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Congress Voting on Bonus Bill; Best Buys for Pharmaceuticals; The AIG Board of Directors: How Much Are They to Blame?; Family Physician Offers Free Services to Struggling Patients; Retirees Heading Back to Work
Aired March 19, 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: Paying big taxes on big bonuses. Later this afternoon, the House will vote on a bill calling for a 90 percent tax on some employees whose companies got at least $5 billion in government bailout money. That would include, of course, AIG, the insurance giant on the congressional hot seat for paying its executives $165 million in bonuses. We'll follow that vote, and bring you an update when it happens.
A growing number of Americans may be worrying less about their economic future. A new CNN Opinion Research Corporation Poll shows more than one-third are very confident about maintaining their standard of living in the next year. Forty-two percent say they are somewhat confident; 19 percent say they are not confident at all.
President Obama wakes up in California, gearing up for day two for his visit to the state. The president will stop by in an electric vehicle center in Pomona. He'll take part in a town hall meeting in Los Angeles, and then head to Burbank, for an appearance on "The Tonight Show with Jay Leno."
We are on the "ROAD TO RESCUE." All week long, we're helping you understand the financial crisis, guide you through it, and deal with it. This hour, we will bring you some of the best buys for treating all sorts of medical conditions for migraines and diabetes to depression.
And we'll have some advice for those of you who are retired or contemplating retirement. That includes the all-important financial planning.
We are also keeping our eye on two hearings on Capitol Hill. One involves a big, fat tax on executive bonuses paid for with your money. The other, more accountability of the $700 billion of the bailout, the financial sector.
President Obama is preparing to take his message to the people. His second town hall in two days will be in Los Angeles. And Vice President Joe Biden is walking the road to recovery in Minnesota.
On Capitol Hill now, there is outrage to spare over those big AIG bonuses and the big pay-back. Lawmakers have in mind. Let's get to our congressional correspondent, Brianna Keilar now.
Brianna, what are they going to be voting on exactly today?
BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: This is a plan to tax those bonuses. What it would do, Heidi, is levy a 90 percent tax on bonuses if a person makes over a quarter million dollars a year, and if they work for a company that has received $5 billion or more in bailout funds.
This is the proposal before the House of Representatives. There's also something being mulled over by the Senate. It levies a tax not only against the person receiving the bonus, but also against the company that gives the bonus. But either way, Heidi, the whole point here is to tax back, take back that bonus money by taxing it back, Heidi.
COLLINS: Is that tax going to work?
KEILAR: Well, there are some concerns, certainly. One that has been raised, is it constitutional if someone who receives a bonus and then has to give it back, if this were to pass congress, if they were to sue, might they have a legal leg to stand on? And some experts that we have spoken with have said, yes, they very well may. But this is all about Congress trying to say they're responding really quickly to this, Heidi.
COLLINS: Yes. When do we expect a vote, exactly? Any idea?
KEILAR: We're looking about 2:00 p.m. Eastern, so about four hours, that's approximate.
COLLINS: All right. Very good. Our congressional correspondent, Brianna Keilar, thank you.
An about-face. Senator Christopher Dodd, a day after telling CNN he didn't know how it happened, he owns up to helping pave the way for those huge AIG bonuses. It was a last-minute addition to a measure aimed at strictly limiting executive bonuses. A loophole exempted any bonuses that were agreed to agreed to on or before February 11th.
(BEGIN VIDEO CLIP)
SEN. CHRISTOPHER DODD (D), CHAIRMAN, BANKING, HOUSING, AND URBAN AFFAIRS: I apologize. I had some confusion about whether or not we wrote it exactly. But I didn't write it at my own behest. I was being sought out and asked to modify this with the alternative, candidly, being losing the amendment itself.
(END VIDEO CLIP)
COLLINS: Dodd says the Obama administration pressured him to make the change.
Troubled mortgage giant Fannie Mae handing out big retention bonuses to four top executives. The payouts to the executive vice president are around half a million dollars each. The excuse for the big bucks? One you've been hearing on Wall Street, the director of the federal housing finance agency tells CNN the bonuses were necessary to keep valuable employees.
Keeping waste out of stimulus spending. A House oversight committee holding a hearing on that this hour. The panelists are considering measures to help better manage millions of dollars in stimulus funds.
CNN's Kate Bolduan is live on Capitol Hill this morning. So Kate, what type of measure is the panel considering?
KATE BOLDUAN, CNN CORRESPONDENT: Well, they're really waiting to learn, Heidi, who the watchdogs are. Basically, everyone that we have talked to say it's -- these are unprecedented times...
COLLINS: Right.
BOLDUAN: ... and these call for unprecedented measures and transparency when it comes to the stimulus dollars in recovery.gov.
Today in that House oversight, a government reform committee, they're going to be hearing from the new chairman of the recovery act board, Chairman Earl Devaney, he is a former IG from the Interior Department. And this is the board, so many new boards being created. I can explain.
COLLINS: Yes.
BOLDUAN: This is the new board that the president created, established specifically to make sure that stimulus dollars were disbursed efficiently, as well as with a - in a transparent process. And this is where recovery.gov, that website we have been talking about, comes into play.
