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American Morning

White House Plan for Rescuing the Auto Industry to be Announced; Parts of Northeast Could Get a Foot of Snow; Warren Thanks Obama for Picking Him and Taking Heat; Great Expectation for Obama from African-Americans; Madoff: Following the Money

Aired December 19, 2008 - 08:00   ET


PATRICIA MURPHY, EDITOR, CITIZENJANEPOLITICS.COM: I think with Caroline Kennedy, you know, I don't think it's un-American. If you look at history, I think it's entirely American if she was to get this. The one thing I'll say, David Paterson is looking for somebody who is not only qualified and can do the job, but can get elected in 2010. She's a viable statewide candidate. So I think she's inherently qualified in that way.
JOHN ROBERTS, CNN ANCHOR: Patricia Murphy, it's always great to see you. Thanks for coming in this morning.

MURPHY: You, too.

ROBERTS: All right, take care.

MURPHY: Thank you.

ROBERTS: Happy holidays.

MURPHY: You, too.

KIRAN CHETRY, CNN ANCHOR: Breaking news into AMERICAN MORNING now. A White House plan for rescuing the auto industry appears to be imminent. CNN's Dana Bash is following the developments for us and joins us on the phone.

Dana, thanks for being with us. What are you learning about what this deal could possibly entail?

ON THE PHONE: DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Good morning, Kiran. Well, first of all, basically what we are told by two sources familiar with the administration, deliberations is that we should expect an announcement on an auto bailout as early as this morning. But after saying that, I should tell you, I'm also cautioned that the details are still being worked out, Kiran, even as we speak as to what they intend to do to try to help Detroit before the end of the year, before at least one of these companies say that they could fall into collapse.

Now this obviously have been very intricate and very difficult deliberation inside the White House, because they have been picking up the ball after this bail died on Capitol Hill. And so, we don't have a lot of details in terms of what the plan will be. It has been a very, very close hold. What we understand is that it will be some kind of short-term loan. We don't know exactly how long it will be. And our understanding always has been that the White House has been trying to work out some strings, some real strings to attach to that loan for Detroit.

Again, those are some of the details that we are not sure of yet. People on Capitol Hill who I've talk to have not gotten word from the White House. And we're, again, has been told that they have been very, very careful with what they have been telling anybody. But the bottom line is that we are listening, we are watching, we are listening to hear any official word from the White House as we are told that they are wrapping up this package for Detroit that we could hear an announcement on as early as this morning, Kiran.

CHETRY: So can you tell us -- because there's also been talk and reporting about, quote, "orderly bankruptcy" as it's being described. The Bush administration is looking at this as also another possibility. Would these loans or this "deal" on the autos have an organized bankruptcy as part of that or with this be instead of?

BASH: That's an excellent question, and we're not sure of the answer to that yet. But, you know, it was really fascinating that yesterday at the White House they made public for the first time that that was a real consideration having an orderly bankruptcy.

But, you know, the minute that they said that there was obviously uproar in Detroit, because the car companies have been very, very resistant to having anything with the label bankruptcy on it even if it is an orderly bankruptcy. And then later at the White House, they described it as an option of last resort to be used only if there wasn't another agreement.

So, now, we're waiting to see what that agreement is. If and when they actually finalize it, because again we're told that they are doing that -- that they are on the process of that even as we speak. So, bankruptcy did not seen like something that would happen if there wasn't agreement. But at this point, as we know, because we've been reporting this for so long, and they are so desperate to get help in Detroit. If that was the only way they are going to get it, they might have had to agree to it.


CHETRY: Dana Bash with these developments. A possible deal in the works for the auto industry. Keep us posted this morning, Dana. Thanks.

BASH: We'll do. Thanks.

ROBERTS: Our other top story in the morning. With the official start still two days away, much of the country getting an early taste of winter with a mix of snow, sleet, ice and freezing rain.

Parts of the northeast could get as much as a foot of snow today, maybe even more. A live picture there of CLTV. That would be Chicago. Chicago, there you go. And the streets of Chicago getting a light dusting of snow. Nothing too bad there. It's actually worse in Michigan as the storm is heading east. The National Weather Service issuing a winter storm warning for the entire New York metropolitan area. And ice storm warnings issued for parts of five states in the Midwest.

We are tracking the extreme weather with Reynolds Wolf. He's at the CNN weather center in Atlanta. And Susan Roesgen at Chicago's O'Hare Airport. Let's start with Susan this morning.

