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Is Bankruptcy Court the Answer for U.S. Auto Industry?; Fighting Crime on Facebook

Aired March 30, 2009 - 14:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: Well, pushing forward, one thing's for certain. U.S. automakers haven't reached the end of the road yet but the road to rescue is steep. CNN's Susan Candiotti is in Detroit for us. Susan?

SUSAN CANDIOTTI, CNN CORRESPONDENT: Hi, Kyra. We have been trying to get reaction all day from employees but of course, they have been in the middle of their shift change. But we do have now a couple of people who represent the Union. This is UA (ph) Local 160. We have Michael Fergeson and we have Earl Fuller.

Starting with you, what did you think of the president's comments?

MICHAEL FERGESON, UNION AUTO WORKER: Well, I like the part that he mentioned that we lost 400,000 jobs. I like the part that he paid accolades to labor. The part I didn't like is when he's asking for more concessions because we have given enough already.

CANDIOTTI: You're not going to give anymore? He said there's going to be pain.

FERGESON: No. I've given enough. Enough is enough.

CANDIOTTI: How is there going to be progress made in the next 60 days if you have opinions like Michael Fergeson here, who is not willing to give back any more? Are you, Earl?

EARL FULLER, UNION AUTO WORKER: At this time, I'm willing to do what it takes to keep the company viable and satisfy the federal government. However, when General Motors recovers, I will be looking forward to negotiating and regaining much of what we have given up to make the company viable.

CANDIOTTI: You now have someone new at the helm. Wagoner is out, Fritz Henderson is the acting CEO. How much of gm's troubles do you blame on Wagoner?

FULLER: Well, I'm going to say some of GM's troubles have been because of the market and fuel prices, there's no doubt about it, but when you lead a company and the company doesn't perform, you can't blame it all on the workers. You have to take responsibility for your leadership and I think by and large, General Motors, the failure of our company to exceed and be number one lies on Rick Wagoner's shoulders. So ... CANDIOTTI: You have heard comments, obviously, that union members have not made enough concessions, that you could be doing more, and if you don't do more, a bankruptcy court might get involved. What about that?

FERGESON: We're only 10 percent of the cost of a vehicle, so taking money out of our hides is not going to help in the long run. They need to go after that other 90 percent.

CANDIOTTI: In the long run, however, if a judge steps in and says this is the way it's going to be, many members will have to live with that, won't they?

FULLER: That is correct, if General Motors gets protected from a judge during a bankruptcy proceeding, he will dictate what our wages are, what our work practices are, what our benefits are.

CANDIOTTI: I am sure that both of these employees would agree and shop steward would agree as well, that Fritz Henderson, who is the acting CEO, is saying that the goal is looking for a leaner, stronger, viable GM, and that certainly is what all the employees want. Back to you, Kyra.

PHILLIPS: Understandable. We're going to talk more about Fritz Henderson in just a second. Susan Candiotti, thanks so much. So far, GM and Chrysler have gotten $17.4 billion from taxpayers and billions more are on the way. So what are taxpayers getting? As you may have heard live on CNN, President Obama is promising government backing of U.S. auto warranties and income tax deductions for the sales and excess taxes paid on new American-made cars. Both of those are aimed at boosting demand which is what the car makers need most.

Now the White House, which is firmly in the driver's seat for the GM and Chrysler turnaround, CNN's Kate Bolduan is there for us. Kate, tell us about strengthening confidence. Especially right now when you've got a lot of workers and consumers really stressing out about this new, leaner deal.

KATE BOLDUAN, CNN CORRESPONDENT: Absolutely, a leaner deal it will be. And that's a really important point. We are talking about the details of the restructuring but the consumer confidence portion of the speech, it kind of was a tone that was just there throughout the speech, pardon the windy spring day, Kyra. A couple things that stuck out to me I wanted to point out in the speech. President Obama said, "We cannot, we must not, we will not let our auto industry simply fail," making a statement of strength, trying to boost confidence there, as well as talking directly to the people in the industry saying I will fight for you.

And then even to the consumer, you alluded to that, he said if you have any nagging doubts, he pretty much said you can buy a car, you will be fine. And that's talking about the warranty guarantees. So listen here to that.

(BEGIN VIDEO CLIP) BARACK OBAMA, PRESDIENT OF THE UNTIED STATES: If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired just like always. Your warranty will be safe. In fact, it will be safer than it's ever been because starting today, the United States government will stand behind your warranty.

