th Street. But one of the guys -- one of the firefighters I work with in the back was yelling at me, saying, "There's the plane!"
And it looked like just a regular jet plane. It didn't look like it was a commercial airliner. It was floating down south on the Hudson River.
So I pulled in to Circle Line Pier, and our captain, Captain Paul Lawla (ph), he commandeered one of the Circle Line boats. And we all got on there.
And it took us out to where the plane was. Me and another firefighters, Michael Pravone (ph), we put our wetsuits on and we proceeded to go into the water and go over to the plane. A lot of the passengers were already on the wing, but we were instructed to go inside the plane and just do another primary search, see if there was anyone else in there.
And so me and Michael Pravone (ph) and two NYPD divers all entered the plane, and we proceeded to go down to the cockpit, just checking to see if we have any people underneath the seats, in the water, under the water, you know, drowned or something. We were inspecting to see people still in their seats.
We didn't expect to see that a lot of the cockpit was already out. Everybody was on the wing. There was so many boats there.
It was just -- everyone says it's, like, very confusing, but to us firefighters and emergency responders, we basically -- it's all day-to-day operations. But it definitely takes a toll on you just making sure that we wanted to get everybody out safely.
HARRIS: What does it say to you, Brian, that you said you expected a different scene in the plane. What does it say to you about how this whole situation was managed, that you didn't enter that plane and come across a much different scene?
MCLOUGHLIN: Well, basically, our training takes over. If we would have got in there, we definitely would have got everybody out, conscious or unconscious. We wanted to make sure that we get them out, get them in the water, or get them on a boat that was nearby.
We had Coast Guard, we had the New York waterways, the Circle Line. We had a bunch of boats there with the FDNY and the NYPD. So we just wanted get them right out of the boat and make sure, you know, get them -- I'm sorry, get them on the boat and get them to safety before the plane sank anymore.
HARRIS: Yes. And Brian, how does it feel to be a part of something that went so well?
MCLOUGHLIN: It was definitely -- it was an amazing situation for me, myself, the training. I didn't really think about, you know, no panic. Just let the training take it. When it hit the water, it was definitely cold. But the suits definitely held us. We didn't get too wet. It's a very big experience for all of us. You never expect to be in a situation like that. Just like 9/11. You never expect that either. But we just kept doing what we were told and what we were taught and we just kept going.
HARRIS: How did it feel this morning, the mayor acknowledging, you know, all of your fine work? What did that feel like for you?
MCLOUGHLIN: It was a pretty good feeling. I was basically working all night. And they called us late last night saying you're going to the mayor's office with your captain and a fellow firefighter, Michael Pavoni (ph). So it was just a little nerve- racking at first. But it's -- I'm sure all the emergency responders there, it's a day-to-day thing with us and we do it all the time. And it's just our job.
HARRIS: Look, we can't thank you enough for doing your job. Brian McLoughlin is from the New York City Fire Department.
Brian, great to see you. Thanks for sharing the story.
MCLOUGHLIN: Thanks, Tony.
HARRIS: Man, what a story.
All right. The Senate votes to relieve the remaining $350 billion from the financial bailout. It is your money, so we're getting your views on the spending. Senior political analyst Bill Schneider joins us now live from Washington with some of the poll numbers. And I got a bit of a preview on this but I won't steal your thunder here.
Good to see you, Bill.
BILL SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Hi, Tony.
Well, you know, senators were in a tough spot. They faced pressure from President Bush and President-elect Obama to release the remaining financial bailout money. They faced pressure from the public to block the funds. More than 60 percent of Americans oppose releasing any more money for the ailing banks and financial institutions.
Now, why is that? Because the vast majority of Americans don't think the bailout money released so far has done any good. Why should the government be bailing out the institutions that caused the problem in the first place? And where's my bailout check? Members of Congress are independent political entrepreneurs. They're in business for themselves. Usually it's better for business to support what the voters want.
