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Good Borrowers Go Bust; GM Nears Bankruptcy; Preventing Cyber Attacks; Learning to a New Beat; California Budget Crisis; GM at the Crossroads; Carving Your Own Road

Aired May 29, 2009 - 11:59   ET

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

TONY HARRIS, CNN ANCHOR: First this hour, the road to recovery. Subprime mortgages set off this recession and now even with sprinkles of good economic news, prime mortgages are threatening to prolong it. Many Americans who lost their jobs can't make their house payment.

Look at these numbers.

Twelve percent of mortgages are delinquent or in foreclosure now. That is the highest rate since recordkeeping began way back in 1972. Almost half of first quarter foreclosures were prime mortgages outpacing subprime foreclosures for the first time in this crisis.

Whoa! Gerri Willis, CNN's personal finance editor, joining me now from New York.

And Gerri, experts say unemployment has to peak before foreclosures will. Are we seeing the second wave of foreclosures?

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Yes, indeed. You know, Tony, look, more homeowners than ever, as you were just showing, they're falling behind on mortgage payments, sliding into foreclosures and the Mortgage Bankers Association numbers here, 5.4 million home loans - or 45 total, 45 million total - were in some state of foreclosure in the first quarter. As you said, 12 percent of all mortgages. The previous quarter was 11.9 percent.

This is really worrisome because it exerts a downward pull on home prices for everybody out there. Experts say this next wave of foreclosures will come as people lose their jobs. Of course, we know some 5.7 million jobs have been lost since the recession began.

And Tony, that's the old fashioned way that people get into trouble with their mortgage. They lose their job. They lose their income. They can't pay their mortgage.

HARRIS: Boy, I think you mentioned it. It suggests that we've got some more downward pressure on home prices.

WILLIS: That's right. You know, we have seen mortgage rates fall, fall, fall, but it has turned around now, and we're seeing mortgage rates spike. They've gone up almost a half percentage point in the last week. That makes everything more expensive for people out there who would really like to buy a new home.

HARRIS: Boy. The housing department just announced news about the homebuyer tax credit which is worth $8,000. Tell us about it, Gerri.

WILLIS: Hey, this is important. You know, just released today, new details to a plan that allows the first time homebuyer to get cash up front. Yes, up front.

You know, a tax credit, you normally have to wait until you pay your taxes to get it. But now we're seeing that they're trying to make it available immediately, obviously.

It boils down to this: First, instead of waiting until you buy a home and file your taxes to receive the cash, you use the money immediately toward an FHA-backed loan. You're not able to use the credit as part of your down payment; however, FHA-backed loans only require a 3.5 percent down payment anyway. You'll be able to use that money for closing costs, private mortgage insurance, to pay points to buy down your interest rate.

Look, as a practical matter, the money will get to consumers in the form of a short-term loan from lenders and FHA-affiliated agencies. You can't get the credit if you owe back taxes, Tony, or you're unable to qualify for a loan in the first place. You have to purchase a home within specific dates, January 1st of this year and before December 1st of this year. And, you know, you can't have bought a primary home in the last three years.

HARRIS: Yes.

WILLIS: To take advantage of these loans, the tax document you need, Tony, when you go to IRS.gov, 5405.

HARRIS: OK. Boy...

WILLIS: That's the big a one you need to know, 5405. But that's the good news. You're going to be able to have the money up front instead of waiting until you file your taxes.

HARRIS: That's the good news, but the figures on prime mortgages in trouble now.

WILLIS: Not good.

HARRIS: That is not good.

WILLIS: And, you know, Tony, I have to tell you, that really adds top spin to this whole thing. It's hard to correct the market. It's hard for people to feel better until we start seeing some kind of improvement in those foreclosure numbers. With unemployment continuing at these rates, that's just not going to happen anytime soon.

HARRIS: Gerri, appreciate it. Thank you.

WILLIS: My pleasure.

HARRIS: You know, it turns out the economy didn't do quite as bad as thought in the first quarter. Gross domestic product, GDP, staying at a 5.7 percent pace from January through March. That revised figure from the Commerce Department is down from 6.1 percent.

General Motors is now expected to file for bankruptcy protection on Monday. The deadline set by the Obama administration. GM will also name the 14 plants next week that it will close by the end of the year.

Let's talk about all of this with CNN's Susan Lisovicz at the New York Stock Exchange.

And on top of this, I guess we just saw the sticker price there. I didn't get a chance to look at it, but we're talking about lows we haven't seen since, what, the depression, Susan?

SUSAN LISOVICZ, CNN BUSINESS CORRESPONDENT: 1933, Tony.

HARRIS: Look at that.

LISOVICZ: Developments fast and furious now. GM, the nation's largest automaker, is trading at 88 cents a share. It's just had an astonishing collapse in its stock price, particularly in the last year. Of course, fueled by this deep recession.