(END VIDEO CLIP)

BOLDUAN: And we all know consumer confidence is such a big factor when talking about the U.S. economy any time, but especially right now. And so we see mixed in with the tough talk, you also see President Obama, maybe we call it a little bit of a pep talk to the country, to the markets, trying to quell some fears saying we are going to get through this.

Quell fears but also, Kate, you and I have been talking about this and I talked about it with a couple of the gm workers a few minutes ago about this perception of fairness, you know, that the White House is playing a lot tougher with Detroit than Wall Street.

BOLDUAN: And it's a very interesting question. You're looking -- we're looking at here, you ask a CEO of this auto company to step down, but what about the bankers who are receiving government funds, taxpayer funds. We have heard a couple different answers, to be quite honest, from the press secretary, Robert Gibbs. He says basically saying it's Apples and Oranges. You have to look at the two circumstances as just that, two separate circumstances. They are talking about different situations and they need to be treated that way as well.

Senior administration officials will tell you that this is part of the clean slate, the fresh page that GM needs in order to move forward on that path of viability to get that aggressive restructuring and moving forward. We also heard from the vice president's top economic advisor, Jared Bernstein, who said it's not really a double standard. He said the administration also did push for a leadership change in AIG and Fannie Mae and Freddie Mac, but Kyra, it is a good question to be asking.

PHILLIPS: Sure. They weren't asked to give up their health benefits, either. Kate Bolduan, thanks.

So who is Fritz Henderson, the man now at the helm of General Motors? Henderson was already considered the heir apparent to Rick Wagoner. He's been serving as the company's president and chief operating officer. In announcing his resignation, Wagoner praised Henderson as the ideal person for the job. Fritz Henderson began his career at GM in 1984.

And you may have noticed all bailouts are not created equal. Later this hour our Susan Lisovicz looks at the differences between the bank bailouts and the bailouts for GM and Chrysler.

European car maker Peugeot got a $4 billion bailout from the French government last month but with the company still struggling to stay afloat, its board decided to fire the CEO. Jacques Varin will take over effective June 1. He is a veteran of the steel industry and Peugeot's problems will test his mettle. The company's stock has fallen almost 70 percent over the last year.

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CROWD: (INAUDIBLE)

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PHILLIPS: Not exactly the kind of welcome you want if you're making your first European trip as U.S. president but President Obama and other G-20 leaders can expect angry outbursts at their London summit on Thursday. Compare these protests to eight months ago. That's when candidate Obama was greeted as a rock star in Berlin. He remains very popular in Europe but it's his stimulus policies that in part are sparking protests now, and blunt talk from his European counterparts. You'll be hearing a lot about the g-20 this week but what exactly is it? It's made up of top financial officials from 19 nations and the European Union. On the G-20 agenda this week, a possible global stimulus package, finding ways to stop countries from limiting trade just to protect their own businesses, helping developing nations hit hard by the recession, and coming up with better ways to regulate the financial markets.

Now one word that strikes fear in the hearts and minds of some G- 20 members is "protectionism". The host of this week's summit says he will do all that he can to prevent members from throwing out such trade barriers.

CNN's Jim Bolden reports from London.

(BEGIN VIDEOTAPE)

JIM BOLDEN, CNN CORRESPONDENT (voice-over): Could anything make this recession worse? Some politicians say erecting barriers to trade in order to protect a fragile domestic industry would. British Prime Minister Gordon Brown, the host of the London G-20 summit, says the world cannot afford what he calls deglobalization.

GORDON BROWN, BRITISH PRIME MINISTER: In 2009, we must tackle protectionism head-on and make sure that we do not risk a spiral of trade collapse.

BOLDEN: Eyebrows were raised after automaker Renault announced it will create 400 jobs at a French plant to make the Clio instead of at its lower cost Clio plants in Slovenia. This after France tied an auto bailout to pledges not to cut jobs at home. The European Commission wants more details on the Clio decision.

JONATHAN TODD, EUROPEAN COMMISSION SPOKESMAN (through translator): What's surprising in this specific case is the industry minister, Luc Jatel (ph), should have made a statement that this would be directly related to this French automobile plan.

BOLDEN: The World Bank estimates 17 of the G-20 countries have taken some protectionist measures since vowing not to. At the last G- 20 summit just five months ago. From Russia raising tariffs on used cars, to China's ban on Irish pork, to India's ban on Chinese toys, even auto bailouts and help for struggling banks can be protectionist.

