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Stocks Rise, President's Green Agenda; Inside a bank Failure; No-Show For His Trial; City of Fires; Major Winter Storm; All Dolled Up

Aired January 26, 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, NEWSROOM: Hello again, everyone. I'm Tony Harris in the CNN NEWSROOM. Here are the headlines from CNN for this Monday, the 26th day of January 2009. Companies across the economic spectrum announced thousands of job cuts today. We will detail the damage.

His impeachment trial opens next hour in Illinois. But the defendant won't be there. Governor Rod Blagojevich hits the media circuit, including CNN.

Hey, look. It's marvelous Malia and there's sweet Sasha. The beanie baby company says it is not what you think, but the first lady is not amused.

It is like living on a cliff, a staggering number of job cuts announced again today, a little more than an hour ago. President Obama talked about the ugly economic news.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Over the last few days, we've leashed that Microsoft, Intel, United Airlines, Home Depot, Sprint/Nextel and Caterpillar are each cutting thousands of jobs. These are not just numbers on a page. As with the millions of jobs lost in 2008, these are working men and women whose families have been disrupted and whose dreams have been put on hold. We owe it to each of them and to every single American to act with a sense of urgency and common purpose. We can't afford distractions and we cannot afford delays. And that is why I look forward to signing an American recovery and reinvestment plan that will put millions of Americans to work and lay the foundation for stable growth that our economy needs and that our people demand. These are extraordinary times and it calls for swift and extraordinary action.

(END VIDEO CLIP)

HARRIS: Our Christine Romans is holding her breath watching all these jobs fall away. Christine, you hold your breath because this is breathtaking news that we're talking about. If you would, detail the damage for us.

CHRISTINE ROMANS, CNN CORRESPONDENT: I had to frankly get a gut check from some of my friends and colleagues who have been covering this stuff for 10 and 15 years too, asking them, have we seen something like this before? Is it just feeling to me that it's raining job cuts? And I'm getting unanimous agreement that this is a lot of job cuts all at once. If you see 20,000 job cuts, Tony, that is so rare. And now 20,000 from Caterpillar, 8,000 from Sprint/Nextel, 8,000 from Pfizer, Home Depot, 7,000, John Deere, 700, Schlumberger, the oil services company, 5,000. There's steel companies that announced a couple thousand today. We're just confirming now that GM will be laying off another 2,000 workers, mostly in Michigan and Ohio.

So depending on where you live and what industry you're in, you know somebody or you're watching these jobs kind of melt away and the reason we're hearing about it now, Tony, is because it's the earnings season. So the companies reporting their quarterly profit reports for the fourth quarter and they're looking into 2009. They're looking into the crystal ball and it's not so much that what they see is horror, but what they're seeing is uncertainty. And they just can't keep operating on the best possible scenario here. They've seen how quickly things have turned against them over the past year. And so they are, you know, they're operating with the utmost caution and laying off workers to try to save money. SprintNextel is trying to save $1.2 billion in costs and that's 8,000 workers to get there. So that's what they're doing. You know, I'm afraid that over the next few weeks we're going to keep seeing this. That's just the honest truth.

HARRIS: Let me follow up on that. Are the analysts and the experts, the economists that you speak with, are they indicating to you that we are anywhere close to a bottom on this?

ROMANS: They say no. And I say, are CEOs overreacting? Are companies overreacting and are they going too far too fast? It's a criticism you hear about companies who kind of economic -- a few clouds on the horizon and use it as a reason to cut jobs, but this is totally different. This is -- last quarter was the worst quarter in years for many of these companies. So they're looking forward and some of these companies you could argue should have been cutting jobs earlier, but they were trying to find ways by cutting 401(k) matches, by doing furloughs in some of the manufacturing. There have been a lot of things companies have been doing over the past five or six months to try to stave off mass job loss but now we are starting to see that.

You just saw that screen we put up there. A survey of private economists, the National Association of Business Economists, these are the people who work for companies and in industry. So they're not like the ivory tower guys or the think tank men and women who are economists. These folks say 39 percent see more job cuts in their industries over the next six months and 47 percent see demand falling. What that means is you got companies tightening the belt, hoarding their cash and cutting workers probably for the next six months.

HARRIS: Boy, oh, boy. We're looking for silver linings here and maybe you have one. Existing home sales are starting to move forward a little bit.

ROMANS: They are and there's a little bit of hiring in the service sector too and there's a lot of working being done in the outplacement firms who are retraining people from things that are losing jobs to things like health care, which are gaining jobs. I say it every time I talk to you Tony, health care jobs are growing. Take your skills, figure out how to translate it. It might take time. It might take some money. It might take an nvestment. Figure out how to translate those skills into health care. It's a local thing and it's also, there could be some good-paying job there.