And Chairman Devaney will be appearing for the first time in front of a congressional committee this morning, in his new position as the man in charge of this huge effort of trying to track these stimulus dollars, and as - we expect to hear him say, as he said in the past, they're looking to prevent fraud on the front and not play crime detector on the back end. It's obviously clearly much easier said than done when we're talking about $787 billion.
COLLINS: Yes, I kind of thought this was partially the responsibility of the position of the chief performance officer. Does that position not exist anymore? Are they not going to refill that position? Or do we have any information on that?
BOLDUAN: I believe in - I will check. But I believe that position still stands. I'm not sure what coordination happens between Chairman Devaney's position, and the chief performance officer. All I know is that Chairman Devaney is specifically tasked with watching, talking to the local and state officials and coordinating with the federal agencies, as well, making sure that if fraud happens, when it happens, they catch it, and they deal with it. And that's what we're partly going to be hearing today.
I spoke with the chairman of the committee, Congressman Ed Towns earlier this morning, and he said that one thing that he really wants to learn more about, not only how they're going to coordinate with recovery.gov to get the information out there to you and me and every taxpayer, but also, what the role of the individual is. Chairman Towns says the whistle blower is going to be key in this, because individuals hear about waste and fraud and see it before it gets to the federal government.
COLLINS: Yes.
BOLDUAN: And that needs to be a key part.
COLLINS: Sometimes it gets all the way to the federal government and still nothing happens.
BOLDUAN: Absolutely. And the chairman is well-respected in the industry and is known for - for rooting out that fraud.
COLLINS: All right. Kate Bolduan, very interesting. We'll keep our eye on that. Thank you.
BOLDUAN: Of course.
COLLINS: Later in the hour, we take a look at where some of your economic recovery package dollars are going, and what they're being spent on. We're keeping count, and we will bring you live reports.
In these tough economic times, so many people need a helping hand to get back on their feet. And that help can come from some surprising places.
CNN's Allen Chernoff shows us one school that reaches beyond the classroom to help their kids.
(BEGIN VIDEOTAPE)
ALLAN CHERNOFF, CNN SENIOR NATIONAL CORRESPONDENT (voice-over): Unemployed single dad, Tim Randall has six kids to get off to school. After breakfast and brushing, it's backpacks on and piling into the backseat for a brief ride to school.
Eleven-year-old Latina, the eldest, is dropped off last at St. Phillip's Academy. It's a private school for promising children, where she is thriving while attending on a full scholarship.
LATINA RANDALL, STUDENT, ST. PHILLIP'S ACADEMY: We get treated like a family, so everyone is treated like brothers and sisters. And everyone is treated equally.
CHERNOFF: Latina began attending St. Phillip's last fall, self months after her father lost his information technology job. Tim fell behind on rent and was on the verge of being evicted with his six kids.
St. Phillip's reached out to donors who, overnight, raised enough not only to pay up Tim's rent and utilities, but also pay three months forward to provide a cushion while he continues hunting for work. TIM RANDALL, PARENT: I feel so honored. I mean, I started crying. You know, I normally don't cry, but, you know, I was shocked, really, you know - you know. So...
CHERNOFF (on camera): What did that say to you about this school?
T. RANDALL: I love it. I mean, that was the best choice I made.
CHERNOFF: Tim Randall's situation struck at the core of St. Phillip's philosophy. So much is achieved in these classrooms, but if a child leaves this building for an unstable environment, much of that achievement can be wasted. Which is why St. Phillip's provides a safety net for its families.
MIGUEL BRITO, HEADMASTER, ST. PHILLIP'S ACADEMY: We have a fragile population. You know, your car breaks down, you can't go to work, you lose your job, and all of a sudden what stability you had disappears. So the Family Support Fund is designed to support families in crisis.
CHERNOFF (voice-over): That safety net is no small feat in these times. Corporate and foundation donations, upon which St. Phillip's relies, are down about 30 percent this year. But individual donors, like David Farrano, are opening their wall let's to ensure parents can provide a safe home for their children.
DAVID FARRANO, DONOR, ST. PHILLIP'S ACADEMY: St. Phillip's, if it we want to keep our focus on the child, has to step up and do whatever we can to get that child back to a place where life is normal.
CHERNOFF: It's more than a commitment to education at St. Phillip's. It's a commitment to a child's potential, and a pledge that this recession won't destroy their hopes and dreams.
(END VIDEOTAPE)
COLLINS: Allan Chernoff is joining us now from Newark, New Jersey.
A little more on this and I know that some of the premise here, Allan, is they believe there that the children and what comes of them and their educational sort of experience is not only in the classroom, but also outside of it.
CHERNOFF: Absolutely essential. The parents here actually sign a covenant.
COLLINS: Really?
CHERNOFF: They commit to providing a safe, secure, quiet place for their children to study, and St. Phillip's wants to ensure that the parents can live up to that, and they do whatever they have to do to make sure that the education continues outside of the classroom. COLLINS: You know, there's obviously people who are supporting this who are those donors. And we've been hearing so much about donations to even nonprofits, and programs like this, it's really a tough time for people who are, you know, trying to hang on to their money for themselves.
CHERNOFF: It is a tough time, but the donors to this institution, St. Phillip's, are incredibly committed. And the donors come from all over the country, not just around here in Newark. David Farrano, the fellow we interviewed, he used to work at Morgan Stanley. This school is only 20 years old, so they do not rely on alumni. They rely on people who are committed to education and making sure that these children have the opportunity that everyone should have.
