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President's Economic Push; Banks on the Brink; U.S. Soldiers Attacked in Iraq; Nationalizing Banks?; Miracle on the Hudson Hearing

Aired February 24, 2009 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

TONY HARRIS, CNN ANCHOR: It is February 24th, 2009, Fat Tuesday. And here are the top stories in the CNN NEWSROOM on this Mardi Gras.

President Obama in front of Congress and the American people tonight. He sold the stimulus. Now can he sell a little confidence?

Big banks face a government stress test this week. The Obama administration setting the stage for nationalization?

Chinese investors coming to America. They're on a house-hunting mission. Foreclosures at bargain-basement prices.

Good morning, everyone. I'm Tony Harris, and you are in the CNN NEWSROOM.

Where do we start this hour? Where else but at the White House?

President Obama laying it on the line. Ten hours from now, he delivers a primetime address to convince Congress and the country that his economic plan will pull the nation out of recession.

Let's get right to our White House Correspondent Dan Lothian.

And Dan, the president has to be a realist and an optimist tonight. That sounds like a pretty tough needle to thread.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: It really is, Tony. And this is such a critical address for the president.

As you mentioned, he'll be focused on Congress and addressing Congress, but really, this is a speech to the American people. During this difficult time, the president expected to lay out the challenges facing this country.

The speech is expected to last anywhere from 50 to 60 minutes. And I had a chance to talk to Christina Romer, one of the president's economic advisers, and she said that the president will try to balance sort of this dire, dark tone with an optimistic view.

(BEGIN VIDEO CLIP)

CHRISTINA ROMER, COUNCIL OF ECONOMIC ADVISERS: The analogy I like to use is he's like a doctor; right? He's -- the patients in his office, he's going to tell us the truth. We have a serious problem. But the important thing is, he has a plan. There is this treatment, and we will get better. And I think that is the ultimate message of hope that he's going to give, is by being realistic about the problems that we face, and then making sure that we understand there's a comprehensive plan for dealing with it.

(END VIDEO CLIP)

LOTHIAN: And the thing you hear from everyone here at the White House is that Americans really need to be patient. Ms. Romer saying that you have to look at it as a large ocean tanker. You can start turning that wheel to try to change course, but it's going to take some time before that tanker actually turns around. And she says look at the economy this way.

The president has been throwing $787 billion to stimulate the economy. All these various tools, the housing plans, that's the turning of the wheel. But as she says, it will take some time for this economic tanker to turn around -- Tony.

HARRIS: Boy, that is a perfect analogy.

All right. Dan Lothian at the White House for us.

Dan, appreciate it. Thank you.

LOTHIAN: OK.

HARRIS: You know, some high expectations for President Obama's first address to a joint session of Congress. A new CNN/Opinion Research poll finds 62 percent of respondents say the president's speech will likely make them feel more confident about the economy. Thirty-seven percent said it is not likely to do so.

And of course you can watch President Obama's address to Congress live, right here on CNN. That's tonight at 9:00 Eastern. It will be followed by "ANDERSON COOPER 360" post-game, with the best political team on television.

And a special edition of "LARRY KING LIVE." That's at midnight.

And right now, you and your Facebook friends can join in on special online coverage, live at CNN.com. Join CNN's John King for a special exclusive online edition of "STATE OF THE UNION," with real- time responses from you. It is happening now at CNN.com/live.

They begin tomorrow. The credit crisis leads to stress tests for banks. Will that lead to nationalization of big financials caught in a clutch? Fed Chairman Ben Bernanke is taking questions about all this right now from the Senate Banking Committee.

Senior Correspondent Allan Chernoff keeping an eye on the Q&A from New York.

Oh, Allan, what the heck is a stress test?

ALLAN CHERNOFF, CNN SR. CORRESPONDENT: Well, Tony, I know you're much too young to have ever had a stress test at your doctor's office, but...

HARRIS: It's been recommended, I'll tell you that.

CHERNOFF: Well, what Dr. Bernanke is recommending now for the banks is that they get one. And this is going to involve basically putting a little stress on the banks, a "what if" scenario, worst-case scenario.

What if -- what if the banks actually saw the economy continue to decline dramatically? Say that foreclosures picked up, loans are not paid off, credit card balances not paid off. Can the banks handle it? Can they deal with it?

And so that's what those stress tests are going to be. If a bank fails, then the government is going to require the bank to raise money.

Now, will they be able to raise money in the private market, issuing stock, issuing debt? Or are they going to have to turn to the federal government and maybe have the government buy more stock or give more, or maybe even take over the bank? -- Tony.