You didn't wear your sensible shoes today, Susan, and how much trouble are you in for doing that?

SUSAN ROESGEN, CNN CORRESPONDENT: Hey, I'd like to know, John, who thinks these are bowling shoes. We love the snow, but this is slush. And actually, this is a chic Chicago wear for a CNN reporter who was optimistic this morning, John, that it would not be that slushy out here.

Look, can you imagine here, we are at O'Hare. Somebody at least got here on the roads, but this poor guy -- first, he had to fix a tire.

Hey, how's it going?


ROESGEN: You don't want to know. OK. Well, good luck, buddy.

I think there is a better luck right now, John, with actually the planes. Last time I checked the board, the cancellations had gone down. Some -- maybe one out of every five planes now. And the delays weren't too bad here, either. But they do have 274 snowplows out here in the city of Chicago. And they got 9,000 miles of main roads that they got to clear.


ROBERTS: All right. Susan Roesgen for us this morning. The guy was a little busy, I guess. Is that what it was?

ROESGEN: Oh yes.

ROBERTS: I didn't quite hear what he had to say, but it didn't sound like much. Thanks, Susan. We'll check back.


LISOVICZ: I think it was go away.


CHETRY: First, he had to change the tire on the snow, and then it will (INAUDIBLE) pouring either, what, anti-freeze or some sort of windshield wiper hood.


ROBERTS: Just a bad day for some people this morning.

CHETRY: All right. Well, CNN's Reynolds Wolf is tracking the extreme weather.

Yes, it's easy for us because we are here at the warm desk, right? Meanwhile, that poor guy is out there, trying to change tires in several inches of snow and flush. Not fun.


ROBERTS: Reynolds, thank you so much.

This morning Pastor Rick Warren responding to the outcry over his role at the inauguration. Warren commends Barack Obama for his courage to pick him, taking enormous from gay Americans, their supporters and other liberal groups. CNN's Jason Carroll has got more on this firestorm, and firestorm it is. This is outrageous.

JASON CARROLL, CNN NATIONAL CORRESPONDENT: Absolutely. He's really taking a lot of heat for this. Actually, taking heat from the left and some on the right as well. Some of them calling it a betrayal. President-elect Obama says he hopes his choice will help bring Americans together on social issues, but shows so far, it simply shows how far we really are apart.


CARROLL (voice-over): Liberal bloggers are in an uproar.

LEAH MCELRATHYN, BLOGGER, THE HUFFINGTON POST: Emotionally, it felt like a kick in the gut. It's also just very puzzling.

CARROLL: They're writing headlines such as "Obama picks homophobe." To his followers, Pastor Rick Warren is a spiritual leader. But his critics say the choice for him to do the invocation at the inauguration is a slap in the face.

KATHRYN KOLBERT, PEOPLE FOR THE AMERICAN WAY: He has taken positions against women in America, against gays and lesbians in America.

CARROLL: Why so much anger? Warren is against a woman's right to choose and same-sex marriage, which he appears to compare to incest and pedophilia.

PASTOR RICK WARREN, SADDLEBACK CHURCH: I'm opposed to having a brother and sister being together and call that marriage. I'm opposed to an older guy marrying a child.

UNIDENTIFIED MALE: And you think those are equivalent to gays getting married?

WARREN: Oh, I do.

CARROLL: So why would President-elect Obama choose such a controversial figure for such a historic day? BARACK OBAMA (D), PRESIDENT-ELECT: I was invited to Rick Warren's church to speak despite his awareness that I held views that were entirely contrary to his. And that dialogue, I think, is part of what my campaign has been all about.

CARROLL: Some of those who supported Obama during his campaign say they feel betrayed.

HARRY KNOX, HUMAN RIGHTS CAMPAIGN: We worked very hard for Senator Obama's election. For us to not be respected by his choices in this case is really very disappointing.

CARROLL: Disappointment not just from the left. Some Evangelicals say Warren has no business preaching at the inauguration.

DAVID BRODY, CHRISTIAN BROADCASTING NETWORK: My e-mail box is flooded with pro-life conservatives saying this is ridiculous. So why is Rick Warren associating himself with Barack Obama on such a historic day?

CARROLL: Does anyone think Obama made the right choice? Politically some analysts say he may have.

STEPHEN HAYES, "THE WEEKLY STANDARD": You have criticism from the left as he heads into his first 100 days. That could be helpful as he looks to sort of quickly pass several bills. He's going to need centrist help.