COLLINS: Well, it's a great story. All right, Allan Chernoff for us this morning in Newark, New Jersey. Thank you, Allan.
Well, plenty of blame to go around. Our Special Investigations Unit turns the spotlight on AIG's board of directors. What were the gate keepers up to while the company went begging for your money?
(COMMERCIAL BREAK)
COLLINS: Explaining problems, providing solutions, and answering your questions. As we travel the "ROAD TO RESCUE," CNN is breaking down the economic crisis to help you make the best decisions. It also means going in-depth to understand some of the outrage.
With all of the focus on AIG executives and their million-dollar bonuses, no one seems to be paying much attention to a group of independent professionals, those most responsible for overseeing the insurance giant. We're talking about AIG's 11-member board of directors.
CNN's Special Investigations Unit correspondent Abbie Boudreau is with us now with a bit more on this.
So, what exactly is the role of a board of directors, specifically at AIG?
ABBIE BOUDREAU, CNN SPECIAL INVESTIGATIONS UNIT CORRESPONDENT: Well, the board of directors is supposed to be the last line of defense for the shareholders. They're supposed to keep an eye on the company and made changes to avoid the kind of disasters that hit AIG. So how well has the board performed?
We asked former AIG CEO Hank Greenberg, who is now the single largest stockholder in the company. Here's what he had to say.
(BEGIN VIDEO CLIP)
HANK GREENBERG, FORMER CEO, AIG: They were saying they were all working harder, doing more things, more committees were established. So where was the oversight if that's true?
(END VIDEO CLIP) BOUDREAU: Now Greenberg has had some history with AIG's board. He was forced out two years ago during an unrelated accounting controversy. So he says board members failed to act on the problems that went down - that took down AIG.
COLLINS: Yes. We're talking about Eliot Spitzer....
BOUDREAU: Right.
COLLINS: We had a guest on earlier on the show who worked there for 12 years, under this CEO Greenberg.
BOUDREAU: Definitely some history.
COLLINS: Yes. Certainly. There has been so much made of these payments that are being made to the current AIG executives. Is the board of directors responsible for that, too? Signing off on it?
BOUDREAU: Right. Well, the short answer is, yes. But it is a little bit more complicated than that. We don't know how closely the board looked at the $165 million in bonuses that have been so criticized. But all the same, the board is supposed to supervise executive compensation. So, if it didn't know what was going on, it probably should have.
And remember, these are paid positions. And sitting on corporate boards can be lucrative, even if the company is collapsing. According to one recent study, AIG's board paid itself nearly $4 million in 2007 alone, when AIG's troubles first became evident. Nearly half of that was in direct cash payments. The payments ranged from just over a quarter million dollars, all the way up to $435,000. Not bad, especially when you consider the board met just nine days that year. It's very few meetings to get paid. It actually averages out to $30,000 per person, per paycheck, yes.
COLLINS: Yes, wow. Any talk of replacing the board now?
BOUDREAU: No one is really talking about that at this point. That would be up to the shareholders. And, you know, we have reached out to the board. They basically are not talking. No one is talking at this point. AIG is not talking about this, either.
The company is set to release its 2009 proxy statement in April, and we should get more details then as to how much these people made during the time after they received the bailout money, the company received the bailout money. So more answers next month. A lot more answers.
COLLINS: OK. And we know you'll be on it.
BOUDREAU: Absolutely.
COLLINS: Special Investigations correspondent Abbie Boudreau. Thank you, Abbie.
BOUDREAU: Thank you. COLLINS: A tight budget could force you to cut back on your medications. We have a better idea for stretching your bucks without endangering your health.
(COMMERCIAL BREAK)
COLLINS: I want to get this news out to you now, just in to the CNN NEWSROOM. According to the "Associated Press," 13 of the companies receiving billions of dollars in federal bailout money apparently owe a total of more than $220 million in delinquent federal taxes. That is the word from the chairman of the House subcommittee overseeing the federal bailout of financial firms.
Apparently, according to this - from, again, the "Associated Press," there are a couple companies that owe more than $100 million apiece. So it is going to be interesting, especially today, where the House is expected to vote on a bill that is going to impose steep taxes on those employee bonuses that firms have been receiving from the bailout money.
Obviously, talking directly there about AIG. But, again, this is apparently 13 firms that have been receiving a federal bailout money that owe back taxes. So another issue entirely. We'll stay on top of that for you, CNN working to confirm.
People helping people in these tough times. It's happening around the country and our local stations are helping us tell those stories. KMOV in St. Louis found one man who has spent his entire career caring for others. Now, he's offering to do it for free.
Larry Connors has that.
(BEGIN VIDEOTAPE)
LARRY CONNORS, KMOV REPORTER (voice-over): Greenfield is small. Very small. But doctor Gary Turpin is doing something big. Dr. Turpin has been seeing patients here for 45 years.
DR. GARY TURPIN: My patients are almost like family. Many of them, I've known for so many years. We're talking about that lady who is coming in...
CONNORS: Now he is starting to see patients who have lost jobs or insurance right in the midst of this recession. Recently, he and his wife decided they should help those patients out.