HARRIS: Wow. OK. And that leads folks down to the road of wondering whether or not -- and I don't know how much discussion we'll get of in this morning, but I can imagine it would be asked as a question -- as to whether or not the idea of nationalizing banks might, in fact, be a good idea.

CHERNOFF: It's under debate.

HARRIS: Yes.

CHERNOFF: I mean, the Obama administration has said that they prefer not. They do not want that to happen at all.

I mean, they're hoping that the banks can pass these stress tests. But Citigroup already has come back and said, hey, you know, we may need to have you pick up some more stock of our company to actually convert the preferred stock that the taxpayers, the government now owns in Citi, and convert that over to common, which would give the government a massive controlling interest in Citi.

Now, we do actually have some good news out of the Bernanke testimony this morning.

HARRIS: Wow. OK.

CHERNOFF: The Fed chief actually did say that he sees the potential for some light at the end of this tunnel. Let's have a listen.

(BEGIN VIDEO CLIP)

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Actions taken by the administration, the Congress and the Federal and Reserve are successful in restoring some measure of financial stability, and only if that is the case, in my view, there is a reasonable prospect that the current recession will end in 2009, and that 2010 will be a year of recovery.

(END VIDEO CLIP)

CHERNOFF: A reasonable prospect. That's something to at least hang your hat on, Tony.

The Fed chief is saying that he does think the economy will contract by as much as 1.25 percent this year. Some economists would say that's a little optimistic, but that's what the Fed's going with right now, and they're actually saying that the worst of it is right now, the first half of the year. They're talking about the beginning of turning up in the second half of the year, and then continuing next year.

That's if all these plans work, if it all comes together.

HARRIS: Yes. Well, Allan, we're going to take on this whole debate and this question of whether the banks should be nationalized a little later this hour with a Harvard economist.

Allan Chernoff in New York.

Allan, appreciate it. Thank you.

And still at the Capitol, this time on the House side, lawmakers have more questions about last fall's $700 billion financial bailout. The House Financial Oversight Subcommittee will hear from key players this afternoon. Those testifying include special inspector general of the Troubled Assets Relief Program, Neil Barofsky. The panel also hears from Elizabeth Warren, who chairs a congressional panel that is keeping tabs on TARP spending.

Word of a deadly attack involving U.S. soldiers and Iraqi police today at a police station in northern Iraq.

CNN's Arwa Damon, live from Baghdad.

And Arwa, some conflicting reports on this. What do we know about the shooting in Mosul today?

ARWA DAMON, CNN CORRESPONDENT: Well, Tony, according to the U.S. military, American soldiers were at a meeting at an Iraqi police station in Mosul when the police station came under small arms fire attack, wounding four U.S. soldiers and killing their interpreter. However, according to Iraq's Ministry of Interior, there were actually Iraqi policemen who were somehow involved, perhaps even carried out that attack. And they are saying that four U.S. soldiers and their interpreter were killed.

Still trying to confirm that information from the U.S. military. For now, just saying that four of its servicemen were wounded.

Mosul does still remain, according to the U.S. military and the Iraqi Security Forces, al Qaeda's last urban stronghold. There have been a number of operations in that city throughout the entire province, in fact, to try to eradicate al Qaeda once and for all.

The most recent operation that's being called Operation New Hope actually began on Friday and has the Iraqi army in the lead. They say that they're trying to eradicate al Qaeda, to create the conditions for the newly-seated provincial council to be able to begin to function properly, carry out its duties, saying specifically they're targeting al Qaeda sleeper cells. But what we are seeing happening today, to include an attack that took place in Diyala Province yesterday, where a roadside bomb killed three U.S. soldiers and their interpreter, just very much an indication of the challenges that still remain here -- Tony.

HARRIS: OK, Arwa. And we will wait for further clarification from the U.S. military on this.

Arwa Damon in Baghdad for us.

Arwa, thank you.

And trying to get through these difficult times by sticking to a budget. Personal Finance Editor Gerri Willis has the advice you need, and it's next.

(COMMERCIAL BREAK)

(WEATHER REPORT)

(COMMERCIAL BREAK)

HARRIS: The key to money smarts, a family budget. You've got to make one, and everyone's got to stick with it.

Personal Finance Editor Gerri Willis is here to show us how.

Gerri, good to see you.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Good to see you, Tony.

HARRIS: So, Gerri, what do we do? What are the first steps here?

WILLIS: OK. Job number one, Tony, you really want to keep a money journal for a month. Now, that means you write down exactly what you spend on a daily basis. I'm talking everything...

HARRIS: Oh boy.

