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Gibbs Answers About AIG Bonuses; No More McMansions; Billboard Resume
Aired March 17, 2009 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: It's the top of the hour, and we're pushing forward with some housing help. Whether you're just trying to stay put in your home or put your money into a housing bargain, we've got answers for you.
And AIG definitely has a lot to answer for, especially after today's twist: ex-employees getting retention bonuses.
I'm Kyra Phillips live at the CNN world headquarters in Atlanta, and you're live in the CNN NEWSROOM.
We've got breaking news for you. And a lot of details that probably won't make you feel any more love for AIG. New York's Attorney General Andrew Cuomo says that 73 AIG execs got $1 million, or more, and 11 of them no longer work for the company.
In all, we're told those bonuses totaled $165 million. And failing AIG got more than $170 billion in tax dollars. The very thought of it has really stirred up a hornet's nest on Capitol Hill. Senator Charles Grassley minced no words when he blasted the company and then explained what he meant in an interview with Abbie Boudreau of the CNN's Special Investigations Unit. Take a listen.
(BEGIN VIDEO CLIP)
ABBIE BOUDREAU, CNN CORRESPONDENT: What exactly did you mean when you said you would feel better if the executives resigned or committed suicide?
SEN. CHARLES GRASSLEY, (R) IOWA: No different than what I said back on October the 1st last year, when we were talking about the first bailout bill. Of course, I don't want people to commit suicide. But I do want an attitude within corporate America that's similar to what they have in corporate Japan, in which people that run a corporation into the ground have violated their trust with the stockholders, and maybe even the taxpayers. They take a very deep bow. They accept -- they apologize, they're remorseful, they're contrite. They take full responsibility. You know, going way back into last year, we have not heard this sort of apology, remorsefulness, contrition, that we ought to hear from corporate executives in America, assuming full responsibility. You know, it's just kind of like business as usual.
(END VIDEO CLIP)
PHILLIPS: Well, he's one of the key players helping President Obama plot the country's economic recovery. Larry Summers, head of the National Economic Council, and adviser to the president, he actually sat down just a short time ago with CNN Senior White House Correspondent Ed Henry.
And Ed, why don't we go ahead and start with what he said about AIG. I know you pressed him on this. And we've been talking about the handing out of all these huge bonuses, while it was getting bailed out by taxpayers.
ED HENRY, CNN SR.WHITE HOUSE CORRESPONDENT: Well, Kyra, Larry Summers said he's outraged by the way AIG has been, as he put it, run recklessly, and regulated with abandon. He's frustrated at a number of levels. But then I pressed, if you're so outraged, why didn't this White House push back on these bonuses a week ago, when they had some leverage, when AIG was asking for more taxpayer bailout money?
Larry Summers basically said Treasury Secretary Geithner tried to add as many restrictions as possible. Obviously was not that successful. And that there was a contract from last year that they were obligated to, and that there wasn't really that much they can do. That's obviously frustrating to a lot of people. So I pressed and said to Mr. Summers, if AIG comes to the president and wants more taxpayer bailout money, given their frustrations with them, would you give them more taxpayer bailout money? Surprising answer. Take a listen.
(BEGIN VIDEO CLIP)
LARRY SUMMERS, DIR., NATIONAL ECONOMIC COUNCIL: As the president said in his state of the union address, it is wrong to govern out of anger. We have to recognize what we're angry about, do something about it. That's why we're focused on establishing a new resolution regime as part of a sweeping overhaul of the financial system. So when the next time one of these things happens, the government will have the authority to do what's right. But we can't let anger stop us from taking the steps that are necessary to maintain the stability of the financial system, keep credit flowing.
(END VIDEO CLIP)
HENRY: Keep credit flowing. You can hear the suggestion there from Larry Summers clearly that the door is open potentially to more bailout money for AIG. Potentially, others as well. That's going to be frustrating to a lot of people to potentially. And I think what it points up is the fact that while the White House keeps talking about how they inherited these bailouts, they inherited this financial crisis from the Bush administration, it's theirs to deal with now. And there are no easy answers, as they try to struggle and figure out, how do we get the bonus money back, how do we decide whether we bail out more companies.
The last point I'll make is that Larry Summers said, look, if we don't bail out AIG more, they could really fall and then this crisis could get a lot worse. Where have we heard that before? We've heard it from the Bush administration last fall and winter. So I think now that they're governing, they're facing a lot of these tough issues, Kyra. PHILLIPS: I'm curious, are you going to be in that White House briefing today?
HENRY: You know, since I'm out here talking to you, my colleague Dan Lothian will be there. And I'm sure he'll ask a lot of good questions.
PHILLIPS: That's what we're expecting. So, we'll get more from Robert Gibbs there, when Dan asks those questions. Since you had the Summers interview, OK, we'll count on Dan for Robert Gibbs.
Thanks so much, Ed.
HENRY: Thank you.
PHILLIPS: Outrageous and inexcusable, that's what a lot of people are saying about the huge bonuses handed out to AIG's top executives. It's really got some of our iReporters stirred up. Take a listen.
(BEGIN VIDEO CLIP)
ZACHARY PRATHER, CNN IREPORTER: These companies say they have contracts to honor. They say the top talent will just move on to better paying jobs. Well, I say, where are they going to go to? What higher paying jobs? These so-called top talents has brought the world's economy to its knees.
JULIA FULLER, CNN IREPORTER: These bonuses should not be paid. They should not be paid. They should be ashamed of themselves for even wanting or thinking about it.
TIAMIYU OLADIPO, CNN IREPORTER: We'll ride your you-know-what like Zorros until you pay us our investments back.