Consumers reining their spending in, and that is a big-ticket item, a car. Of course, it was already hurt by record high gas prices because GM's bread and butter were things like SUVs and trucks, light trucks.

So, we are sharing GM shares now below a buck. And pointing to just another sign that GM will file bankruptcy, because what happens in a bankruptcy is that shareholders are wiped out. And this would be a very extraordinary reorganization.

We have a pie chart to show you.

GM right now is owned by its shareholders, but a government-led reorganization would see Uncle Sam being the majority shareholder, 72.5 percent. The Canadian government is expected to kick in something as well, because obviously they have some interest at stake here as well because there are plants, GM plants in Canada, right across the board.

UAW will be represented, 17.5 percent in bondholders. That was the big development yesterday, accepting a sweetened deal, trading $27 billion in debt for equity, for a stake in the company. And that also pointed to a bankruptcy filing, Tony, because as you know, basically they agreed to a bigger stake if they don't put up a fight and let this surgical bankruptcy take place.

We do know that the board of directors at GM is meeting tonight into tomorrow to discuss the restructuring, and Monday could be a big day. This would be, by the way, if GM files, the fourth biggest in U.S. history.

HARRIS: My goodness. All right, Susan. Appreciate it. A lot of information there.

Susan, thank you.

LISOVICZ: You're welcome.

HARRIS: You know, GM is scrambling right now to sell off its European operations, including Saab and Opel, before bankruptcy.

CNN's Al Goodman is in Saragosa, Spain, where Opel is one of the big employers.

And Al, if you would, what is the outlook for GM's European workers, and what are some of their biggest concerns?

AL GOODMAN, CNN MADRID BUREAU CHIEF: Well, the outlook is up in the air right now. And you've got just in this city alone, 33,000 workers, Tony, 7,000 working at this Opel plant that produces three different models -- a small car, a delivery truck, and a minivan. And 26,000 other workers in this city in supply firms that feed in parts and other material to this plant.

And then if you go right across Europe -- of course, Germany is the headquarters for Opel -- there have been reports of talks in Germany this day between the German government, between GM and potentially some investors in there. So everybody in this town and Opel workers all across Europe, the U.K., Germany, here, and many other countries, are hanging on what might happen. And the answer is we just don't know -- Tony.

HARRIS: Yes. And so there's -- is there a way to sort of quantify how hard a hit Saragosa might take if the Opel plant actually shuts down?

GOODMAN: Right. Well, due to the drop in car sales, they have already gone to a reduced number of shifts. But basically right now, the European Union, which has got so many countries involved with these Opel plants, they've had a meeting today of their industry ministers. And what Spain is arguing is let's not, for instance, have Germany save all of their jobs and close this one. OK?

They're saying if everybody has to take a hit, let's take it together. Let's have maybe lower shifts, lower salaries, but save as many jobs as possible. They want a United front, Spain and France, at these talks in Brussels, European Union-wide.

So there is a lot of jockeying. This would be the equivalent in the United States between the various states that have auto plants, who's going to save jobs, Pennsylvania, Ohio, et cetera. Well, that's what's going on in Europe right now. Everybody is trying to save their own jobs, the governments, that is, to keep their workers in place -- Tony.

HARRIS: I see. OK.

CNN's Al Goodman in Saragosa, Spain, for us.

Al, appreciate it. Thank you. And tonight, another reminder for you. CNN's Ali Velshi and Christine Romans explore the fall of the American auto industry and where it might go from here. "HOW THE WHEELS CAME OFF: THE RISE AND FALL OF THE AMERICAN AUTO INDUSTRY" runs Friday night. That's tonight, at 8:00 p.m. Eastern, only on CNN.

Protecting the nation's computer systems from terrorists, hackers and spies. We are talking about computers that control everything from the financial networks to the nation's power grid.

Now, last hour, President Obama announced the creation of a new position to coordinate cybersecurity efforts.

White House Correspondent Dan Lothian joining us now.

And Dan, how serious a problem are we talking about here?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, Tony, this is a really, really big problem here, as the president pointed out. It's a weapon of mass disruption.

Just to give you some context here, the Department of Homeland Security points out that the attacks on both private and public networks spiked from just over 4,000 in 2005 to more than 72,000 last year. So that gives you a sense of how serious this problem is. So that's why the president really wants to attack this issue of security on the Internet.

The president today, as you pointed out, saying that he will appoint a cyber coordinator, essentially a cyber czar, who will try to tighten up cybersecurity. This is -- as you know, computers are used for everything from BlackBerrys to the air traffic controllers. Everything in society now involves computers and the Internet. So this person will oversee security there.

