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Detoxing Our Banks; Plea for Sandbagging Volunteer; Pres. Obama's Hardest Decision; Back in Campaign Mode; Chaplain Preaches Money Management
Aired March 23, 2009 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HEIDI COLLINS, CNN ANCHOR: Happening right now. The plan to rescue our banks. How is it all help you? The CNN Money team breaks it down. Asian markets already bullish before the plan was out. Will Wall Street also get a bounce? We count down to the market opening in just 30 minutes. It's Monday, March 23rd. Hi, everybody. I'm Heidi Collins You are in the CNN NEWSROOM.
We begin with breaking news this morning. What we've all been waiting to hear, details about the government's plan to get credit flowing by buying banks bad assets. Treasury Secretary Timothy Geithner just unveiled the program. Our Suzanne Malveaux is joining us now from the White House with details. So Suzanne, what is the main point now of this plan?
SUZANNE MALVEAUX, CNN CORRESPONDENT: The main point obviously to use initially $75 to 100 billion to buy up these toxic assets and with the goal, the ultimate goal in mind, potentially, to value that at $1 trillion worth of those bad assets.
How is this going to work? Essentially, it's a partnership between a private firms, private companies, and the government. These banks are going to go ahead and auction off these bad assets and the government is going to pick up 50 percent. Subsidize 50 percent of the cost. Obviously, that means there is a risk of burden to the government and that means to taxpayers as well.
So I put the question to White House council adviser Christina Romer this morning, essentially, asking her what if this whole thing doesn't work and the taxpayers lose out on this? What happens next? Here's how she responded.
(BEGIN VIDEO CLIP)
CHRISTINA ROMER, DIRECTOR, COUNCIL OF ECONOMIC ADVISERS: I think the key thing is if this one doesn't work, it's like any policy, you take your best shot. If it doesn't work, you adapt. You innovate and you come up with something that does. You know? We have thought about this a lot. We've talked to investors. We've tried to make sure that there's a market.
If it doesn't work exactly as planned, we'll tweak it.
(END VIDEO CLIP)
MALVEAUX: So, Heidi, obviously, there is an acknowledgment of the administration that there is a risk involved here, that this is something new they they're going to try but ultimately, you know, this is a part of this trial and error process. They are certainly hoping, they have faith here, that it's going to work but they ultimately don't know how this is going to turn out.
COLLINS: Yes, I wonder, too, how they're going to sell it. I mean you mentioned risk to the taxpayer and risk to the government as well. But then there's also the risk to the companies who would be buying.
MALVEAUX: And there's an acknowledgment from White House officials I spoke with this morning, including Miss Romer, that there is a crisis of confidence here when you think about it, whether or not Wall Street is confident with the government, taxpayers confident with the Obama administration.
You've got Timothy Geithner notably who's not doing something on camera this morning but giving kind of a pen and pad briefing...
COLLINS: Yes.
MALVEAUX: ... to outline these details because there were mixed reviews, quite frankly, about how the market was going to respond to some of these details so we're going to have to see. They are obviously going to make the case. They've got to deal with executive compensation after all the outrage last week over AIG bonuses.
All these things, the administration acknowledges they have to address to instill more confidence in taxpayers, as well as Wall Street.
COLLINS: Yes. Suzanne Malveaux, sure do appreciate that. Live from the White House this morning, thank you.
The markets upbeat about the bank rescue plan. All the major Asian markets closed higher today. European markets opened up on the positive side. Wall Street's futures indicate a possible bounce at the opening bell. We, of course, will be there at the bottom of the hour for that.
Also, Christine Romans is joining us in just a few minutes with more on the plan to get that credit flowing to you.
Now we want to take you to those two deadly plane crashes on opposite sides of the globe.
In Montana, 14 people are dead. Their plane nose-dived into a cemetery just short of an airport runway. CNN's Dan Simon is live at the scene this morning.
In Tokyo, a deadly gust of wind may have caused a fiery crash of a FedEx plane. Both people aboard that plane, the pilot and co-pilot, were killed despite the heroics of people on the scene. We're going to have a live report from Tokyo in just a couple of minutes.
Let's begin, though, with the tragedy in Montana. The airplane was a single engine turboprop. The day its flight began in Redlands, California and was on final approach in Bert Mooney Airport in Butte. It crashed and burned just 500 feet short of the runway. Fourteen people are dead including seven children.
Let's get the very latest now from the scene of the Montana plane crash. CNN's Dan Simon is in Butte this morning.
(BEGIN VIDEOTAPE)
DAN SIMON, CNN CORRESPONDENT (voice-over): The single-engine turboprop plane, a Pilatus PC-12, was just 500 feet from the runway in Butte, Montana when witnesses say it crashed straight into the ground.
MARTHA GUIDONI, CRASH WITNESS: I've never seen anything like this in my life. We were just taking a ride and all of a sudden, we watched a plane just take a nose dive right into the cemetery.
SIMON: The FAA confirmed seven children and seven adults were on board. No one survived. Federal officials say the group might have been headed to a ski trip. But the destruction at the crash site leaves very few clues.
GERRY O'BRIEN, EDITOR, THE MONTANA STANDARD: One of the eyewitnesses who ran across the street in there and took some photos said he was about 20 feet from the wreckage. It had created a large pit when it had augured in and it just disintegrated. There wasn't much left of the plane, of the wreckage.