(END VIDEO CLIP)
PHILLIPS: Laid it out there. We've heard from you now. But iReports and e-mails, keep them coming in. Many of you are really good and worked up over AIG's bonuses. It's a good time to ask the question on everybody's mind. What happens if AIG needs more bailout cash? Will it get it? Probably. Here's why. According to Chief Business Correspondent Ali Velshi, he says it will cost taxpayers more to let AIG actually go belly up. That's because AIG has 74 million insurance policies out there, and it insures just about everything.
Take a look. Everything from airline catastrophes to big-name movie stars to oil companies. AIG insured billions in mortgages that were repackaged and resold to investors. Now it has to pay out on all of those policies. Again, according to Ali Velshi, business wouldn't happen without insurance companies and there is no one bigger in the risk business than AIG.
Now, we turn to bulldozers on the "Road To Rescue". For the first time in eight months, home building is, well, building. To the surprise of just about everybody, housing starts shot up 22 percent last month. If you think that's a fluke, well, building permit applications rose, too, by 3 percent. Housing still down by almost half compared to February of '08.
And you know times are really hard when price hikes are cause for celebration, or at least relief. Two straight months of slightly higher wholesale prices mean a drop in some experts' fears of deflation.
If your house is on the auction block, issue number one is blocking foreclosure. We've been reading your questions about saving a house, saving for a house, selling, buying or keeping a house. Gerri Willis joining me now with answers.
Gerri, let's go ahead and start with our first e-mail. This comes from Dave. This is what he wants to know, "I've been paying $2,000 in rent per month for nine years. I don't have enough for a down payment. So how can I buy a home where I can turn my rent into a mortgage payment?"
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, this is a problem that renters in really expensive areas get into, because they're paying so much money out in rent. It's nearly impossible to save for a house. And he's just outside San Francisco, so you can imagine how much money -- well, he told you how much money he's paying each and every month. It's hard not to do that in that area.
Sometimes you can do what some folks call rent-to-own, which is people who are having trouble unloading their house, may actually help you get you into a home. Now, you'll pay for the privilege, it's like a regular loan, only you pay the proceeds in interest right to the owner. These have been controversial in the past. But I can't think that this will not become more popular with so many people having trouble with real estate, Kyra.
PHILLIPS: All right. How about this? Manny says, "I'm paying $4,600 a month at 9 percent interest. I've called my mortgage lender, and asked for a fixed rate, but with no success. My home value has come down. The payments are too high. What can I do?"
WILLIS: Well, Manny, 9 percent, that's a very high rate of interest. Right now we're cruising right under 5 percent. The money you could save by locking in that lower rate, it would be significant. I think what you need to do, the president has come out with a plan to help people in your situation, where home prices have come down. You want to approach your lender, tell them that you want to take advantage of that program. Start getting your documents together, in place. What they do is they bring down your interest rate, and that will bring down what you're paying each and every month. So definitely check out Financialstability.gov. That's the website that the government has put out describing these programs. But contact your lender.
All right. This one comes from Tim. He says, "I'm in the U.S. Navy. I'm 23 years old. I feel I'm ready financially to buy a home. But everyone seems to tell me I'm making a mistake. Either I'm too young or the economy is not going so well. And I might lose the home. What do I do?"
It seems if he's young and he's financially able to do it. But this is a good time to buy, right, Gerri?
WILLIS: Oh, I have to say, Tim, I would go with my gut here. Prices are down, down significantly. You can probably get a great house for very little money. Take advantage of the opportunity. It's not very often that you're in a situation where you can actually buy major assets at a discount. You are. I'd go for it.
PHILLIPS: Gerri, I could never afford to buy a house at 23 years old. That's a blessing.
WILLIS: Me neither. It really is. And you know what? That sets you up for more financial security down the road. Once you lock in that low price, you're not overpaying for your housing. Well, now other things are more affordable. You can save more. You can invest more. You know, get married, have kids, put the kids through college, save for their college, makes everything else a little bit easier.
PHILLIPS: Gerri, thanks.
WILLIS: My pleasure.
Whether you're buying, selling, saving or moving, send us your questions about housing. Our address is CNNnewsroom @cnn.com. Gerri Willis will be back later in the hour with more answers for you.
You can't make your mortgage payment? Afraid the foreclosure hounds are ready to bark at you? We've got tips to help you hang onto your home. So don't go anywhere.
It's a national epidemic, but foreclosure is a lot more prevalent in some states than others. Nevada leads the nation with one home in 70 lost to repossession. Arizona's rate is second worst, one home in 147. California's third, one home in 165.
The flip side, of course, is the vast majority of homes that are not in trouble. But even they and their hardworking owners can suffer when neighbors' homes sit vacant or builders lose their funding in mid development. For an CNN iReporter in Arizona, it's all too much.
(BEGIN VIDEO CLIP)
CNN IREPORTER: The property values out here, you know, in this neighborhood, southern Arizona has greatly depreciated in value. The builders have walked away. The landscape has gone to pot. The homeowners association not taking care of their business. It's an eyesore. And it gets to the point where you just want to walk away and say, I give up.
(END VIDEO CLIP)
PHILLIPS: Rhode Island is another state slammed by home foreclosures; statewide last month it had one foreclosure filing for every 1,102 homes. Foreclosure rates range from one in every 860 homes in Providence County, to 1 in 3,720 homes in Newport County. But at least one community that they're trying to turn things around, well, that's where Stephanie Elam is. She joins us in Providence.
Stephanie, tell us about the folks there. Is it Olyville? Is that right? What are they doing to help solve -
STEPHANIE ELAM, CNN FINANCIAL CORRESPONDENT: Olneyville.