TURPIN: I don't really see the idea of somebody not having medical care because they have lost insurance or their job. They're going to get taken care of for free, and I'm happy to do it.
CONNORS: You heard right. That's free medical care for the rest of this year. Maxine Longmeyer who has been a patient all her life isn't that surprised.
MAXINE LONGMEYER, PATIENT: Oh, I think it's marvelous. But he served in the war, he's that kind of a guy. CONNORS: Dr. Turpin led a unit at the height of the Vietnam war, 1968-70. He admits he didn't want to go, but felt it was the right thing to do. Now he has that feeling again.
TURPIN: I'm not trying to drum up accolades, you know. I'm just doing it, because I think it's the right thing to do.
How are you getting along with your cough and that?
CONNORS: Dr. Turpin says he can afford to offer free treatment because he has been in practice for so long. But if other physicians decide to follow his example, well, that would be just fine.
TURPIN: I would hope that people would be inspired by it. That's not my aim of doing it, but I would hope they would be.
(END VIDEOTAPE)
COLLINS: Dr. Turpin says he and his wife got the idea for the free treatment offer after hearing President Obama speak about the need to volunteer.
When Wall Street tanks, we pay. Older workers losing their retirement savings forced to make drastic lifestyle changes. It's our snapshot across America.
(COMMERCIAL BREAK)
COLLINS: If your budget is tight, and whose isn't these days, you may be putting your health in danger in order to save money. "Consumer Reports" says people are not filling prescriptions, skipping doses and even sometimes cutting pills in half.
On the "ROAD TO RESCUE," our Elizabeth Cohen is here now with a better way to make ends meet. It's almost like some people are getting a little careless. I mean, they're coming to be their own doctors.
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Well, I think they wouldn't think of it as careless. They would think of it as ways to save money. Pills are really expensive. And so when you don't have the money to pay for them, you try to come up with what you think are smart ways to save money. Really not so smart.
COLLINS: Yes, you're changing the dosage.
COHEN: Right. You're doing all sorts of things you shouldn't be doing. So let's look at what the "Consumer Reports" survey found. What they found when they polled Americans is that 28 percent of Americans are doing some kind of dangerous cost-cutting measure, they're not filling a prescription, they are skipping dosages. They are cutting pills in half without consulting a doctor.
So the question becomes, if you don't have money for the prescription drugs that you need, what do you do? Here are a couple of tips. They're on cnnhealth.com, right now. I'll go over a few of them. Ask for a generic.
COLLINS: Yes.
COHEN: Always, always, always ask for a generic. It's going to be cheaper. There won't necessarily always be one that you can take, but there might be one. It's worth asking.
Also, use the mail order services, buy in bulk, get a 90-day supply for much less.
Maybe split your pills. This is a big maybe. The reason for that maybe, there are some pills that should never be split. But if you're taking ten milligrams of something, you can say to your doctor, can you give me a 20 milligram prescription, and then I will split them. It won't always work. But talk to your doctor about it.
COLLINS: Because it won't cost more if the dosage is larger.
COHEN: Correct. Usually or if they do, it's just a tiny bit more. So it's definitely worth asking. Also find a prescription assistance plan. On cnnhealth.com, we have a link where you can find one that's good. There's a lot of places out there that are waiting to help you find a way to save money on your drugs. So, again, cnnhealth.com.
COLLINS: You know, I've had pretty good luck with this, but I don't know that everyone has a doctor who is pretty aware of how much prescription drugs cost. When they go ahead and prescribe them to you.
COHEN: Right. The experts I've been talking to say doctors really don't know. They really don't know. For a couple of reasons. One, every patient is different. Some people have insurance, some people don't. Everybody's insurance is a little bit different.
COLLINS: Yes.
COHEN: So don't rely on your doctor. Don't assume, oh, if it my doctor is handing me a prescription, it must be for the cheapest thing that will work for me.
COLLINS: Yes. Right, right.
COHEN: No. They don't know.
COLLINS: Yes, not always. People have so many concerns, though. I mean, from where to get their prescription drugs, the best health care, all of that. The big questions to little. Where is the best place to go?
COHEN: Freeadvicefridays. That's the best place. That's what we're going to be doing tomorrow and every Friday -
COLLINS: And it's free.
COHEN: It's free. You just have to send us an e-mail. Empoweredpatient@cnn.com on Fridays, we will be asking your questions about how best to take control of your health care. Prescription drugs is just one area. So send that e-mail to empoweredpatient@cnn.com.
COLLINS: All right. Very good. Our senior medical correspondent, Elizabeth Cohen, thank you so much.
And now we are taking on the economy this week. Helping you figure out and handle the financial meltdown that's changing your life. We've got what you need to know to get to get to the tough times successfully. "Road to Rescue," a CNN survival guide.
Wall Street's crushing losses. They have taken a big bite out of all of our retirement funds. And it may be retirees who are hurting the most. Some are being forced to go back to work to make ends meet.
Here now, our Carol Costello.
(BEGIN VIDEOTAPE)
CAROL COSTELLO, CNN CORRESPONDENT (voice-over): Eva Coffey is 60 and back at work. She drives a school bus, and while she enjoys it, it's not what she expected to be doing now.
What would your life be right now if everything had gone as planned?