HARRIS: Thanks, Christine.

ROMANS: You're welcome.

HARRIS: Appreciate it. You know the economy, item number one on President Obama's agenda today. He started with his daily economic briefing this morning. Last hour he signed executive orders calling for auto makers to increase fuel efficiency standards. Next hour is the White House daily briefing for the news media.

To those Home depot layoffs now, the company closing all 34 of its high-end Expo centers. Our Brooke Baldwin is at one Expo store in suburban Atlanta and Brooke, are more employees at your particular location starting to learn the news?

BROOKE BALDWIN, CNN CORRESPONDENT: They are starting to learn the news Tony. We just talked to an employee, just walked past us, I said in a word (INAUDIBLE) this morning I said, in a word, how do you feel? He said, shocked. You know something is up when you see CNN parked in your parking lot first thing Monday morning, sadly. That's how some of them are finding out. This Expo design store Tony is one of 34 that will be closing its doors some time within the next two months. That is according to the world's largest home improvement retailer making that announcement this morning. Also closing some other high- end design stores.

You heard Christine sort of rattle off some of the numbers. It's 5,000 employees, plus 2,000 others, non-store employees. That includes 500 from the corporate headquarters here in Atlanta. Grand total workforce reduction, 2 percent. They are not touching, though, the customer service employees. It's important to point out, why is this happening? The economy. The CEO of Home Depot came out this morning and even said in a conference call that you know what, these Expo design stores haven't really been doing well in the past. I want to read you part of the statement they released this morning pertaining to these high-end stores. They said even during the recent housing boom it was not a strong business. It has weakened significantly as demand for big-ticket stein and decor projects has declined in the current economic environment.

So the news just coming out this morning, Tony. They are reducing the workforce among the officers, the executives by 10 percent. They're freezing their salaries. Some silver lining here. They still plan to match the 401(k)s, give the other employees bonuses. But have you to imagine this is also creating a trickle-down, not only for folks who come here and work, Tony, but the vendors, the subcontractors, the designers, everyone is affected here.

HARRIS: Boy, Brooke Baldwin for us. You are so right about that. Brooke, appreciate it. Thank you.

Let's take you to the New York Stock Exchange right now for a look at the big board. As you can see, the Dow, boy, this is positive news. The Dow in positive territory, up 96 points. But it must be said, we are off of session highs. We have seen triple-digit gains at least in the first couple of hours of the trading day, but now down just a bit but hovering near triple-digit gains. The Dow up 97 points.

President Obama trying to sell reluctant Republicans on his economic recovery package. They say it is not the answer to the country's financial meltdown. The president is pushing for passage of the $825 billion stimulus plan. It would cut taxes by $275 billion and it sets a goal of creating four million jobs. Congressional correspondent Brianna Keilar live on Capitol Hill for us. And if you would, Brianna, update us on where things stand right now.

BRIANNA KEILAR, CNN CORRESPONDENT: Republicans, Tony, really not on board with this economic stimulus package, especially in the House where a vote is scheduled or expected on Wednesday. And again, this is an $825 billion package. A third of it for tax cuts, two-thirds of it for spending on infrastructure, that kind of thing. And Republicans, what they're saying is that's not enough tax cuts and that's too much on spending. In fact, they're zeroing in particularly on certain projects, for instance millions of dollars for updating and improving the national mall here in Washington, dc, money for the National Endowment for the Arts. They are not a fan of this plan. As it was summed up yesterday by House Republican leader John Boehner.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R) MINORITY LEADER: Our concerns about the plan we see from Democrats on Capitol Hill is just -- it has an awful lot of wasteful spending and slow-moving spending that won't create jobs and won't help preserve jobs in America.

(END VIDEO CLIP)

KEILAR: We're hearing Republicans, though, framing their opposition to this package in a very particular way. They're not attacking President Obama, who is very popular. They're taking aim more at congressional Democrats saying they've been left out of the process. Democrats saying that is not true. We've been listening to your ideas, but the fact is, Tony, Democrats are a majority. They're acting like this, a lot of the committee votes have been on party line and something else that of course is more alarming for Democrats is that now there are voices of opposition in the Senate. The Democrats in the House can just push this through without Republican support, but of course it's a different story in the Senate. They have to win over a couple of Republicans there. One of the key voices of opposition we've heard, Tony, Senator John McCain who is saying that he would not vote for this package as it stands right now.

(BEGIN VIDEO CLIP) SEN. JOHN McCAIN (R) ARIZONA: There's so much unnecessary spending that will not stimulate the economy. The tax cuts, we need to cut the pay roll tax. We need to cut business taxes. We need to have a permanent moratorium on new taxes and we also need to provide and not spend money on programs that will not have an immediate effect on our economy. And it's filled with billions of dollars' worth of spending that will not stimulate the economy. It's just the old spending practices of liberal Democrats. So I hope we'll be able to sit down and negotiate, but right now I could not vote for the stimulus package as it's been presented.