SIMON: The aircraft began its journey in San Diego and made a few California stops. The last of which was in Oroville where it refueled before heading to Bozeman, Montana. The FAA says the flight diverted to Butte where it went down in the Holy Cross Cemetery just 500 feet from the airport. The cause of the crash is still unknown.
BEN BERMAN, FORMER NTSB INVESTIGATOR: The loading of the aircraft is one of the things the investigators will be looking into. They will be looking into, you know, whether there was a possibility of engine failure that could have brought the airplane down, as well as many other possible crash causes, including weather and pilot performance and all kinds of things.
(END VIDEOTAPE)
COLLINS: Dan Simon is joining us now live.
So, Dan, you being at the scene, just wondering if investigators have already started going through the wreckage looking for clues?
SIMON: Well, first of all, let me tell you where I am. The cemetery, the crash site, is about 300 yards away from me and right now it's being protected by local law enforcement until NTSB actually gets on the scene. We are told that they arrived last night, but just in terms of the way these things operate, usually what happens is -- you can tell, it's still kind of dark here, but as soon as you get more daylight, the NTSB will start examining the wreckage site. This is the way it's typically done. They'll start removing the bodies. Obviously, a very grim site there, Heidi. As you know, 14 people dead, seven adults and seven children. And then they'll start talking to witnesses in the area, asking them exactly what they saw, and perhaps, perhaps when they start looking at causes here, those witnesses will be helpful in ultimately determining what happened here, Heidi.
COLLINS: Yes, boy, it's just a, it's just a terrible story. And, you know, we talk a lot about that type of plane and the weight and how much it could really hold. That is something, I'm sure, investigators will look into.
Also, Dan, could they be looking at weather as a factor here?
SIMON: Well, as you can see, still very much winter here. A little bit of snow, but we're told actually at the time, and this is from our CNN meteorologist, Jacqui Jeras, that at the time of that crash, 3:00 yesterday afternoon, it was about 40 degrees and partly cloudy skies but visibility for the most part was pretty good so at this point, they're not looking at weather as a possible cause here, Heidi.
COLLINS: All right, Dan, well, we know that you are there and trying to learn as much as possible. Sure do appreciate it. Check back with us if you need to do that with new developments coming out of Montana.
Flames shooting higher than the trees, wreckage strewn in all directions. Dramatic descriptions from witnesses who were on the scene almost immediately.
(BEGIN VIDEO CLIP)
GUIDONI: And I have never seen anything so scary in my whole life. When you see it on TV, you go, oh, my god. That's awful. When you see it in real life, you go, oh, my god. That is more than awful.
It didn't look like a big plane. I can't see how it had 17 people on it. It didn't look that big. But who's to say? Who's to say? And the fact that we lost those kids and we lost those babies is a bad thing.
I just hope that God takes good care of these people because they deserve it.
(END VIDEO CLIP)
COLLINS: We also have images captured by CNN iReporters. Dani Rollison and her husband Ken took these pictures. As you can see the plane's wreckage is scattered in the Holy Cross Cemetery.
If you would like to hear from other witnesses and see more footage from the scene, just go ahead and head to our Web site at CNN.com. Alaska's Mt. Redoubt is shooting at the clouds when the volcanic eruption started and what geologists are telling people who live within the volcano's reach.
ROB MARCIANO, AMS METEOROLOGIST: Ash fall advisories being issued by the National Weather Service and Alaska Airlines canceling flights to that airport. We'll have a complete rundown on what's going on up on that volcano when the CNN NEWSROOM comes right back.
(COMMERCIAL BREAK)
COLLINS: We are focusing this hour on the bank rescue plan just unveiled by Treasury Secretary Timothy Geithner. CNN's Christine Romans is joining us more to talk a little bit more about this.
Christine, first off, how is this going to work? And we're talking about possibly a trillion dollars here.
CHRISTINE ROMANS, CNN CORRESPONDENT: Yes. How this is going to work is essentially the government with our money is going to try to attract private investors to create a huge investment vehicle to buy up these bad assets off the banks' books.
Government is going to put up, Heidi, up to $100 billion. The goal to buy back at least 500 billion of these, maybe a trillion of these assets. It's a public/private partnership. That means the taxpayers and the government are going to bear a lot of the risk but they've got to have the expertise and the money, too, from private financiers and Wall Street basically to do this.
The government going to finance up to 50 percent. Some people think it might be more like 80 percent, but this is, Heidi, cleaning those toxic assets up off the banks' books and trying to put them someplace...
COLLINS: Yes.
ROMANS: ... in a big investment vehicle so they can be traded again and so that market can be...
COLLINS: They've....
ROMANS: You know, re-energized.
COLLINS: They've got to have buyers, though.
ROMANS: They do.
COLLINS: For this.
ROMANS: They have to have buyers here. And the Treasury Secretary in an op-ed in "The Wall Street Journal" said look, we need to expertise of Wall Street. We need to share the risk with Wall Street, with the private sector rather. He said, "Simply hoping for banks to work these assets off over time risks prolonging the crisis in a repeat of the Japanese experience." The Japanese experience, as you know very well, Heidi, was 10 years of recession and no growth and it was very, very painful. No one wants to repeat that here in this modern economy.
COLLINS: Boy, that's for sure. So there's going to be a lot of challenges that this administration is going to face trying to make this whole public/private partnership work.
ROMANS: Yes.
COLLINS: And also interesting to me how AIG still kind of weaving its way through here because they are frightened.