EVA COFFEY, RETIRED WORKER: I would have a smile on my face. I would be working at the clinics every day. I would be volunteering at the school every day, and I would just be on a daily basis doing my own thing and having a ball.
COSTELLO: In short, Coffey would still be a retired accountant, but she, like a growing number of people between 55 and 65, finds herself on the job again.
DANIELLE HOLALND, AARP: Many people have done the right thing. They have saved their money. They've had a plan in place. Yet here they are, going into their golden years, so to speak, and they have to keep working. They have to come back to work. Their retirement plans are kind of upside down.
COSTELLO: Like Coffey.
COFFEY: This is just my house.
COSTELLO: Coffey's retirement account is in free-fall, losing $53,000 so far. Plan B is worrisome, too. Coffey and her husband own two town homes. Their combined value, though is down some $400,000. So what is your goal to rebuild, because, you know, so many people have lost almost half of what was in their retirement fund.
COFFEY: That's what we've done.
COSTELLO: So you - can you possibly make that up?
COFFEY: You can't make it up. But what you can do is, you can minimize your loss.
COSTELLO: So, in addition to driving a school bus, Coffey plans to get another part-time job. It won't be easy. According to government statistic, the unemployment rate among people 55 and older is the highest it's been since 1984.
COFFEY: Thank you, John.
COSTELLO: Still, coffee is doing the right things: Looking for work, and leaving her investments alone.
DANIELLE HOLLAND, AARP: The 55 to 60 years old, you will have some time, given the markets, to recoup some of your money. So, AARP has been encouraging people to take withdrawals from your 401(k) as a last resort.
COSTELLO: Coffey hopes that's true. For now, she considers herself a survivor, one who still believes in the American dream.
(END VIDEOTAPE)
COLLINS: Older workers working longer. Retirees going back to work. The financial crisis and our shrinking retirement income are changing the dynamics of the workforce. In today's "Snapshot Across America" -- easy for me to say -- we're talking with Rosemary Haefner of CareerBuilder.com and Beverly Goodman, senior editor of "SmartMoney."
First, Rosemary, I want to go to you, because I know your company commissioned a survey of workers nearing retirement. The survey was really interesting in the results. What did you find out?
ROSEMARY HAEFNER, SENIOR CAREER ADVISER, CAREERBUILDER.COM: Very interesting. So, the workers we surveyed, 60 years or older, 60 percent said that they're going to be delaying their retirement. So, that's significant. Even more so, 73 percent said that delay is going to be at least six years before they can actually settle down and retire.
COLLINS: Wow. So, well over half of the people that you talk to say, yes, I've got to push this wonderful, golden years of retirement off, and I'm going to do it for at least six years. What does that say in the bigger picture?
HAEFNER: Bigger picture is, obviously, we know that the economy is struggling right now. But the hardest-hit seem to be those that were just on the brink of retirement, and so now they're back in really tough job market, competing against a lot of people that are also unemployed. Other situations are that they just need to talk with their employers about staying on longer than what they originally planned, so...
COLLINS: Yes, because is that always...
HAEFNER: ... there's a lot of...
COLLINS: Sorry. Is that always possible?
HAEFNER: In some cases, it is. And what we're really advising those mature workers is, start talking about it now with your employer. I think a lot of companies can see that there's value in that knowledge that the more experienced worker has. And they need to be very competitive when the market turns back up. One good way is to be able to retain those mature workers and use that experience to train some of the newer workers that are entering the workforce.
COLLINS: I hope so. But it does seem like there's always a push for new blood.
HAEFNER: Push for new blood, there is. But, again, you know, I think companies are being smarter in the last couple of years to say, in order to be successful, we do need to have people at different experience levels. We really do need to collaborate, work as a team, and so the mature workers are really a cornerstone of that strategy working.
COLLINS: OK. Understood. Interesting survey, indeed. Beverly Goodman, I want to bring you in now because I know that at "Smart Money," you guys actually did a series called Parents in Crisis. And you yourself are a child, and you are dealing with your own parents and having conversations with them about what to do in retirement and about retirement. How'd those conversations go?
BEVERLY GOODMAN, SENIOR EDITOR, "SMARTMONEY": Those are some tough conversations.
COLLINS: Yes.
GOODMAN: My mother and I have a very good relationship, and so those conversations sort of started in bits and pieces a way back. But, you know, even a financial journalist needs way more information...
COLLINS: Yes.
GOODMAN: ... than most parents are willing to share with their kid. And obviously, a professional financial planner would need even that much more. So, it's really hard to approach from sort of along the margins, just these bits and pieces that a lot of conversations are between parents and children.
COLLINS: Yes. It's a little nerve-racking, though, thinking that even someone like you, who has the experience you have, has a tough time talking with their parents about these types of issues. When do you start? It sounds like it shouldn't wait until they're already in retirement. You should start these conversations years and years before.
GOODMAN: Yes. Ideally, you start way before retirement so you know what the plan is to get to retirement, and you know what the plan is if something as we saw these past few months happens. A lot of people feel like their retirement plans have been thrown off track, as you were saying earlier. It's not necessarily the case. Sometimes you just need a dispassionate conversation and a thorough examination of your financial situation. And a lot of people have realized -- my mother was one of them -- that she was actually a bit better off than she thought. You know, it's easy to see the headlines and see your portfolio shrinking, but when you take a step back and think about your long-term plan, things look a little better.