And also, he wants to see sort of an education campaign to educate the public about the seriousness of this problem. And the president says his concerns come from personal experience.

(BEGIN VIDEO CLIP)

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: I know how it feels to have privacy violated, because it has happened to me and the people around me. It's no secret that my presidential campaign harnessed the Internet and technology to transform our politics. What isn't widely known is that during the general election, hackers managed to penetrate our computer systems.

(END VIDEO CLIP)

LOTHIAN: Now, the president says that this cyber coordinator, cyber czar, will be a member of the national security team, as well as the National Economic Council. And the reason for this is because he believes this threat is not only against national security, but also against our economic infrastructure -- Tony. HARRIS: Hey, Dan, one more quick one for you. The president made it his point to say that all this that is going on, that he is creating here, the government won't be spying on you. Correct?

LOTHIAN: That's right. And you know, obviously, that's the big concern sometimes from the public, when they hear about the government really stepping into this. And he said they're not going to dictate how the private industry should really conduct their own cybersecurity, and he also says that the government won't be monitoring Internet traffic or your computer when it comes to tightening up cybersecurity. So, trying to put the public at ease when it comes to that.

HARRIS: Exactly. All right.

Our White House Correspondent Dan Lothian for us.

Dan, appreciate it. Thank you.

LOTHIAN: OK, Tony.

HARRIS: Just how serious is a threat of cyber terrorism? That's what I'm going to ask the former director of the National Cybersecurity Center. He will join me live in just a couple of minutes.

But just ahead, U.S. satellites spot vehicle activity at a North Korean ballistic missile site.

We will find out what that means.

(COMMERCIAL BREAK)

HARRIS: North Korea test-fires another short-range missile. It is the sixth missile launch this week. Satellite imagery indicates the communist nation may be gearing up for more defiant action.

Our Pentagon correspondent, Barbara Starr, is working the story.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Two Defense Department officials tell CNN that in the last 48 hours, U.S. spy satellites have observed activity at a North Korean long-range missile facility.

The officials say the activity, which mainly is the movement of vehicles on the ground, appears to repeat a pattern they have seen in the past prior to a long-range missile launch.

The officials say there is no conclusion yet about whether North Korea is actually planning to launch a long-range missile or they're simply moving things around on the ground because they believe the U.S. satellites can see it.

This is the latest move by the North Koreans in the last week to move things around to make a number of very bellicose statements. Defense Secretary Robert Gates is trying to press the point that there is not a military crisis for the United States, that this needs to be solved through diplomacy in the region and in the United Nations.

The U.S. military does not want to get involved in a crisis here. The chief of staff of the U.S. Army, General George Casey, says if there was an armed conflict in North Korea with the South, it would draw the United States into the whole situation, it could take as long as three months to get enough U.S. forces to the peninsula, not something that the U.S. wants to do.

Barbara Starr, CNN, the Pentagon.

(END VIDEOTAPE)

HARRIS: Civilians paying the ultimate price as Pakistan takes on the Taliban. Pakistani officials now say 12 people died in a series of explosions yesterday in Peshawar. That is the capital of the province where government forces are waging a massive operation against Taliban militants.

The deadliest attacks happened at a crowded market. Timed explosive devices on two parked motorcycles detonated back to back. Authorities say after the blast, three suspected militants were killed in a gun battle with police. These attacks follow suicide bombings on police headquarters in Lahore that left 27 people dead.

President Obama focuses on international issues next week. He is hop scotching the globe again.

The president will meet with Saudi Arabia's King Abdullah in Riyadh on Wednesday. The White House says they will discuss a range of issues, including Mideast peace, Iran and terrorism.

Next stop Egypt, where the president plans to deliver a speech on U.S. relations with the Muslim world.

Then it is on to Europe and Germany. President Obama will visit the Buchenwald concentration camp. And in France, he will help commemorate the 65th anniversary of D-Day in Normandy.

President Obama announces plans to appoint a cyber czar to protect the nation's computer systems. Security experts say most security systems in the United States are not secure enough and the country could learn lessons about cyber protection from a surprising source -- China.

CNN's Katie Pilgrim explains.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT: Most computers in this country are vulnerable to attack; government computers, computerized infrastructure systems, transportation, communications, even things like water supply and ATMs. The worry is hostile attack, what Dale Meyerrose, former chief information officer and top information officer calls cyber crime. He says most U.S. computer systems are just not secure.

DALE MEYERROSE, FORMER CIO FOR U.S. INTEL. COMMUNITY: We're always at risk. And every system is at risk to some degree. 85 percent of the critical infrastructure in the United States is in private hands. And oftentimes, the business cases is made based on buying the least expensive, most available software.