ROMANS: I know. And one source that I was just talking to, Dan Clifton, the strategic research partner in Washington, he was telling he wishes this plan to come out before the AIG mess.
COLLINS: Yes.
ROMANS: Because it actually complicates it. Look, you have to attract the private investors and convince them Congress after the fact won't come after them and say, oh no, you used good government loans to get all of the profits from this and so now we're going to take those back.
You have to convince the private investors to get in there, you know, and try to grow the money and fix the problem.
Also, the executive compensation limits. I mean, is that going to restrict any kind of investment or are they going to have to just wave those altogether for these new financiers who, frankly, will be less inclined to participate if there are executive compensation limits.
And public support. You have to convince -- and the administration, Heidi, has to convince the public, especially after last week in the outrage over these AIG bonuses, you have to convince the public that you need private money, that you need Wall Street expertise, that you need financiers, rich, wealthy, savvy financiers to help fix this problem.
COLLINS: Yes. Boy, those are a lot of challenges, right?
Christine Romans coming to us live from New York. Thanks, Christine.
To this now. Alaska's Mt. Redoubt is erupting. Geologists say it began spewing flumes of ash and steam high in the sky about 2:30 this morning.
Here's what we know. The 10,000 foot peak is about 100 miles southwest of Anchorage. Multiple eruptions started about 10:38 p.m. Sunday, Alaskan time. That's about 2:30 a.m. Eastern.
It blew volcanic ash 50,000 feet high. An ashfall advisory was in effect for communities in the area until 4:00 a.m. this morning, Alaskan time, or 8:00 a.m. Eastern. Geologists say the volcano has been moody for months -- we've been telling you that here -- with periodic increases in seismic activity. It last erupted 20 years ago.
Meteorologist Rob Marciano is standing by just waiting to talk about this one. And yes, we have been talking about it for a while, kind of waiting for this to happen. So here we are or we're still waiting?
MARCIANO: No, no. It's happening. And Redoubt is definitely not disappointing. We've had four eruptions since this thing began. And actually just a few minutes ago via Twitter, we got this update from Alaska Volcano Observatory. Another large explosion is occurring at Redoubt right now.
So they anticipate this activity to continue for the next several hours, probably several days until it kind of releases that pressure and sun up to come in about three hours so hopefully we'll be getting some pictures from some of our affiliates there.
All right. Check out this thing. This actually will tell you where that ash is going. Ashfall advisory has been issued, but likely -- unlikely to get to Anchorage which is about 100 miles to the northeast of where Redoubt is. Winds will carry that ash toward Anchorage at about 40,000 feet so that's pretty high, even higher than most jets will fly.
But elsewhere, both to the north and northwest, will lower level winds and those are less populated areas. So that's a good news there.
All right. We'll do a little zoom in and we'll give you a little bit of a lay of the land. This is along the Alaskan inlet there where the Cook Islands are. This thing, as you mentioned, about 10,000 feet tall.
The northern side is where most of this activity has been, in the northern vent of the drift glacier is where all this steam has been coming out the past few days and now that's likely where that eruption is happening and this glacier cut or that -- part of the mountain cut by that glacier there.
So about 20 years since this thing last poked its head out, Heidi, and it will continue to do that -- well, we just don't know actually.
COLLINS: Yes.
MARCIANO: So it will be interesting to see and hopefully we'll start to get some pictures from this area. As luck would have it there is a decent storm happening southwest of that area so whether it's complicating things to say the least. And we have quite a bit of weather here in the lower 48 as well. We'll talk more about that in the next half hour.
COLLINS: I know. Yes. Yes. Very good. All right. We're going to get back to you with that. Rob, thank you.
MARCIANO: You bet.
COLLINS: In fact, if you were anywhere near the scene and have any pictures or videos to share with us, talking about the volcano here, you can go ahead and send them to ireport@CNN.com. We're going to talk more about this coming up shortly in the program.
In Japan now. High winds are suspected in a fiery crash of a FedEx cargo plane. Both American crew members aboard were killed. And the catastrophic crash landing was caught on tape.
CNN's Kyung Lah has the details.
(BEGIN VIDEOTAPE)
KYUNG LAH, CNN INTERNATIONAL CORRESPONDENT (voice-over): A traffic camera captured the moment of impact. A FedEx cargo plane en route from Guangzhou, China bounced against the runway then bounced again, tilting to the left, then bursting into flames. The plane flipped over.
Fire crews managed to pull out the two American crew members but the hospital said the U.S.-based pilot and co-pilot died from their injuries.
For hours, wreckage smoldered on the long (INAUDIBLE) Narita's two international two runways. Many international flights in and out of the Tokyo's biggest airport were canceled.
TOM CROWELL, AMERICAN TRAVELER: From what I understand, the larger airport have to use the big runway. And so our flight is going to Detroit so we have to wait until they say that the runway is usable before they can make a decision.
LAH: You can hear and see the wind conditions at the time of the crash. Gusts of 30 to 50 miles per hour. While investigators say it's still too early to determine the cause of the crash they believe strong winds may have played a role.
Aviation expert Jim Eckes draws comparisons to two prior crashes where the MD-11 flipped while landing. On July 31st, 1997 an MD11, also a FedEx cargo plane, bounced on landing at Newark International and flipped upside down. Two years later on August 22nd, 1999, a China Airlines' MD-11 crashed in Hong Kong during a rainstorm with gusting crosswinds. This plane also flipped upside down.
