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Storm Continues to Cause Delays Along East Coast; Stocks Open at 12-Year Low, Quickly Drop More; Former FDIC Chairman William Isaac Discusses Nationalizing Banks; Prius Named Best Green Car Sixth Year Running; Golden Opportunities in Pawning Parties
Aired March 02, 2009 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HEIDI COLLINS, CNN ANCHOR: Following two big stories this hour. First, a big time winter blast. Snowstorm moves into the northeast. We're tracking it and we'll tell you the very latest on airport delays.
And the economy, it was dubbed the economy too big to fail. Now there could be more taxpayer outrage over a new deal for an insurance giant. It's Monday, March 2nd, I'm Heidi Collins, you are in the CNN NEWSROOM.
An ugly day unfolds on Wall Street. One big reason, more of your money is being funneled into insurance giant AIG. When will the bleeding stop? CNN's money team is following all of the latest. Stephanie Elam covering the grim trading today, now stretching around the world, in fact. And Christine Romans has the latest measures of the deepening recession. So we want to go ahead and begin with your stocks this morning.
And Stephanie Elam is at the New York Stock Exchange with all of that.
Pretty scary out there today, Stephanie.
STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Indeed it is, Heidi, just to put things into perspective, the Dow fell more than four percent last week, and ended last week at a 12-year low. For all of February, now that that month is behind us, the Dow lost 12 percent. And so far this year has lost nearly 20 percent. That's the worst two-month start in the 113-year history of the average.
The Dow has actually lost ground for the last six months in a row. Now, remember, the Dow hit a record high above 14,000 less than a year and a half ago. So to get back to that level, many pundits believe it could take a decade or more. We've already seen the European and Asian markets tumbling by up to four percent today and then you have Warren Buffet, the Oracle of Omaha, this weekend saying that the economy will remain in shambles all year and possibly beyond.
Another thing to keep our eyes on, obviously, Heidi, is AIG, and it's actually up 16 percent today, but keep in mind, it's trading about 49 cents. So we pretty much know why that is. A bigger percentage gain there. But they're getting some more bailout money as you're mentioning so that's a stock we'll be keeping our eyes on from here.
COLLINS: Yes, very good. Stephanie Elam, sure do appreciate that.
That's right. As you heard Stephanie say, $30 billion. It is your money and it's being added to the massive bailout already spent on insurance giant AIG. So when and where will it end? Christine Romans in New York now with more on that.
So we usually say the third time's a charm, but this is the fourth intervention, right.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: This is the fourth intervention and the federal government and the Treasury and the Fed this morning in the release explaining why it was doing this, it even sort of indicated it might have to go back in again. There might be more money that has to go to this trouble insurer to shore it up. They're trying to stabilize this company so they can sell off big chunks of it and so that it can return to some sort of sense of normalcy at some point down the line.
But there's nothing normal about losing that much money in a quarter. Over three months, it lost hundreds of thousands of dollars a minute, almost $62 billion AIG lost in the quarter. And, you know, it's tough. This is a company that is tied into so many different parts of business. Look at what the government said why this company is so important.
Given the systemic risk, AIG continues to pose in the fragility of markets today the potential cost to the economy and the taxpayer of government inaction would be extremely high. The government points out that AIG provides insurance to some 100,000 different entities including small businesses, cities and municipalities, 401(k) plans, Fortune 500 companies. It insures the retirements of teachers and non-profits and all different kinds of groups.
And it's just tied in so deeply in so many different layers.
COLLINS: Right.
ROMANS: You know, some analysts call it a black hole. Trying to figure out exactly how deeply entwined this huge company is in so many different parts of the global economy, they just can't let it fail, Heidi. And so you know, $30 billion more from the federal banking bailout if AIG needs it has been put on the table.
COLLINS: Yes. And I'm glad you mentioned that. Because a lot of people may not understand how it is interwoven into, you know, the world banking system.
Also Christine, I'm just noticing here now. I'm looking at the Dow Jones Industrial averages, we are now below that 7000 mark, Dow already down about 117 points resting at 6,945. Something like the worst numbers we've seen, I believe since '97. I'm not sure if you can see the big board right now. But wow, we are down big time in just the first about 35 minutes of trading. ROMANS: We're going to get a jobs report this week. A lot of people are saying that the numbers this week will be grim. They're going to show as we learned on Friday that the recession got worse in the fourth quarter, deteriorating much more quickly than anybody thought. They expect that has continued into the first quarter and we're going to start to get more real meaty economic news this week about just how bad it is.
We got a personal spending and a personal income number today and what it showed us is that incomes crept up slightly in January, Heidi.
COLLINS: Right.
ROMANS: But that's because so many people are federal employees and so higher wages, the raises for federal employees went into effect in January.
Also, the cost of living adjustments for a lot of different federal programs went into effect. So there's a little bit more money in there. And we know that the people are now saving about five percent of what they get. Five percent savings rate, the highest since maybe 1995. What that's telling me too I think is people are feeling a little more comfortable because they're saving a little more money, so they spent just a little bit more money in January.
But still, people on the whole are quite, quite nervous here, Heidi.
COLLINS: No question. All right. Christine Romans, thanks for that.