Now, Senate Republicans saw no political profit in supporting President Bush on this, so they voted against releasing the remaining funds. But for Democrats, it might have been costly to defy President-elect Obama. His popularity is soaring. By better than 2 to 1, voters say they trust Mr. Obama more than Democratic leaders in Congress if there's a showdown. So, Senate Democrats voted to defy public opinion rather than embarrass their new president and spoil the honeymoon -- Tony.
HARRIS: Wow. All right. Some surprising numbers. Maybe not so surprising. All right, Bill Schneider for us in Washington. Thanks, Bill.
SCHNEIDER: Sure.
HARRIS: You know, he is being hailed as a hero. I will speak with a friend and fellow pilot of U.S. Air Captain C.B. Sullenberger, "Sully," in just a moment.
(COMMERCIAL BREAK)
HARRIS: Let's take a look at the big board, New York Stock Exchange now, just three hours into the trading day. OK. As you can see, the Dow is down 89 points. Joe, Nasdaq? How is the Nasdaq doing? Nasdaq down 17. So a down day. I believe we started in positive territory. But as you can see, stocks have turned down almost in triple digits. As you can see, down 87. We'll follow the numbers from the New York Stock Exchange and the markets throughout the day right here in the CNN NEWSROOM.
All right. In just a couple of minutes, we will talk to the former Labor secretary, Robert Reich, and we will get his views on how the TARP money has been spent so far and what is the proper course of action for the remaining TARP funds moving forward. Right now let's get to Christine Romans back in New York at our business desk.
Christine, why are you back?
ROMANS: I'm back because we have some breaking news for you about more job cuts, Tony.
Hertz is going to cut 4,000 jobs. It said through the first quarter of 2009. So that's the foreseeable future for 4,000 of these folks who work at Hertz. They're going to get word about losing their job. They're going to focus on jobs that are non-customer facing jobs. So I'm assuming those are not the people who are actually renting you the car, but other people within the business. The cuts are because of decreased demand for rental cars and also they're trying to cut costs. They're really trying to cut costs at this company.
You know, Tony, all week we keep a list of the companies that come out and announce job cuts. And I'm telling you, this list pretty much is out of date every six hours because there are new companies all the time. Among them -- there are far more than this, but among them, Motorola, Cessna, Cummins, it's an engine company, Neiman Marcus, Google is laying off some 100 recruiters. Why do you need recruiters if you're not hiring anywhere else in the company.
And then earlier today we told you about Circuit City. The company had been in bankruptcy. It did not find a buyer. It is liquidating. That means 30,000 jobs will be lost at Circuit City.
So these are job cuts that are, you know, really hitting home for a lot of neighborhoods. Hertz, gosh, you know, the Circuit City jobs are at some 500 different stores.
Tony.
HARRIS: Oh, yes. OK. And, Christine, when we see you here of late, it's usually to announce this kind of news. But I know you're there to find the silver lining where there is a silver lining to be found on this story, but we appreciate you keeping us posted on this.
ROMANS: Sure. It's a tough Friday for a lot of folks out there and, you know, we're just going to keep on top of these companies, what they're doing to try to tighten the belt.
HARRIS: And, remind us, the unemployment rate is at 7.1 percent or 7.2 percent?
ROMANS: It's 7.2 percent.
HARRIS: It's 7.2 percent.
ROMANS: And, I mean, I think people should be prepared that it's going to be a little -- it's going to be tough this year. But, remember, 7.2 percent, you still have vast majority of people in this country still have their jobs, still have their house.
HARRIS: That's right.
ROMANS: This is the time to be kind of buckling down and making sure that you've got your own fiscal house in order so that you have the -- so you can weather if you do lose a job, you know. It's time to kind of get back to some basics here, I think.
HARRIS: There you go. All right, Christine, thanks. Appreciate it.
ROMANS: Sure.
HARRIS: Let's get back to that plane going down in the Hudson River. Can you imagine that pilot, Chesley B. "Sully" Sullenberger III, cool, calm and collected.