COLLINS: How do you keep them from panicking?
GOODMAN: That's not easy. But, again, you really have to think long-term. You have to think -- my mother, for instance, loves her job and would love to work for another five years. That right there builds in a lot of time for her portfolio to recover.
It's also a good time to start thinking about, you know, risk assessment, and a lot of people were a bit more heavily invested in equities than they really maybe should have been or really were comfortable with. And that's, you know -- it's not a bad time to sort of re-evaluate, do a gut check on your portfolio.
COLLINS: Yes, obviously what I hear both of you saying is keep the communication going. And do your research, definitely. Thanks so much to the both of you. Rosemary Haefner of CareerBuilder.com and Beverly Goodman of "SmartMoney." Thank you, ladies.
GOODMAN: Thank you.
COLLINS: From the moment he was nominated, Timothy Geithner has been underfire, but he has the biggest of supporters, the man in the Oval Office.
(COMMERCIAL BREAK)
COLLINS: There's lots of economic news happening right now on Capitol Hill, and we are watching all of it. A House panel is looking to eliminate waste in projects funded by the multibillion-dollar economic recovery and reinvestment plan. Also, a House committee looking into federal tax compliance in the multi-billion-dollar banking bailout. And later today, a House vote expected on a bill calling for a 90 percent tax on some employees whose companies got at least $5 billion in government bailout money.
President Obama says he takes responsibility for the AIG bonus scandal, and he is defending Treasury Secretary Timothy Geithner.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Nobody's working harder than this guy. You know, he is making all the right moves in terms of playing a bad hand.
(END VIDEO CLIP)
COLLINS: CNN White House correspondent Dan Lothian joing us now with details. Geithner certainly has the support of the president, but is that enough for a Treasury secretary who walked in on shaky ground, and really has been constantly under fire, Dan?
DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, you know, it's really difficult to predict what will happen in the future. But as you heard there, the president really does believe that's enough, that he's really standing behind him in these difficult times.
But there is a lot of pressure on this administration around Timothy Geithner up on Capitol Hill. At least a couple lawmakers have said that he should resign. But, again, the president really standing behind him, as we saw yesterday, even saying that he needs to provide him with the support that he needs in order to tackle all of these problems.
COLLINS: Yes. And the latest problem, obviously, these bonuses for AIG, the retention clauses. Why the administration wanted this clause in there in the first place? Because they did come out and say, we knew about it, the Treasury secretary -- excuse me, the Treasury Department.
LOTHIAN: Right. They really knew about it. And the concern was that if they didn't have it in there, there might be lawsuits coming from these AIG employees and perhaps even others in the financial industry. So, they sort of made this calculation, according to senior administration officials, that it was better to deal with it this way than to spend all of this money on lawsuits, money they felt could have even cost more than the bonuses themselves.
COLLINS: The lesser of two evils...
LOTHIAN: That's right.
COLLINS: ... is that what we're talking about here?
LOTHIAN: That's right.
COLLINS: All right, Dan Lothian, appreciate that. Thank you.
Tonight at 8:00, a reminder here, Treasury Secretary Timothy Geithner in a rare interview with CNN's Ali Velshi, and an exclusive behind the scenes look how Geithner and his team plan to lead us down the "ROAD TO RESCUE." A can't-miss interview tonight at 8:00 on "CAMPBELL BROWN: NO BIAS, NO BULL." That's only on CNN.
A busy day of cruising in California for President Obama on his 59th day in office. He'll tour an electric vehicle center in Pomona. There, the president will deliver remarks on the economy and his energy programs. Then at 4:00 p.m. Eastern, Mr. Obama will answer questions in a town hall meeting in Los Angeles. California Governor Arnold Schwarzenegger expected to attend.
And tonight, the president has a date with Jay Leno. Mr. Obama will be Leno's guest on "The Tonight Show." Vice President Joe Biden in Minnesota today. He'll hold a town hall-style forum at a bus plant in St. Cloud. His big focus, ways the middle class can benefit from the $787 billion economic recovery plan. No decision today on whether Bernard Madoff remains behind bars until his sentencing in June. An appeals court plans to issue a ruling now after hearing arguments this morning.
Prosecutors warn Madoff is a flight risk. But his defense attorney says a judge made a legal error when he ordered Madoff jailed. Madoff, as you remember, pled guilty last week to swindling investors. He now faces up to 150 years in prison.
Wars are not cheap, and the U.S. is on two fronts. A look at the cost and what lies ahead.
(COMMERCIAL BREAK)
COLLINS: The Federal Reserve is going on a huge shopping spree, with plans to spend more than $1 trillion. The goal? To help the ailing housing market. Susan Lisovicz is at the New York Stock Exchange now with more details on this. Hi there, Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Heidi. Well, it was dramatic indeed. The Federal Reserve has vowed it would use all available tools, and it certainly has been using tools that has never used before. What the Fed is doing is buying $750 billion in mortgage securities. So, it's expanding its purchase of those agency mortgage- backed securities from Fannie Mae and Freddie Mac.