And one more issue about your money. Uncle Sam becoming a banker, a former FDIC chairman talks about nationalizing banks. That'll be coming up in just a little while.
Here's a dire thought that the government will officially run out of money this Friday unless Congress passes a 2009 omnibus spending bill. The senate is meeting today at 2:00 p.m. eastern to take up that bill. We'll stay on top of it for you.
March roars in like a lion, a massive late season snowstorm slogs out of the south and is now plowing into the northeast. Winter storm warnings blanket the east coast. Washington, Philadelphia, New York, and Boston are in the path and bracing for a very ugly day. We do have crews at both ends of the storm too. Suzanne Candiotti is in New York and meteorologist Reynolds Wolf is in Atlanta where some kids are actually celebrating a day off from school. So good for them.
Let's go ahead and begin with Susan standing right there in New York's Central Park.
Hey there, Susan.
SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Hi, it's been a steady snowfall that started last night. Over my shoulder, Broadway, if you make it out to the canyons of buildings on either side. It's certainly a beautiful sight, but it's a messy one here.
Getting a lot of New Yorkers are still out and about walking around, they're being urged, of course, to use public transportation on a day like this. But we're still seeing a lot of snowplows out, a lot of taxi cabs out. And over here in Central Park, we're seeing a lot of people walking through, already managed to clear the path ways there. So you see joggers, you see people walking their dogs.
And over here, this is a good place if you're cold to catch a hot cup of coffee. Jose, is business affected by the weather today?
JOSE: Very much so. Very much so. Today as you can see, not many people are in the street, and I count on people coming over here for hot coffee, chocolate, tea, today is not the day, unfortunately.
CANDIOTTI: Exactly. And the economy has been hurting you anyway?
JOSE: We don't even talk about the economy. The economy has really taken it's toll. It's really hurting, especially this business. But today is no help. But you know what? I have to congratulate the weather man, he finally got it right.
CANDIOTTI: There you go. Well, he didn't have much work getting here. He came here very, very early driving in. But it's the kind of day where it's probably - it could get worse before it gets better. They're expecting an accumulation of maybe up to a foot or so. Heidi, we'll see how that plays out.
COLLINS: All right. Very good. Hang in there. Susan Candiotti, thank you.
Meanwhile, we want to get out to Reynolds Wolf, as well, he is standing by here in Atlanta now to talk a little bit more about the weather and what's going to be happening as it moves northeast.
REYNOLDS WOLF, CNN METEOROLOGIST: Well things will certainly be getting better here, Heidi. I'll tell you. This is really a part of the country where in fact we've had just a little bit of it. Some parts of Atlanta about four to five inches, mainly over towards Douglasville, which is west of downtown Atlanta. There is still some 50,000 people without or customers without power this time. There was some icing on the roadways. A few accidents or reports along parts of I-285 and I-20 earlier today.
But for the most part, things are getting much better here. Obviously, a far cry different from what they've had in the mid- Atlantic states, back to our nation's capital and of course, for New York and into Boston. Let's go right to the forecast here in Atlanta, certainly chilly. But take a look at the next five days. We're going right up the scale from a high of 38 expected today, going to 47 on Tuesday, then into Wednesday in the 50s and Thursday and Friday. getting into the 60s near 70 degrees as we get into Friday.
OK. Let's talk about the delays. Do we have some?
COLLINS: Yes.
WOLF: Yes. We most certainly do. Take a look at LaGuardia right now, you got a delay. Let's see ground stoppage until about 10:30, San Francisco, you got an hour and 25 minutes due to the storm. Sweeping off, Pacific Philadelphia, still have the issue, ground delays of 45 minutes there.
Let's go right ahead and move on. We'll show you what else we have. Later today, you can expect those delays to continue in New York and Boston of course and also the nation's capital. Now, a very quick look at showing you what's happening in terms of the national perspective in the snowfall totals. I can tell you across the nation the heavy snowfall is going to be right there in the northeast. I know we're seeing some out in the west coast. But still up in New York over a foot there.
Here's the big snow maker, the area of low pressure zipping right up the eastern seaboard. You see pulling on that combination of rain, sleet, and snow. The heaviest now moving out of Washington, D.C. and as we wrap things up, we're going to go very quickly up to parts of New York and into Boston. There you go. You're seeing all the way, up towards West Point, right along the Hudson and then back into Boston. The snow beginning to lessen a little bit.
So that installation's gone for you, we're going be with you all day long, Jacqui Jeras is also going to be giving you some issues, the latest in terms of travel, how it can be affecting people. Let's send it back to you in the studio.
COLLINS: Yes. All right. Reynolds, thank you. We sure do appreciate that.
Southern discomfort, though, several states below the Mason Dixon are digging out this morning. Alabama and Georgia as we've been mentioning, both got several inches, eight inches, in fact, fell in parts of South Carolina.
Joining us by phone now, Cotton Howell, the emergency management director for York County.
Thanks for being with us. I just want to know the situation this morning now. I know some of these warnings and advisories have actually been canceled this morning, but then you're having to deal with what's left.
COTTON HOWELL, EMERGENCY MGNT. DIRECTOR, YORK COUNTY: Well, we certainly are not accustomed to this. But with the forecast that we got from the weather service, we had a good time to prepare and our agencies did.