(BEGIN VIDEO CLIP)
BRAD WENTZELL, PLANE CRASH SURVIVOR: This pilot -- and if this guy doesn't get the recognition he needs, is the reason my daughter, my two-and-a-half-year-old, has a dad and my wife still has a husband.
(END VIDEO CLIP)
HARRIS: John Wiley is a former colleague of Captain Sullenberger. He is also a pilot.
John, good to see you. Thanks for your time. Thanks for rushing in to be with us here today.
JOHN WILEY, US AIRWAYS PILOT'S FORMER COLLEAGUE: Thank you. No problem.
HARRIS: Are you surprised by anything that you're hearing from survivors as to how your friend performed in bringing that plane down?
WILEY: No, not really. Sully, as we call him, a consummate aviator, former Air Force Academy graduate, top of the class. So he's used to competition. He's articulate. He's educated. And he's what we call a good stick. So -- and there are no rookies at U.S. Air. I mean these people have been there for a while. Sully's been there since '78. Just a guy that you like to hang around with. Good stories. Good aviator.
HARRIS: I like that terminology, "a good stick." What's that mean?
WILEY: Flies the airplane. Has good command. You're looking at the captain, not only as a flyer, but you're looking at him as a leader. This crew has had a time to fly together so now they've gelled, they're working together.
You take off from the airport, business as usual. Another day at the office. You're out at 2,000, 3,000 feet. The airplane, by that time, is cleaned up. You've retracted the flaps and the gear. And now you run into this flock of birds. A good analogy would be, you take a brick and throw it in the Cuisinart.
HARRIS: Yes.
WILEY: I mean there's got to be a moment for a state of disbelief. I mean this is not another day at the office now.
HARRIS: Because we heard from Sully's wife, Lorrie, last hour that he called and he basically said, "there's been an incident" and that he was calm, he was -- what were her words? Controlled and professional, even in the conversation of detailing what happened yesterday.
WILEY: Yes. Yes. I mean you look down, you've got these engine instruments that are going to be going down. You know you've got a problem with it. You've obviously lost thrust. Your airplane is now turning into a glider. Your options are becoming rapidly limited. You've got a checklist, an extensive checklist, which you don't have time to run. The flight attendants now, they were thinking about serving coffee. Now they're thinking about getting these people off the airplane. And the captain and the crew set the tone. To get 150 people off this airplane in frigid conditions, in water, with no fatalities is extraordinary.
HARRIS: I want to close the window a little bit. This time window. Because everything we're indicating is, we're talking about minutes from takeoff until the plane is in the Hudson River.
WILEY: Yes.
HARRIS: All right. And you sort of detailed some of this. But let's put it together in one kind of cohesive package. You get the double bird strike.
WILEY: Right.
HARRIS: And you're a pilot. Sully's a pilot. What is he thinking? What is he going through? Mentally? Emotionally? Talk us through that process. That work process.
WILEY: You look down, like I said, you've got the airplane. You're getting ready to cruise to Charlotte. You've done this 100 times, if not thousands of times. It's just another day at the office. And now everything has gone wrong.
We don't normally train for dual-engine failures. I mean you go through the simulators and you practice single-engine failures and single-engine landings. But the certification for the engines is to swallow a bird. It's not swallow birds. It's not for two engines to swallow birds.
HARRIS: Yes. Yes.
WILEY: So when this rock goes through the Cuisinart, it starts shedding blades. The engine starts deteriorating. You're losing thrust. Can I make it back to my departure airport? The answer is no. You've got short runways. You're also now going in the opposite direction that you took off, conflicting traffic.
Sully decides possibly can I make Teterboro. Short runways. A congested area. That's out of the question. Now you're beginning to lose energy so your options are rapidly diminishes as to what you're going to be able to choose. Your brain is now moving at better then mach 1 for an event you probably have not really considered. This is so far out of the ballpark that it's not one of these type things of, oh, hey, what happens if I have a dual-engine failure taking off out of LaGuardia. It's beyond the realm of contemplation.
HARRIS: John Wiley, that's pretty vivid. Thank you. Thanks for your time.
WILEY: You're welcome. HARRIS: That was terrific.