PILGRIM: For its own defense, China has developed new operating software, disclosed during a recent hearing in Congress. This software is being installed in China's government and military system to harden its key military servers against the attack. The Pentagon says China is making steady progress in efforts to hack information from U.S. government and industrial computer systems. China denies cyber spying, but Pentagon officials say they have millions of hacks a day, many suspected from China.

James Carafano of the conservative Heritage Foundation says the new Chinese defenses are to be expected and our government must get up to speed.

JAMES CARAFANO, HERITAGE FOUNDATION: Everybody's doing this to everybody, and everybody knows everybody is doing this to everybody, so governments are out there not only looking at how to protect their own systems, but they are looking at how to exploit information from other governments.

PILGRIM: The Pentagon is requesting a budget for increasing the staff from 80 cyber experts to 250 by 2011.

Kitty Pilgrim, CNN.

(END VIDEOTAPE)

HARRIS: So let's take a closer look at the idea of a cybersecurity coordinator, a so-called cyber czar position that the president is creating.

Rod Beckstrom was director of the government's National Cybersecurity Center until his resignation in March. We will talk about that in a moment. He joins us from San Francisco.

And Rod, if you would -- first of all, good to see you.

What has the president, in your estimation, created here? A position in the White House under an alphabet soup of agencies here -- the NSC, the NEC. So really, what has he created?

ROD BECKSTROM, FORMER DIRECTOR, NATIONAL CYBERSECURITY CENTER: Sure. Well, the good news is we have a very net-savvy president here, who actually won his campaign largely leveraging this technology. And what he's doing is elevating the role of cybersecurity within the White House by creating a new Office of Cybersecurity, placing it under the National Security Council and balancing it under the National Economic Council, which is somewhat of a surprising move. That only developed over the last couple of weeks.

HARRIS: Yes, explain that to me. What do these two agencies -- why are they involved? And explain this to me.

BECKSTROM: Sure. Well, the National Security Council overviews our activity and coordinates it across most military and intelligence activity. But the secretary of the Treasury also has a seat there. But it really focuses on the nation's security and on our wars.

It works very closely with the Pentagon. It has a military and intelligence flavor.

The National Economic Council focuses more on the economy, and what's going on with business and what's going on with the Federal Reserve Bank and the Treasury. Very active in a broader purview. And I think what we see here is the president is saying, hey, this is not just a military and intelligence issue, we've got to balance this off with the private sector and the economy, which he elucidated very well in his speech.

HARRIS: Got you. Rod, you were trying to do this job. What difficulties did you run into? I'm wondering, did you run into some turf battles? What happened to you?

(LAUGHTER)

BECKSTROM: You know, well, look, I had a great experience. And any time you're trying to tie these pieces together, as the president talked about today, it's really challenging.

As we say, a lot of departments and agencies are very stove- piped, want to hold tightly onto their own information. And it's easier to talk about information sharing than to make that happen. And my job was to lead that information sharing and collaboration effort across the military government, across all of the intelligence activity, and the rest of the federal government.

HARRIS: Turf battles. Turf battles. Turf battles.

Tell me what happened to you. Why did you resign?

BECKSTROM: Well, I resigned -- I came in and I had committed to stay until January and the new administration. I stayed for a bit longer.

I'm a huge fan of the new president. And as much as I was of the past administration, very much wanted to help. But when I learned that we weren't really getting the budget and the funding and the support that we needed, it was clear to me that it didn't make a lot of sense to stay. And to be candid, I missed my wife and kids and beautiful Silicon Valley, California.

HARRIS: I can understand that piece of it. That's for sure.

I ask you these questions because I'm trying to understand and better gauge what the new person to get this job is likely to face. Did you run into turf battles? And you mentioned funding. Two questions here. So, what would it take to adequately fund this new position, in your mind? BECKSTROM: Look, there's billions of dollars going into these initiatives overall already, and more is needed, but in the right places. I think more needs to be put into our civilian government and our departments and agencies. They're outside the military and intelligence purview.

Did I run into turf battles? Absolutely. Everybody in Washington does. And if you're in an area this strategic and this technological, it's going to be a very challenging job in the White House.

But I think that's why it's good that the president has elevated this to have a seat on both the National Security Council and National Economic Council. That's a real position of power there in Washington, D.C., that this person is going to be able to lead from.

HARRIS: Hey, Rod, button this up for us. How important is this job? How vulnerable are our systems?

BECKSTROM: We're extremely vulnerable, and it grows every day. What keeps it from being totally horrible is that the whole world is dependent on the Internet. And this is not an American network anymore, this is the world's network, and the president made it a national security asset. I hope they'll make it an international security asset, because the whole world is together here. That's what tamps down some of the problems.

All of the countries are struggling in general with trying to bring down cyber crime and the hackers and what's going on. And we really need to lead international collaboration, and President Obama is the right person to do that. And let's hope that he chooses someone in that position that will help in that effort.