Eckes believes crosswinds can be particularly tough on the MD-11.
JIM ECKES, AVIATION EXPERT: Wind shear is a very tough thing for a pilot to handle and it sometimes can only last for a short period of time. Just a burst. The crews of FedEx are extremely well trained to land the MD-11 on simulators and they know exactly the problems that are associated with a crosswind landing.
(END VIDEOTAPE)
COLLINS: All right. Kyung Lah is joining us now live from Tokyo.
Kyung, what can you tell us about the investigation at this point?
LAH: Well, Heidi, it was still a very active scene at Narita International, Tokyo's largest airport. The wreckage is actually still sitting on Runway A so traffic in and out of the airport is still being affected especially some of those longer international flights like between Japan and the United States.
What the Japan's Ministry of Transport has been able to tell us is that there was actually a warning about the wind shear. The plane that landed just before this FedEx plane...
COLLINS: Yes.
LAH: ... radioed air traffic control to say that there is a wind shear problem and that air traffic control radioed the FedEx plane, the pilot of the FedEx plane, to say -- to give them that warning. That was just four minutes before the crash, Heidi.
COLLINS: Yes. Yes. Boy, we just keep looking at that video. It's so upsetting.
The NTSB is actually going to play a role in this investigation now, aren't they?
LAH: Two investigators from Washington, D.C. are actually being sent here as we speak. Those investigators will be assisting Japanese authorities and try to figure out exactly what happened. Again, they are going to look at wind but investigators tell us that they are not ruling anything out. That there might be human error involved, mechanical error so a number of factors is going to be looked after this investigation.
COLLINS: Absolutely. All right, Kyung Lah, live from Tokyo this morning. Thank you.
Oakland, California, devastated after four police officers die in a shooting. Now an outpouring of support as the community tries to figure out what happened.
(COMMERCIAL BREAK)
COLLINS: Shock and grief in Oakland, California after four police officers are killed over the weekend. A makeshift memorial has been set up outside police headquarters. People are leaving flowers and notes to share their condolences.
CNN's Kara Finnstrom tells us how it all happened and how the community is reacting.
(BEGIN VIDEOTAPE) MAYOR RON DELLUMS, OAKLAND, CALIFORNIA: It's in these moments that words are extraordinarily inadequate. We come together in shock, in grief, in sadness and sorrow at a set of tragic incidents that have caused the death of several of our police officers.
KARA FINNSTROM, CNN CORRESPONDENT (voice-over): Oakland's mayor and community are now mourning the deaths of four of their officers. 41-year-old John Hege, 40-year-old Sgt. Mark Dunakin, 43-year-old Sgt. Ervin Romans, and 35-year-old Sft. Daniel Sakai.
Police say the suspected gunman was also killed, 26-year-old Lovelle Mixon. Investigators say it all started with what appears to have been a routine traffic stop. That Sgt. Dunakin and Sgt. Hege were on motorcycles and tried to pull over a car.
Immediately afterward, emergency dispatchers received reports of officers down. Other officers then began an intense search for the suspected gunman. Police chief Howard Jordan says they tracked him to an apartment where he barricaded himself in.
HOWARD JORDAN, ACTING CHIEF, OAKLAND POLICE: When officers gained entry into the apartment they were immediately fired upon by the suspect with an assault weapon.
FINNSTROM: Two more officers were killed. Chief Jordan says officers then returned fire in self-defense killing the suspect.
Mixon was wanted on a warrant for violating parole on a conviction of assault with a deadly weapon and police say he had an extensive criminal history.
Many questions remain for a devastated police force and a community in grief.
BILL FELLS, WITNESS: When I arrived on the scene, I noticed two officers laying out there and they was crying. A lot of the backups came crying and everything. And it just was devastating.
FINNSTROM (on camera) : A lot of raw emotion in Oakland this weekend as an investigation gets under way as to exactly how and why those four officers died.
Kara Finnstrom for CNN, Los Angeles.
(END VIDEOTAPE)
COLLINS: The administration spelled out its plan to save our banks. About 45 minutes ago, there is an awful lot to digest. But we've got a team of experts to take us through the ins and the outs.
(COMMERCIAL BREAK)
ANNOUNCER: Live in the CNN NEWSROOM, Heidi Collins.
COLLINS: Wall Street rallies again. Stocks are coming off their first back-to-back weekly gains in nearly a year. Can you believe that? And, today, we are expecting the party to continue.
Susan Lisovicz is at the New York Stock Exchange now with details and what's sparking investors to buy.
There's the opening bell, Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: Perfect timing, Heidi. We're expecting triple-digit gains here on Wall Street as well. We saw big rallies in Asia and Europe and we're seeing a big rally, in particular, in banking stocks.
The government plans to help banks remove as much as $1 trillion in toxic assets from their books. If the plan works, banks will start lending again. And a healthy banking system should lead to economic recovery. It's that simple. Christine Romans will break down some of the details in just a few moments.
We talked about the rally that we saw overseas. We've also got more economic reports coming out in about half an hour on the housing market. The latest read on existing home sales. The broadest part of the market expected to dip slightly.
And in corporate news, more worries about the nation's biggest automaker. Some of GM's bondholders warning the government, that the automaker may be headed toward Chapter 11. And a letter to the Treasury and President Obama's auto task force, financial advisers expressing worries that GM survival plan won't be enough to keep it out of bankruptcy court.