It's also, for the first time, buying $300 billion in long-term Treasury bonds. The goal is to reduce mortgage rates. So, to bring interest rates down on long-term loans and to get credit flowing again.
We did see an instant reaction in the bond market. The yields on the ten-year note yesterday fell by the biggest amount since the 1987 crash. And we should remember that mortgage rates are tied to ten- year Treasuries.
It certainly also boosted stocks yesterday, but we're not seeing a big rally.
COLLINS: No.
LISOVICZ: Well, we saw a positive open. The Dow, well, it's flat right now. The Nasdaq is still up a third of a percent, Heidi.
COLLINS: All right, so, back to the mortgage rates. How low can they really go?
LISOVICZ: Well, they can certainly go lower. Bankrate.com says a 30-year fixed now stands at 5.15 percent. But some analysts say it could fall to 4.5 percent, and that would bring it down to the lowest level since World War II.
We have seen this before tied to other Fed moves. In November, you may recall, the Fed announced plans -- that was when it first announced plans -- to buy mortgage-backed securities in a big way. The 30-year fixed eventually fell to 4.96, and that was the lowest at the time since Freddie Mac began keeping track in 1971. The idea, though, is still to make credit available. And for credit to be available for consumers to have access, you need to have confidence, both here on Wall Street and elsewhere on Main Street -- Heidi.
COLLINS: Absolutely. And certainly begs the question: Where is that $1 trillion coming from and can you avoid any type of inflation? I mean, to me, these seem to go hand-in-hand.
LISOVICZ: Two good questions, Heidi. No tax dollars are used for this. In effect -- and Ben Bernanke has said this. The Fed is printing money. But the downside of that is that it could bring inflation. It could dilute the value of the dollar.
And, in fact, the dollar hit a two-month low yesterday against the euro, and it sets the stage for inflation. Oil right now, oil prices are up nearly 7 percent, trading above $51 a barrel, and gold prices are up 7 percent, trading above $950 an ounce. But clearly, the Fed's first concern is to promote economic recovery. Inflation is something that policymakers feel they can deal with down the road.
COLLINS: Very interesting. All right, Susan Lisovicz, thank you.
LISOVICZ: You're welcome.
COLLINS: Looking to cut your energy bills? When money is tight, buying new energy-efficient appliances may not be at the top of your list. But they can save you money in the long run. CNNmoney.com's Poppy Harlow has our "Energy Fix" right now. Good morning to you, Poppy.
POPPY HARLOW, CNNMONEY.COM: Hey there, Heidi. Well, yes, we're all about saving people money these days, and the EPA insists Energy Star appliances will actually pay for themselves in five years, believe it or not, saving the average homeowner about 75 bucks a year. Add it up, and it makes sense.
They're really out there at every price point, OK, not just the fancy models you may have seen. So. when you go into a store and want to buy a new appliance, ask the sales associate to show you the older models, as well.
And Heidi, ask yourself, right, do I really need an icemaker? Because believe it or not, those models, an icemaker in your fridge, they use 20 percent more energy. And Heidi, they can cost as much as $250 more. So, I mean, ice is great, but do you really need an icemaker in your fridge? I didn't know how much more it cost.
COLLINS: Yes, I didn't know that, either. Specifically, though, which Energy Star appliances are the best? And we're talking about bang for your buck. It sounds to me like you don't always have to buy the brand-new ones?
HARLOW: You know, what you want to do, look at what you have in your home and probably replace your oldest model, OK? Whirlpool tells us they're replacing a 20-year-old refrigerator with an Energy Star one, Heidi, that's going to save about 200 bucks a year. They say the -- the EPA says replacing a 10-year-old washing machine can save 145 bucks a year if you buy an Energy Star one. So there can be a lot of savings there.
COLLINS: Yes. I guess I was just saying, you know, there's a lot of Energy Star equipment, if you will, out there. You don't always have to buy the newest model of Energy Star, right?
HARLOW: Exactly. Exactly. Exactly.
COLLINS: How do you find these deals?
HARLOW: A couple of ways. First, again, when you go in the store, ask the sales associate what's on sale, or ask them, is a sale coming up in a week or month or something. And also go online to the Energy Star Web site. You can enter your ZIP code right here and then tell them -- just enter what you're looking for -- a clothes washer, a dishwasher, a refrigerator -- and they'll bring up a bunch of rebates. Believe it or not, you can just take those in to the local store and use those rebates.
COLLINS: You also want to contact your local power company. Ask them about rebates, how they can save you money. A lot of power companies will haul away your old fridge for free, for example. And there is also government rebates in 15 states. That's in the form of sales tax holidays on these Energy Star appliances.
And the stimulus bill, Heidi, as we talked about, it sets aside $300 million for Energy Star rebates. We don't know the details of that yet, but as soon as they're laid out, we'll bring them to you. So, you may want to wait until that kicks in to make these big purchases, Heidi.
COLLINS: Yes, good idea. All right, CNNmoney.com's Poppy Harlow. Thank you, Poppy.
HARLOW: You're welcome.
Stocks, health, tax breaks, money for college. Find out about all that and more. Just check out our Web site at CNNmoney.com. Lots of information there.
Among our "ROAD TO RESCUE" stories, this is one about a road to success. Three moms with a dream that's become reality, even in these tough times. Here now, CNN's Reynolds Wolf.