WILLIS: ... your morning coffee, your cable bill. Put it all in there. Get in touch with where you're spending your money. You'd be surprised at how much you allocate to, you know, just stuff you really don't need.

Most people are still spending cash on discretionary items, even during the recession. That's not a bad thing, but you want to know exactly where your money is going. Next, figure out where you should be allocating your money in an ideal world. OK, take a look at this pie chart.

Housing, utilities, insurance, all those things together should be 40 percent of your budget. And if you just strip out housing -- that's the mortgage, that's rent -- it should be only 31 percent to 33 percent.

Now, living expenses should be 25 percent -- food, clothing, medicine. Transportation, 15 percent. That's, you know, what you're paying for your car, plus what you're paying for gas.

Savings, 5 percent. Debt, check this out, only 5 percent. Education, childcare, 6 percent. Recreation, 4.

Now, your situation will vary. And, of course, as you know, Tony, the worst component of this, the most difficult to manage, has been that housing allocation, where people have really allowed that to get out of hand.

HARRIS: Hey, Gerri, how do you go from tracking your expenses -- great idea -- to actually divvying up your money?

WILLIS: One idea is to go online. You can really track your income and your outgo.

Software like Quicken, even CNNMoney.com, can help you organize yourself when it comes to your savings and spending. I want to tell you, you know, Quicken has a free -- yes, free -- online version where you can track all of your money. On one page you can see your retirement, your checking accounts, everything you own.

And the program will calculate where your money is being spent, so it will tell you the category. Is your clothing budget out of control? You'll find out.

You'll also find out how you're progressing towards goals. And it alerts you if your balances are getting low, so you don't let a check bounce. So it's a useful tool.

Also, CNNMoney.com, a great place to go.

HARRIS: Hey, Gerri, let me ask you a quick question here. Are these programs easy to use? Because I think -- we know that it's important to do it, and you pointed out that this morning. But I think maybe one of the reasons more of us don't do it is because we think it's going to be onerous and difficult to use these programs.

WILLIS: That's right.

HARRIS: Are they easy to operate?

WILLIS: Yes, they're easy to operate. And they're kind of fun, because they show you what you need to know in a very visual way.

HARRIS: OK. WILLIS: Look, bottom line, if you really hate this kind of thing, the shortcut, if you want to budget, and you really don't know how to do it, is pay yourself first.

HARRIS: Yes. Yes. Yes.

WILLIS: Put your money in your savings, put your money in your 401(k), and then let everything else go. You know what I mean? That way, you get the important thing done, because that's what this is about, making sure you have savings.

HARRIS: Awesome. Thank you, Gerri.

WILLIS: My pleasure.

HARRIS: You know, the U.S. housing market, too many homes, not enough buyers. Now Chinese investors are eager to cash in on that opportunity. They're house shopping and bargain hunting in the United States.

CNN's Emily Chang has that story.

(BEGIN VIDEOTAPE)

EMILY CHANG, CNN CORRESPONDENT (voice-over): At the Beijing airport, 40 Chinese investors embark on a mission to open their wallets on the other side of the world and buy a house in the United States. "The price is right," says lawyer Yin Guohua. For him, it will be a home away from home, a place to stay on business. And quite simply, an opportunity to get a deal.

"It sounds cheap," says this businesswoman, "but I'll have to see it with my own eyes."

Their journey will take them on a tour of bargain and foreclosure properties from L.A. to Las Vegas, San Francisco, Boston and New York. Yin says he has been watching the U.S. housing market for two years. He is willing to spend up to a million dollars, and pay it all at once.

"This could be a positive stimulus for the American economy," he says. He's a family man who already owns three properties in Beijing. "Our son will have a place to stay when he goes to America for school someday," his wife says.

(on camera): The house-hunting trip is being run by a Chinese real estate brokerage, soufun.com. The company says it received hundreds of applications for just 40 spots from Chinese eager to invest overseas. But it's raised questions. Are the Chinese capitalizing on the misfortune of Americans in the subprime mortgage crisis, and is this the start of a dangerous flow of capital out of China, when China's own economy is slowing down?

VINCENT MO, SOUFUN.COM CHAIRMAN: It is still a very, very small fraction of the purchasing power here in China. So I don't think, you know, this, you know, small group of people, because of their personal interests or their -- for whatever reason, it's going to affect the Chinese demand for properties.

CHANG (voice-over): Foreigners can buy property in the U.S. under fairly simple guidelines. They may have to make a bigger down payment, or pay more taxes. And investment experts say China's restrictions on transferring money out of the country are relatively easy to navigate.