CARROLL: And this morning, prominent Democratic Congressman Barney Frank is also slamming Obama's choice of Warren calling it disappointing. For his part, Pastor Warren has responded to the backlash, commending Obama for his courage in selecting someone with views different than his own. Warren says, quote, "Hopefully, individuals passionately expressing opinions from the left and from the right will recognize that both of us have shown a commitment to model stability in America."

ROBERTS: Yes. Barack Obama under a lot of pressure to rescind the invitation. Rick Warren under a lot of pressure to not go. But it seems to me both of them are going to stick with this.

CARROLL: So far, that's what it seems like.


ROBERTS: (INAUDIBLE). Jason, good to see you. Thanks for coming in. 11 minutes now after the hour.

CHETRY: The Detroit city blues.


UNIDENTIFIED MALE: Detroit needs help. It's just kicking the city in the stomach.


CHETRY: The big three in big trouble. Sky high unemployment and a team that just can't win and it could get worse. You're watching the "Most News in the Morning."


CHETRY: We're following breaking news this morning here on AMERICAN MORNING. CNN has learned that in less than an hour, President Bush will announce an auto rescue plan and the news certainly couldn't come at a more crucial time for Detroit.

Today Chrysler will halt production in all of its 30 plants. They will be shutdown for the next month. The future certainly uncertain. The big three are fighting to survive, and really, so was the city of Detroit. Its workers, even its home team, The Detroit Lions.

CNN's Carol Costello is live in Washington with a fan's perspective I guess you could say, Carol.

CAROL COSTELLO, CNN CORRESPONDENT: I know because I am a Detroit Lions fan. There, I admitted it. I feel like I'm at an AA meeting. But I do have a sense of humor, because they're -- the lines have become kind of a national joke. There are jokes going all around the country like -- how do you keep a Detroit Lion out of your back yard. You put up goal post. Where do you go when a tornado hits Michigan? To Ford Field, they never have a touchdown there.

I mean, pity Detroit. Some say the winless lions had become a perfect metaphor for the city itself.


COSTELLO (voice-over): You could call Detroit the "Big Hurt." It's sole major industry is begging for a government bailout. Right now, the answer is a big, fat no.

SEN. RICHARD SHELBY (R), ALABAMA: This is only delaying their funeral.

COSTELLO: Ouch! Unemployment stands at 10.1 percent. Foreclosure rates are staggering. And the city's mayor?

KWAME KILPATRICK, FORMER DETROIT MAYOR: I'm asking for, you know, your forgiveness. It will never happen again.

COSTELLO: He lost his job and landed in jail for lying under oath about a lurid sexual affair. Detroit, the "Big Hurt."

DREW SHARP, "DETROIT FREE PRESS" COLUMNIST: Detroit needs help not just from the economic standpoint but, you know, people in this town count on the sports team to kind of help them get through the real world, and as bad as the Lions were this season, it's just kicking the city in the stomach even more.

COSTELLO: Are they ever. The Detroit Lions, far from uplifting, they've become a metaphor for what's wrong with Detroit. Owned by William Clay Ford, yes, those Fords, the Lions are on the verge of a historic NFL record. If they lose this Sunday, they will be 0-15. Yes, 0-15. For you non-sports fans, that means they have not won a game all season. If they lose this Sunday after, they will be 0-16. Fans are beyond angry.

UNIDENTIFIED MALE: With any luck maybe William Clay Ford will hire George W. Bush to our new general manager. And if that happens, you thought 0-16 was bad? We might even lose the pre-season.

COSTELO: Detroit seems to be taking out all of its woes on the team, booing them so relentlessly that Lions center Dominic Raiola gave the finger to his own fans with no regrets.

DOMINIC RAIOLA, DETROIT LIONS CENTER: I'm tired of being a doormat. You know, for people to just talk to us, how do they want to talk to us. I'm just not going to put up with that any more.

UNIDENTIFIED MALE: Quite desperate times calls for desperate measures?


UNIDENTIFIED MALE: Why do you say that? I'm asking you, are you desperate for a win?

MARINELLI: I want to win.

COSTELLO: Some fans are starting to drift away, but for many there remains those beautiful things that Lions fans have always had and that Michigan possesses -- intense loyalty and hope. You can hear it in the governor's voice.

GOV. JENNIFER GRANHOLM (D), MICHIGAN: In Michigan, we are going to be all right.

COSTELLO: And in sports fans' hearts.

SHARP: I'm one of the few people in this town who actually thinks 0- 16 is impossible in the NFL.