(END VIDEO CLIP)

KEILAR: President Obama has said he wants wide bipartisan support, but Republicans say they're not going to give him that support without more tax cuts, less spending, Tony.

HARRIS: OK, Brianna. I'm going to try to fire a couple questions here at you if you've got a moment. We just heard from John Boehner. A big issue here between Democrats and Republicans is this question of how fast the money will be spent on infrastructure and other projects. The truth is there doesn't seem to be much agreement on that, even among economists.

KEILAR: No. And you're seeing some of their differing opinions being held up by Republicans if it suits their point and Democrats if it suits their point. What you have is Republicans saying why are you having all of this spending on these projects if it's not going to create jobs immediately? And what they're holding up is a cost assessment on the spending part of this bill from the Congressional Budget Office, which is a nonpartisan office. And it showed as of a week ago, before some of these -- before this legislation had gone through some changes, that really not a whole lot of money, only about half of it, maybe less than half of it would be actually rolled out in the next two years.

On the other hand, you have Democrats as well as the Obama administration holding up a plan by Peter Orzag (ph), the president's budget director which says that in the next 18 months, through the next year and a half really, through the next two fiscal years, 75 percent of these funds will be rolled out. So we're still waiting for more information, an overall assessment from the CBO to see maybe if that changes in their next look at this. Tony.

HARRIS: Brianna, when will we the people get an opportunity to take a look? This is $825 billion we're talking about. When will we get an opportunity to take a look at what is being proposed here? When will the bill go online or somewhere where we can look at it ourselves?

KEILAR: And that's the beauty of it Tony. It's already online at least in the current form. This has really gone through the House at this point. It's gone through the Ways and Means Committee. It's gone through the Appropriations Committee and on those respective web sites they have posted it so you can check it out. The Senate is still taking it up, going through some markups. But I think you can see it there as well, although not in the final form. If you want to look at it, you can. If you want to see exactly what is in this and make up your own mind about it, you can.

HARRIS: Exactly. That's the point. Maybe we should break out some elements of it as well. All right. Brianna Keilar on Capitol Hill for us. Brianna, appreciate it. Thank you.

A defiant stance from Illinois Governor Rod Blagojevich.

(BEGIN VIDEO CLIP)

GOV. ROD BLAGOJEVICH (D) ILLINOIS: I would rather let them throw me out on principle than allow them to get away with some phony process that is undermining the will of the people.

(END VIDEO CLIP)

HARRIS: He is taking his case to the court of public opinion and boycotting his impeachment trial. We will take you to Springfield, Illinois. That is next.

(COMMERCIAL BREAK)

HARRIS: Gearing up for the impeachment trial of Illinois Governor Rod Blagojevich, it starts next hour, but Blagojevich himself will be a no-show. He is nowhere near the Illinois state senate where the proceedings will be held. Our Susan Roesgen is there though. She joins us now from Springfield. Susie, why is he not there and why is he not going to be there?

SUSAN ROESGEN, CNN CORRESPONDENT: Well, Tony, he has said in the last couple of weeks that he doesn't believe he'll get a fair shake here. He says in his words, the fix is in. The governor believes that it's pretty much a forgone conclusion that the state senate will kick him out of office. And you know, Tony, he is probably right. But he has gone on this public relations blitz trying to tell the people he is working for them and he doesn't want to go.

(BEGIN VIDEO CLIP)

BLAGOJEVICH: I'm not going to violate my constitutional oath of office. I swore on the holy bible that I would support the constitution of the United States and the state of Illinois. To participate in an unconstitutional process that denies fundamental due process and is a violation of the sixth amendment right to bring witnesses in to confront your accusers is to violate my constitutional oath of office. That's what they're doing. I can't participate in that and I would rather let them throw me out on principle than allow them to get away with some phony process that is undermining the will of the people. Give me a chance to call witnesses and I'll show I did nothing wrong.

(END VIDEO CLIP)

ROESGEN: Well in fact, Tony, he does have the right to call witnesses here at this senate trial even though it's not a criminal trial, they call it a trial. He has a right to call witnesses except for those who might affect the actual criminal case. The Federal prosecutor doesn't want the governor to call certain people who might affect that wiretapping and other things that involve the possible attempt to sell Barack Obama's Senate seat. He can call other witnesses, just not the ones in the possible upcoming criminal trial. But in the meantime, the governor is taking his case not only to people here in Illinois, to people all around the world through the big apple.