MARTIN BROUGHTON, PRESIDENT, CBI: Certainly supporting bailouts or even supporting the banks, if that is done on the basis where preferential treatment is now given to UK domestic entities and withdrawn from -- that's a form of protectionism.

BOLDEN: The U.S. Chamber of Commerce called the buy America program included in the latest stimulus package quote, "a dumb idea", noting other countries could retaliate, costing jobs. The Chamber was relieved when buy America was diluted.

So why are many businesses against protectionism? In the past, companies sourced components at home. In a globalized world, many import parts and export finished goods. Professor Richard Portes says the G-20 summit must issue strong language or minor protectionist moves to date could become dangerous.

RICHARD PORTES, LONDON BUSINESS SCHOOL: We have seen some moves. We might call them murky protectionism. They aren't yet dangerous. They could be very dangerous if after the G-20 meeting, governments then say well, OK, no constraints now, we can go ahead and do what we want. That's what we hope the G-20 meeting will stop. World trade is already projected to go down nine percent this year. Any serious protectionism would be absolutely disastrous.

BOLDEN: And that's why this g-20 meeting is so crucial. Jim Bolden, CNN, London.

(END VIDEOTAPE)

PHILLIPS: Winds, waves and snow. A new threat to the Red River today after a weekend of record flooding.

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PHILLIPS: Check out this time lapse view of the Red River flooding from the U.S. Geological Society. It tracks the water's rise in grand forks, North Dakota from last week, then pushes it forward. Keep your eye on the (inaudible) now in the upper right corner of your screen as the river rises up the banks, yep, completely flooding the surrounding area and the benches right beneath it. Red River residents are bracing for more problems today as well. Late season snowstorm is approaching and it could damage those fragile levees. Reynolds Wolf right there in Fargo, North Dakota, giving us a firsthand look at everything they're dealing with. Reynolds.

REYNOLDS WOLF, CNN METEOROLOGIST: Indeed, we are, Kyra. A nice view that we have here. The snow now coming down sideways. We didn't see this so much the last time we spoke. Let me show you a couple things we have here. I'm going to step off these bricks. I will walk over and show you this structure. When Fargo was founded in 1871 and many people lived in structures not unlike this wooden one. Most of them made out of wood or made out of logs, but with the advent of the Union Pacific Railroad, you actually see a stretch of it right behind me, this area began to flourish. Now in present day, you got the tall buildings, you can barely see above that tree line in Downtown Fargo.

From way back when to present day this area has been dealing with all kinds of stuff, I'm talking tornadoes, violent storms, blizzards. Obviously some snow. But also, historic flooding. We have been dealing with it for a good part of the week. If you look out over this field, right over parts of this beautiful field of vision, you see, of course, the barrier that's been built up, this earthen dam. And beyond that, a big stretch of the red river that is, of course, overflowed its banks, dropped a little bit but still, this historic flood, no doubt. You are also going to notice something else, Kyra. You are going to see that sheet of ice which not a long time ago was actually all white but you're now seeing dark lines that have popped up in a couple of spots. Those dark lines actually cracks in the ice that have been created because of the wind. Wind picking up, and that was the big fear, if we have some strong winds that move through here, creating waves, those waves are going to test these earthen dams.

Let me show you why we have some issues. Steve Sorgs (ph) is our photo journalist right behind me, he is handling all these cords. Guys, stay put for a second because I've been putting you through hoops. I want to show Kyra and the rest of America the problem we have having with these dams. I am not going to walk on this but take a look at what we got. If I take some of this and bring it to you, this is the big issue we have with these earthen dams. See? They don't stick together real well. With the cold conditions, well, it's kind of porous. And the big problem is we have that liquid from that water going through it really tests the mettle, tests the strength, the soundness of these barriers.

And because of that, much of the area is undergoing sandbagging. Not so much here in Fargo. They did have a 24 hour blitz there filling up those sandbags. They have well over three million that they have had since the start of this event but across the way, beyond that field of trees, you have Moorhead, Minnesota, where the mayor is asking people to come in and voluntarily make sandbags to shore up levees just like this. This theme you're seeing unfold in this area has been pretty much the story we have seen up and down this river for hundreds of miles. As we walk over here just a little bit, we're going to wrap things up by showing you a shot of this neighborhood over here and the Old Grove area. Lot of these houses still in certainly in harm's way. Hopefully, these levees will certainly keep that water back and I don't know if you can hear it at home, but you can just catch a little bit of the drone of some engines, some machines back there that are still piling up that earth. A lot of work to do until these waters move out of harm's way.

That's the latest we've got for you, Kyra. Lends send it back to you in the studio.