Overnight we dealt with quite a few power outages. Thank goodness the temperatures didn't get much below 30 degrees. And we still have about 5,000 power outages in our county, about 10,000 before midnight. And there's 178,000 within one of our major power providers, Duke Energy, but they're whittling those numbers down rapidly. Our biggest concern is they're talking about the temperatures getting down into the teens tonight and all of this refreezing. We aren't equipped to deal with ice and that sort of thing. So we're concerned there and we had lots of rain before this. And we have some flash flooding and a lot of flooding issues we're dealing with.
COLLINS: Yes. Understood. We're looking at some of the video, though, from yesterday in your area. Man, I can imagine how you wouldn't be very accustomed to that much snow in South Carolina. Hey, tell us about schools. Are the schools canceled? Or are they sort of making their way back?
HOWELL: No, all of our schools are canceled. We, you only have to say that four-letter word snow and we shut everything down just because the word's mentioned. And so all of our schools are closed. Many of our county offices are closed, some of the city offices around are delayed, state offices are delayed to 1:00 p.m., so we're just making a day of it, hoping people stay in and make snow men or do whatever they want to do and stay off the roads and be safe.
COLLINS: Absolutely, all right. Cotton Howell, we sure do appreciate all of that. The picture from South Carolina, believe it or not.
Reality check, a final update for the past month, our Sean Callebs lived on a budget equal to food stamps. There he is, he's still standing. That's good. How did he do? What did he learn? He'll share his story in just a moment.
(COMMERCIAL BREAK)
ANNOUNCER: This is CNN, the most trusted name in news. Now back to the CNN NEWSROOM.
COLLINS: We are all stretching our budgets. Could you feed yourself, though, on $176 for a whole month? Our Sean Callebs did. And a firsthand account of what it's really like to live on food stamps. He's joining us now from New Orleans to share more of his experience. Good morning to you, Sean.
SEAN CALLEBS, CNN CORRESPONDENT: Good morning, Heidi. Made it through.
It breaks down to about $6.28 a day. And I ended up a month long experiment with a little more than $3 left over and just a handful of items left over. I want to quickly point out how you can eat for about $6 a day. This can of peas cost about 70 cents, a little bit of rice here. You know, half a can of peas, a little bit of rice, and then last night, a little baked chicken breast. So all of this is probably about $2. And that is where I spent more money as opposed to breakfast or lunch.
But really after 30 days on this diet, I think I only got a taste, a slice of what 31 million Americans deal with day in and day out.
(BEGIN VIDEOTAPE)
CALLEBS (voice-over): The crowded aisles at the grocery store never looked more intimidating. $176, the maximum amount in food stamps one person in Louisiana can receive.
(on camera): OK. I'm going to run out of money.
UNIDENTIFIED FEMALE: Yes.
CALLEBS (voice-over): I wanted to be as careful and as frugal as possible. Even state leaders in charge of the food stamp program had their doubts.
(on camera): How difficult do you think it would be for me to live on $176 for one month?
SAMMY GUILLORY, DSS OFFICE OF FAMILY SUPPORT: Very difficult if you had no other sources of income or food.
CALLEBS: I started this project on Sunday, February 1st. $6.28 a day to eat. The first shopping trip cost more than $70 so I knew I had to live pretty cheaply. By the second week, I hit my stride, food got better. Baked chicken, potatoes, healthy vegetables and by the final week, I knew I would make it, even though the cupboard got a lot more bare.
(voice-over): The food was heavy on calories and light on taste. Still, I consider myself among the lucky. I made it through the entire month.
Across the country, there are millions of families like the Allens who live near Homa, Louisiana. Their monthly allotment of about $580 for food stamps always runs out before the end of the month.
JIMMY ALLEN, FOOD STAMP RECIPIENT: If you can't make it or you can't get it our own, you don't need it but that's not always the case whenever I've got a wife and six kids.
CALLEBS: For the Allens and 31 million other Americans on food stamps, pride takes a back seat to feeding hungry mouths. Food banks and churches try to fill in the gaps. But the simple answer is more and more families who never thought they would be turning to food stamps, are asking for government assistance.
(END VIDEOTAPE)
CALLEBS: And the three biggest lessons I'd say I learned. One, even though the government's doing what it can to reduce what they call the shame factor - they now have these debit card instead of food stamps - a lot of people wrote in our blog saying it's very difficult for them. They always feel bad, feel humiliated going through the line.
Secondly, you don't realize how it weighs on you mentally. You always think about what do I have in the cupboard? What's in the fridge? Do I have enough money to get through.
And lastly, Heidi, the social factor. It's amazing how many people say let's go grab a bite, let's get lunch, let's go grab dinner and people simply can't afford to do that.
COLLINS: Yes. We seem to say that all the time. Whenever you're getting together with friends or even business associates, it always centers around food and going out. Some great points. Great experiment too. We sure do appreciate it. Sean Callebs coming to us from New Orleans this morning.