And in the first minute of trading, check it out. Triple digit gains, following, as you mentioned, Heidi, the first back-to-back weekly gains for the three major averages...
COLLINS: Oh, look at that.
LISOVICZ: ...in nearly a year. And that...
COLLINS: Oh, yeehaw (ph)! You brought the cow bell!
LISOVICZ: I have not used the cow bell in probably about a year.
COLLINS: I know. But it feels so good, doesn't it? Ring it again.
LISOVICZ: Here we go! Let's hope I ring it at the closing bell.
COLLINS: Yes. Let's, let's -- we started off with the bell and we'll end with it. I hope so, anyway. All right, Susan, sure do appreciate it. Thanks so much.
LISOVICZ: Talk to you later.
COLLINS: As Susan was saying, the Obama administration laying its plan on the table to save our banks. The aim is to buy up at least $500 billion in those bad assets like those subprime mortgages which made defaults. Now the plan would set aside 75 to a hundred billion to get the ball rolling. Then the government would partner with private investors to buy the bad assets. It will set up auctions with banks that need to get rid of them.
Well, that is a complex plan. There's an awful lot riding on it, too. So what are the chances of it really working? CNN's Christine Romans is live in New York with more on this.
So that's the big question. And Christine, if you can answer it for us, we would appreciate it. Is it going to work?
ROMANS: Is it going to work? Look, the Wall Street this morning is saying that they hope it works and they feel like it's going to work. That's why Wall Street is rallying here. The banking stocks just doing so well. The idea is to get this toxic garbage off the banks' books.
The United States government and taxpayers are shouldering an awful lot of this, quite frankly, subsidizing this move. We're going to have to try to attract private investors to do it, but the hope is, Heidi, is that after six weeks of painstaking work on this, the Treasury Department has a good plan and that they hope it will work.
There are those people already this morning, Paul Krugman of "The New York Times", and Nobel-Prize winning economist, Jeffrey Sachs, also another very well regarded economists who are saying that they have concerns about it. But the administration, Christina Romer at the administration and the economists there are all saying that they are confident about it.
COLLINS: Well, you know, regarding those challenges and some of the concerns, what are they?
ROMANS: Well, a couple of different things. First of all, you have to attract the private investors. And we are still waiting to hear from the Treasury Department if they have people lined up. If there are -- if there are financers...
COLLINS: Wouldn't we heard about that already?
ROMANS: Well, I have not seen the list, quite frankly yet. But I know late last week after the whole AIG debacle, there were some concerns that it would be difficult to attract private investors in this kind of environment, you know, where frankly there might be concerns that after the fact Congress could try to go in and write some law to recoup, you know, some of the profits.
Also, there are the executive competition limits. Would those have to be waived? Will you be able to attract private financiers if there are strict executive compensation limits? And also, public support? Will they be able to convince the public that, yes, indeed, you need the very people who've been vilified over the past week -- actually, the past six months -- you know, the people who led us into the problem, the high-flying Wall Street-type, you know, those are the kind of people who are going to be relying on to help us build this big, new kind of public-private investment bank and get that market moving again, and get those things traded again.
So you have to convince both the private sector and you have to convince the American people that it's a good idea for there to be a partnership here.
COLLINS: Yes, yes. All right. That's why I just sit around and report on it alongside you instead of actually trying to make that happen, right? And Christine Romans, thanks a lot.
ROMANS: A lot of hard work happening right now. Still a lot of hard work to do.
COLLINS: Yes. Absolutely. All right, we've got our eye on it, too. It's become a big-time buzz word. And the punch line to a lot of bad jokes. But what exactly are those toxic assets? Here's our Josh Levs now with an explainer.
(BEGIN VIDEO CLIP)
JOSH LEVS, CNN CORRESPONDENT: That's what we keep hearing all the time security. Is this bundle of people's mortgages or your credit card loans? You might have a bank come along and buy up a bunch of those and create a security that's backed by people's credit card debt. And that's actually good for them. When it's a good economy, these people are paying interest to those things and making money.
DON LEMON, CNN ANCHOR: Right.
LEVS: So it's good to own them. But let investors get a piece of that, right?
LEMON: But, you know, in this climate, they know probably they are never going to get this money back and that is a concern.
LEVS: And that's where we get to toxic. You have these bundles of mortgage-backed securities or credit card-backed securities, and all of a sudden you've got the bad economy.
People aren't paying their credit. They are not paying their mortgages. They're foreclosing. These securities can suddenly become worthless. And the banks that bought them are suddenly stuck with them and they are toxic. They can't move them.
(END VIDEO CLIP)
COLLINS: With more on toxic assets, and what the Treasury's plan means for the average investor, let's go ahead and talk with Paul Lamonica. He's editor-at-large with Cnnmoney.com.
Hi, there, Paul. Thanks for being with us this morning.
PAUL LAMONICA, EDITOR-AT-LARGE, CNNMONEY.COM: No problem. Thanks, Heidi.
COLLINS: There's so much to talk about here. My first question to you is really what's the incentive for some of these private investors to come and buy these assets?
LAMONICA: I think what the Treasury Department is hoping is that private investors may be able to buy what, you know, Josh referred to as these toxic assets.
COLLINS: Right.
LAMONICA: And they are probably going to be able to buy them at a relatively low price with the hopes that...
COLLINS: Well, sure.