PHILLIPS: Terrific work. Reynolds, thanks so much. And Chad, right here next to me, and I was saying to you as we were looking at him there with the dams that are being built, OK, why use that kind of material. Because they have to work quickly. It's temporary.

CHAD MYERS, CNN METEOROLOGIST: Right. These are not the levees that would have been there two years ago. They just used the materials, the whole thing, they really just used these bulldozers and pushed all that dirt in a big pile. Now that whole big pile that we're trying to use, that is where the porous dirt is because it didn't have time to get compacted. It certainly didn't have time to get any kind of grass growing on it or anything else that may help hold it back or hold it together. Here's the snow that Reynolds was seeing here into Fargo. This is the blizzard he's talking about. Winds are going to be 25 to 30 miles per hour. You need 35 to get a blizzard but it will be close enough, for sure.

We are going to see some of these areas here up and down the Red River continue to flood. This is a very flat flood plain. This is a very new part of the country. Only 12,000 years old. Let's say the Grand Canyon, 17 million years old. This plain was caused by a big sheet of ice, a glacier, that came down and scraped it all away and this entire Red River valley, so to speak, although it's not really, it's just a bottom of a lake, it's an old glacial lake and so finally this very slow progression of the water moving downhill and downhill is actually toward the north.

We did get one more thing I want to talk to you about. We got an earthquake about 40 minutes ago, not that far from San Jose. Little bit farther to the east, Church Hill seeing a little shaking going on. It was only a 4.3. You may have felt it in the Bay Area, although we did call one of the 911 operators saying hey, are you getting a lot of problems with this, lot of phone calls. They said no, the only phone calls are from you. So obviously people in California ...

PHILLIPS: That's because you're monitoring everything and being from California, it's like yes, earthquake, schmearthquake, unless it's really huge, we just continue our day. Thanks, Chad.

MYERS: If you just moved there and felt it shake, it really was a shake.

PHILLIPS: It's OK. So far, so good.

New pictures of that apparent North Korean rocket on the launch pad. We will tell you what the Obama administration has to say about it.

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PHILLIPS: Well, they're still on the road to rescue but for two of the big three, bankruptcy's still on the table. We will break down the tough terms for a few more weeks of government financing and see what's in the deal for you.

We have new pictures this hour said to be a North Korean rocket on a launch pad. CNN's Chris Lawrence at the Pentagon. Chris, what can you tell us about the new images? And do they make any possible threat to the U.S. any more real?

CHRIS LAWRENCE, CNN CORRESPONDENT: They do show that the North Koreans look to be on track for what they said they are going to do all along, which is launch this missile between April 4th and April 8th, which would be this weekend or early next week. Now, the thing is, when you hear the word missile, it automatically gets a lot of people start thinking about weapon. The key thing with this missile launch is yes, it is a missile, but what is on top of it, what is its payload. The North Koreans say it is a communications satellite. People here inside the Pentagon believe that is so, that it will be a commercial satellite.

But the thing is, if this launch is successful, and that's a big if, but if it is, the North Koreans will have demonstrated all the technology they need to perhaps one day switch out that payload to a nuclear warhead. They will have demonstrated the ability to use reliable fuel, guidance, control, all the things that they would need to turn a missile like this into a nuclear warhead. Kyra?

PHILLIPS: Now, when North Korea did this in the past, and it wasn't too long ago that they did, it didn't make it too far. So I know the administration always has a plan in place to fire back if necessary, so where is the Obama administration at right now, where is the Pentagon at right now with regard to wait and see mode, or are they ready to go?

LAWRENCE: Little bit of both. The key word is if necessary. And right now, from talking to people here in the building and the Pentagon, they don't believe it will be necessary. They have Navy warships with very advanced radar that have moved into that area to monitor this launch and if it contained an actual warhead, if it was directed towards the U.S. or towards one of its allies, the U.S. would be in position to take action. But they do not believe it will come to that, that there's no real indication here that they will be forced to shoot it down.

Japan would be most affected because the missile is most likely to fly over Japan but they're more positioned, thinking more along the lines of shooting down some of the debris from the missile.

And Kyra, in any case, the decision would have to be made very quickly because by all accounts, this missile would be over Japan in a matter of seven to eight minutes.

PHILLIPS: Chris Lawrence, we'll keep monitoring it, thanks.

Bailouts are bailouts and contracts are contracts, but government aid for Wall Street and government aid for Detroit are apples and oranges.