Kansas Governor Kathleen Sebelius poised to become the health and human services secretary nominee. President Obama making the official announcement at 1:00 p.m. Eastern today. We'll have it for you live, of course. The president's previous pick, former Senate majority leader Tom Daschle withdrew after questions regarding failure to pay taxes. Officials say Sebelius has a good personal relationship with the president and that she was considered for other cabinet posts.
Here's more now on Kathleen Sebelius. She was elected Kansas governor in 2003 and reelected in 2006. She endorsed Mr. Obama for president in January of 2008. She is a former Kansas insurance commissioner. Sebelius is 60 years old, Catholic, and has a master's degree from the University of Kansas. She received her undergraduate degree from Trinity College. She is married with two children.
A mother with two wombs gives birth to twin daughters. One in each womb. So how did it happen? We'll tell you in just a moment.
Our iReporters, though, are giving us the first snapshots of the unusual weather. These pictures from Birmingham, Alabama. If you happen to have any pictures or videos that you'd like to share with us, just go ahead and send them to cnnireport.com.
(COMMERCIAL BREAK)
COLLINS: All right. We've got a three-for in today's medical segment. Three stories that really got us talking this morning.
First this one, a Michigan woman with two wombs gave birth to twin daughters. One from each womb. Our senior medical correspondent Elizabeth Cohen is joining us now to talk about it.
And we were talking about it in some of our morning meetings today. I'm trying to remember back in all of my health classes how exactly does something like this happen? It's rare.
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: I'm sure you never talked about this in health class.
COLLINS: We did not talk about this.
COHEN: It probably did not come back. But a small number of women it is quite rare are actually born with two uteruses or uteri apparently. COLLINS: Yes.
COHEN: You can say either one. It's very rare and it's also very rare then to get pregnant in both of them, but take a look at these two babies this woman has had two children now named Kaylin Joy and Valerie Marie. And the mom's name is Sarah Reinfelder. She is aged 21 and she lives in Michigan. And she, there's mom and dad with the babies.
And so it was a cesarean section. The were born seven weeks early because of the condition of having the two uteri. Each of the uteri, they're not as strong as they should be. So she went into labor, premature labor. And they were delivered early but they're doing well. They both weigh somewhere around let's see 4 pounds 13 ounces, and three pounds 15 ounces, so not bad for seven weeks early.
COLLINS: All right. Now we want to get on - it's a great story. I want to get on to the next one though. A lot of Americans really losing sleep. I think most of us know we're attributing some of this anyway to the economy.
COHEN: Sure, you lose sleep when you worry. And there are a lot of worried people out there these days. I think that comes as no surprise. So let's take a look at this new study that actually quantified how many people are losing sleep. Sixteen percent, rather, of the people who responded to the study said, survey said that they are losing sleep over personal finances. Ten percent said they're losing sleep over job concerns, and eight percent said they're losing sleep over health care costs. And we mean really losing sleep, not just in sort of the metaphorical sense. They really are losing sleep, getting up in the middle of the night, et cetera.
COLLINS: What can you do?
COHEN: There are a couple of things you can do. One all the standard stuff like drink some warm milk, take a hot bath, that kind of thing. But about this particular cause of losing sleep, here's a list of things to do. Make a plan and have a budget, if you're having financial difficulty.
So that way during the day you kind of take care of it as much as you can. Have a family meeting so that everyone is on board with what you want to do. And be realistic about what you can control and about what you can't control. For example, if you're sort of worried about the global economy...
COLLINS: Yes.
COHEN: There's not much you can do about it. But if you're worried about your particular situation, sit down and try to get a hold of it as much as you can.
COLLINS: Personal responsibilities, personal finances.
COHEN: Right. That'll help you sleep better.
COLLINS: Yes.
So now, there are these folks who we see in a lot of our meetings sort of doodling.
COHEN: Right. I'm one of them.
COLLINS: Right. But apparently this is not a bad thing. You actually might be somebody who is getting more of the information that's coming than everybody else.
COHEN: That's right.
COLLINS: Sitting there listening.
COHEN: That's right. Doodlers might be better off. Yes, this is a fascinating study that they did in England. What they did is they sat some people down and they had them listen to this boring recording and then they gave them a sheet like this and said you know what, while you're listening, we want you to shade in these little shapes. So the people were told to do this and shade them in, and another group was told just listen with no doodle at all now.
Well the group that doodled, like I'm doing as I talked to you - the group that doodled remembered almost 1/3 more than the group that didn't doodle. So there you go. And they think it has something to do with the fact that when you're doodling, you're not daydreaming.
COLLINS: True, you're paying better attention.
COHEN: Right. Right. Even if it's something like that. Right.
COLLINS: All right. Very good. Well, we sure do appreciate it. Again, that's a three-for with the medical team.
COHEN: There you go.
COLLINS: Of course. Very good. Elizabeth, thank you.
Hey, we want to get back to the weather. Because it is nasty in a lot of parts of the country, specifically the northeast. We are tracking the storm, we've got live pictures from all over the place. Back in a moment.
(COMMERCIAL BREAK)
ANNOUNCER: Live in the CNN NEWSROOM, Heidi Collins.
COLLINS: The garden state, just one of the places slammed by snow today. Much of the east coast, in fact, is under a winter storm warning.