(BEGIN VIDEOTAPE)
REYNOLDS WOLF, CNN CORRESPONDENT (voice-over): It began in 2006. Three friends abandon their corporate jobs with one simple business idea, to create an apparel company that celebrates motherhood. Drawing on their separate strengths, PeaceLoveMom was born. And now three years later, amidst a grim recession, their company's not only staying afloat, it's flourishing.
UNIDENTIFIED FEMALE: You know, we've gone from, like, zero customers to over, I guess, 350 retails from coast to coast.
WOLF: They say that kind of growth comes from a belief in their message and their product.
SUZANNE SIMKIN, PEACELOVEMOM OWNER: Besides developing a great product that everyone wants, I think we know who our customer is and what they want. And we are going after that customer and matching our product with their needs.
WOLF (on camera): You have to have something that's creative. You have to have something that's really neat. Where do you get your ideas?
KAREN EDELBERG-GOLD, PEACELOVEMOM OWNER: You know, we look to what's trendy, what's interesting, and just also try and put a unique spin on it, too.
WOLF: And they credit that unique spin to their diverse opinions.
SIMKIN: I think that's what makes us successful, because we can all look at the business differently, then put all the pieces together, and then make the best decision we can to be a successful business.
WOLF: A professional transformation was a voluntary option for these three entrepreneurs. But with jobless rates approaching record highs, it is a must for many.
(on camera): And someone that is thinking about starting their own business, are there any warnings that you would give them?
SIMKIN: You have to absolutely be a strong time manager. You have to make sure you are highly organized. And you have to be able to handle stress. At the end of day, if the cash didn't come in, you're not getting paid.
WOLF (voice-over): Perhaps the most important thing, Simkin says, is to love what you do.
SIMKIN: You have to get up and think this is the greatest thing ever. I get up every morning and say, oh, PeaceLoveMom. I love PeaceLoveMom. I might have a bad moment, but I never have a moment where I say I don't like what I do.
WOLF (on camera): Like this?
(voice-over): And it's that mindset, they say, that allows them, even in these tough economic times, to keep the orders coming in and the products going out.
(END VIDEOTAPE)
COLLINS: I kind of wanted to see Reynolds in the PeaceLoveMom T- shirt. Didn't you?
A fragile economy and fighting on two fronts. A look at what the wars in Iraq and Afghanistan are costing you, and who's benefitting.
(COMMERCIAL BREAK)
COLLINS: Knowledge is power. And we're trying to strengthen your hand during the high-stakes recession. All this week, we're bringing you stories under our "ROAD TO RESCUE" banner. And we're taking you all across the country, too, watching your stimulus dollars at work in Chicago, Oklahoma City and a small town in Texas.
Critics call it an earmark, but Chicago officials are spending $4 million on federal money on a facelift for the city's deteriorating lake shore. The president's hometown is getting nearly a billion dollars in economic recovery package money. A lot of that same money is going towards construction projects, but hold the sexual stereotypes. In Oklahoma City, women are donning hard hats to claiming their fair share of federal cash.
And soldiers at Fort Hood, Texas are catching a break. Many of them deployed early and were victims of the housing collapse. Now under the economic recovery package, some will get up to 95 percent of their home's value.
Well, today marks six years since U.S. troops went into Iraq. They've been in Afghanistan even longer. Some say it's too expensive to keep them there. Others say we cannot afford to go. Here's our Pentagon correspondent now, Barbara Starr.
(BEGIN VIDEOTAPE)
BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): In South Carolina, Force Protection, Inc. builds and wraps (ph) the bomber assistant vehicles that protect troops in Iraq and Afghanistan. For the company and its workers, the war has been a boon. Since 2003, the stock price has nearly quadrupled. Annual profits are up more than 600 percent.
But what about the fragile U.S. economy and the nearly $1 trillion spent on the wars? Most of the spending has been simply added to the ballooning $11 trillion national debt. It's money the U.S. has to largely borrow from overseas and pay back with interest. And it's more than $10 billion a month some say could have been pumped into the economy.
ROBERT WORK, CTR. FOR STRATEGIC AND BUDGETARY ASSESSMENTS: Which could have been used for any number of things: infrastructure improvement, improved schools, education, whatever you wanted to use it for. It was just an opportunity lost.
STARR: But some conservative economists are holding to a more traditional view that war actually increases the demand for goods and services.
DIANA FURCHTGOTT-ROTH, HUDSON INSTITUTE: The war in Iraq did that. But what it also did, most importantly, is it kept us safe from further attacks. STARR: And what lies ahead? Even if it the U.S. left Iraq right now, the spending won't end. It could take another 15 to $20 billion a year for several years to replace worn-out and damaged equipment.
(END VIDEOTAPE)
COLLINS: It costs $775,000 per year to put one soldier or Marine in Iraq or Afghanistan. That's three times what it has cost during any other war the U.S. has fought.
I'm Heidi Collins. Join us again tomorrow morning starting at 9:00 a.m. Eastern as we continue our "ROAD TO RESCUE, CNN SURVIVAL GUIDE." Tomorrow, we check in for an update with some of our previous guests, see how they're doing, uninsured and unemployed. We'll find out what's happening for them now.
For now, though, CNN NEWSROOM continues with Don Lemon.