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PHILLIPS: Watching the markets for you right now. Dow industrials down 285 points, quite a switch from when we had that rally that got up 500 points about a week and a half ago.

U.S. automakers are not being kicked to the curb but they won't be carried much longer by U.S. taxpayers. That's a pledge from President Obama, who's giving GM and Chrysler a few more weeks of government aid in which to slash their costs and obligations or take their problems to bankruptcy court. Chrysler's getting 30 days and a $6 billion incentive to merge with Fiat and a deal's already in the works.

As you may have seen live here on CNN, the president offered ironclad warranties on GM and Chrysler products and tax breaks for new car buyers.

Finally, he had a special message just for car builders.

(BEGIN VIDEO CLIP)

OBAMA: But what I can promise you is this. I will fight for you. You are the reason I'm here today. I got my start fighting for working families in the shadows of a shuttered steel plant. I wake up every single day asking myself what can I do to give you and working people all across this country a fair shot at the American dream.

(END VIDEO CLIP)

PHILLIPS: As the White House driving a harder bargain with automakers than it drove with big banks? The bailouts have a lot of similarities, but some big differences, too.

Susan Lisovicz has been running all the numbers and the details.

So what do you think, Susan? What's the biggest difference?

SUSAN LISOVICZ, CNN CORRESPONDENT: The biggest difference is the amount of money that is being spent on the bailout between banks and Detroit. But having said that, Kyra, your eyes glaze over. They're both getting an awful lot of taxpayer assistance.

But listen to this argument from Congressman Brad Sherman of California. Listen to what he has to say about the difference between the two.

(BEGIN VIDEO CLIP)

REP. BRAD SHERMAN (D), CALIFORNIA: What about the rich and powerful that AIG was owed money to? They are getting paid every penny. They demand it and it comes from the American taxpayer. It's time that we respect the companies that do work, that make products. It's time that we not hollow out our manufacturing sector.

(END VIDEO CLIP)

LISOVICZ: And you know, Kyra, no matter what you think of Detroit and how badly it may have bungled this mess, the fact is, yes, they are getting a much harder bargain when it comes to this bailout and I think that was made clear by President Obama earlier today.

PHILLIPS: It's just hard to see, you understand that big fat cats on Wall Street should be giving back million dollar bonuses. It's really hard to see blue collar workers trying to build cars having to give up their health and retirement benefits, as you well know.

LISOVICZ: You know, and I think the point is, though, that as tough as it may be to swallow, and Ben Bernanke himself has said this, that AIG in particular makes him angriest of all. You cannot exist, Main Street cannot exist with quote, unquote, "Wall Street." It's just that simple.

And in fact, when the credit crisis really reared its -- when it really became terrible in the fall, that further hurt Detroit. Why is that? Because it was tough to get -- it was tougher to get credit. So there's no question that one is more important, essentially, than the other.

And Ben Bernanke said that when he was making the case in the fall to key Congressional leaders. He said if you don't pass this $700 billion bank bailout within a few days, we may not have an economy left.

I mean, it's pretty tough to swallow, but that's basically the difference. You need a banking system. You need some sort of stability in the banking system. As tough as it would be for manufacturing, no question the unemployment rate would go up, no question that auto parts suppliers would go under as well, but we would still get through it.

Susan Lisovicz, thanks.

PHILLIPS: Again, your hard-earned tax dollars potentially going to companies that have failed miserably. We really want to hear what you think about it. Log on to iReport.com and send us a video.

Here are strong words from iReporter Adriana Maxwell.

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ADRIANA MAXWELL, CNN IREPORTER: While Mr. Wagoner's exit is a great symbolic step, particularly to those who want to see GM return to its former glory, the reality of it is that there's hundreds of mini-me Ricks. And they have all positions of power. And they're not going to be easily let out.

So, in my mind, it is foolish, it really is foolish to believe that by removing one gentleman, that that seriously equates to change within the GM model.

(END VIDEO CLIP)

PHILLIPS: Gas prices are up for 13 straight days, averaging nearly $2.05 a gallon. And U.S. automakers are struggling to stay in business. Now proposed legislation could help you and Detroit at the same time.

CNNMoney.com's Poppy Harlow has our "Energy Fix" from New York.

Hey, Poppy.

POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: Hey, Kyra.

We learned about this bill about a week ago, but really taking on a whole new light today. It's nicknamed "Cash for Clunkers." And the goal is to help consumers and the beleaguered U.S. auto industry.