And if you think nothing ever gets accomplished in Washington. Well, at least there's an excuse today. Residents are digging out from a blanket of snow.
And this is what the storm left behind on its way out of the southeast. Awful traffic jams like this one on Interstate 85.
COLLINS: A snow emergency in Washington is no longer in effect, but people are still trying to deal with the storm. CNN's Elaine Quijano is just out there trying to keep warm.
So Elaine, it does, every time I look at it you, it looks like it gets colder and colder.
ELIANE QUIJANO, CNN CORRESPONDENT: You know I have to tell you, Heidi, the wind has really seemed to pick up a little bit more since we talked last hour. But in terms of the overall conditions, the visibility, greatly improved from just what we saw a few hours ago when you wouldn't have been able to see the Capitol dome just behind me.
That being said, what we're looking at here on the National Mall is several inches of snow actually on the ground. And the continuation is still a little bit of blowing and drifting snow here in the city itself.
Now, we should tell you in some of the outlying suburbs in Virginia and Maryland, there have been some reports of scattered power outages. The result of some of that heavy snow pulling down power lines. Of course, crews are working to get those power outages, to restore that power to affected customers.
Overall, though, here in the District, we have seen more and more people start to venture out as the day has progressed here. We have seen people both out on the streets walking, on the sidewalks walking, and people also in their cars driving in. But certainly a treacherous morning commute for people who decided to come in no matter whether they took their cars or they decided to commute via trains, which were up and running, we should mention, here in the District.
All in all, certainly not as bad as it could have been, Heidi. Could have been a lot worse. But definitely, an inconvenient morning for a lot of people here in the Washington, D.C. area.
COLLINS: No question about that. All right, Elaine Quijano for us in the Washington D.C. for us. Thanks, Elaine, for that.
I want to change the picture now and head over to Reynolds Wolf who is standing by.
And what is normally like a sunny, wonderful place, Atlanta, Georgia, nice and warm about this time of year, what the heck, Reynolds? You're putting your gloves on.
REYNOLDS WOLF, AMS METEROLOGIST: Yes, well, give it a few days, we'll going to be right back into the 70s towards the end of the week. But right now, we are certainly very chilly temperatures in the 30s. Few 20s. People out and about. Wind has been kind of strong, but in terms of snowfall, we really don't have a whole lot of it left. You know, parts of the western suburbs of Atlanta, back over towards Douglasville, Georgia had up to four inches of snow. And I will tell you, here in the city, there's not a lot of it. Especially here in Centennial Olympic Park.
But we're going from one park to another. Check out this video from Central Park in New York, where you're going to see the snow coming down in just droves. I mean, it was very heavy at times. This video is showing you what New Yorkers are going to be facing, some very heavy snowfall in the parts of the Empire State, some locations well over a foot.
And if you want to know what they're going to be dealing with at the airports, take a look. Let's go right to the computer, New York LaGuardia, currently have a grand stoppage until 11:30 this morning. San Francisco, on the other coast out towards the west, you've got an hour and 25 minute ground delay. Lot of rough weather out there. Another storm coming in off the Pacific. In Philadelphia, you have ground stoppage for about 45 minutes or so.
Now let's move on to show you what else you're going to be seeing today. No surprise in delays at all of your New York metros, same deal at Washington D.C. Boston Logan, you had some issues earlier. Really just with the lights and the runway. The issue was that you had, again planes on a holding pattern because the lights on the runway actually went out. So, they're trying to fix that problem.
And of course, the biggest culprit, the wind and the snow. Take a look at those totals. Over a foot in Upton, New York. Very impressive totals in places like West Milford, New Jersey. Also, in Central Park, over seven inches of snow and still continues to come down. You're going to see the totals go up quite a bit.
And here's the reason why. There it is. That upper level lows dipping its way to the northeast. Right ahead along the coast. Some showers, but it's all snow biz when you get back along the coast.
Very quickly, let's zoom into the nation's capitol. And although things are getting a little bit better there, they're going to be digging out and that strong wind will cause some drifts in a few places.
Very quickly as we wrap things up, you'll see up towards New York and into Boston, the snow continues to fall there too.
That is a look at your forecast. It has been a whopper of a storm affecting millions of people, and we're going to be digging out for a little while yet.
Let's send it back to you, Heidi.
COLLINS: It sure sounds like it. OK, Reynolds, thank you. Keep us posted.
Heading to Wall Street now. I'm not sure that's where we want to go, but it's a completely different storm, that's for sure, that is swirling. The Dow Jones Industrial Average, as you can see there, dropped below 7000. Actually, within the first minute of trading today. That comes as insurance giant AIG is posting the biggest quarterly loss in U.S. history. Stephanie Elam is at the New York Stock Exchange with all of the numbers.
Now we are resting at almost 150 points to the negative on the big board there, Stephanie.
STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Yes, we're off more than two percent at this point, Heidi, on the Dow. Stocks opened up at 12-year lows and immediately dropped on further. The Dow trading below that key 7000 mark we were looking at, the first time since 1997. From where it stands now, the blue chip average would have to double in value just to get back to where it was 17 months ago at a record high above 14000. That seems like a lifetime ago now.
Let's take a look at the numbers. The Dow on the downside by 143, 6919 is where it stands. Nasdaq off 1.5 percent at 1356.