(BEGIN VIDEO CLIP)

BLAGOJEVICH: I'm here in New York because I can't get a fair hearing in Illinois, in the state senate in Illinois. They've decided with rules that are fixed that don't allow me as a governor the right to be able to bring witnesses in to prove that I've done nothing wrong.

(END VIDEO CLIP)

ROESGEN: OK. Now, I said what I said about the witnesses. He can call some but not all, and Tony, it does seem as if this state senate here will in the next couple of days probably go ahead and kick him out of office and then eventually the criminal case will come forward and that is a case that could put him in prison, which seems a far more serious punishment than being kicked out of office.

HARRIS: Great point, Susie Roesgen for us in Springfield, Illinois. Susie, appreciate it, thank you. You can hear directly from Governor Blagojevich. He will be on "Larry King Live"" tonight, 9:00 Eastern right here on CNN.

And later this hour, we will get the local perspective on Governor Blagojevich. I will talk with a Chicago talk show host, John Williams.

President Obama wants to go green on the highway, but are car dealers seeing red? We will get a live report from the National Automotive Dealers Association convention. That's next.

(COMMERCIAL BREAK)

HARRIS: President Obama today issuing orders giving states more power to curb auto emissions and pushing auto makers to produce more fuel-efficient cars. Let's see how this is playing with the nation's auto dealers meeting in New Orleans. Our Sean Callebs is there. Sean, what if anything are people saying there about the president's green agenda?

SEAN CALLEBS, CNN CORRESPONDENT: Well, they haven't had a whole lot of time to digest it. We talked at length to folks yesterday and clearly a lot of folks say this is the future. There are a lot of cars inside that are more fuel efficient and there are a lot of hybrid cars inside there. And clearly that is where this nation probably is going, but it's going to take some time. I think if you talk to folks inside, they're worried about clinging on to their jobs, just like so many other people across the country.

So far in the last year, about 900 dealerships have closed. To give you an idea, that's about 5 percent of the dealerships around the country. There are 20,000 dealerships around the country. Inside that hall, there are supposed to be 18,000 people registered, but if you walk around, man, there's very, very little foot traffic. The folks we talked to said it is down 30, 40, even 50 percent from what it has been in the past several years and they anticipate they're going to lose a lot more dealerships in the upcoming year.

The whole mood here very somber. Gone are the lavish nighttime parties that really have come to basically set the signature for these kind of conventions. There are a couple of big-name speakers, President Bush, George Walker Bush and Bill Clinton. We talked to some people who are here. They say, look, it's great that we've got those presidents. They can offer some words of inspiration, but it would have been great to get someone from President Obama's administration.

(BEGIN VIDEO CLIP)

BRADY SCHMIDT, PRES., NATL BUSINESS BROKERS: That's the unfortunate opportunity that I think they've missed in this show because the planning of the show, having to plan it so far in advance, it'd be really great if we could have someone from the current administration at a high level out here talking to dealers and telling them what they plan on going back to Washington and doing. That would be ideal. Since we can't have that, having former presidents come and inspire people and tell them to stick in and pull up by the boot straps like Americans have always done in tough times is a good message right now.

(END VIDEO CLIP)

CALLEBS: Real quickly Tony, want to get back to what the people inside are looking for, the exhibiters. Now everybody who gets these credentials, they have different colors on the bottom. The press is red. The exhibiters are yellow. What they look for, a brown strip on the bottom. Those are the contractors and those are the people spending money. I didn't see any brown credentials when I was walking through there this morning, didn't see any yesterday. There's just not a lot of people. I is a very, very difficult time to be in the automobile industry.

HARRIS: Hey, Sean, I'm just curious so we can sort of articulate what the issues are for the dealers. Certainly they're talking about it, if not on the floor, maybe in some meetings in areas of the building. But what is the strategy for these dealers to survive these difficult times? Is it about merging operations? Is it about structuring better deals with the Detroit auto makers?

CALLEBS: If you talk to them, I think there's a lot of frustration at the way the credit industry has tightened up. A lot of them basically blame the banks. They say look, we have people coming in, ... sell the same car three, four even five times before it gets off the lot because people are having a much more difficult time qualifying for credit. You have to have basically 700 credit rating until this past week when they loosen that up just a little bit. So that's a big sense of frustration. But they know a lot of these dealerships are simply going to go away. We see a lot of booths in there this year that simply aren't going to be there next year, because they are going to lose jobs and that is what is going to have to happen, this whole industry is going to contract.

HARRIS: Sean Callebs for us in New Orleans. Sean, appreciate it. Thank you.

White House orders on going green. President Barack Obama putts his stamp on environmental policy. What it could mean for you and your car.