HARRIS: All right. We'll go off line here and I'll get some names, a short list going.

And Rod, it's good to see you. Thanks for your time.

BECKSTROM: All right. Thank you, Tony. Good to see you.

HARRIS: Yes, my pleasure.

When you think of learning to read, using music may not be the first thing you think of. So we will have a story where we'll actually go behind the scenes of a new music video series which is using hip-hop to teach toddlers and preschoolers to read.

We're back in a moment.

(COMMERCIAL BREAK)

HARRIS: And turning now to our "What Matters" segment, in partnership with "Essence" magazine, we start with the June issue on what people are talking about.

George Lambus is running for mayor in Jackson, Mississippi. The renegade Republican candidate says the best way to fight crime is to bring back the hanging noose.

Lambus says the tough stance is welcome in some parts of the city. The election, Tuesday.

It is being called the downslide before the downturn. A new study from Brandeis University finds the recession hitting middle class Hispanic and African-American families the hardest right now, with four out of five in danger of falling out of the middle class all together. Even before the recession, 88 percent of Hispanic and 84 percent of African-American middle class households were financially insecure.

And check this out, a new musical series using hip-hop to teach toddlers and preschoolers to read. It is getting rave reviews from parents and psychiatrists, but what's really compelling about this educational series is how it got started.

Here's Fredricka Whitfield with a preview of a story you'll see this weekend.

(BEGIN VIDEOTAPE)

CANDI CARTER, CREATOR, HIP HOP BABY: Emerson let's go.

FREDRICKA WHITFIELD, CNN CORRESPONDENT (voice-over): Six-year- old Emerson Carter is slow to start the day.

CARTER: You have to go to school. No kicking.

WHITFIELD: He won't respond to words but his mother, Candi Carter, says a song gets him moving and gets him to do just about everything else.

CARTER: Walk with mommy. Walk with mommy.

WHITFIELD: You can see even the little things for them have not been easy.

CARTER: I give birth and my son has a hole in his heart. A big hole in his heart but once we got out the physical stuff taken care of, he still wasn't -- something was wrong. My husband kept saying something is not right. He wasn't doing what other kids we're doing. He couldn't sit up at one year old.

WHITFIELD: Candi says doctors discovered a rare disorder called chromosome HP deletion.

CARTER: And I distinctly remember sitting with the geneticist and her saying you know it causes mental retardation, severe speech delay and she went down the list.

WHITFIELD: By the time Emerson was three, Candi and her husband realized how tough it would be.

(END VIDEOTAPE) HARRIS: So what Candi Carter did was create this music video series to help communicate with toddlers and preschoolers. The results just might amaze you. You can hear more about those results this weekend.

Be sure to join Fredricka Whitfield for a look at Hip-Hop Baby starting tomorrow at noon Eastern. Carter will then be live with Fredricka at 4:00 Eastern.

California's massive budget deficit, it could hit everything from children's health care to summer school. How will the state dig out? A look at that, just ahead.

(COMMERCIAL BREAK)

HARRIS: So here we go, just three hours into the trading day and as you can see, it's been pretty flat to negative throughout the day. The DOW is down nine points. The NASDAQ essentially flat down a point. We are following the numbers of course for you throughout the day, Friday getaway day right here in the CNN NEWSROOM with Susan Lisovicz.

Children's health care, summer school, California state parks, all could take a hit as the state tries to handle a massive budget deficit.

Here's CNN's Casey Wian.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Angry protesters surrounded California's state capital as lawmakers struggled with more than $18 billion in budget cuts proposed by Governor Arnold Schwarzenegger.

JIM NIELSEN (R), CALIFORNIA ASSEMBLY: This is historic. This is of the magnitude that's incomprehensible.

UNIDENTIFIED MALE: The mood is a little bit of a shock and awe.

WIAN: Now that voters rejected plans to close California's budget deficit with borrowing and taxes, spending cuts are the only alternative.

LINNIE COBB, HEALTH CARE PROVIDER: People are angry and upset and they are confused.

WIAN: Especially about cuts that will eliminate health care coverage for nearly a million children.

JOSHUA STARK, LAID OFF WORKER: I don't want to wait until my two and a half year-old baby has an emergency to ever get to be looked at by a doctor.

DEENA LAHN, CHILDREN'S DEFENSE FUND: To eliminate or even cut back this program makes absolutely no sense. WIAN: And by cuts to education.

UNIDENTIFIED MALE: Putting the students off from money for college there must be other alternatives.

WIAN: Other proposed cuts include ending California's Welfare to Work Program, laying off 5,000 state workers, releasing 19,000 jail inmates and eliminating funding for state parks.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: We have overspent more money than we have this day. That I think we have to stop that; we should not live beyond our means. We wanted to raise some extra revenues but the people in the special election have voted against that.