Now, the selloff comes as the government says it will pump another $30 billion of taxpayer money into insurer AIG. Remember, this is a company that's already received $150 billion from the government, but AIG says it lost $62 billion over the last three months. That's the biggest quarterly loss in U.S. history. Now, get this, for the year, AIG lost $99 billion, it's blaming the market turmoil for this staggering loss, Heidi.
COLLINS: Yes, and I guess a lot of people are wondering, with losses like that, how do you keep throwing more money at them? But then, I guess you have to look at the alternative if you don't.
ELAM: And basically, what the government's saying here is that AIG has been and continues to be too big to fail. In a statement, the Treasury and Federal Reserve point out that AIG operates in 130 countries and provides insurance protection to small and big businesses, and is a major source of retirement insurance for teachers and non-profits, as well.
So, given all of this, the government says the potential cost to the economy and the taxpayer of government inaction would be extremely high. As you see the quote there. But for many of us, it's still really hard to swallow at this point when you take a look at a company that 52 weeks ago was trading over $51.00, but now it's trading at about 48 cents, Heidi.
COLLINS: All right, wow. Stephanie Elam, sure do appreciate it. Thanks so much.
And we will continue to follow those numbers for you today. You can look at the screen and see them on the bottom, right hand side.
Nationalizing the banks. We've heard a lot about that recently. Would it help solve our financial crisis? Do you even know what it really means? Who better to tell us than William Isaac. He's a former chairman of the FDIC. He's joining us live from Washington this morning.
Thanks for being with us. Listen, the reason that we have you on is because you've actually done this. It was quite some time ago, the name of the bank was Continental. Tell us about that and how it went.
WILLIAM ISAAC, FORMER CHAIRMAN, FDIC: Well, Heidi, we nationalized Continental Illinois Bank in 1984. We took over - and I think it's important to define the term "nationalization," because a lot of people use it in different ways.
COLLINS: Absolutely.
ISAAC: I believe that the term applies when the government seizes control of the stock and the operations of a company. And that's what we did with Continental Illinois Bank, which was the seventh largest bank in the country at the time. We seized control of the ownership, ultimately getting 100 percent ownership, and we oversaw the operations of the bank. We replaced boards of directors and senior management and alike.
It took us about seven years to work our way out of it. We shrank the bank in half in the process.
COLLINS: Yes, you actually said there are three phases to this, the reason why, in your mind, it was successful. The first one was the bank shrunk dramatically. And then you also talked about that you had to have a clear exit strategy. You had to know what was going to be coming next.
ISAAC: That's right. And those are the reasons why it won't work today for these megabanks. We just simply can't afford, as a nation, to have our biggest banks today shrinking to half their size or even shrinking at all. We really need them to grow and more make loans. In the case of Continental it was less than two percent of the country's banking assets, even though it was the seventh largest bank. Today, the top four banks control over 50 percent of the banking assets. We're already in a serious recession with concerns about deflation and the last thing we can do is shrink these banks. We really need them to grow.
Third - secondly, there's just no way out of this easily. It was very difficult to get rid of Continental. I don't know how you would denationalize, if that's a word, any of these major banks today. Who is going to buy them? There's just not that kind of money in the world to buy these banks if we were to nationalize them.
COLLINS: And another thing you wrote, and we should say that you wrote this op-ed, if you will, in "The Wall Street Journal." Who is going to run them? Where are you going to find will you find the talent? A very important component of all this.
I also want to get to one other thing that you mentioned in there. Because we really do hear a lot about Sweden when we talk about nationalizing banks. And there's this comparison that's made all of the time. You say it's irrelevant?
ISAAC: Well, it's not totally irrelevant, except that Sweden didn't nationalize its banks. It only nationalized one bank and that bank had already collapsed, so they had to do something with it. They did recapitalize another major bank but they didn't nationalize it.
In any event, Sweden is roughly the size of Ohio in terms of its economy, its banking system, and population. So, it really doesn't apply when we're talking about trying to nationalize these megabanks. Actually, a better example would be Mexico, which nationalized its banks for the better part of two decades and absolutely totally made a mess of their banking system.
COLLINS: So William, what do you do? Very, very quickly. What do you do?
ISAAC: Well, I think we have to keep on putting capital in the banks in order to stabilize them and help them to grow again. Which we're doing. And I also think that we have got to address the problems that have led us to this. The biggest one being a very bad system of accounting called mark to market. We really need to get rid of mark to market accounting and we need to do it at once. We're way, way too late in getting rid of it. And it's causing untold devastation in our financial system.
COLLINS: All right. Well sadly, we don't have time to go into more of that. But I'd like to have you back again to talk more about it. Sure do appreciate your time.
ISAAC: Any time.
COLLINS: William Isaac, former FDIC chairman who wrote this article in "The Wall Street Journal," op-ed piece that we were interested in.
Thanks so much for your time. Appreciate it.
ISAAC: My pleasure.
COLLINS: If you're going green, some experts say this car is one you should consider buying. It's held the title as "The Best Green Car" for six years straight. So why is that?