(COMMERCIAL BREAK)

TONY HARRIS, CNN ANCHOR: So Wall Street has a mountain of news to digest today. Huge companies like Caterpillar, Sprint, Home Depot and Pfizer are cutting thousands of jobs. And for the first time in years, a major merger is announced. Pfizer and Wyeth coming together. And existing home sales increase. Yes, that's right. Sales actually rose last month. A lot to get to. Susan Lisovicz is at the New York Stock Exchange with a look at how investors are reacting.

Good to see you, Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: Good to see you, Tony. And it's good to see some nice numbers on the big board.

And why is that? Because, you know, you ran through some of it. We kind of have a man-bites-dog story here today. First of all, we're seeing a big merger on this Monday. Something we really have not seen in a long time. $68 billion, Pfizer buying Wyeth. Pfizer's concerned about the looming expiration of its blockbuster drug, Lipitor. But how does a company like that get financing during a credit crisis? So that's giving investors a little bit of confidence. So that's something that we haven't seen in a while.

Also, as you said, existing home sales, the biggest part of the housing market, increased last month. The National Association of Realtors says, "it appears some buyers are taking advantage of much lower home prices." It also acknowledges the market is still far from normal.

OK. And then leading economic indicators also unexpectedly rose. So, you know, just a nice trio of economic news that is pushing the market higher. Check it out, three hours into the session, the Dow, right now, up 116 points. The Nasdaq is up 26. We're talking about gains of at least 1.5 percent. Yes, lots of job cuts. Yes. But we are seeing some silver lining here. Occasionally, and we are happy to report them, when it is clear to us.

HARRIS: All right. Appreciate it, Susan. Thank you.

LISOVICZ: You're welcome.

HARRIS: Yes, we'll take that good news.

President Obama taking action on the environment. He's signed orders today on auto emissions of fuel efficiency while also promoting his economic recovery plan. White House correspondent Suzanne Malveaux joins us live with details.

Good to talk to Suzanne.

You know, the president wants, look, our vehicle fleet to be more fuel efficient. And for him it's not only an environmental issue, it is also a national security issue as well.

SUSAN MALVEAUX, CNN CORRESPONDENT: National security. It's also a job issue, Tony. He's making the case for all three of those points.

One of the things that he talked about is increasing fuel efficiency standards. And right now it's at 27.5 miles per gallon that we get for most vehicles. And Congress had passed essentially legislation saying let's make it 35 miles per gallon by 2020. Well, President Obama said let's speed up the process. Let's make this happen by 2011. So that's one thing that he highlighted today.

The other thing he highlighted is actually considering letting some states, California and some 13 others, set their own auto emissions standards. Even stricter than what's called for by federal law. Now this was something that Governor Arnold Schwarzenegger had asked President Bush, could he have a waiver -- could the EPA waver this so that he could actually go ahead and put those stricter standards in place. President Bush said no. President Obama is saying let's reconsider that decision. Perhaps it would be best for states to go ahead and have even stricter auto emissions standards than what is required by federal law.

And, Tony, the argument he made here is, look, it's important to be energy efficient and independent, but also this is in connection to jobs, creating these green jobs. The kind of jobs that he says many people will need.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: First, we must take bold action to create a new American energy economy that creates millions of jobs for our people. The American Recovery and Reinvestment Plan before Congress places a down payment on this economy. It will put 460,000 Americans to work with clean energy investments and double the capacity to generate alternative energy over the next three years. It will lay down 3,000 miles of transmission lines to deliver this energy to every corner of our country.

(END VIDEO CLIP)

MALVEAUX: So, Tony, he's making the case here that obviously it's about national security, not being dependent on foreign sources of oil, but he's also saying this is an economic thing as well. He talked about those huge numbers, the job loss numbers that we expect from Home Depot, from Sprint, Caterpillar, all of those. It's going to be really tough for a lot of people. He says push for this $825 billion economic stimulus package. We'll create those jobs. We'll create green jobs. It is all related. Tony.

HARRIS: Our White House correspondent Suzanne Malveaux for us.

Suzanne, thank you.

Tonight on "Lou Dobbs Tonight," CNN's Special Investigations Unit goes inside a bank failure. Silver State Bank in Nevada shuts its doors this fall after a meteoric rise and a devastating failure that has left many victims in its wake. This is the first in a series of planned collaborations with the online investigative journalism group propublica.org. Here's CNN SIU's Drew Griffin.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN CORRESPONDENT: It's a rare look and admission, really, from one of the bank's officers on how the quest for profits and the belief that the housing boom, the building boom just couldn't end despite multiple warnings.

Are you sad about what happened?

DOUG FRENCH, FORMER CHIEF LOAN OFFICER: I'm very sad. I'm very sad. It's very humbling.

GRIFFIN: Doug French is now in Alabama. But the failure of Silver State Bank could be just the beginning of many small to mid level banks that will fail because they made some bad gambles. The real losers, though, are depositors who have lost their uninsured savings. And in Nevada, that includes a group of deaf seniors who are having a hard time understanding why.