Yin has his eyes on a few homes in New York and L.A., but like any smart investor, he says he won't make a deal unless it's a good one.

Emily Chang, CNN, Beijing.

(END VIDEOTAPE)

HARRIS: Hey, another invite for you. Let me extend the invitation.

If you would like to join the conversation on the economy and the president's first 100 days, here is another opportunity for you. You can certainly stay with us here in the NEWSROOM, but let me offer this to you -- John King is hosting a special "STATE OF THE UNION" special on CNN.com/live. And as you can see, that is happening right now.

North Korea testing its missile program and its neighbor's patience.

(COMMERCIAL BREAK)

HARRIS: A satellite launch gone bad. By the looks of the video, everything seemed to go well, at liftoff; right? But NASA says the global warming satellite it tried to launch this morning crashed into the ocean near Antarctica, just three minutes later. The $273 million satellite would have monitored greenhouse gases in the Earth's atmosphere.

New worries about North Korea. This time, centering on whether the communist nation is preparing to test a long-range missile. Pyongyang insists it's only planning to launch a satellite.

Our Sohn Jie-Ae reports from neighboring Seoul, South Korea.

(BEGIN VIDEOTAPE)

SOHN JIE-AE, CNN CORRESPONDENT: North Korea announced today that it was getting ready to launch what it calls a satellite, but South Korean, U.S. officials believe that in actuality, it could be a long- range missile, a delivery system that, if successful, could carry a warhead to as far as Alaska. The last time North Korea test-fired its long-range missile was in 2006, when the Taepodong-2 flew for only a few seconds, and then ended in a failed launch.

Now, South Korea's military sources say that they have not yet detected any type of delivery system being mounted on South Korea's launch pad, but the news of North Korea's impending test has raised alarm bells here in South Korea. North Korea's missile technology, combined with North Korea's nuclear capabilities, could create a potentially dangerous situation. U.S. and South Korean officials have warned North Korea against conducting such a test, and have said that if Korea chooses to do so, could face U.N. sanctions.

Sohn Jie-Ae, CNN, Seoul.

(END VIDEOTAPE)

HARRIS: Well, Iran says tomorrow will be a first for its nuclear program. The country's atomic agency says the nuclear plant at Bushehr will go on line for testing.

Russia helped Iran build the reactor at a cost of $1 billion. Russia says the startup won't happen tomorrow, but by the end of the year. Iran says the nuclear plant will generate electricity. The U.S. has complained it could help Iran develop nuclear weapons to alleviate concern. Iran is supposed to return spent nuclear fuel to Russia. .

Just what does it mean to nationalize a bank? Is this something the U.S. should do?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

LARRY KING, HOST, "LARRY KING LIVE": Has his pessimism, some have said, been wrong, or has it been honest?

ARI FLEISCHER, FMR. WHITE HOUSE PRESS SECRETARY: Well, I think it's the role of every president to accurately describe the economy, and the economy as bad. I do think Barack Obama has to show a sunnier side to his disposition, because the cheerleader aspect of the job is an important one.

(END VIDEO CLIP)

HARRIS: Former White House Press Secretary Ari Fleischer looking for a ray of hope when President Obama addresses Congress tonight. Word this morning the president is listening. Aides say he will try to strike an optimistic tone.

On Wall Street, stocks are moving -- let's see here -- are moving higher, but they have a lot of ground to make up since the Dow and S&P 500 -- there we go -- closed yesterday near 12-year lows.

Man.

Susan Lisovicz is at the New York Stock Exchange with details and a look at what some financial companies are doing to get out of this mess.

I'm really curious to that part of your reporting this morning, Susan. Good morning.

SUSAN LISOVICZ, CNN BUSINESS CORRESPONDENT: What, the -- what some financial companies are doing?

HARRIS: Exactly, yes.

LISOVICZ: Oh, well, they have to do a lot of things, and they may need a lot more help, unfortunately, Tony.

HARRIS: Yes.

LISOVICZ: But maybe there's some cheerleading going on on Wall Street this morning, because Fed chief Ben Bernanke considers that one of his roles, as well. Speaking before Congress this morning, the chairman of the Federal Reserve says the recession will end this year if the markets stabilize.

For some, that's a very big "if," because consumer confidence -- we got that report about an hour and a half ago -- it's at a new record low. And we got another report, that on the housing market. It showed home prices continue to plummet.

Still, we have a rally. The Dow and S&P are bouncing off nearly 12-year lows. The Dow industrials right now up 86.5 points, or 1.25 percent.