Here are the details for you. This bill currently sitting in the House would give $3,000 to $5,000 in terms of vouchers to people trading in their old car to buy a new more fuel efficient one. The idea, the more fuel efficient the vehicle, the bigger the voucher is. The clunker you trade in though has to be at least eight years old to qualify and the new car can't cost more than $35,000.

PHILLIPS: All right, so what's the reaction from Detroit?

HARLOW: As we know from today's headlines, the big three need all the help they can get. Last week, General Motors told us this legislation could really jump start its sales. We hear Chrysler and also Ford are on board as well.

But keep in mind there's a bigger voucher for cars that are built in the United States than for those made in Mexico or Canada, even if they're GM, Ford or Chrysler cars. And also, some foreign automakers take issue with this bill because cars made outside of North America don't qualify at all. Kind of ironic, Kyra, if you were to buy a Toyota Prius made in Japan, that wouldn't qualify, but to other cars that may not be as fuel efficient might qualify because they are make in this country, Kyra.

PHILLIPS: All right, so how much would the bill cost?

HARLOW: No official price tag. Big estimates though between $1 billion and $2 billion a year. Tough to swallow when our budget deficit is at an all-time high.

This isn't the first time we have seen a cash for clunkers proposal. There was one in the original stimulus bill but it got pulled. We'll see if lawmakers jump on board with this one. Back to you.

PHILLIPS: Thanks, Poppy.

HARLOW: Sure.

PHILLIPS: Bankruptcy may not be right around the corner for GM and Chrysler, but it used to be unthinkable. Those days are over.

(BEGIN VIDEO CLIP)

OBAMA: While Chrysler and GM are very different companies with very different paths forward, both need a fresh start to implement the restructuring plan they develop. That may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger.

(END VIDEO CLIP)

PHILLIPS: All right. Well, let's gauge their prospects with automotive analyst Lauren Fix via broadband, I'm seeing here, from Myrtle Beach, South Carolina.

Glad you could join us on your vacation. Thank you so much, Lauren.

LAUREN FIX, AUTO ANALYST: Well, the auto industry I'm very passionate about. And I have to say, Kyra, no matter what it is, 24/7, if it's about the auto industry, I'm not on vacation.

PHILLIPS: Actually, you're right. That's your entire living, right? This is so you can go on vacation. This keeps you in business.

FIX: Yes.

PHILLIPS: The White House is talking about this quick rinse bankruptcy. Can you kind of put that in layman's terms for us? What that mean and is it a good idea?

FIX: Oh, this is ridiculous. I mean it's totally disingenuous to think that anyone could possibly do a complete bankruptcy in 30 days. Even a small company would take 60 days if we were to sit down and actually figure out everything in advance.

So there's a lot of things to this, you have to really read between the lines when President Obama was speaking. Especially this cash for clunkers thing, I am absolutely against it. And it's not going to help consumers. It's been proven not to help consumers.

PHILLIPS: So the odds of this actually happening, because we have been talking a lot about this, I mean, what do you think? What's the reality?

FIX: Well, when you're talking about bankruptcy when it comes to General Motors and Chrysler, they are not going to close their doors and dissolve this. It's not AMC.

However, what really concerns me is when the government tries to micromanage large corporations. We don't want to have something like happened in the British industry, where all the car manufacturers left the country and they no longer have a car manufacturing industry like we do here.

So it's really important that when we are talking about bankruptcy, we are talking about reorganization. General Motors will shrink probably half of what they are now and it will hurt a lot of people that have dealerships that invested their lives into it.

It will also affect -- people just think, oh, it's just the dealerships and manufacturers and the people that work there and the UAWs. It affects so many more companies. Marketing companies, PR event management, and all these things. And all these things all add up.

But when you go to the corporation itself, there's a lot of product that's being duplicated. They can cut back. But for them to cut out two-thirds of what they have in debt is almost impossible to be done in 60 days. And I think it would be a miracle for that to happen. PHILLIPS: So how would - OK, you mentioned how it would affect dealerships, how it would affect the suppliers, how it would affect the actual workers. What about the consumer?

FIX: Well, the consumer, believe it or not, this is very interesting. They said today, President Obama today, that not to worry about their warranties and that it will be covered. Now, if General Motors and their corporations were to go reorganization bankruptcy, you would still be covered. You would still be able to take your Hummer, if you bought one back then, your GMC truck, even your Chevy, and take it to any General Motors dealership and get it taken care of.