LAMONICA: ...when the economy turns around eventually, and it will, even though it doesn't feel like it, it's going to do so any time soon, they will be able to make a decent profit off of that in the future.
COLLINS: Right.
LAMONICA: Once these assets are no longer considered as worthless as they are now.
COLLINS: Right. OK. So, clearly, that's why you would do it. But then, you know, some of these questions and concerns we've been hearing about, Christine just talked about it here. Can Congress then actually come back later on and try to recoup some of those profits that the very investors made?
LAMONICA: I think that is definitely a legitimate concern. What we witnessed with AIG last week is there is definitely a populous backlash against financial firms that are, you know, largely responsible for this crisis that we're in, you know, being perceived as making big profits off of this. So I think there is going to be a weariness about this plan, because there have been so many changes retroactively by Congress and other parts of the government regarding all of these financial bailouts.
COLLINS: Yes. So no rules, no regulations, no laws written on this that they cannot, in fact, come back and take the profits, right?
LAMONICA: There's nothing as of yet.
COLLINS: Yes.
LAMONICA: Right.
COLLINS: Yes.
LAMONICA: But that doesn't mean there won't be, you know, in the future.
(CROSSTALK)
COLLINS: Who knows, right?
LAMONICA: Exactly. COLLINS: Well, hey, listen to this with me. From Christina Romer, this is something that she said. It's actually in "The New York Times" this morning. It says -- she is obviously the White House chief economist. She said this, "What we are talking about now are private firms that are kind of doing us a favor coming into this market to help us buy these toxic assets off banks' balance sheets."
All right, so doing the government a favor. I guess I just wonder, you can't do it without the private investors, right?
LAMONICA: Right. You really can't probably have an effective way of removing these assets. Because here's the thing that a lot of people I've spoken to have been worrying about.
If the government tried to do it without the private investment community, and just saying we're going to create an entity that we absorb all of these assets ourselves and don't worry about private investors buying them up, we'll try and sell them later. You could have the taxpayers reaping all of the potential rewards down the road for that, but you also have them on the hook for all of the potential losses.
COLLINS: Sure. The risk.
LAMONICA: And no one wants -- at this point in time, everyone is so afraid of risk. And taxpayers rightfully so have seen lots of their money, quote/unquote, you know, "good money going after bad."
COLLINS: Yes.
LAMONICA: We don't want that anymore. So I think that's the big risk right now.
COLLINS: Absolutely.
LAMONICA: You have to have private investors help out even if that dies mean that the taxpayer may lose out on some of the potential profit down the road.
COLLINS: Yes. Yes. And speaking of the taxpayer here, how does this affect everybody at home? I mean, you and me, specifically how does this affect us? We're talking about credit, right?
LAMONICA: Right. Really what it boils down to -- and this is why I think it's been such a tough sell for the previous administration under George Bush and Henry Paulson, and now Barack Obama and Timothy Geithner, is everything is really a hope. It's contingent on the banks getting healthy again, even though the banks are kind of public enemy number one right now. We would be, as an economy, in much better shape if the banks are healthy and making profits again. Because when they do that, then they are actually able to lend to you, me, small businesses. Because we've heard a lot of stories about people that have good credit who have been shut out. They're not able to get loans for their kids to go to college.
COLLINS: Yes, we have. LAMONICA: They're not able to get loans to start new businesses. And that's unfortunate. Because everyone is being penalized for the sins of a few irresponsible borrowers.
COLLINS: Yes, yes. All right. Well, Paul Lamonica, we sure do appreciate your time today.
LAMONICA: Thank you very much.
COLLINS: Cnnmoney.com. Thank you.
More help needed on the line. Urgent call for volunteers in Fargo, North Dakota. Red River is rising, and more than a million sandbags still needed.
(COMMERCIAL BREAK)
COLLINS: OK, so look at this. We are checking the big board now, keeping in mind, the market has only been open for ten minutes. But look at this, Dow Jones Industrial Averages up about 180 points. That's pretty cool. Also, the Nasdaq up 32 and S&P up 20. So we are watching very closely. We like the looks of it, that's for sure. We'll keep our eyes trained on those numbers for you throughout the show.
In Fargo, North Dakota, an urgent plea now for sandbagging volunteers. Red River already three feet above flood stage because of heavy rains and melting snow. With more precipitation expected in the next few days, the River could crest at 24 feet over flood stage by the end of the week. Officials are asking for help to fill more than a million sandbags still needed to keep the river from destroying thousands of homes. The national guard and FEMA have already been dispatched to the area.
Rob Marciano is standing by now in the weather center to talk more about this.
Rob, we were talking about it last week. In fact, you said this was a potential problem.
MARCIANO: Yes. They were sending the warnings out weeks in advance in anticipation of this. Because we have the snow-pack, Heidi, and ice on the river. So you get melt and you get ice jams, and then on top of that, we've got warming and rain that's been coming down. And more rain is on the way.
All right. You're looking at a graph here. This is the current time, this dashed line gives you an idea of how much that river has been rising. The orange here, or the salmon color is moderate flood stage which is what we're entering now. And then this dotted line is the forecast, which brings it to from 25 feet, which was already above flood stage to 40 feet cresting sometime Thursday, Friday or Saturday. And that would bring it around a record flood stage. That's why they are so concerned about this. And they've been seeing it coming for now about a week. And that's not the only river that's in flood stage. Much of North Dakota under a flood warning with all of the snow melt and the rain that's been coming for the past couple of days. Here it is right now. Now hanging parts of Minnesota.