WIAN: California is asking the Obama administration to guarantee short-term loans to survive an expected cash crunch this summer.

The President himself was in California Wednesday night asking for political donations from some of the state's wealthiest residents. He reportedly raised between $3 million and $4 million during a Beverly Hills dinner attended by several Hollywood celebrities.

(on camera): The timing was at best uncomfortable now that millions of Californians are facing a future without jobs, or health care or education because of the state's money troubles.

Casey Wian, CNN, Los Angeles.

(END VIDEOTAPE)

HARRIS: President Obama gets no criticism from his predecessor at least not publicly. In his first major speech since leaving Office, former President George W. Bush defended some of his own policies including water-boarding but he would not take issue with his successor.

No TV cameras were allowed as he spoke at Lake Michigan College. He said he misses -- listen to this -- Air Force One, interacting with service members and the White House food.

As for his legacy he said he hopes it's this, quote, "The man showed up in office with a set of principles and he was unwilling to sacrifice his soul for the sake of popularity," end the quotes.

Neighbors describe her as a pious woman, 80 years old the treasure. But police say she used her church as her own personal ATM.

(COMMERCIAL BREAK)

HARRIS: North of Tampa in Newport Richie, Florida -- listen to this -- a church is surprised to learn one of its most trusted members has been helping herself to money meant for abuse victims; more than $40,000 worth.

(BEGIN VIDEO CLIP) PEGGY DRACHENBERG, NEIGHBOR: She's always going to church. I mean, she's always -- she seems like a pious woman. She's a nice woman

UNIDENTIFIED MALE: So, it shocks you to hear this?

DRACHENBERG: Yes, it shocks me.

(END VIDEO CLIP)

HARRIS: Police say the 80-year-old Earl Ferguson cut checks for herself for nine years as treasurer of the church women's group. Police say Ferguson told investigators she did it because of her own financial difficulty and to help her family.

Looking for your own piece of American history -- how about a civil war cannon or maybe a civil war rifle a bayonet? The auction sites are certainly out right now. The Civil War Museum at Eastover Resort in Lenox, Massachusetts is selling it all.

The museum's owner says it is because of the bad economy. The auction is in August. Now, there is already interest from a range of individuals and museums.

So the auto industry is under pressure to build more fuel efficient vehicles but would a GM bankruptcy derail those plans?

Let's get an "Energy Fix" here. CNNMoney.com's Poppy Harlow has that Energy Fix from New York. Good Friday to you Poppy.

POPPY HARLOW, CNN MONEY.COM CORRESPONDENT: Good Friday, Tony.

Well, this interesting development, it's going to be an interesting weekend on Monday, when we see what the fate is of General Motors. And the big question that a lot of people have is what does this mean for all of those fuel efficient cars, right?

GM says it has the most models out there that get 30 miles per gallon or more. And we asked the GM spokesperson what a bankruptcy would mean and he said, "Listen, restructuring inside Bankruptcy Court or outside of it, no matter what, GM is going to continue with that viability plan and focus on its four core brands Chevy, Cadillac, Buick and GMC."

He said they're still committed to fuel efficient cars and trucks even meeting those new CAFE standards that were just announced. In fact, just today, a few hours ago we learned that GM is going to build 160,000 subcompact cars -- very small cars a year -- at a plant that is currently idle here in the U.S.

They haven't chosen what plant yet that's going to be Tony. And he said when it comes to price and the demand, that's all going to be driven by what consumers are asking for...

HARRIS: All right. HARLOW: ...and what the marketplace is there and he said we might even get cheaper fuel efficient models right now -- right of course, we're trying to get rid of those 2009 models.

HARRIS: Yes.

HARLOW: But analysts we spoke with said, listen, with less competition out there, fewer dealerships, going to mean higher prices especially for those fuel efficient models for folks -- Tony.

HARRIS: Well, break this down for us, Poppy. How fuel efficient is GM's line up?

HARLOW: Right. Well, I think that at the beginning of those 20 GM models that they say get 30 miles per gallon or more, that's a lot. But 12 of them, Tony, are Saturns and Pontiac. And the problem here is that GM is killing Pontiac by the end of the year; they've put Saturn up for sale. If no one buys Saturn, then we could see that disappear too. So that's taking away already more than half of those fuel efficient models. That's the big question out there.

What you're seeing on your screen now, the Chevy Cobalt. That is a GM model that gets 32 miles per gallon; it starts below $16,000. Next spring, you're going to see that replaced with a Chevy Cruise and that's going to get probably 40 miles per gallon. We don't know the price tag on that yet.

But Tony, a big obstacle again is that these automakers don't make the same big profit margins on these small cars that they do on these Hummers -- Tony.