PHILLIPS: OK, Olneyville. What are they doing to try to solve their housing problem?
ELAM: Well here in Olneyville, Kyra, they're looking to really revitalize neighborhoods. This area has been really decimated with the fact that so many people in the '80s that had a lot of properties here that were owned by absentee landlords. Then when things got bad their properties went into foreclosures. That just sort of left the neighborhood on a decline. So, about 10 years ago they started working to make things look better here in the neighborhood. If you take a look, right here, you'll see that you've got new buildings right in the middle of the section of Providence called Olneyville.
These new buildings are going up. They're looking to get families in there. They're providing counseling, these groups working together. If you go right across the street over here you'll see there is a house that is still -- broken glass, still in need of some rehabilitation. But the idea here is to get some homes rehabilitated, get people in them, living here, get owners occupying these homes, and hopefully the communities will start coming back together.
In fact, we talked to one young couple who is living here. They've lived here for a long time, but they just purchased a home. The reason we wanted to talk to them to see what they think it will be like in a few years from now.
(BEGIN VIDEO CLIP)
ELAM (On camera): By the time your sons are 10, what do you think the neighborhood will be like? How do you think that will affect their development?
JORGE BURGOS, HOMEOWNER: It's going to be very positive for our kids. The neighborhood is looking good. And hopefully 10 years from now, 20 years from now, everything will be better.
(END VIDEO CLIP)
ELAM: So obviously there's still a lot of work to be done in this community. But overall people moving into some of these new homes feel like there's hope for the community to come together. Kyra, it's not just about new homes. Obviously if you want to have a good neighborhood, you need a place for kids to play. You need to have businesses there. They're also working to attract good businesses and also make sure there's recreation and parks for families.
PHILLIPS: And I can just imagine there's probably a lot going on in Rhode Island to help folks go through foreclosure, right? ELAM: Definitely. And they have a lot of resources here. There's a group called Rhode Island Housing. They've been working a lot with different families to help them stay out of foreclosure. They actually had a problem here in Rhode Island of affordability being the problem. That started out before the mortgage crisis ever began. So because of that, they've been working to keep people out of foreclosure, also giving them counseling, and then on top of that, getting people into these communities to help sustain them and make them viable places for people to live in.
PHILLIPS: Stephanie Elam, thank you.
If you don't like my budget, give me some constructive solutions. Those words from President Obama to members of Congress who oppose his $3.5 trillion spending plan. Mr. Obama met this morning with the chairman of the House and Senate budget committees to talk about the $3.5 trillion plan. Big part of that plan? Renewable energy.
(BEGIN VIDEO CLIP)
BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES: Because we know that the new jobs and new industries of tomorrow will involve harnessing renewable resources, renewable sources of energy. This budget will finally spark the transformation we need to create those jobs and those businesses right here in America.
It makes clean energy the profitable kind of energy. And it invests in technologies like wind power and solar power. Advanced biofuels, clean coal, fuel-efficient cars and trucks.
(END VIDEO CLIP)
PHILLIPS: The president calls his budget plan an economic blueprint for the future.
Phones are ringing off the hook at crisis hotlines across the country. Callers desperate about their financial troubles, counselors desperate to help them.
(COMMERCIAL BREAK)
PHILLIPS: Straight to the White House briefing. Robert Gibbs stepping up to the mic. We're expecting our Dan Lothian, of course, to ask him about AIG, and the talks about those bonuses.
(BEGIN LIVE FEED, IN PROGRESS)
QUESTION: Back to AIG, revisiting yesterday's topic.
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Yes.
QUESTION: It seems clearer -- even clearer now that -- that the administration would have known about these -- this new round of bonuses as early as January, but I think Secretary Geithner said he only knew about it last week.
And the question is, why didn't he know about it sooner? Did he talk to the president about it? And why didn't the president start talking about it until, you know, yesterday and officials over the weekend?
GIBBS: You know, I've seen what the secretary said in the paper about his knowledge of these bonuses. I don't -- I have not talked to the president specifically about when he was informed.
I do know that Secretary Geithner last week engaged with the CEO of AIG to communicate what we thought were outrageous and unacceptable bonuses, that Secretary Geithner received a commitment to lessen some of the bonuses for senior executives, a promise for the restructuring moving forward, that, obviously, this bumped up against a contractual deadline of March 15th, but that the -- the secretary of treasury did as much in his legal power at the time to lessen the impact of what we all understand is outrageous.
The president yesterday has asked that we continue to look for ways to either block or recoup that money. There are certainly provisions, whether it's in existing law or whether specifically in provisions, executive compensation provisions that are contained in the Recovery and Reinvestment Act that contain a safe harbor for pre- existing contracts. They're looking and working on that as a possible avenue that the president talked about yesterday.
But I also want to point to a couple of things that the president and the economic team are focused on going forward, because I think this situation and many of the situations that we have found ourselves in as a result of the amazing economic challenges that we have, the president is also focused on two very important things going forward, the first being reissuing his call to move as quickly as possible to institute financial regulatory reform so that whatever mechanisms were used to affect companies that have gotten us -- companies and banks and insurance companies into the situation that we're in now never happen again.
And, secondly, and equally as importantly, that the law provide for this current administration, but for there be some legal remedy with which a resolution mechanism can take place. And what I mean by that is, if a business -- if a small business gets in trouble, you can take that small business, that small business can go into bankruptcy, and, as a result of provisions in bankruptcy, lots can be changed, in terms of existing agreements. If a small bank gets in trouble, the FDIC comes in and does that.
For something the size of a big bank, or AIG, there still is in existing law no remedy with which to unwind and resolve the problems that exist in order to protect the taxpayer.