This is a huge storm, by the way. Not only does it have a tremendous amount of moisture, but it's got a lot of dynamics with this. And also some cold air on the backside of it. So the front side will be warm and wet. And that would include places like Minneapolis and Chicago. The backside is definitely cold. And we've got winter storm warnings posted for parts of Wisconsin -- for Wisconsin -- for Wyoming and Colorado, and the western half of the Dakotas. And some of these are in flood warnings are also in blizzard warnings for a 20 to 40 inches potentially, especially the Black Hills of South Dakota of additional snow here. And we are officially into the first full week of spring, which would also mean, Heidi, the potential for severe thunderstorms and moderate risk for strong storms that could potentially bring us hail and tornadoes later on today or tonight and through parts of the plains.
COLLINS: Wow. So last week was quiet. This week is certainly shaping up to be pretty active.
COLLINS: That's for sure. Boy. Last thing they need to hear there, certainly. Let's us know if we need to come back to you, Rob. Thank you.
MARCIANO: All right.
COLLINS: So far, as President Obama's toughest decision in office and it's not about the economy.
Plus, an army chaplain is preaching a self-help sermon to soldiers. How to make their way through the wilderness of a recession.
(COMMERCIAL BREAK)
COLLINS: The current financial crisis may be weighing heavily on President Obama, but he tells CBS' "60 Minutes" that his toughest choice wasn't about the economy.
(BEGIN VIDEO CLIP)
STEVE KROFT, CBS "60 MINUTES": What's the hardest decision you've had to make in the last 60 days?
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Well, I would say that the decision to send more troops into Afghanistan. You know, I think it's the right thing to do, but it's a weighty decision because we actually had to make the decision prior to the completion of strategic review that we were conducting.
And when I make a decision to send 17,000 young Americans to Afghanistan, you can understand that intellectually. But understanding what that means for those families, for those young people, when you end up sitting at your desk signing a condolence letter to one of the family members of a fallen hero, you're reminded each and every day, at every moment, that the decisions you make count.
(END VIDEO CLIP)
COLLINS: Another thing President Obama talked about last night is your money. He's in the middle of a hard sell for his budget proposal, and he is getting help from the same people who hit the pavement for him during the election. Here now, our Jim Acosta.
(BEGIN VIDEOTAPE)
JIM ACOSTA, CNN GENERAL ASSIGNMENT CORRESPONDENT (voice-over): Don't tell them the race is over. Once volunteers for the Obama campaign --
UNIDENTIFIED MALE: I just want to ask you if you support that and if you're willing to the sign this.
UNIDENTIFIED FEMALE: Oh, definitely.
ACOSTA: A vast grassroots network of supporters is back on the trail.
UNIDENTIFIED MALE: Basically, here's the plan.
ACOSTA: Reactivated. This time, to sell the president's agenda.
UNIDENTIFIED MALE: Could you be interested in signing up?
UNIDENTIFIED MALE: Well, I'm interested in talking about it.
UNIDENTIFIED MALE: OK.
UNIDENTIFIED MALE: I'm not saying that I'm interested in supporting all of his plan.
UNIDENTIFIED MALE: OK.
UNIDENTIFIED MALE: I'm part of a nationwide movement today called Organizing for America.
ACOSTA: Michael Lafemina was one of hundreds of volunteers who went door-to-door from New York...
UNIDENTIFIED FEMALE: No money is involved.
UNIDENTIFIED MALE: Really? I've got my checkbook here.
ACOSTA: ...to California on behalf of something called Organizing for America, a project of the Democratic Party run by remnants of the Obama campaign.
MICHAEL LAFEMINA, OBAMA VOLUNTEER: I don't feel like I'm volunteering for President Obama, I feel like I'm volunteering for myself, for our country, for our democracy.
ACOSTA: How do they do it? Using the campaign's old e-mail list, Organizing for America alerted supporters to visit its Web site where a message from the president was waiting.
OBAMA: Talk to some neighbors and let people know how important this budget is to our future.
ACOSTA: And voila! (ph)
UNIDENTIFIED MALE: If you can provide your name, some contact information, we would send you some information.
UNIDENTIFIED MALE: I would be happy to do that.
ACOSTA: The mission on this outing -- to blunt criticism from Republicans.
SEN. JUDD GREGG (R), NEW HAMPSHIRE: If we maintain the proposals which are in this budget, over the 10-year period that this budget covers, this country will go bankrupt.
ACOSTA: And even a few skeptical Democrats over the president's budget.
UNIDENTIFIED MALE: I'm especially concerned about the long term.
UNIDENTIFIED MALE: He's not trying to pass the budget. It's coming out of my pocketbook.
ACOSTA: As Michael Lafemina found on Long Island, not everybody is sold.
UNIDENTIFIED MALE: He's already crippled the (EXPLETIVE DELETED) economy. Him and the Democrats. I don't care. Let them film it.
ACOSTA: These volunteers insist they can take the heat.
UNIDENTIFIED MALE: Keep up the good work, Obama.
UNIDENTIFIED FEMALE: We support him 500, 2,000 percent.
(END VIDEOTAPE)
COLLINS: Jim Acosta joining us now live from Washington.
Jim, can we expect the president to get this kind of grassroots support on some other issues?