COSTELLO: I hope so. But you know, Kiran, some fans are actually hoping for 0-16 because at least the lions will have won at something. They'll won the kind of embarrassing place in NFL history.

CHETRY: Yes. Plus, don't they get a better place in the draft next year. Hey, hope springs eternal. Right?

COSTELLO: Well, they haven't been very smart in their draft choices though. I don't even know if that's good.

CHETRY: Oh, that's a whole another bowl of wax.

COSTELLO: I know. I hope they win. They are playing New Orleans this Sunday. I hope they win.

CHETRY: Carol Costello for us. Thanks.


ROBERTS: In 32 days, Barack Obama will make history when he is sworn in as America's first black president. But is the African-American community expecting too much from Obama? We'll talk to one member of Congress and get his take.

And Iraq in transition. There is now a plan in place to have troops out. But is it soon enough for the next administration? It's 18 minutes after the hour.


CHETRY: Welcome back to the "Most Politics in the Morning." Just 32 days until Barack Obama's inauguration, and he will of course become the first black president in American history. Some are worried that the expectations may be too high from the African-American community.

Joining me now is Missouri Congressman Emanuel Cleaver, who knows first hand the potential challenges and pitfalls.

In 1991, you were elected Kansas City's first black mayor, and you said that you went through something similar where expectations were so high. What do you think are some of the challenges that Barack Obama is facing, Congressman, when it comes to the African-American community?

REP. EMANUEL CLEAVER, FIRST AFRICAN-AMERICAN MAYOR OF KANSAS CITY: Well, first of all, I think people are going to have to realize that if he takes off his shirt, there's not going to be an "S" carved into some kind of a hidden uniform.

The expectation -- inflated expectation I might add I think is natural. It was -- president when I was elected mayor in Kansas City. A city with very small African-American population, and the Africa- American community expected to miracles, they expected roads to automatically be built.

And if you look at what's going on in Washington, in preparation for the inauguration, you have almost four million people expected in a city of 800,000. And they are coming there without hotel rooms, without places to eat, without any assurance that they will even get near the inauguration. And I think that kind of expectation for the inauguration also is going to be present during his term. That he is going to be able to fix all the problems and that African-Americans who've been suffering discrimination will see it ended almost immediately.

CHETRY: So it's very interesting. You write in your op-ed in "The Washington Post" that Obama will be the first black president, not the black president first. What do you mean by that?

CLEAVER: Well, because I listened to my black brothers and sisters, mainly brothers, are talking about what Obama is going to do once he's in office. I had a cousin, for example, who lives on the east coast telling me that one of the bad neighborhoods, the decrepit neighborhood where he lives is going to be fixed. I couldn't believe it.

He said, while things are bad right now, he said that when Obama gets in office, he will take care of this neighborhood. And I spent some time, worthless time I might add, because I didn't convince him that he's not going to be able to go around the country driving some truck with piles of money in the back fixing problems, that the nation is broke.

In fact, this is a really difficult time to have a first black president when the nation is broke and a potpourri of problems are hitting Washington almost daily. It's going to be difficult.

CHETRY: So, I want to ask -- what is your message then to fellow African-Americans? Are you saying don't add to the pressure. Don't expect miracles? What is your message, I guess?

CLEAVER: Well, first of all, I think we got to expect Barack Obama to be a great president, and I think he will. But we cannot expect the changes to take place overnight and we cannot expect bigotry to be race. It's going to still be a part of American life, and we've got to support Barack Obama.

We have put him there by huge numbers, and we can't start applying pressure for him to do things, particularly serving as a civil rights leader. He is not a civil rights leader. He's not black first. He's the first black president, meaning that, he's got to be president for the entire nation, and expecting him to put nine people on the cabinet for example, or three or four, for that matter, is unrealistic. We've got to support a man who all of us I think can make into a great president without this high, almost irrational expectation.

CHETRY: You also point out, though, that Barack Obama does owe an enormous gratitude to many African-Americans who came out for him in record numbers, who, you know, pounded the pavement, trying to register voters. Make sure people get out there.

Is there some obligation on his part to make sure that issues that are extremely, extremely relevant and important to the African-American community get brought front and center?

CLEAVER: Yes. Barack Obama is African-American. And there is absolutely no way he's going to sit in the Oval Office with an awareness of the unique needs in the African-American and the brown community for that matter and ignore them.