OK. Let's show the live picture first. Let's do that, Joe. This is the location in Bedford Heights, Ohio, of a company there where Barack Obama will be speaking in just a moment talking about his economic stimulus package. We show you the picture because the event was scheduled and the remarks were scheduled for some time after 1:00 Eastern Time, but we're getting an indication that the president-elect is running early today. Just want to show you the picture and let you know that when the president-elect begins his remarks, we will take you there live.
Before we do, we want to talk about the president-elect really scoring his first victory on Capitol Hill yesterday. The Senate voted to release the second half of the TARP money, $350 billion, to continue to shore up the economy.
(BEGIN VIDEO CLIP)
SEN. BARBARA BOXER (D), CALIFORNIA: He needs this to -- in his pocket to bring it out if he's in a crisis worse than the one now. I cannot walk away from that.
(END VIDEO CLIP)
HARRIS: Joining me now, former Labor Secretary Robert Reich.
Professor, good to see you.
ROBERT REICH, FORMER LABOR SECRETARY: Hi, Tony. How are you?
HARRIS: Thanks for your time.
But let's dive into this here, because I think we're close to the president-elect. A new CNN poll just moments ago brought to us by our Bill Schneider indicating that people didn't want -- didn't want the second half of the TARP released. People are angry. They think the program is not working. Are they correct?
REICH: Well, a lot of people are very angry and they are correct to the extent that this program has not worked so far, Tony. It was intended to get money to main street. It has bailed out Wall Street. And by almost anybody's criteria, this has been a failure and a waste of $350 billion. I think as a sign of confidence in our next president that Congress, with a lot of reluctance and again a public very, very suspicious said, well, we've got to give him all the ammunition he needs.
HARRIS: Well, Bank of America, as we go to more of the news of the day, is getting an additional $20 billion from the TARP. And then there is this extraordinary plan to backstop future losses. I've been trying to get a real clear answer to this question, Mr. Secretary. Is it the simple truth here that until the toxic assets for these financial institutions are either bought by other investors or the government, the TARP funds will be used to insure banks against really the possible losses due to those assets? REICH: Yes. Essentially you're right, Tony. These basic assets -- in other words, a lot of banks are holding assets they just don't know what the value is. Nobody's going to buy them because they have so much securities tied up in them whose value is unknown, such as mortgage-backed securities where the mortgage owner may not pay back. So you've got banks that really are suffering a crisis right now. They don't have enough money. And what's happened so far is that the Treasury has been giving them a lot of money just to keep their operations going so there won't be essentially a run on these banks.
Now what the public has been very, very concerned about -- and I think for good reason -- is that the banks have turned around and they continue to pay their executives and their directors a lot of money. They continue to pay their shareholders big dividends. They continue to buy up other banks. They're not using this money to do what Congress intended to do, and that is to give the banks enough liquidity. That is enough money so that they can turn around and lend to small businesses and to troubled homeowners and to students and everybody else who needs the money.
HARRIS: OK. And to that end, as you know, Larry Summers, top economic adviser for the president-elect, sent a letter to Senate Democrats this week. Summers pledging to commit $50 billion to $100 billion to address foreclosures, the point you were just making. He also said, "we completely agree that this program must promote the stability of the financial system and increase lending, preserve home ownership, promote jobs and economic recovery and have the maximum degree of accountability and transparency possible." What do you think of this plan moving forward as the president-elect enters the room and then we may have to go, Mr. Secretary?
REICH: Well, it is necessary. I think the president-elect has made sure people understand that he needs it and I'll talk to you more about this later.
HARRIS: OK. And I think we may have a moment because there's going to be an introduction that takes place.
How do you believe, moving forward, how do you believe, what is the best way to use these assets? We're talking not only about another $350 billion for the TARP program for the financial sector, but we're also talking about an economic stimulus package, which the president-elect is about to talk about in just a couple of moments, somewhere in the neighborhood of $800 billion. What is the best use, if you with devising the plan, advising the president-elect for moving forward?