WILLIAM MORAN, DEAF SENIORS ASSOCIATION, LAS VEGAS, (through translator): I received a phone call, a friend of mine, who is our treasurer. It was like at 11:30 at night. He had -- he was -- he was -- he had alerted me and said, hey, you know, watch the news. Watch the news. Something's happened. I said, what are we going to do? I couldn't sleep for two days.

GRIFFIN: The Deaf Senior Association of Las Vegas was saving the money to host the national convention. When Silver State Bank closed, they lost $170,000. Money not covered by the FDIC because it exceeded the $100,000 limit.

You guys have been earning money all sorts of ways, ingenious ways, for a long time for this. I wonder if there's a collective feeling of sadness, madness or what?

UNIDENTIFIED FEMALE, (through translator): Yes. Yes. Yes. Absolutely.

GRIFFIN: Just can't believe it happened?

UNIDENTIFIED FEMALE, (through translator): That's right. Cannot believe it. I think it's awful that this happened. This money belongs to the deaf senior citizens. It's just terrible. GRIFFIN: The FDIC covered more than half a billion dollars in investments deposited at Silver State Bank. But $20 million in unsecured deposits, like those held by the deaf seniors, are simply gone. Tonight, you will find out who made those stupid loans, those gambles that we are all still paying for.

Drew Griffin, CNN, Atlanta.

(END VIDEOTAPE)

HARRIS: And you can see Drew's full report on "Lou Dobbs Tonight" at 7:00 p.m. Eastern Time.

His impeachment trial begins today, but he won't be there. Illinois Governor Rod Blagojevich hits New York to tell his side of the story.

(COMMERCIAL BREAK)

HARRIS: His impeachment trial opens at the top of the hour, but count the defendant as a no-show. Instead, Governor Rod Blagojevich is all over TV and radio painting himself as a victim. John Williams is with us. He hosts the talk show on Chicago's WGN Radio.

John, good to talk to you. Thanks for your time.

JOHN WILLIAMS, CHICAGO RADIO TALK SHOW HOST: Good morning. How are you?

HARRIS: Great. Great.

The governor is defending himself everywhere except in Springfield today. What are people who call your show saying about this media blitz?

WILLIAMS: They want it to be over. They're real amused. I mean it's kind of interesting that he's going on "The View." He's going to be on with "Larry King," et cetera, et cetera. So it's kind of funny. I mean it's a real comedy show. But it's also sort of tragic. I mean it does matter. He is our governor, you know.

HARRIS: Thank you. Yes. Yes. And that's why we wanted to have you on the show today just to talk about that. I mean, is any work getting done in your state or is it all overshadowed by, you know, what some are describes as a three-ring circus?

WILLIAMS: Imagine that. I mean Barack Obama leaves. It was the greatest day that many of us remember in Chicago. In Grant Park we had the huge celebration. And at that time, our governor was plotting, conceivably, the allegations are to sell Barack Obama's seat to somebody. And then the whole Roland Burris thing surfaces. So it's really been a three-ring circus for us.

HARRIS: Given what you know of the governor, is it conceivable that these allegations are true? Just from -- just from what you know, what the aura is around the mans, is it even conceivable that he would have been attempting to sell the seat of Barack Obama as is alleged? WILLIAMS: I don't know. You know, I really don't know. All of us were stunned.

HARRIS: Is it hard for you to believe?

WILLIAMS: I beg your pardon?

HARRIS: Is it hard for you to believe that it could be true?

WILLIAMS: Yes, sure it is hard. It's hard to believe that anybody would do that, particularly here in Chicago when we're all celebrating and then that's what was happening. But the charges that may end up getting him out of office may not have anything to do with that. Patrick Fitzgerald, the prosecutor, has these criminal charges, the likes of which are the selling of the seat, the trying to get members of The Tribune editorial board out, et cetera, et cetera. And those are the criminal charges. But there's a whole nother dozen counts against him that the senate is actually hearing today. And irrespective of those other charges, he could be thrown out of office for other charges which aren't nearly so scandalous but are the usual boiler plate, abuse of power type things.

HARRIS: Yes, here's the governor on "The Today Show" this morning talking about the day he heard about the charges.

(BEGIN VIDEO CLIP)

GOV. ROD BLAGOJEVICH, (D) ILLINOIS: The day unfolded and I had a whole bunch of thoughts. Of course, my children and my wife. And then I thought about Mandela, Dr. King, Gandhi and tried to put some perspective in all of this. And that's what I'm doing now.

(END VIDEO CLIP)

HARRIS: So the governor has likened himself to Nelson Mandela, Martin Luther -- I hear you wanting to jump in. So go ahead.