I mean, I think you're going to see a labor department that's going to be very active in terms of job training. I think you're going to see Department of Housing and Urban Development that's going to be actively involved in trying to rebuild the urban core. Things that we haven't seen in a while. And he is going to deal with those issues that black Americans are concerned about, but they've got to understand that that is not going to be his sole point of concern. He's got to be concerned for the entire nation. And even in the areas where he is going to be able to work, he is not going to be able to work miracles. These problems have taken several hundred years in the making and he's not going to erase them in four or eight years.

CHETRY: All right. You bring up some good points. Still showing that there is still a lot of work to be done.

Congressman Emanuel Cleaver, thanks for joining us this morning.

CLEAVER: Good to be here with you.

ROBERTS: Well, when it comes to the incredible $50 billion scam that former NASDAQ chief Bernie Madoff is being accused off, there are still more questions than answers. How could this have gone on for so long, and did he really act alone? Our Allan Chernoff has been following the story for us. He's got the very latest developments this morning.

So, could he have acted alone?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well, John, have a look at this. Here's the account statement of just one customer of Bernie Madoff. Dozens and dozens of stocks listed over here. Just one monthly statement. Here's his SEC registration from a couple of years ago saying that he managed $17 billion. Professional investors and lawyers with vast experience in fraud look at these documents and say could one man have done all of this? They don't think so.


CHERNOFF (voice-over): Federal investigators are trying to determine how Bernard Madoff executed his fraud are digging through records at Madoff securities, also seeking to learn whether others were involved.

WILLIAM GALVIN, MASSACHUSETTS SEC. OF THE COMMONWEALTH: It's extraordinary can you could be -- have that much money under management, involved in that much money and do it as a solo act.

CHERNOFF: Massachusetts has issued a subpoena to Madoff's brother, Peter. The firm's chief compliance office and to Cohmad Securities, a firm that shares a floor in the same office building as Madoff. Cohmad had no comment. Clients of Madoff point to their detailed monthly statement, listing extensive trading as evidence that Madoff could not have done it all himself. There were red flags. The SEC received repeated detailed warnings about Madoff from investment professional Harry Marcopoulus. When Bernard Madoff finally registered as an investment advisor in 2006, he told the SEC he managed $17 billion, yet claimed no one was soliciting clients on his behalf.

ROBERT HEIM, FORMER SEC ATTORNEY: It's a misrepresentation in the registration statement, but it also should have been a red flagged to the SEC in asking how could he have raised so much money without anybody referring him any clients. BERNAND MADOFF, CHAIRMAN, MADOFF INVESTMENT SECURITIES: I'm very close with the regulators so I'm not trying to say that they can't, you know, that what they do is bad. As a matter of fact, my niece just married one.

CHERNOFF: That former SEC regulator says his romance had no impact on oversight of the Madoff firm. Even so, Madoff ran one of the top trading firms on Wall Street and served on industry advisory panels. Never was subject to a serious inspection.

HEIM: I think in a certain sense, the SEC investigators may have gotten caught up and blinded by the fact that he was such a prominent person on Wall Street.


CHERNOFF: Now the SEC is scrambling to compensate, but it is not an easy investigation. It will likely take months and months to fully unravel. For his part, Mr. Madoff's attorney will say only this is a tragedy. We are cooperating fully with the government investigation to minimize losses.

ROBERTS: This goes to show that in this environment, you don't know who to trust, right?

CHERNOFF: John, I think there is a lot of mistrust over here. This is really going to reshape how many investors, even professional investors view that very critical issue of trust when you're giving your money over for someone to manage.

ROBERTS: All right. Allan Chernoff for us this morning. Allan, thanks so much.

It's coming up on the half hour. Breaking news.

President Bush will make a statement on the administration's plan to assist automakers at 9:00 a.m. this morning. The White House will give troubled automakers the opportunity to avoid collapse and help them restructure for the future. Details of the bailout were not disclosed, but sources tell CNN it is expected to involve short-term loans for the big three automakers. No idea of where the money is going to come from.

Right now a major storm gaining strength in the northeast. It's moving across the midwest right now and on into New York and Massachusetts where they are expected to get as much as 18 inches of snow in some areas. Already a number of flights in the area have been canceled or delayed.

And the winner of the Minnesota Senate race may not be known for a while longer, but the "Minneapolis Star Tribune" is predicting that democrat Al Franken will beat republican incumbent Norm Coleman by 89 votes. The Associated Press however reporting the actual recount has Coleman up by just two votes now. The winner will likely won't be known until the New Year after state Supreme Court ruling said improperly rejected absentee ballots will now be included in the recount.