HARRIS: Yes. What about GM's electric hybrid -- the Chevy Volt? I've heard so much about this. I'm wondering if it will be impacted by a bankruptcy.

HARLOW: That's exactly what we asked GM. What would a bankruptcy mean for the Volt because they're scheduled to release it next November? They said we're still on track for that.

But analysts say this isn't going to be a big seller. It's rumored to be 40 grand, expensive. GM hasn't confirmed that price yet. It's pricey if that's the case and it could lose money for the company in the beginning. That's another problem.

The only value proposition here for GM and the Volt and that electric car is that it could really change people's perception of General Motors like we saw with the Prius and Toyota, right, that even tough times they're willing to invest in these cars of the future. We'll have to see, though, Tony but a dramatic shift to the lineup, certainly ahead, as GM turns down those brands.

HARRIS: I'm really interested in that Volt. They need to get that one on line. I'd like to take one...

HARLOW: We got to test drive one.

HARRIS: Yes, yes. The price point is a little crazy right now. Poppy, have a great weekend. Thank you.

HARLOW: You too.

HARRIS: And tonight CNN's Ali Velshi and Christine Romans explore the troubled American auto industry and where it might go from here; "HOW THE WHEELS CAME OFF: THE RISE AND FALL OF THE AMERICAN AUTO INDUSTRY" tonight at 8:00 p.m. Eastern only on CNN.

Hey, look, can you spell laodicean? Is that -- I can't even pronounce it. How in the heck would I ever be able to spell it? Meet the 13-year-old girl who can -- still ahead in the NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: Here's a question for you. Do you owe more than your home is actually worth right now? A lot of folks are finding themselves in that bind these days.

Here's a question. Can you modify your mortgage? CNN personal finance editor Gerri Willis asks "The Help Desk" in New York.

(BEGIN VIDEOTAPE)

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: We want to get you answers to your financial questions. Let's get straight to "The Help Desk."

Beth Kobliner is the author of "Get a Financial Life" and John Simons is the personal finance editor at "Black Enterprise" Magazine. Ok, guys, let's get down to it.

Frank in Arizona asks, "We are in deferment on our mortgage which ends June 1. We modified our loan in September and I lost my job in January. We're hoping to modify our loan again with our current lender. We have $650,000 on our home. It's worth -- get this, guys -- $258,000. What are our options?"

John, this is a tough situation.

JOHN SIMONS, PERSONAL FINANCE EDITOR, "BLACK ENTERPRISE" MAGAZINE: Yes. It really is.

WILLIS: My heart goes out to them.

SIMONS: It really is. It sounds like this guy is a perfect candidate for the "Making Home Affordable" programs that are being run by the federal government right now. What this guy should do immediately is go to makinghomeaffordable.gov where they will help you -- walk you through the process and make sure that you're eligible for a modification done by -- your loan has to be underwritten by Fannie Mae or Freddie Mac. There are options for this person.

WILLIS: And can I tell you, they have great applets, great work sheets on that Web site. It will help you figure out how to use it.

BETH KOBLINER, AUTHOR, "GET A FINANCIAL LIFE": Very useful. WILLIS: Our next e-mail: "I would like to start an education fund for my 20-month-old daughter but don't know the best way. What's the rule of thumb on how much I should set money aside for her?"

How much? Beth how much should you say then -- thank goodness she's asking the question, right?

KOBLINER: It's a great question. She has a 20-month-old but if I told her the numbers, she would just chuck it all and have her kid never go to school again.

The typical private school cost, on average, costs $26,000 per tuition. Public schools are $7,000 per tuition. It's so expensive. My advice is, let's not worry about the number right now. Let's max out of what she has.

If you have a 401(k) with matching, max out of it. If you Roth IRA, you're eligible. If you're a couple earning under $166,000, max out of it. Because you can't borrow for retirement, you can borrow for college.

WILLIS: And just to mention, savingforcollege.com, a great Web site to go to.

KOBLINER: Excellent.

WILLIS: "The Help Desk" is all about getting you answers. Send me an e-mail to gerri@cnn.com or log on to cnn.com/helpdesk to see more of our financial solutions.

And "The Help Desk" is everywhere. Make sure to check out the latest issue of "Money" magazine on newsstands now.

(END VIDEOTAPE)

HARRIS: She is absolutely adorable. A 13-year-old eighth grader from Kansas takes top honors in the Scripps National Spelling Bee. Kavya Shivashankar had a unique way of helping herself spell out the winning word.

(BEGIN VIDEO CLIP)

KAVYA SHIVASHANKAR, SPELLING BEE CHAMPION: Laodicean, l-a-o-d-i- c-e-a-n, Laodicean.

UNIDENTIFIED MALE: We have a champion.