So the president, in addition to financial regulatory reform, would seek a resolution authority in order to break apart, unwind, and finally resolve the issues that we face with systemic risk.
QUESTION: I understand all that, and I understand you want to look forward. But is there a sense here at all that Secretary Geithner did not foresee what a public relations problem this might not be, not getting the White House involved or informed...
(CROSSTALK)
GIBBS: No, I -- I think that would be very unfair -- well, first of all, let me say the president has complete confidence. Secondly, I think it would be very unfair based on the actions that the secretary of treasury took in order, as we got closer to the pending legal deadline, to restructure what could be restructured and to change for the future to get that commitment, was an extremely important protection for the American taxpayers. Look, let me -- let me -- let me just say...
(CROSSTALK)
QUESTION: ... White House didn't start talking about this until after that deadline had passed. And I'm wondering if that's because of the...
GIBBS: I'm sorry. What's that?
QUESTION: The White House didn't start talking about this issue until after the deadline was already over. So I'm wondering if that's because the White House hadn't been informed by Geithner of what was coming or what the reason is for that.
GIBBS: I -- I -- I think what's important most of all are the actions that were taken, the extraordinary actions that were taken to protect the American taxpayers in accordance with all that we could do, as we look back to recoup what can be recouped and to go forward in ensuring that there are protections, both in the regulatory structure and in the resolution mechanism to deal with this.
I think many of the problems that we deal with -- you know, we've -- we've had occasion in this room to talk about what happens if there are catastrophic failures, particularly of entities that pose the size of systemic risk that a corporation like AIG could cause. And having something like that declare bankruptcy or fail to exist we all have understood provides a massive systemic risk of which nobody wants to face.
Obviously, I think the secretary of treasury took extraordinary steps, based on contracts that were in existence in April of last year, in order to do all that he could to protect the taxpayer.
Yes, sir?
QUESTION: There's an interesting suggestion that's coming out of Congress on how that money might be recouped. Congressman Barney Frank has suggested that the government, as a majority stakeholder, would be in a position to sue AIG to recoup that money.
And you have the Senate -- some Senate Democrats, led by Harry Reid, are warning employees that they should return the money or else face a massive tax bill, in other words, getting that money taxed away from them.
GIBBS: Right.
QUESTION: What -- can you address how the administration would view those proposals, whether they seem them as viable?
GIBBS: Well, I think two things. Obviously, as the president mentioned yesterday, as I've just talked about here, the president has asked us to do everything possible to look at recoupment for these retention bonuses that he and all of us find outrageous, whether that's in, as I mentioned, the existing law that was passed as part of the recovery and reinvestment plan or whether that is, secondly, some mix of new legislation that's proposed.
The administration and the legal team would certainly look at those as it is looking at existing law, including the Dodd provisions, in order to meet the test of looking at all remedies at recoupment, including whether it's changing the tax code or whatever ideas I think percolate between now and whenever coming out of Congress.
Obviously, the president is committed to working as quickly as possible with Congress to find ways to recoup this money.
QUESTION: Is filing a lawsuit seen as a real possibility?
GIBBS: I'd certainly have to ask the legal team. I think, obviously, as has been mentioned in some of the stories, there are the potential for penalties that could increase the cost of what we're talking about exponentially.
QUESTION: The Treasury Department was informed about the AIG bonuses last September, during the previous administration. Secretary Geithner learned about the bonuses, I suppose, Wednesday of last week or -- or around then. Can you walk us through what members of your administration learned about the bonuses and when they learned about it?
GIBBS: I don't have a particular tick-tock in front of me. And, obviously, I was not involved in all of those conversations.
I outlined that the secretary was obviously involved in conversations with the company to extract concessions regarding senior executive bonuses and how one might go about changing retention bonuses in existing contracts for the future.
QUESTION: That was Wednesday, right?
GIBBS: I think that was over the course of several days leading up to the legal deadline of March 15th. And, obviously, what the president talked about yesterday in asking us to go back and look at the recoupment possibilities and the stuff that's being proposed in Congress.
QUESTION: Well, I guess, just the question I have is, if you said that you have confidence -- the president has confidence in Secretary Geithner. Are you confident that the oversight process is working, if these bonuses had been -- the Treasury Department had known about these bonuses since September -- Secretary Geithner didn't act on it until last week?
GIBBS: Well, again, I don't -- let me make sure -- I mean, obviously, you and I understand this, but let's make sure everybody understands that there was a change in administration between September of 2008 and what we're talking about even at some point last week.
QUESTION: OK, right. That's what I'm saying. But clearly somebody dropped the ball. Somebody didn't tell Secretary Geithner about this or Secretary...
GIBBS: Let's also understand -- and I'd -- let's also understand that these are contracts that existed, as I understand it -- and I prefaced this yesterday about not surprisingly telling you I'm not a contracts lawyer.
These contracts were entered into, as I understand it, April of 2008, long before any entity of the government got involved in a rescue and a restructuring process that existed even before Congress passed the Troubled Asset Relief Program and where we find ourselves, in the second tranche of that money today.
QUESTION: Right. But surely you would grant that you wish that you had known about these bonuses before the $30 billion that you guys gave or lent AIG two weeks ago?
GIBBS: Well, again, that, as I said yesterday -- and maybe I wasn't as clear -- that $30 billion facility has not been acted on and that there are recoupment possibilities as a part of conditioning additional future assistance of which that $30 billion is part of.
QUESTION: But do you not see that -- are you confident that the oversight process at Treasury is working properly?