But if the government's going to back those warranties, I really worry because they can't handle the Department of Motor Vehicles as it is. What are they going to do when it comes to them handling the warranties? Are you going to pay for that? Are they have government registered auto repair shops? And then you send in your money and wait 120 days to get your money back? That's just totally unrealistic.

So you have to be careful when you say you're backing this. Does this mean the government is now going to own General Motors? Is that part of the deal they're making and why they let Rick Wagoner go? We don't know this.

We so know that they'll probably clear out quite a bit of their board of directors and there will be a lot of products that will be eliminated.

But for a consumer, if you purchase a GM car, you will be covered. You're not going to be in a situation where you have a car that doesn't need any, you know, you can't get taken care of warranty- wise.

And as far as Chrysler's concerned, if they don't do their agreement with Fiat, they probably won't be around. And they can't be forced into that relationship in 30 days. Because I were Fiat, I'd wait till day 29 and say now I'm in the position of power, let's make the deal on day 29 and the terms are my terms.

PHILLIPS: Ha! You should be running the company and doing the negotiations.

Lauren Fix, appreciate the insight.

FIX: Thank you.

PHILLIPS: Flood levels on the raging Red River have been dropping, but will an approaching snowstorm bring a new round of flooding in North Dakota and Minnesota?

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PHILLIPS: Folks along the Red River in Fargo, North Dakota and Moorhead, Minnesota, got a new warning today, don't drop your guard just yet. A new snowstorm could whip up winds, waves and quite a mess for the fragile levees. Officials say the temporary dikes made of 3.5 million sandbags have kept Fargo and neighboring Moorhead, Minnesota safe from catastrophic flooding so far. All that could change if wind-whipped waves cause a breach in the next 24 hours.

Chad Myers, watching it all in addition to other types of severe weather around the country.

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PHILLIPS: Forget about the fingerprint kit, just get out the laptop. We will tell you about a new way to catch a thief.

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PHILLIPS: New information on the man accused of shooting up a North Carolina nursing home yesterday, killing eight people. Police have confirmed the suspect's estranged wife works there as a certified nurses' assistant. She is not being listed as one of the victims in Robert Stewart's rampage. That's the 45-year-old painter allegedly targeting elderly residents sitting in bed or in wheelchairs.

A police officer wounded Stewart after being shot three times himself. The officer will be OK and his boss, full of praise today.

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CHIEF CHRIS MCKENZIE, CARTHAGE, NORTH CAROLINA POLICE: He has been the recipient of the Officer of the Year award for the town of Carthage. He has been exemplary in the past. However, I don't think you could classify anything yesterday other than heroic. Absolutely nothing other than that. If that's not heroism, I don't know what is.

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PHILLIPS: We hope to hear more at another police news conference scheduled in just a few minutes.

As always, "Team Sanchez" working hard back there. What are you working on, Rick?

RICK SANCHEZ, CNN ANCHOR: We're going to have that news conference as a matter of fact.

Let me just send this real quick here.

PHILLIPS: What are you sending?

SANCHEZ: I'm sending some of the video elements that we're going to be putting in the story we're talking about later.

In fact, let me tell you about that story. There's a man who lives in Georgia who took it upon himself to put Old Glory in his front yard. You know, a flag pole. A really pretty flag pole, he's got lights on it, he's got it very beautifully landscaped and he's very proud to have the American flag flying in his front yard except for one thing, Kyra.

PHILLIPS: Yes?

SANCHEZ: The homeowners association says you can't fly a flag pole in your front yard.

PHILLIPS: Why not?

SANCHEZ: It says if you want to fly a flag pole, according to the covenants, you have to hang it off of your front porch or perhaps off of a window or off of a wall. But it can't be a standing fixture in the front yard. And rules are rules.

PHILLIPS: What's the difference?

SANCHEZ: Well, when you live in a community and they say you can't park your boat in the driveway, you can't park your boat in the driveway.

PHILLIPS: Rules, shmuls. Come on, it's patriotic.

SANCHEZ: There you go. Now you're getting to the meat of the argument.

PHILLIPS: Well, look at 9/11. Everybody - and that's kind of a shame. You've seen a lot of American flags taken down. Remember after 9/11, almost everybody in this country had an American flag hanging somewhere in the yard, on their house, on their car?

SANCHEZ: But what if your neighbor decided he was going to fly a flag as big as the one in the Ford dealerships off of I-85 or I-75? You know, 100 feet by 90 feet or something. And he's saying I'm being patriotic and the Constitution says I got a right -- I mean, it's an interesting question, isn't it?