ACOSTA: I think we can. I think -- and no pun intended there. Yes, I think that what the Democratic Party hopes, and keep in mind that the Democratic Party has been taken over by and large by many of the people who run that successful campaign.
COLLINS: Yes. ACOSTA: They hope to mobilize these grassroots supporters not only on the budget, but on other issues. And this was sort of a trial thing that happened over the weekend here. They're anxious to see just how this worked out across the country. And from our indications that we gathered over the weekend, it seemed to go pretty well. Having said all of that, as you noted in that piece, there are a couple of instances in which the responses were not the ones they were expecting.
COLLINS: No.
ACOSTA: So in many cases these supporters are not just salespeople for the Obama agenda, they are shock absorbers with all of that outrage out there - Heidi.
COLLINS: And then do they go and take that feedback directly to the administration in some form or fashion?
ACOSTA: It goes to the party and then, you know, there are contacts between the party and the White House, of course. And so yes, they are getting feedback in terms of how people are responding to Mr. Obama's budget. But keep in mind that this is going to be used again on health care, on other issues, and it's a part of this permanent campaign that has worked for other presidents in the past. And they hope to have it work for them, as well, here.
COLLINS: All right. We'll be watching closely. Jim Acosta, thank you.
ACOSTA: You bet.
COLLINS: CNN Tuesday night, President Obama faces down the press. CNN is there live until every question is answered. Our special coverage begins Tuesday night at 7:45 Eastern. CNN correspondents that are working on several developing stories this morning. Here's a look ahead.
LISOVICZ: I'm Susan Lisovicz at the New York Stock Exchange, where stocks are rallying, in fact, stocks are rallying all around the world today. This is the U.S. government unveils its biggest effort yet to tackle the financial crisis. I'll have the numbers and the reaction from Wall Street. Heidi, more on that at the top of the hour.
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: I'm Elizabeth Cohen. When it comes to the health of your heart, the color of your skin matters. Heidi, I'll have more of that at the top of the hour.
MARCIANO: And I'm Rob Marciano in the CNN severe weather center. After a quiet week last week, this week is shaping up to be anything but that with floods, blizzards, and the potential for tornadoes later on today. We'll talk about that. Plus, the volcano erupting in Alaska. All that coming up at the top of the hour.
(CROSSTALK)
COLLINS: Yes, boy, we've got it all going on, that's for sure.
All right, guys, thanks so much for that. Looking forward to it all.
Plus, the American dream changing. A snapshot of what people are struggling with in this economy. They're going to share their stories next hour.
(COMMERCIAL BREAK)
COLLINS: There you are. Just seeing if you were awake.
Last week our "ROAD TO RESCUE" coverage featured stories on helping people survive the economic storm. And we're still bringing you that type of reporting. Today, an army chaplain has a sermon for soldiers. Now is the time to form a battle plan to fight the recession.
CNN's Nic Robertson is at Camp Victory in Baghdad.
(BEGIN VIDEOTAPE)
CHAPLAIN MIKE JONES, 10TH MOUNTAIN DIVISION: You can get $1,000. Isn't that right? We can do that. We went over how we can do that.
NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice- over): Chaplain Mike Jones is preaching a different message to his usual sermons.
JONES: The stock market is sucking wind, brother. I mean, it is hurting. It is absolutely hurting.
ROBERTSON: From his chapel at a base just outside Baghdad, he's teaching soldiers a new fight, how to battle the global economic downturn.
JONES: If our fighting force is hobbled financially, then we're not going to be able to fight properly. And if things are not right back home, obviously the soldier's state of mind to be able to accomplish the mission is not going to be as good.
ROBERTSON: Troop commanders are so concerned soldiers learn to manage their money, they gave 80 free places on a commercial course at a cost to the Army of $7,000. Chaplain Jones volunteered to run it.
Sergeant Emily Burlogh (ph) came saddled with debt.
SGT. EMILY BURLOGH (PH), MILITARY FINANCE CLASS PARTICIPANT: I have enough to worry about being over here. My husband is deployed as well.
ROBERTSON: Others are worried about the recession back home.
SPC. ANNA MARIE GREENFIELD, 10TH MOUNTAIN DIVISION: The economy is just awful right. And I help my mother out with finances. And my friend, she's gotten laid off. JONES: Just because we're wearing this uniform does not mean that you'll be in the military forever.
ROBERTSON: Part of Jones' effort, to cut through the complacency that can lull soldiers into believing a military career is insulation enough against the woes of the world.
(on camera): Although officers have been joking about it a little bit tongue in cheek, the financial class has been proving more popular than some of the Sunday services. Almost every seat in the chapel here has been filled.
JONES: I hate to admit it as a chaplain, but that is absolutely the truth. That in times of financial straits, people are going to seek help, you know, in any fashion that they can.
ROBERTSON (voice-over): So important has been the class, when troops graduated, a general came to hand out certificates. When the same course was offered two years ago, barely five percent of the participants passed. This time, it's been 90 percent.
Nic Robertson, CNN, Camp Victory, Iraq.
(END VIDEOTAPE)
COLLINS: Speaking of dealing with the recession. We want to keep our eyes on the markets today. Because look at this, about half an hour into the trading day now, Dow Jones Industrial Average is up about 190 points, resting at almost 7,500. We're also understanding that the S&P and NASDAQ also up significantly. So, again, we are watching the numbers closely, right here, live in the NEWSROOM. It's a plan to help the banks and then help you.