GIBBS: I am confident the oversight process is working. Am I confident -- what I'm -- what I think the president and all of America are outraged about is the message that any bonus like this sends, that -- as I said yesterday and as the president said, it offends our common sense. It offends our values.
It sends the wrong message by giving and rewarding the very entities which took a company like AIG with a hedge fund placed on top of it and ran the entire company into the ground to the point where taxpayers have had to inject $170 billion. I think everybody is offended by every aspect of that.
QUESTION: But why didn't you know about it until last week?
GIBBS: Well, I -- again, I will check on some exact tick-tock, but, understand, there's a contract. They're existing contracts. The secretary of treasury did each and every -- did everything that we know of humanly possible to change the structure of what AIG ultimately was required to pay out, change that structure going forward.
The president has asked the team here to examine ways in which we can go back, in terms of a look-back and a recoupment process that includes the process in the Dodd amendment -- the Dodd legislation that was in part of the recovery and reinvestment, as well as mechanisms moving forward to do that.
QUESTION: I guess, you know, maybe I'm beating a dead horse here, but I'm not hearing the answer...
GIBBS: That's what I do all day.
QUESTION: I mean, is it...
GIBBS: Giddy-up.
QUESTION: Is it possible that Secretary Geithner did not completely inform the president about what was happening here until it really just all blew up?
GIBBS: No, because -- now, let's understand, again, there -- the reason that -- that something couldn't be done -- the reason, ultimately -- there was ultimately -- AIG made a determination based on existing contracts that they had no choice, right?
QUESTION: I understand the background to it...
GIBBS: No, no -- but -- but let's not...
QUESTION: ... but in terms of the...
(CROSSTALK)
GIBBS: But let's not -- hold on. But let's -- let's understand -- let's understand that that background governs a lot that we're discussing here today, right? Contracts law. Again, I'm not a contract lawyer, but I understand some of the ramifications of that.
The president is -- the president is satisfied that we are taking the steps necessary to recoup this money, but, again, is completely outraged at the entire process that has led us to this point, that has provided the very employees, AIG Financial Products, the very employees that have found the taxpayers on the hook for tens of billions, hundreds of billions of dollars, receiving the wrong message through a bonus. He finds that offensive.
That's why he's instructed us to take the steps -- all steps that we can humanly possible up to that deadline and after that deadline to recoup that money.
QUESTION: So is the president then satisfied that he found out about this in a timely manner?
GIBBS: Yes, the president is satisfied. The president will not be satisfied until we've exhausted every avenue that he instructed us to yesterday. And the president certainly won't be satisfied until, moving forward, we have changed the way we do business in Washington, changed the way we do business on Wall Street, to ensure that there's a financial regulatory system that's in place in order not to find things like AIG happening again.
And, finally, as I said, that there's a mechanism, a legal mechanism that would help us unwind and finally deal with the problem of AIG.
Again, I -- I use this example. If you're a small business, you can change these things through bankruptcy, right? If you're a community bank that gets in trouble -- and we've all seen them, you've all written about them -- FDIC comes in, takes them over, and changes the way they do business.
But for an entity of the size and the structure of AIG, there's not a legal mechanism with which to resolve those issues in a way that protects the taxpayer. That's part of which -- part of what the president would like to see as a portion of financial regulatory reform.
Go ahead.
QUESTION: I think only about half of the AIG bonuses to this -- the Financial Products unit have been paid at this point. I think there's still about $200 million due. When the next round of AIG bonuses comes due, will the president say, "No"?
GIBBS: Well, again, that's exactly what Secretary Geithner has talked to the CEOs about moving forward to restructure. I think that's what I alluded to, that Secretary Geithner -- taking all humanly possible steps in order to change that.
QUESTION: But the federal government owns 80 percent of AIG. Can't the president simply say, "No, we're not making those payments"?
GIBBS: Again, I'd refer you to a contract lawyer, of which I'm not one. But obviously, if it were as easy as all of that, I can assure you we'd be talking about Russia (ph).
QUESTION: One follow-up. You -- you mentioned that the president and the American people are outraged. There were some on Capitol Hill who have questioned his outrage. They -- they say, how can he come out and say he's outranged when his economic team had just thoroughly looked into these payments and concluded they had to be made?
GIBBS: I -- I suggest that there's very little basis for any of those -- for any of that thought. I -- I -- I don't think anybody on Capitol Hill should doubt the genuineness of the outrage.
There was -- understand that the compensation structure for executives prior to the president of the United States, Barack Obama, laying out the way we're going to do business changing, there was -- Barack Obama came in and there was a new sheriff in town on executive compensation.
He changed the way we did business here and the way Wall Street did business by instituting the toughest executive compensation rules that had ever been entered into, changing the lawlessness with which all of this was governed prior to that announcement.
So I think it would bear some going back to any of the critics of the president's genuine outrage and ask them what they did or didn't do to change the way executives are compensated before Barack Obama got to town as president of the United States and, in one of his very first announcements, financial announcements, argued for a change going forward in the way we compensate executives.
QUESTION: One other. You said you haven't talked to the president yet about when he learned about these bonuses. Could I just put in a request that you ask him when he learned?
GIBBS: I will -- I will -- I'll write that down.
QUESTION: First of all, why haven't you asked the president when he learned about this?
GIBBS: There are a lot of questions I haven't asked the president. We (INAUDIBLE)
QUESTION: Is the -- the problem with trying to figure out where the oversight slipped up in the fact that it is not clear, does AIG answer to the Federal Reserve or to the Treasury Department?
GIBBS: I don't -- I don't know.
QUESTION: Is that the issue here?
GIBBS: I don't know the answer to that, honestly.
QUESTION: Would you say -- I mean, does the -- what is the answer to the question?