PHILLIPS: Well, and then I think you have issues with, you know, there could be people who want to raise some offensive flags. So that brings in a whole other issue. If they can have the American flag, why can't I have my, you know. I don't want to bring up anything that's going to be controversial. But you know what I'm saying.

SANCHEZ: Yes, because you'll get in trouble if you do that and they'll write blogs about you and me.

PHILLIPS: Last thing we want.

SANCHEZ: We're going to cover it down the middle, Kyra.

PHILLIPS: You got it.

SANCHEZ: By the way, you're right. That news conference that we're expecting out of North Carolina on those eight people who were shot at the nursing home, if that turns out in the first couple minutes of the show, we're going to take it live and let people hear what the authorities are saying there. So, we're going to be all over that thing. And an update on the Dallas football player. We've got new information on the guy who got held up from being able to say good-bye to his dying mother-in-law. So we're on that, too.

PHILLIPS: Great. Thanks, Rick.

SANCHEZ: There you go. There's some of the pictures. See ya, Kyra.

PHILLIPS: All right.

Well, most people use Facebook to keep up with friends and network, but it turns out the site can be handy in fighting crime. The news comes as Facebook is expected to reach a major milestone this week, 200 million members.

Here's Jackie Renard (ph) with affiliate WLTV.

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JACKIE RENARD (ph), WLTV CORRESPONDENT (voice-over): A smashed window gets replaced. It's been broken since Wednesday afternoon. That's when Al Chapman, the owner of a moving company in Brunswick (ph), pulled into his neighborhood and found this.

AL CHAPMAN, THEFT VICTIM: And I see a big hole in my window. I'm just, man, what happened to my truck. Then, I turned around and looked at my other truck and saw the whole window knocked out of it.

RENARD (ph): Someone smashed windows in two of his work trucks. They also stole what was inside.

A. CHAPMAN: Radar detector, GPS system, XM radio was gone.

RENARD (ph): He called his wife Mary right away.

MARY CHAPMAN, CAUGHT THIEF WITH FACEBOOK: And I said you're kidding me.

RENARD (ph): Mary didn't waste any time.

M. CHAPMAN: Don't mess with the Lenxington (ph) Place wives.

RENARD (ph): She and the other wives of Lexington Place got to work. While police were dusting for fingerprints, Mary hit Facebook to tell her friends what happened.

A. CHAPMAN: When my wife passed it on to her friends, she passed it along to her friends, who lives in the neighborhood, and she Facebooked it back to my wife.

RENARD (ph): Long story short, Mary told one friend on Facebook who told another and another. One neighbor wrote back she thought she saw the suspect and knew where he lived. They then called police.

A. CHAPMAN: The officer was on top of her job. She had fingerprints, she had a suspect, but Facebook went just like cyberspace, straight to the crime and got our criminal.

RENARD (ph): The suspect was an 18-year-old who lived just down the road.

M. CHAPMAN: If it wasn't for Facebook, I would have never -- we would have never known who did this, why they did it, and where our stuff was at.

RENARD (ph): For a guy who didn't see a need for this...

A. CHAPMAN: I was like Facebook, same thing. And I really didn't like...

RENARD (ph): He now has his own page and checks it regularly on his cell phone.

A. CHAPMAN: Yes. I love Facebook. I love it.

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PHILLIPS: Well, the bad news is this is what Fargo, North Dakota looks like right now.

But Chad Myers, the good news is, you've got 90 percent of Fargo pitching in to help save that place.

MYERS: Yes. I don't know where the other 10 percent are, but they're doing something else. They just didn't tell you they were doing something else. Because I tell you what, the support for this flood is amazing.

But here's some of the other areas that are not protected by the levees. We talked about this all day so here are the levees. Here's the levees, here are the here are the levees; here's what they're doing, they're holding, they're holding. But there are many homes that are outside of the levees north and south of the city and they are being affected and they are being flooded.

We got some iReports and if you know of any pictures that you'd like to send us, I know these pictures are of misery because the levees are not holding it back but we like to show people on TV what is happening to your community.

There you can see that the homes are right in the middle of the water.

PHILLIPS: And this is even happening after the sandbags, the added dams, everything they have been trying to build to support around those levees, right?

MYERS: The houses you see there that are flooding are not protected by the levee system at all. At all. The levees are right now holding and the water is coming down. That's great news.

PHILLIPS: All right. We'll keep tracking it. Thanks, Chad.

MYERS: You bet. See you tomorrow.

PHILLIPS: All right. That does it for us. We'll be back here tomorrow. Rick Sanchez takes it from here.