WILLIAMS: Well, no, I mean, I know, isn't that just amazing? You know you rotate between being amused and just being saddened by it all. It's really fascinating.

I will say one thing. It's been a real civics lesson for us here in Illinois. I mean I didn't know anything about impeachment processes until this. I didn't know about the powers of the senate and house and the governor necessarily in great detail. So we are all sure learning a lot about government.

HARRIS: Yes. John, thanks for your time. John Williams with WGN Radio. Thanks for you time.

WILLIAMS: OK.

HARRIS: And you can hear directly from Governor Blagojevich. He will be on "Larry King Live" and taking your calls, 9:00 p.m. Eastern, right here on CNN.

A Pennsylvania town afraid to sleep at night. We will tell you why, and talk to someone who lost his home. That's next.

(COMMERCIAL BREAK)

HARRIS: CNN has just confirmed Pennsylvania State Police and the Bureau of Alcohol Tobacco and Firearms have been called to help investigate a series of fires. Have you been following this story? Coatesville, Pennsylvania, a community of about 11,000 people west of Philadelphia, living in fear amid a wave of suspected arson attacks. Fourteen this month alone. Fire victim Ron Townsend joins me live from Coatesville.

And, Ron, thanks for your time.

First of all, look, I just landed on the planet and I just heard the details of this story. Tell me, in your own words, what is going on particularly this month in Coatesville.

RON TOWNSEND, FIRE VICTIM: Well, I think that there's just been a rash of arson fires within the city. Probably actually, to be real honest with you, it probably started more like a month, month and a half ago. So far have been unable to catch who's setting the fires.

HARRIS: Ron, if you had to guess, who is behind these fires?

TOWNSEND: You know, there are so many rumors running around. And I'm not real good at guessing, to be honest with you, Mr. Harris. One speculation is, it's some kind of gang initiation, which I really find that hard to believe because all the houses that are burning up, it seems to be, in my opinion, some kind of method to the madness.

HARRIS: Right. Well, is it comforting at all to know that Alcohol, Tobacco and Firearms, the state police, that these agencies have been called in to help in the investigation? Does that bring you any comfort at all?

TOWNSEND: Yes, sure, because the more help that the officials out here can get, the better off that they will be equipped to catch who ever is starting these fires. That's just my belief. Something has to be done because it's really out of hand. People are really afraid to go to sleep at night. It's a bad situation for a small town. It really is.

HARRIS: Ron, when did you lose your home?

TOWNSEND: January 6th I was burnt out.

HARRIS: Well, what are the details of -- yes, what are the details around your particular fire? What it at night? Were you away from home, maybe at work? And talk to us about what happened to you.

TOWNSEND: It was early morning around -- a little after 12:00. And, yes, someone took a trash can and put some kind of -- according to the fire marshal, someone took a trash can, put some kind of accelerant in it and ignited it underneath the porch. And the whole house -- and the adjoining house next door also was burnt completely down.

HARRIS: So at this point you're displaced, you're without a home. And how many members of your family?

TOWNSEND: There's four members. Me and my wife and we have custody of my two grandchildren. Two of my grandchildren.

HARRIS: So what are you -- where are you living? What are you doing? And how are you getting along?

TOWNSEND: It's very difficult right now. And I was fortunate enough to have the guys that I work with put us up in a hotel for a week. I really wanted to get that out because I have received help from different people. Actually last night was our first night in the shelter. There's not a lot of shelters around in this area that will accommodate families, but we were fortunate enough to find one. And last night was our first night in a shelter. And I'm unemployed right now. and I go back to work in March. And just trying to maintain and hold the family together until then. It's very difficult.

There seems to be no kind of -- everybody that's willing to help as far as getting another home needs me to be able to show some kind of employment right now and I can't do that. So it's kind of tough. It's really tough, Mr. Harris.

HARRIS: All right. It sounds like a couple of things need to happen here. We need to find out -- make sure that your family is stable in a place to live. And then investigators have got to get about the job of finding who is responsible for this and stopping this in your town.

Ron, we appreciate your time. Best of luck. And we'll check in with you from time to time to see how things are going.

TOWNSEND: Thank you. You have a good day.

HARRIS: Yes, you too.

Ron Townsend, Coatesville, Pennsylvania.

Let's turn to weather now. Drivers in Reno, Nevada, are rolling the dice by getting on the highways. Take a look. Reno yesterday morning getting about a half of an inch of snow. Meteorologists there are warning drivers of some patchy areas.

And, Chad, patchy areas and, of course, always a concern, black ice.