REICH: Well, just think three words, Tony -- jobs, jobs, jobs. And think of a fourth word, and that is main street. What we've got to make sure is that Americans have jobs. A lot of them are -- you know, we're losing. We're hemorrhaging jobs, 2 million jobs lost last year alone. We're on the way, unfortunately, if nothing else is done, to losing 3 million additional jobs this year. So that TARP money has got to go to main street to create jobs and the stimulus bill also has got to go out to small businesses, to all of the places and to people in this country that generate jobs. We've got to get the economy back on track.
This is what all of these programs are about. The reason that the president got the additional TARP money, even though this is a very unpopular program, nobody wants to bail out Wall Street for its mistakes, is because people have confidence that the president is going to use this money well.
HARRIS: Yes, but, Mr. Secretary, I was struck by something you said just last week, I believe it was, in congressional testimony. That if anyone tells you they know what they're doing now with this financial crisis, they're not telling you the truth. Doesn't that almost require that we take a deep breath and figure out what we are really doing and what we need to really target as opposed to moving forward with the kind of speed that we see, not only with the TARP program, but with the calls for this massive economic stimulus plan?
REICH: Well, Tony, the problem is, we've never been here before. And this is not the Great Depression of the '30s. We are now in a different century. It looks like we're heading, if we're not careful, to a depression. But we've got to be experimental. The public has got to trust the new president and his people are going to do the best job possible. There's got to be transparency. The public has got to see, unlike the old TARP, where this money is actually going, and we've got to spend enough money. It's got to be a bold program is anything is going to actually get done.
HARRIS: And as we show pictures of the president-elect touring this facility in Bedford Heights, Ohio, I'm try to walk us up, if you can just be patient with me, Mr. Secretary, to the remarks from the secretary -- from the president-elect. Are you of the opinion -- and it seems to be a growing opinion -- that regardless of what we do for the financial sector, there are going to be winners and losers and that regardless of how much money we pump in to the financial sector, there are going to be banks that absolutely fail and the quicker we can let markets determine the winners and the losers, the quicker we can get to the job of targeting these TARP funds where they're most need and can do the most good?
REICH: Well, I agree very much with that, Tony. I think we've got to make sure that these distressed or toxic assets actually finally are priced somehow or they get off the books of these banks. Because the banks are not going to turn around and lend unless they feel confident that their balance sheets are fairly good.
That's the contradiction that is right now working its way through the entire banking system. We're giving the banks money, and we have continued to give the banks money, but at the same time the banks are saying, wait a minute, you want us to be liquid, you want us to be safe, you want us to be ongoing, you don't want us to be insolvent. We are not going to lend this money to people who we think are credit risks. And so that tension is going to continue to be there.
I think what the Obama administration is going to try to do is make sure that a certain percentage of that money definitely goes to main street, that there's more transparency, that is the public and the media can see exactly what is being done with this Wall Street bailout money, and also that it doesn't go to executive salaries and it doesn't go to -- in all kinds of directions that are essentially not what the public feels is appropriate.
HARRIS: Is it appropriate for Citi to break up its financial services division from its core business which is banking? Would it be prudent for Bank of America, which just, as you know, bought Merrill, to do the same thing?
REICH: Well, what you're asking now what I think is prudent and appropriate, I haven't seen the books of these particular banks. Let me just say, though, that it looks like, just on the surface -- I don't have any inside information at all -- it looks like Citigroup is hemorrhaging about $100 million a day. They've already got $45 billion of taxpayer money and several hundred billion dollars of loans from the Federal Reserve. This could be kind of pushing on a wet noodle.
Now Citigroup is a huge banking institution. One of the largest we have. Everybody is afraid that it's too big to fail. So somebody -- and hopefully the next administration is going to be looking with Citigroup and seeing what pieces can go where, how it can be saved and essentially make sure that taxpayers are not left holding the bag.
HARRIS: Secretary Reich, we appreciate your time so much. Thank you for the time and thanks for the insight.
REICH: Thanks very much, Tony. Bye-bye.