The level, check it out, 7,200. In October of '07, it was 14,100. So we do have some ground to make up.

The NASDAQ composite, meanwhile, up 22 points, or 1.66 percent.

You know, we talked about what financial companies are doing. This is a real aberration, Tony. American Express is paying some customers to go away.

HARRIS: Yes, I heard this.

LISOVICZ: Amex is offering selected cardholders 300 bucks if they pay off their balance and close their accounts. American Express trying to avoid getting stuck with customers who can't pay their bills, and there are a growing number of them, unfortunately -- Tony.

HARRIS: So is this a sign, Susan, that American Express is expecting things to get worse?

LISOVICZ: You know, this is - you know, these are just unprecedented times, and I think what you're seeing is this is the - a defensive mechanism, you know, prepare for the worst, hope for the best. Remember, this is a company that caters to more affluent Americans, but even that group is defaulting on some loans. We're seeing American express is reporting higher delinquencies and charge- offs, those are loans that are deemed uncollectible.

JP Morgan Chase is also being very defensive. It's slashing its dividend by nearly 90 percent to save money. JP Morgan is considered a healthier bank. Remember, this is the one that acquired Bear Stearns a year ago. The company says it wants to be ready in case the recession lasts two years. Now, Bernanke said - he's saying, it could end this year, but a full recovery may take a couple years. So hopefully, Bernanke's scenario will be the one that we can actually see recovery this year.

HARRIS: Fingers crossed. All right, Susan, appreciate it. Thank you.

LISOVICZ: You're welcome, Tony.

HARRIS: Banks in deep trouble. Many will likely need more money, as Suzanne eluded to, from the federal bailout fund to stay at that flowed. The Obama administration is assuring it is not trying to take over banks. CNN's Josh Levs revisits what it means to nationalize a bank.

(BEGIN VIDEO CLIP)

JOSH LEVS, CNN CORRESPONDENT: It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring. I understand that once in a hundred years, that is what you do. And I tell you something, that remark was especially striking from him. "Financial Times" pointed out that for decades, Greenspan was regarded as - they called him the "High Priest of Laissez Faire Capitalism," which basically means that the government does not get involved.

HARRIS: What would it mean, exactly, Josh?

LEVS: Yes, let's put it this way. Love this very simple definition we have for you in a graphic. Really simple definition, boils down to this: To put under state control or ownership. That's from word net. And let's look at that for a second. Because that's the key here. You know, the U.S. has already been given money to a lot of major banks, and these banks have already taken on some responsibility to the public. They're accountable to the government now. The line that would be crossed would be officially saying that the government actually runs the banks. Not that they're run by private people with some accountability, but that the government actually runs them, owns them, controls them. That would be the line we would be crossing if we were to nationalize, obviously a very controversial idea.

But you know what, Tony, it's an historic financial crisis. We can't protect everything that will happen.

(END VIDEO CLIP)

HARRIS: OK, should it matter to you whether or not your bank is nationalized? After all, the ATM will still work, right? Let's talk to Professor Jeffrey Miron in Newton, Massachusetts. He's a visiting professor of economics at Harvard University.

Professor, Jeffrey, good to see you again. Thanks for your time.

JEFFREY MIRON, PROFESSOR OF ECONOMICS, HARVARD UNIVERSITY: Thank you. Nice to be here. HARRIS: Let's start with this, here. Have a listen to a bit of the nationalization discussion on "AMERICAN MORNING" just this morning with White House Spokesman Robert Gibbs, and then let's talk about it.

MIRON: OK.

(BEGIN VIDEO CLIP)

JOHN ROBERTS, CNN ANCHOR: What about all of this talk in recent days about nationalizing, or at least partially nationalizing some banks. Not the system itself, but at least some banks. Citigroup is among them. Are - is that going to happen?

ROBERT GIBBS, WHITE HOUSE PRESS SSECRETARY: Well, I don't want to get into what Citi might be talking about with financial regulators or financial authorities now. But I can tell you this, as I have said from this briefing room and from the podium behind me, is that our banking system should be privately held and regulated by the government. That's what we have always had, and that's what we'll always have in this country.

(END VIDEO CLIP)

HARRIS: All right, Professor Miron, there you have it. Nationalizing banks - is that really what's happening right now despite what the administration is saying? About a desire to maintain a private banking system?

MIRON: Well, there is a lot of confusion, because the words are very widely and differently used. Some people think when you hear the term "nationalization," we're talking about a complete government takeover, where the government makes all of the decisions and holds on to that industry, whether it's banks or railroads or telephones, for decades, for centuries.