(END VIDEO CLIP)

HARRIS: We have a champion. Now, in case you're wondering, the word she spelled means lukewarm or indifferent in matters of politics or religion. You know what it means? $40,000 to that young lady in cash and prizes.

The king of late-night TV signs off tonight. It is Jay Leno's final turn on "The Tonight Show." Leno is the fourth host of the long running variety series following the late-night legends. We're talking about Steve Allan, Jack Paar, Johnny Carson -- my fave -- tonight's guest is Conan O'Brien who will take "The Tonight Show" reigns on Monday. Leno isn't going anywhere. He's getting his own prime time show starting in September.

Britain's Prince Harry is in New York today. It's a two-day tour. It's his official trip to the United States. The prince will meet with relatives of 9/11 victims this afternoon. He will also dedicate a memorial garden honoring the British victims of the terror attacks. Later some lighter fare; Prince Harry plans to take part in a charity polo match.

Hitting the road to be your own boss; meet Jennifer and Joe, casualties of the dotcom boom, certainly the bust. How they became their own bosses and carved a road to success.

(COMMERCIAL BREAK)

HARRIS: A couple tired of working for big corporations become their own bosses, carving their own road -- so to speak. They've been on a cross-country tour in an Airstream -- takes their lives in a new direction.

It's our Friday special: "Survival of the Fittest."

(BEGIN VIDEOTAPE)

HARRIS (voice-over): Back when these photos were taken in London, a smiling Jennifer and Joe Remling had no idea what was around the corner. They had moved overseas with lucrative jobs as corporate recruiter and an architect. But it was 2001 and the dotcom boom was about to go bust; they both lost their jobs.

JENNIFER REMLING, AUTHOR, "CARVE YOUR OWN ROAD": I would wake up in the morning and my thoughts would be, like, what's the point of getting out of bed? There's no job, there's no prospects.

It was a period of deep reflection, deep soul-searching and I determined at that point in my life that I wasn't going to allow this to happen to me again. I was going to be in control the next time a recession came around.

HARRIS: Five months later she was spinning the plans to become her own boss and get control of her own financial destiny.

REMLING: I went on a journey of reading 300 books in two years from the very esoteric to the very scientific and everything in between about that. And I started to apply those principles to my life.

HARRIS: She found another corporate job but slowly began building her own recruiting company, one client at a time.

REMLING: You can't just jump off a cliff and everything appears. It's like -- you sort of -- build a bridge and it takes about two years. HARRIS: After two years, she quit her day job.

Joe had his own epiphany. After years of working for large corporate firms, he split away and founded his own architecture and design firm with two partners.

JOE REMLING, ARCHITECT: You have to be the director and not the participant in your own life.

HARRIS: With two entrepreneurs in the family, their lives changed completely.

JENNIFER REMLING: This started out with Joe and I becoming a lot happier with our lives after carving our own roads, so to speak.

HARRIS: They not only carved their own road, they hit the road -- literally.

JOE REMLING: It started off actually as an adventure for us as a couple to kind of hit the road.

JENNIFER REMLING: We wanted to get out and find out about other people so we could share this with people in the country who want that for themselves but don't know how to get it.

HARRIS: Jennifer and Joe took a cross country road trip in this borrowed Airstream. The end result, this book -- "Carve Your Own Road."

JENNIFER REMLING: Interviewed about 40 people who had been either in a corporate job and quit to become an entrepreneur or who has figured out a way inside the corporate setting to innovate and do really cool things.

HARRIS: Through these interviews Jennifer found a common denominator for success. First, get clarity.

JENNIFER REMLING: We aren't taking time to get deep clarity about what we want with our lives. So it's about taking that time to ask yourself the bigger, deeper question.

What am I doing when I lose all sense of time? What is it that feeds my soul? Do I want to have an impact and what does that look like? What things am I told that I do well? These are the kinds of questions, deep soul-searching questions.

HARRIS: Second, set big goals. Right a vision statement.

JENNIFER REMLING: Big goals move me forward and they get me really excited about overcoming fear and obstacles. When you set sort of mediocre goals it's hard to get like super-motivated and excited about it.

HARRIS: Third, immersion.

JENNIFER REMLING: Taking 10 minutes out of your day every day to set the tone for your day and where you're headed. And at that point, you can be very clear about what action to take.

HARRIS: She also recommends a visualization board. Cutting out pictures of your goals so that you can get a literal picture of what you want. Now Jennifer only does corporate recruiting 10 percent of the time. The rest she's holding workshops, getting paid to help others find their life's work.

JENNIFER REMLING: Your work, your life, your terms -- period. It's sort of taking control and realizing that you have control and exerting that again.

(END VIDEOTAPE)

HARRIS: Good stuff. We're pushing forward now with the next hour of CNN NEWSROOM with Don Lemon.