HARRIS: And let's listen now to the president-elect.
OBAMA: Thank you.
I want to, first of all, say a word of thanks about your outstanding governor, Governor Ted Strickland. He has been managing the ship of this state through some very rough waters. And he's done so with grace and compassion and has just been a great friend of mine. We won Ohio because of his outstanding work. His partner in crime, Lee Fisher, lieutenant governor, I want to thank both of them.
Is Congresswoman Sutton here? There you are. How are you? It's great to see you. We've got a lot of work to do in Washington.
And I know that Mayor Fletcher Berger and his wife Melba (ph), are here. Wonderful to see both of you.
I want to thank John Grabner and the Grabner family because they exemplify what's at the core of the American spirit. You can tell just by meeting John and by talking to him that if there is a barrier out there, he's going to knock it down. He's not somebody who's going to take no for an answer. He is somebody who's going to figure out, how do we get this done at the highest quality, at the best price, and it's for that reason that we've seen such extraordinary growth in leadership. And I suspect he learned a little bit of that from his father, who's here today. And so I just want to thank -- and his sons, he's passing on that same work ethic. So I want to thank the entire family for hosting us and the great work that they're doing here.
And I want to thank Smoky for his -- for not dropping that bowl on my toe. For his outstanding service to our country. His wonderful work here and the fact that he's from Chicago. So I know that when the Bulls and Cavaliers played yesterday -- look, you guys have a better record, so you have LeBron. So at least we can do is gloat a little bit when we get one win. But thank you so much, Smoky, for the wonderful gift.
Now I want to thank all the workers here at Cardinal Fastener for the tour that I just received. Their parts are used everywhere. And we just heard this -- from coast to coast, you have bolts from Cardinal in the Statue of Liberty and in the Golden Gate Bridge. So in some ways you can't think of a more iconic company than Cardinal Fastener.
The story of this company, which began building wind turbine parts just two years ago and is now poised to make half its earnings that way is that renewable energy isn't something, pie in the sky. It's not part of a far-off future. It's happening all across America right now. It's providing alternatives to foreign oil right now. It can create millions of additional jobs and entire new industries if we act right now.
In fact, John told me that Cardinal hired two workers this week. With all the bad news going out there, with all the word of jobs being lost and businesses shuddered, jobs were created right here, this week.
The need for us to act is now. It's never been more urgent. We started this year in the midst of a crisis unlike any that we've seen in our lifetime. Last month we lost more than half a million jobs. A total of nearly 2.6 million in 2008. Another 3.4 million people who want and need full-time work have had to settle for part-time jobs. With each passing day, families here in Ohio and across America are watching their bills pile up and their savings disappear. An economist from across the political spectrum tell us that if nothing is done and we continue on our current path, this recession could linger four years and America could lose the competitive edge that has served as the foundation for our strength and our standing in the world.
Now it's not too late to change course, but only if we take dramatic action as soon as possible. The way I see it, the first job of my administration is to put people back to work and get our economy moving again. That's why I've moved quickly to work with my economic team and leaders of both parties on an American recovery and reinvestment plan that will immediately jump-start job creation and long-term growth. And I'm pleased that Congress has seen the urgency as well and is moving quickly to consider such a plan.
It's a plan that will create or save 3 million to 4 million jobs in businesses large and small across a wide range of industries. And 90 percent of these jobs will be in the private sector. I want to be clear, we're not looking to create just any kind of jobs here. We're looking to create good jobs that pay well and can't be shipped overseas. Jobs that don't just put people to work in the short term, but position our economy to be on the cutting edge in the long term.
That starts with new, clean sources of energy. We know that the possibilities are limitless. Here in Ohio and all across America, we've seen old factories become clean energy producers. We've seen entrepreneurs turning solar energy into electricity and corn and soybeans into biofuels. Our scientists and engineers are hard at work developing cars that use less gas, homes and appliances that require less energy, schools and offices that are greener and more efficient than ever before. But we also know that nowhere in America are we near realizing the full potential of this work.