That's not what people mean when they're talking about nationalizing here. What they're really talking about is something that, in fact, happens all of the time for banks to fail. They go into what's called a receivership run by the FDIC, which is basically a bankruptcy-like process that restructures the banks with the explicit goal of getting them back in private hands as quickly as possible. Maybe months, maybe six months, perhaps a year or two in the worst-case scenarios. But it's not that the government comes in and makes all of the decisions about where the lending goes, about how much dividends are paid or things like that. It's an attempt to basically change the terms of who owns that bank, so that it has a proper capitalization.

HARRIS: That's interesting.

MIRON: And so I think across the political spectrum, economists think that the correct kind of nationalization is exactly what the banks need. It's, in fact, exactly what the current law says that the FDIC should be doing. And it would put the banks on a firm financial footing at little or no taxpayer expense. In contrast to what we're doing now, throwing money at the banks and we sort of have partly nationalized them already, because now we are involved in their decision making day to day.

HARRIS: Professor, it's one thing to say we're going to place small banks in receivership; the FDIC does that all of the time.

MIRON: Right.

HARRIS: What about a bank the size of BofA or Citi?

MIRON: There's no question, it's a bit messier, a bit more complicated. There are some legal niceties having to do with banks versus bank holding companies with the magnitude of counterparty issues. But this is something that, ideally, the Obama administration was - has been thinking about bank since October, November when they realized they were going to be in charge...

HARRIS: So you think it's on the table.

MIRON: I suspect it's on the table. I suspect they're thinking very hard about it and one of issues may be the political will to get past the negative connotations of the term "nationalization" as it's used in other contexts for other industries in other countries.

HARRIS: What would be - what would that FDIC model look like, if the FDIC sort of took over a bank the size of Citi or BofA? Would it be you're taken over, and then sell off the assets?

MIRON: That's one possibility. It sort of depends on exactly how much the assets are worth. And there are several models which are basically similar, but all get you the same place. The ideal scenario, of course, is once you announce that's what's going on, you find a new bank that is healthy that will actually buy the existing bank, at a low price. That is, the existing owners of the failed bank will be zeroed out and the creditors will not necessarily get everything they think they should be entitled to.

HARRIS: No, but I don't want that. I want the credit card division, for example. I don't want the other stuff. I don't want the mortgages, I want credit cards and maybe I want other financial services.

MIRON: So, two things. You're absolutely right. Some potential buyers might only want some part of it, so in some cases they will slice it and dice it and sell different parts to different parties. But, of course, if the mortgage stuff were appropriately priced, if f it was really cheap, then there would be plenty of people who would buy that stuff, as well. It's not worth zero, it's just worth a lot less than it was, you know, six months, a year ago. So there should be buyers for that, too, if it's done appropriately.

HARRIS: Twenty or so banks undergoing the stress test this week. What's going on here?

MIRON: Well, I think that's the first step toward doing this appropriate nationalization. It's getting the information, and I think it's kind of a hint to the market that that is what is in the works. HARRIS: All right. Professor Miron, great to see you. Thank you for your time. Terrific discussion.

MIRON: Thank you.

HARRIS: And we'll take this up again next hour right here in the NEWSROOM.

The high price of protection. President Obama is now considering a helicopter, because the price is just too high.

(COMMERCIAL BREAK)

HARRIS: Pictures into the CNN NEWSROOM from just moments ago.

There you see Illinois Senator Roland Burris back in Washington after a turbulent weekend in Chicago where he is facing calls from just about every corner to resign because of the disclosure that Burris was not as forthcoming about his fundraising efforts for former Governor Rod Blagojevich as he might have been. Reporters just moments ago asked the senator if he would step down, and he didn't answer the question.

But once again, Roland Burris walking the halls of the Senate building in - one of the Senate buildings - in Washington, D.C. just moments ago. And refusing to answer the question that everyone - I don't know what he is saying there - but refusing to answer the question on everyone's minds right now, whether or not he will resign. We will continue to follow the story and bring you the latest right here in the CNN NEWSROOM.

ROB MARCIANO, AMS METEROLOGIST: Check out these dramatic pictures out of Arizona. Swift water rescue happened on Monday. Rescue teams are hurrying to save a couple clinging to a tree in the middle of a rushing river, Tony. Officials say the man and woman were actually riding an all-terrain vehicle, four-wheeler in the area. So they probably just fell into that area. We had some rain, but not a tremendous amount to cause that sort of flash flooding.

That's dramatic stuff. It's amazing to watch those guys go to work.