CHAD MYERS, CNN METEOROLOGIST: Yes, and we're going to have a lot of it, Tony. This is a dangerous situation setting up from Oklahoma City through Ft. Smith and Springfield right all the way across to Cape Girardeau. I'm going to show you my maps, but you can look at the maps while I give you some forecast because they are so important.

Oklahoma City, you're beginning to ice up now. Tulsa, you will begin to ice up, along with Springfield. Everywhere that's red, from Louisville and Cincinnati all the way down through Springfield, Oklahoma City, these are all winter storm warnings. And let me tell you why.

Cape Girardeau, you'll get 2 inches of ice. That's going to bring down trees and power lines. Same story, Ft. Smith, nearly paralyzed. Memphis, you're going to start out as rain and then turn to ice by tomorrow, Wednesday morning. Oklahoma City, only a quarter inch of ice. You're kind of on the backside there.

Louisville, 1.5 inch of ice everywhere across the city. We're talking -- Tony, this is like that -- this is a bread and milk storm. You better go get it because you may not be able to get it for a while.

We have Gulf moisture that's pouring up into a very cold air mass. It doesn't like it when the air is aloft. Two thousand feet aloft. If that air up there is 35 and the air where you live is 28, that's a bad number because it rains right into your 28 and the freezing goes everywhere. This is a big-time ice storm. I'm betting hundreds of thousands of people will be without power by Wednesday. And it's starting tonight.

HARRIS: And it's starting tonight.

MYERS: Yes.

HARRIS: All right. We'll be watching it, Chad. Thank you.

MYERS: You've got it.

HARRIS: President Obama's face has popped up on everything from collectible plates, to nail clippers, to bottles of water. But now his two young daughters have entered the spotlight and that has the first lady saying, hold up, wait a minute.

(COMMERCIAL BREAK)

HARRIS: Imitation may be the highest form of flattery, but the first lady is not thrilled about two dolls seemingly named after her daughters. CN's Alina Cho has the story.

(BEGIN VIDEOTAPE)

ALINA CHO, CNN CORRESPONDENT, (voice over): Meet Marvelous Malia and Sweet Sasha. Names sound familiar? They're the latest dolls by toy company Ty, Inc. And they're a passing resemblance to first daughters Malia and Sasha Obama.

ALLAN LICHTMAN, AMERICAN UNIVERSITY: They are really cute. They're really wonderful. And, you know, by virtue of being so wonderful, they're marketable.

CHO: But does that make it right? The first lady doesn't think so. Through her spokeswoman, Michelle Obama tells CNN, "we believe it is inappropriate to use young, private citizens for marketing purposes."

CHARLES FIGLEY, CLINICAL PSYCHOLOGIST: This is sickening and a horrible thing. As a country, we're all prepared for a terrorist attack. Well, this, in many ways, is a greed attack.

CHO: Others argue, why not. Everything the Obama girls touch turns to gold. LICHTMAN: There really isn't much of anything that the Obamas can do about it. The president is not going to go sue private companies.

CHO: If history is any guide, children in the White House, especially the young ones, are generally off limits. In the Obama White House, the first couple makes it clear they want their daughters to live as normally as possible. These dolls, some say, leave the first daughters exposed.

DR. JUDY KURIANSKY, CLINICAL PSYCHIATRIST: They should not be sold and feel like that they can be bought. This is not healthy for them psychologically.

CHO: Ty, Inc. tells CNN, information about the development of its products is proprietary. A Ty executive adds, "we did not make the dolls to physically resemble either of the Obama girls."

LICHTMAN: It's not surprising that in our consumer culture and in this hard-times economy that people are going to try to take advantage of the Obama image and even Obama's wonderful two little girls.

CHO: They're not the first. In the '60s, Caroline Kennedy had a doll too. And some say from a marketing standpoint, it's a genius idea.

LICHTMAN: We live in the land of the free and the home of the dollar. Barack Obama is kind of a unique figure. He's a political leader. He's a rock star. He's an icon.

CHO: According to psychologists, the problem is having a doll that's just like you leaves you, the child, exposed. They say it can make children narcissistic or very shy, both ways to protect themselves from the fact that everybody has a little piece of them. But Ty, Inc. says it's just a coincidence the dolls are named Malia and Sasha. A spokeswoman says they're beautiful names and worked well with the dolls we were making.

Alina Cho, CNN, New York.

(END VIDEOTAPE)

HARRIS: Coincidence?

BETTY NGUYEN, CNN ANCHOR: Just a coincidence, Tony.

HARRIS: Woo.

NGUYEN: I mean some of the other dolls are, what, Britney and Paris. Those are coincidence too.

HARRIS: Malia, Sasha. Exactly.

Good to see you, Betty.

NGUYEN: What was that, land of the free, home of the dollar. That's what he said.

HARRIS: Betty is obviously in for Kyra. CNN NEWSROOM continues right now.