GIBBS: I -- let me ask somebody who works on this full-time.
QUESTION: We don't know who sort of has government oversight over AIG right now, the Federal Reserve or the Treasury Department?
GIBBS: I can either take your question or you can ask and surmise its answer.
QUESTION: OK, it's not answered in -- in the tone (ph). No, no, I -- you...
GIBBS: Go ahead. I'm...
QUESTION: So we don't -- we don't know who -- who has oversight over AIG?
GIBBS: You've asked me a question of which I am going to find you an accurate answer so that, by the time you transmit this to the world, you'll have a good answer.
QUESTION: You were going to find out for me...
(CROSSTALK)
(LAUGHTER)
GIBBS: I have.
QUESTION: ... to Abu Ghraib and Bagram and...
GIBBS: There is...
(CROSSTALK)
QUESTION: ... black hole, since...
GIBBS: Yes. The law that governs employees of this government bans torture.
QUESTION: Is the president concerned...
GIBBS: This is an easy process. You ask the question, I take it, and I get an answer.
QUESTION: I just hope I don't want to wait until tomorrow.
GIBBS: Well...
QUESTION: You made poor Helen wait until tomorrow, 24 hours.
GIBBS: Maybe -- maybe you're torturing me and Helen.
(LAUGHTER)
QUESTION: Don't give us any ideas.
(CROSSTALK)
GIBBS: I would -- I would posit that the CIA should look at the process in which I'm undergoing...
PHILLIPS All right. Are we going to go to the members on the Hill, guys? OK, great.
Yes, do you were just listening to Robert Gibbs there talking about AIG, taking questions from reporters. Those bonuses, the breaking news story we've been following about the past half hour now. Now, we're getting response from members on Hill.
Let's go ahead and listen to Tom Perriolo, a democrat from Virginia.
REP. STEVE ISRAEL (D), NEW YORK: ... you can do it now. It is the simplest and fastest and most effective way to recoup the investment. I'm not interested in having a moral debate with the folks from AIG on what they did. I'm interested in getting my money back. And this is the way to do it. OK?
QUESTION: (OFF-MIKE) ISRAEL: I'm not familiar with the Dodd amended (ph) stimulus bill, so I can't speak on it. Let's let Congressman Carnahan say a few words and then answer more questions.
REP. CAROLYN MALONEY (D), NEW YORK: Can I just say on the Dodd. A new piece of legislation would override it. And Senator Dodd has come forward with his own bill that would tax them at 98 percent of the bonuses. And I would take a compromise and tax them at 99 percent so we can have a joint Senate/House bill.
And as to your other question, we have taken over many banks. We have taken over many banks in this country. Many, many banks have failed. We've taken them over for very short periods of time, cleaned then up, either put them in mergers or cleaned them up and put them back in the private sector. And maybe that's something we should look at with AIG.
ISRAEL: Ask Congressman Carnahan say a few words because he is here, and we'll open it up for questions. From Missouri.
REP. RUSS CARNAHAN (D), MISSOURI: Thank you, Steve. It's great to be here and to be here on what I think is a really common-sense approach to this issue that has just vexed a lot of folks here in terms of how to recoup this money. It has angered people back home.
Again, I think this is the common-sense approach to address the greed and the recklessness that was involved. To do it in a way that doesn't present legal problems. And, I think, gets us where we need to be. And I think this is - I'm happy to be a part of this coalition.
And Steve, thank you for your leadership.
ISRAEL: Thank you very much. Yes?
QUESTION: Sir, you would tax anything above $100,000? And you would tax everything? And would someone who makes $105,000 get taxed, get - not be taxed on the first hundred but...
PHILLIPS: Sorry about that. We took the live shot, actually. This is the democrat from New York, Steve Israel. And then right after he spoke, you saw Karen Maloney and then just a moment ago, Representative Russ Carnahan.
But we want to take you back to just a little bit ago, where we were listening to Tom Perriolo, a democrat of Virginia, and his reaction to what's happening with regard to AIG and the bonuses.
Let's go ahead and listen.
(BEGIN VIDEO CLIP)
REP. TOM PERRIOLO (D), VIRGINA: We are in a time of economic crisis. And we will get out of it by understanding that we are in this together. But there's one group of people that doesn't seem to have gotten the message that we are in this together. These are taxpayer dollars. We will protect them. These are bonuses that do not make sense in this economy. They do not follow basic market principles.
We will not get out of this until we deal with the very accountability problems that got us into it. That's why many of us oppose the bailout. But it's particularly why we oppose this irresponsible behavior at a time where everyone is being asked to step up to a new level of accountability. The government needs to answer to that, the private sector and consumers all need to answer to this new era of accountability.
(END VIDEO CLIP)
PHILLIPS: New era of accountability. That, of course, we'll be talking about for the rest of the afternoon into tomorrow, as we follow now what's being brought against these various members of AIG and these bonuses at a time when our economy is simply crumbling.
Once again, you were hearing the members of Congress reacting to what's coming out now with regard to AIG. We're going to cover more for you. We'll take a quick break, be right back.
(COMMERCIAL BREAK)
PHILLIPS: "THE ROAD TO RESCUE" all this week. We're using the unparalleled resources of CNN to bring you a survival guide for these tough times. And we're going behind the jargon and behind the numbers to shed new light on the crisis and to spotlight solutions.
Today, our focus is your house or the house that you wish was yours. We've been reading your questions about selling and buying; refinancing, financing. Gerri Willis joining us now, hopefully with a couple more answers.
Gerri, we'll get to our first question. It's from Anita. Appreciate you coming back with us. She says, "My husband and I are looking into using a negotiator to help us navigate our loan modification. What are the benefits of using this service? Is it better than going at it alone?"