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COLLINS: Quickly now. I want to give you a picture of what's happening at New York's LaGuardia Airport. FAA actually saying the flights inbound to LaGuardia are now being diverted. There also on ground stop until, last we found out, 11:30 or so. And you can see the pictures for yourself. Expecting about six or seven inches of snow right there at the airport. So, you can imagine what a disaster travel is in New York.
Massachusetts could get the worst of the late winter storm, though. The morning commute pretty brutal and the snow is still falling. Meteorologist Shiri Spear has more now from our affiliate WWLP.
(BEGIN VIDEO CLIP) SHIRI SPEAR, WWLP METEROLOGIST: Well, the snow falling at a lighter rate than it was just hours ago for that morning commute, but you can see we're dealing with something else now, the wind. Now that's going to be a big part of our forecast today. Of course, the snow will continue to accumulate. And we could be looking at possibly a foot of snow here in western and central Massachusetts.
And looking at the snow, it's really not that heavy sticky stuff that's going to hurt to shovel, but rather the light fluffy stuff. So it's not going to be very good for making those snow men or snowballs, but it is covering the grounds across western Massachusetts.
All of Massachusetts providing some very slick streets. We've had minor accidents, a couple spinouts, but the real delays are going to be at the airports today. Both in Windsor, Connecticut, Bradly International Airport, and Logan International Airport now seeing so many flights canceled. We have up to 80 percent of the flights in Connecticut canceled. We have hundreds of flights in Boston, canceled. You have to call your carriers. This snow is going to continue at a lighter rate throughout these afternoon hours. And again, we could be dealing with up to a foot of snow in areas in Massachusetts.
I'm meteorologist Shiri Spear in Springfield.
(END VIDEO CLIP)
COLLINS: Consumer reports have named its "Greenest Car for 2009,"and the winner probably won't surprise you. CNNmoney.com's Poppy Harlow has our "Energy Fix" now this morning.
OK, and the winner is...
POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: No drum roll needed for this one, Heidi, I guess. For the sixth straight row, the Toyota Prius takes the cake for the greenest car.
Did you know this? I didn't. Prius stands for - it's Latin for, "to come before." It has been first among all hybrids since hitting the market in 2000. But the question, does it really deserve all of this praise? Take a listen.
(BEGIN VIDEO CLIP)
PETER VALDES-DAPENA, CNNMONEY.COM SENIOR WRITER: It's got all the interior space of a mid-sized car like the Camry, all the storage and luggage space of a mid-sized car. You're not giving anything up, plus it just happens to also get the best fuel economy of any hybrid on the market. So even beyond hybrids, it's actually a much better car overall than I think most people give it credit for.
(END VIDEO CLIP)
HARLOW: Interesting now, Toyota had redesigned the Prius for 2010, that model expected to get over 50 miles to the gallon. What sets Prius apart is that it was designed from the ground up as a hybrid while a lot of the competitors out there right now we're just retooled models of existing cars like the Honda Civic hybrid or the Chevy Malibu hybrid. Even Toyota has a hybrid Camry. But Honda's hitting the market with a hybrid only new model, it's called the Insight. And also keep in mind, despite all of the trouble GM has had lately, it is banking on its plug-in, electric Chevy Volt as the next big thing when it hits the market. The big question thought, will it be applauded like the Prius has been?
(BEGIN VIDEO CLIP)
VALDES-DAPENA: I don't think the Chevy Volt is going to sell anywhere near as many models as the Prius is. But it gives GM a big technology step forward that's going to do a lot on the PR side. Remember when the Prius came out, it did a lot for Toyota's public image as a green car company. And I think the Volt's going to do a lot for GM in that respect too, because it's a big technology leap.
(END VIDEO CLIP)
HARLOW: All right, well, we will see. But if you're interested in looking at the greenest cars, log on to CNNmoney.com. Right here, Heidi, you can see the ten best cars. But the Prius taking the cake once again, Heidi.
COLLINS: All right, very good. Poppy Harlow, thank you.
HARLOW: You're welcome.
COLLINS: Going green. Well, it's great for the environment, but what about the economy? Next hour, Gerri Willis is going to be telling us which green companies are actually hiring.
And you he might be too divisive to ever hold political office himself, but is this man the real power behind the Republican Party?
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COLLINS: It's the 42nd day of the Obama administration. Let's check on what the president's schedule today. He has his economic and intelligence briefings this morning. And then later in the day, he's going to meet with Veterans Affairs Secretary General Eric Shinseki. At 1:00 pm Eastern, the president will announce the nomination of Kansas Governor Kathleen Sebelius for Health and Human Services secretary. We're going to bring that to you live.
He's not the head of the Republican Party, but you might not know it judging by the reception conservatives gave him over the weekend. Jim Acosta has more now on Rush Limbaugh's place in the GOP.
(BEGIN VIDEOTAPE)
(BEGIN VIDEOTAPE)
RUSH LIMBAUGH, CONSERVATIVE RADIO HOST: President Obama, your agenda is not new. It's not change, and it's not hopeful.
ACOSTA (voice-over): Dressed in black at a conservative political conference, talk radio giant, Rush Limbaugh, made no apologies for four words.
LIMBAUGH: I hope he fails.