HARRIS: You know, it reminds me of those pictures - remember we had two hours of coverage on situation in Washington, was it? Was it Washington, D.C. two months ago? Six weeks ago? Where we saw crews doing the same kind of work. And they're amazing. They're absolutely amazing at what they do.

MARCIANO: They are. We obviously don't get to see this stuff, because it's usually in pretty remote spots. But that's the second time in a month, and it looks like the outcome was a success.

(WEATHER REPORT)

HARRIS: Got reason to watch television on the weekends again - Tiger. Back. MARCIANO: Tiger is back.

HARRIS: Live news conference.

MARCIANO: Is that today?

HARRIS: Live news conference with Tiger. Next hour, we'll bring you just a smidgen of it to give you the flavor of the fever.

MARCIANO: I got me the fever.

HARRIS: Yes, I know you do.

Cancel the Fat Tuesday reservations. You are watching this floating Cajun restaurant slowly sinking into the Ohio River west of Charleston, West Virginia. It started going down along the entire marina last night. The restaurant's owners were evacuated along with others living on boats tied to the marina. The restaurant plans to reopen - good news, here - when the barge supporting it is raised.

In mint condition - jazz great, Duke Ellington is the first African-American to grace an American icon. He is featured playing the piano on the District of Columbia commemorative quarter. D.C. residents voted on it and picked Ellington over abolitionist Frederick Douglass.

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HARRIS: You know, in these tough economic times, does President Obama need a fleet of new helicopters? A Marine One fleet has been in the works since 2006, but costs have soared from around $6 billion to more than $11 billion and now the president isn't sure he needs them.

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SEN. JOHN MCCAIN (R), ARIZONA: I don't think that there's any more graphic demonstration of how good ideas have cost taxpayers an enormous amount of money.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I've already talked to Gates about a thorough review of the helicopter situation. The helicopter I have now seems perfectly adequate.

ROBERTS: One quick question before we go, are you going to put this helicopter contract on hold?

GIBBS: The president, when he read the story in the paper ten days ago, we were on the airplane, we've talked about this, we were both surprised that airplane that we were on - which is huge - cost as much as the helicopter we were on. The president talked to the secretary of defense and I think, as he said yesterday to Senator McCain, we don't need any new helicopters at the White House.

ROBERTS: So does that mean you're going to put that contract on hold?

GIBBS: That's exactly what he talked to the secretary about.

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HARRIS: Right now, the project is under Pentagon review.

Happening now on Capitol Hill - let's take you there - a congressional hearing on the US Airways flight that made an emergency landing on the Hudson River last night. The flight crew is there. There is Captain Sullenberger right there, and for the first time we are hearing from the air traffic controller.

Jeanne Meserve is in Washington. And Jeanne, this air traffic controller offered some really "stop-what-you're-doing-and-listen" testimony last hour.

JEANNE MESERVE, CNN NATIONAL CORRESPONDENT: He did. But the whole scene was very unusual. For one thing, when the flight crew came in, the House Aviation Subcommittee and audience stood up and gave them all a standing ovation that lasted for a quite a while. And as you mentioned, the air traffic controller was with the flight crew. He's the guy who managed the flight the today at the crash, and this is the first time we have heard from him. His name is Patrick Harten, and here is part of his description of what happened that day.

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PATRICK HARTEN, AIR TRAFFIC CONTROLLER: I then instructed the captain to turn right to a heading of 280 to land runway one. The captain replied, we can't do it. I replied immediately, which runway would you like at Teterboro. The captain replied, we're going to be in the Hudson. I asked him to repeat himself, even though I heard him just fine. I simply could not wrap my mind around those words. People do not survive landings on the Hudson River and I thought it was his own death sentence. I believed at that moment I was going to be the last person to talk to anyone on that plane alive.

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MESERVE: Harten said he was hyper-focused during the event and had no choice but to remain calm. The hardest and most traumatic part, he said, was when it was all over. Even after he learned that everyone on the aircraft had survived, when he saw them on television, all he could imagine was grieving widows. Harten says he goes back to work this week in air traffic control - Tony.

HARRIS: Whoa. You could you hear a pin drop in this room as he was giving his testimony last hour. Jeanne, you know, there was some words of warning at this hearing as well.

MESERVE: Very strong words of warning from the biggest hero of that day, Captain Chesley Sullenberger. He came out with some very harsh criticism of the aviation industry.

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CAPTAIN CHESLEY "SULLY" SULLENBERGER, US AIRWAYS PILOT: But while I love my profession, I do not like what has happened to it. I would not be doing my duty if I did not report to you that I'm deeply trouble about its future. Americans have been experiencing huge economic difficulties in recent months, but airline employees have been experiencing those challenges, and more, for eight years.