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, Anita, I would say a credit counselor might be a good way to go. And nfcc.org is a good place to find one. This is somebody who will help you figure out exactly what you should be doing. Also, your lender can sort of serve in this function. You're going to be able to tell, did I get a better rate, is my monthly payment is lower.
I'm not sure I would hire somebody to negotiate for me. I'd get a counselor whose services might be free.
PHILLIPS: All right, Gerri Willis, we're going to continue to talk to you all week, of course. Thank you so much.
WILLIS: My pleasure. PHILLIPS: The theme: housing, saving money. I think tomorrow we'll be tackling more direct issues about how we can save our money and start investing during these tough times.
WILLIS: There are a lot of issues out there, Kyra.
PHILLIPS: All right, thanks, Ger.
WILLIS: Happy to join you.
PHILLIPS: Terrific.
Well, remember that the - well, do you remember the A-frame house from the '60s, the Brady Bunch split-level of the '70s? They're homes that no one's really building anymore. And now you can add the McMansions to that list. The recession has architects and builders thinking small.
Susan Lisovicz at the New York Stock Exchange.
We were talking about this this morning. It was a great pitch, Susan. Because, really, when people are just trying to deal with the house that they have and talk about downsizing because they can't afford anything else, it doesn't make sense in our economy right now to be buying a McMansion.
SUSAN LISOVICZ, CNN CORRESPONDENT: You're seeing a major cultural shift, Kyra. Whether you call it a McMansion or a "starter castle," you're talking about these enormous houses on a small plot of land. And what's happening is, builders just aren't building them the way they used to be.
We have the numbers for you. Just in the past year alone, the average square foot of a single-family home has gone down by about 200 feet, or seven percent. There's no question that economics have something to do with it, because it costs a lot more to heat these homes, to cool these homes, and they cost a lot more just to begin with, just for the house themselves.
PHILLIPS: Do you think it's completely due to the recession that we're seeing this?
LISOVICZ: You know, I think we've come to a point, Kyra, and I think it may be why - we may well associate these homes with a certain timeframe, that there was this aspiration for bigger is better. And the fact is, our families are getting smaller. It's not like we have ten kids anymore. Sociologists say we're not spending as much time with each other.
I do think that economics have something to do with it. But also, simplicity and the fact of value. That if you spend maybe less on the size of the home, maybe you can get more value with some of the amenities that you put in the home.
So maybe, you know, it's just a smarter home to begin with, you know? PHILLIPS: All right. Well we're definitely not investing in any big types of homes here within our group, that's for sure.
I was just making sure, I got a little distracted there for a second. I just want to do this for all our dedicated Irish viewers/drinkers, Susan. I know you did a special investigations for us to sort of tell us about the numbers. I believe it was, did we get Guinness? And what were the two stocks that you...
LISOVICZ: We have Molson, Coors, Guinness, which is owned by Diageo, which also owns Harp Lager and Smithwick's Ale as well as Kilkenny Irish Creme Ale. While there is a wearing of the green on big board right now, Diageo shares are flat. And that is a word, you know, a beermaker never really wants to hear. The word flat.
Molson Coors also doing nothing. Also flat. And they have the great ticker symbol of TAP - T-A-P. They made Killian's Irish Red, which is made in America. And I guess you could say, most of the world's Irish people were made in America too, because there are more Americans of Irish ancestry in the U.S. then there are in...
PHILLIPS: Funny that you mention that, seeming that my family is Irish and I'm purposely going to invest in these stocks for my baby cousin just born last year. This is Sullivan Mangen (ph), a true Irishman. And I'm going to promise my cousin Cami (ph),I will teach him how to drink Guinness.
LISOVICZ: Yes, and invest in. Also, you know, there is an argument to be made, Kyra, that these kind of stocks are recession proof.
PHILLIPS: There you go. All right. Little Sully will be a rich man. Thank you so much.
LISOVICZ: Congratulations.
PHILLIPS: Happy St. Paddy's Day.
LISOVICZ: Same to you.
PHILLIPS: All right, he's a professional out of work and he's got a family to feed. Time's a wasting, so what does Mark Heuer do? Well, he posts his resume, of course. Well, sort of. He took a big chunk of his savings account, bought a billboard outside Milwaukee hoping opportunity might drive by. Well, it seems to be working, because Mark's working us for a job in an interview now.
Mark?
MARK HEUER, JOB SEEKER (via telephone): Hello. How are you?
PHILLIPS: Very good. I'm impressed with your billboard, my friend.
HEUER: Thank you. PHILLIPS: All right, so I'm curious. Here you are, a family man. Why would you take the majority of your savings to do this? And in particular, I think you moved in with your grandma-in-law, is that right?
HEUER: I didn't move in with my grandmother-in-law, I was provided an opportunity to move back to Wisconsin in a home that was vacant that used to be my grandmother's.
But I think you have to do unprecedented things at unprecedented times. I've done a tremendous amount of networking, not only in the Atlanta area, but also coming back to Wisconsin. And as I get out and network with different people in all kinds of venues, whether it's with fellow job seekers or whether it's with the business community and the chamber events and all the other business networking, how do you stand above the sea with so many people out of work today? And the many talented people, if you will?
PHILLIPS: All right, I tell you what we want to do, Mark, because you've got us thinking today. And we've decided to start spending our time, a lot of our time looking for folks like you and giving them an opportunity. If you're going to be this creative, then, hey, we've got to help you. We're going to give you 30 seconds all right, we're going to start the clock. And I want you to pretend like you're talking to every possible employer in the country. You've got your billboard up, you've got your website, so you ready to give me the pitch?