ACOSTA: That have ignited a fiery debate over the future of the Republican Party.
LIMBAUGH: I want Barack Obama to fail if his mission is to restructure and reform this country so that capitalism and individual liberty are not its foundation. Why would I want that to succeed?
ACOSTA: The standing ovations may explain why some GOP leaders are being cautious when they differ with Limbaugh.
REP. ERIC CANTOR, MINORITY WHIP (R), VIRGINIA: I don't think anyone wants anything to fail right now. We have such challenges.
ACOSTA: Consider Georgia Congressman Phil Gingrey who recently blasted Limbaugh and other conservatives who he says stand back and throw bricks. Flooded with angry phone calls, Gingrey apologized on Limbaugh's show.
REP. PHIL GINGREY (R), GEORGIA: I regret those stupid comments.
LIMBAUGH: Well, look, I appreciate that.
ACOSTA: Some Republican strategists see danger ahead.
UNIDENTIFIED MALE: If we don't modernize conservatism, we're going to have a party of 25 percent of the vote. Going to Limbaugh rallies who join every applause line, ripping the furniture up, we're going to be in permanent minority status.
ACOSTA: Democrats have pounced. From the White House chief of staff...
RAHM EMANUEL, WHITE HOUSE CHIEF OF STAFF: He is the voice and the intellectual force and energy behind the Republican Party. And he has been up front about what he views and hasn't stepped back from that, which is he hopes for failure.
ACOSTA: To this ad aired by labor groups, accusing Republicans of doing Limbaugh's bidding.
UNIDENTIFIED MALE: No.
SEN. HARRY REID (D), MAJORITY LEADER: No.
UNIDENTIFIED MALE: No.
NARRATOR: So who are Republican leaders listening to?
LIMBAUGH: I want him to fail. ACOSTA: The Limbaugh debate comes as Republicans are searching for a new face. A straw poll held at that conservative conference was nearly a five-way tie. The man who won that straw poll, former Governor Massachusetts Mitt Romney, seemed to distance himself from Limbaugh, telling the crowd at that conference, we want our country to succeed no matter who's in power. But he did not call out Limbaugh by name.
Jim Acosta, CNN, Washington.
(END VIDEOTAPE)
(COMMERCIAL BREAK)
COLLINS: Adios, Avon. Tata, Tupperware. There's a new money- making party for cash-strapped Americans. Is this a golden opportunity for you?
(COMMERCIAL BREAK)
COLLINS: Lots of us are scrambling to make ends meet and trying to figure out ways to get a little more cash flow. Some people, going for the gold. Jewelry pawning parties are now all the rage.
CNN's National Correspondent Susan Candiotti has the story.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: $650.00.
SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Can you part with it for $650.00?
UNIDENTIFIED FEMALE: Heck, yes.
CANDIOTTI (voice-over): Driven by the need for green, women, mostly, are staging gold rush parties. The perfect place to unload clunky high school rings, lonely single earrings, and rarely worn bling taking up space.
ANNE HARRIS, PARTY ATTENDEE: You know, I just had a new roof put on and I needed a furnace, so I'm still, you know, paying on those two items. And so every little bit helps.
CANDIOTTI: Gold buyers are happily setting up shop in private homes, the host gets 10 percent of the action. Magnets check whether the glitter's really gold, solutions test for purity, and scales weigh it all.
ALICIA KEATING, NASSAU BUYERS: You know, whereas we would do three four a week, now we're booked every single night with gold parties.
CANDIOTTI: Catching on because of rising gold prices fluctuating around $940 an ounce. But because of karats and commissions, sellers usually get far less. Wally Naughton recently lost her job and she's three months behind on the mortgage, she gets an offer of $1,200 for a chunky necklace and other jewelry.
WALLY NAUGHTON, PARTY ATTENDEE: It would take care of a month's bill, monthly bills without the mortgage.
CANDIOTTI (on camera): Bills without the mortgage. Is that enough to say, OK, I could use it?
NAUGHTON: I don't make hasty decisions. Never do.
CANDIOTTI (voice-over): Good idea. Experts say, sellers beware. Get more than one appraisal.
DONALD PALMIERI, PRESIDENT, GEMOLOGICAL APPRAISAL ASSOCIATION: Once it's sold, it's gone. All the memories, whatever the happiness that the jewelry brought you in the past is gone. Once you sold it, it's gone.
CANDIOTTI: But for Beth Turner (ph), on disability with three children and a husband just laid off, selling some jewelry may be worth it to take her son to a national cheerleading tournament in Florida.
UNIDENTIFIED FEMALE: $500.00.
BETH TURNER (ph), PARTY ATTENDEE: That's awesome.
UNIDENTIFIED FEMALE: Is that good?
TURNER (ph): That'll pay for my hotel.
UNIDENTIFIED FEMALE: Good for you.
CANDIOTTI (on camera): Gold parties may not be the answer to all of your troubles, but trading in a little gold for green sure can help.
Susan Candiotti, CNN, New Windsor, New York.
(END VIDEOTAPE)
COLLINS: I'm Heidi Collins. Join me again tomorrow morning beginning at 9:00 a.m. Eastern.
For now, CNN NEWSROOM continues with Tony Harris.