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MESERVE: Sullenberger warned that because of severe cuts in pay and benefits his profession is at risk of not attracting the best and brightest. He said pilots are being hired now that are less experienced and are less skilled and that has serious implications . To quote him, the single most important piece safety equipment on a plane is an experienced pilot.

HARRIS: He sure did say that. All right, Jeanne Meserve from Washington for us.

Jeanne, good to see you. Thank you.

In advance of President Obama's speech tonight, we want to hear from you. How do you think the government should start saving money? Hello. Our Josh Levs joins us with that. And Josh, all right, let's set the table here. You've been asking this question for most of the morning, right. The last couple hours.

LEVS: Yes, and playing off of what we're expecting tonight. We've all heard President Obama will talk about halving the deficit, cutting the deficit in half by the end of his first term. So we are doing this in conjunction with Facebook. As you know, we can see on the screen behind me...

HARRIS: That's John King!

LEVS: Yes, there he is. Dotcom live is picked up today with Facebook. And as you watch it you can have a conversation with your friends or with everyone who is signed in to Facebook.

So as a part of that, over at my Facebook page, Josh Levs CNN, we presented this question to you this morning - what should be pulled from the budget? And what this does, this triggers a conversation. Everyone who is signed up at "Josh Levs CNN" got that question. And let me just show you some of things they're saying.

Kathy wrote, "Elected official are the first to say we need to cut back, but the first to vote themselves a raise."

Tony, a lot of people bringing that up. But look at the response here from Mike, "Cutting salaries for elected official is like spitting in the ocean. You want to cut back, do it at the Department of Defense. We don't need troops stations in scores of foreign countries anymore."

Let's take a look at a couple more. David wrote, "I, for one, would be happy to tell the government to keep the few bucks a month they plan to rebate to me if they will agree to put it all towards the national debt. Really, what is it? Twenty to forty dollars a month?" Quickly, let's go to this graphic so I can tell you how you can weigh in. You've got two ways. If you're on Facebook, go ahead and search "Josh Levs CNN." You'll see the discussion. We've gotten hundreds of responses. Join in right there.

If you're not, you can email us at CNNnewsroom@CNN.com.

And Tony, I'll be back next hour with a bunch more responses as this conversation goes all day leading up to that big speech tonight.

HARRIS: Awesome. Thanks you, Josh.

LEVS: Thank you.

HARRIS: States looking for revenue may repeal their blue laws. For some, liquor on Sundays is just sinful.

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HARRIS: Iowa workers thought they'd benefit when a company that shut down a Chicago moves its operation there. Now those Iowa workers are also out of work.

CNN's Susan Roesgen reports.

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SUSAN ROESGEN, CNN CORRESPONDENT (voice-over): More than 100 people lost their jobs Monday in Red Oak, Iowa, laid off by a company that says it's out of cash.

NATE LUN, IOWA PLANT SUPERVISOR: Sure, I'm angry. I've developed a relationship with all these people and what are they going to do now?

ROESGEN: The workers are especially bitter because they thought they were getting the benefit of another plant's closing in Chicago. Remember those window factory workers who were laid off without notice just a few weeks before Christmas? The union staged a sit-in at the factory until the workers got what they were legally owed - 60 days' pay. But as CNN reported last month, before the workers were laid off, the company owner had already changed the company name and moved most of the operation to Red Oak, Iowa.

(on camera): The very same week the union workers in Chicago were being told the company was broke, the company was doing the same work here at this factory in Iowa, a non-union state.

(voice-over): This is Rich Gillman, the man who owned the Chicago company and now the Iowa company. His creditors in Chicago told us that when the Chicago workers demanded their severance, Gillman demanded 60 days' salary for himself and payoffs on the leases on his Mercedes and BMW, leases worth more than $98,000. The creditors refused.

Gillman declined CNN's request for interviews when we wanted to talk to him last month about the move to Iowa. And he did not return our phone calls for this story either.

DWAYNE ANDREWS, IOWA PLANT MANAGER: The group that came in and took the operation over back in December, basically run us in the ground, the way we see it.

ROESGEN: The Chicago union now is suing Gillman alleging unfair labor practices. Whether the non-union Iowa workers will get their money is up in the air.

LUNN: What else do you have to say besides 100 cars driving out of the parking lot with no jobs? What else? Congratulations. You've crushed a community. That's about it.

ROESGEN: The Iowa factory had been open under the new management for less than three months.

Susan Roesgen, CNN, Chicago.

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HARRIS: Strong stuff.