HEUER: I'm ready to give you the pitch.
PHILLIPS: All right, what is it, Mark? Why should you be hired?
HEUER: You know what? I grew up with hands-on positions and wrote sales upwards to area manager, general manager for large companies. Turning around poor operating situations, not only financially but culturally. I've taken a lot of diverse experience in not only the textile laundry industry. I've gone to the coffee services industry, to electrical contractor of the director of operations. And I've even done some of my own consulting, as well as go over to Iraq and serve in 2008 as in procurement.
PHILLIPS: Two seconds. That's it. I stole about ten seconds from you, so you got it there.
OK, I think you hit everything. So this is the deal, Mark. We're going to follow you. We're going to follow your website - Mark4hire.com. You just heard the pitch, help the guy out. He's used almost his entire savings account to put up that billboard.
We're going to track you, Mark. Let us know what happens.
HEUER: I thank you. And I appreciate the exposure.
PHILLIPS: Good luck, Mark.
HEUER: OK. PHILLIPS: Finances and fixes. "The Help Desk" to anybody to answer questions of the upper-most in your mind. And when it comes to your bottom line, turn to CNN for the knowledge.
(COMMERCIAL BREAK)
PHILLIPS: When it comes to your bottom line, turn to CNN for the knowledge that you need to get through these tough times. We have three heads tackling your money questions. Personal Finance Editor Gerri Willis at "The Help Desk" in New York with the other two.
(BEGIN VIDEOTAPE)
WILLIS: We want to get you answers to your financial questions. Let's go straight to "The Help Desk."
Greg McBride is a senior analyst with bankrate.com. Sonia Alleyne is a career editor with "Black Enterprise." And Dani Babb is the author of "Accidental Landlord."
The first question comes from Jerry who says, "My son has served in the U.S. Navy for the past 22 years. He bought a house in Virginia Beach two years ago and put no money down. He has a V.A. mortgage that is strapping him and another large loan to consolidate debt. Is his V.A. mortgage eligible for refinancing?"
Dani.
DANI BABB, AUTHOR, "ACCIDENTAL LANDLORD": Absolutely. It doesn't matter what type of mortgage you have, FHA, VA, absolutely you are eligible for refinance. There is a 105 percent LTV cap, loan to value cap. If you're trying to do a modification, but many banks are working with you even if you're pretty close to the 100 percent LTV and you're behind on your payments.
WILLIS: All right. It's a very complicated world?
William asks, "We are a small plumbing company with about $100,000 of debt struggling to stay afloat. Are there any business credit counselors I can contact to help us pay our creditors? I really don't want to file bankruptcy, but I feel it may be my only option."
Greg, hearing a lot of this too, small business in trouble.
GREG MCBRIDE, SENIOR ANALYST, BANKRATE: Yes. And, I mean, I don't know if this is a business that William owns or how he has it incorporated or if it's just a company that he works for. However, try negotiating directly with the creditors to get those payments reduced so that you can -- so they can swing that. Also, they also want to kind of see what his -- if he owns the business, see what type of personal obligation, if any, he may have for business debt. See an attorney about that.
WILLIS: Yes, that's critical to know. BABB: There are also new loans out there, new money out there. Sba.gov. There's a community express loan and the 7M loan to help people like him if he owns that business.
WILLIS: All right. So lots of help, sba.gov.
Linda in Texas asks, "I am an attorney who was recently laid off. I'm branching out to look for jobs in other areas, but no one wants to hire me for jobs I am overqualified for because they think I'll leave for a higher paying job. How does an experienced professional find work in this economy?"
Sonia, I'm seeing stories all over the place and I have to tell you, I believe them that employers are really hurting people who are older in the work place. They're taking it on the chin. And these layoffs, layoffs after layoffs you here about. What do these people do, over 50, having trouble?
SONIA ALLEYNE, CAREER EDITOR, "BLACK ENTERPRISE": Well, and the thing is, the onus is on the person seeking the job. And it's not that they think that you're overqualified, they know that you're overqualified and they're not -- there's not a fear that you're going to bolt because there's nowhere for you to go. I think what the fear is, is that you're going to come in as if this work is beneath you.
And so the onus is that you really have to come in and not only prove that you can do the job, that you can bring value to the job, but you can enjoy it while you're there and that you're not going to be frustrated because this work is beneath you.
WILLIS: That's great advice.
Well, "The Help Desk" is all about getting answers to your questions. Send me an e-mail to gerri@cnn.com or log on to cnn.com/helpdesk to see more of our financial solutions.
And "The Help Desk" is everywhere. Make sure to check out the latest issue of "Money" magazine on newsstands now.
(END VIDEOTAPE)
PHILLIPS: Well, getting on the road to rescue means cutting corners or cutting back so less of you are eating out. Unless we're talking about one cheesesteak place. Of course, that's where senior correspondent Allan Chernoff is, in Philly, probably packing one in there.
Hey, Allan.
ALLAN CHERNOFF, CNN NATIONAL CORRESPONDENT: Kyra, this is Pat's in South Philly, and this place is an institution. So even during a recession, they're doing just fine. The fact is, we've got people coming from all over the planet here.
And by the way, Kyra, do you want yours with or without? That means, with or without onions. That's the question to ask. PHILLIPS: I'll take it with.
CHERNOFF: So even during tough times, people come right over here, whether or not the economy is sinking - Kyra.
PHILLIPS: I love it. All right, we've got tortillas today and now we have Philly cheesesteaks. Love it! Allan Chernoff, love the bit of good news.
Now, we're going to take it to Rick Sanchez. He'll pick it up from here.