KIRAN CHETRY, CNN, ANCHOR: Well, a new report revealing a major waste of taxpayer money by the FBI in Iraq. According to the "Washington Post," the Justice Department says the bureau encouraged workers in Iraq to routinely bill $45,000 in overtime claiming they work 16 hours a day, seven days a week when they were either off eating or attending cocktail parties. The practice violated federal law and a total of close to $8 million. The FBI says there was a flaw in the system that remained in place too long.

Military commanders in Iraq have now outlined troop reduction plans but that time table doesn't match with the President-elect Barack Obama's. And the man in the middle is current and future defense chief Robert Gates. CNN's Barbara Starr joins us live now from the Pentagon. Hi, Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Good morning, Kiran. Well, as you say, there is now a plan after nearly six years of war to get the troops out of Iraq, but is it the plan that Barack Obama really wants?


STARR (voice-over): Defense secretary Robert Gates still President Bush's Pentagon chief has briefed President-elect Obama on the plan to withdraw U.S. troops from Iraq by the end of 2011. The new plan spells out the draw down brigade by brigade over the next three years. That's what is required under the new agreement between Washington and Baghdad. Just one problem. The next president, Barack Obama, has promised to get most troops out of Iraq even sooner, by May 2010.

SEN. BARACK OBAMA (D), PRESIDENT-ELECT: I said that I would remove our combat troops from Iraq in 16 months.

STARR: But there is already talk of extending the U.S. military presence for years to come.

ROBERT GATES, DEFENSE SECRETARY: When I think of the support that they likely are to need for the Air Force, for the Navy, for counter terrorism, for continued training, for intelligence, for logistics and so on. My guess is that you are looking at perhaps several of tens of thousands of American troops.

STARR: Easier said than done.

GEOFF MORRELL, PENTAGON PRESS SECRETARY: The agreement that the United States and Iraq have entered into calls for American forces to be out at the end of 2011 regardless of what Secretary of Defense Robert Gates may think is necessary at this point.

STARR: Obama himself said that some U.S. troops should stay after the 16 months in a support role. But he will need to convince the Iraqis to change the current deal. And the president-elect is leaving plenty of work room for himself in the 16 month withdrawal promise.

OBAMA: As I've said consistently, I will listen to the recommendations of my commanders.


STARR: So Kiran, with all of this confusion, what is really the bottom line here? The bottom line is Secretary Gates is already making arrangements for the commanders to brief the president-elect on the options in Iraq and the commanders are saying once the President- elect takes office, they will come up with whatever plan he wants. Kiran.

CHETRY: Another big issue that's going to be on the President-elect's plate is Guantanamo Bay. New talk at the Pentagon about possibly closing this place.

STARR: Yes. What we learned yesterday is Defense Secretary Robert Gates has ordered a new review of how to close the detention facility at Guantanamo Bay. This is another example of Dr. Gates serving in the sunset of one presidency and the dawn of another. Because of course the Bush administration opposes, finds now way to close Guantanamo Bay. President-elect Obama says he wants it closed and will make it a priority. So Dr. Gates moving ahead already while President Bush is still in office, asking top advisors to come up with a plan again to be ready to brief the President-elect on a plan to close Gitmo as soon as Mr. Obama takes office. Kiran.

CHETRY: Barbara Starr for us this morning. Thanks.

ROBERTS: Well many of you have been wondering whatever happened to Ali Velshi who we now refer to as primetime patty. Well guess what, he is returning to AMERICAN MORNING and he is bringing along some important information to help you get your money back. 35 minutes now after the hour.



ROBERTS: Well he is back. The hairless prophet of doom Ali Velshi and as Slim Shady was about to sing, we have created a monster.

CHETRY: That's the next line, right. You left us. You left us and you come back and you are copying this.

ALI VELSHI, CNN, SENIOR BUSINESS CORRESPONDENT: I'm the tireless prophet of doom now.

CHETRY: What's going on? Do you wear a tie on Anderson's show?

VELSHI: Listen, I-

ROBERTS: It's an Oprah thing, right.

VELSHI: This is how things have changed. I put it on and I see you wear a tie. I figured I will try that. I got to watch this though because I got more -

CHETRY: You got what?

VELSHI: It's a morning show, but you know.

ROBERTS: So we are talking to him about a prime time program that's coming up.

VELSHI: Yes. tomorrow -

ROBERTS: "Give me my money back."

VELSHI: "Give my money back," it's Saturday and Sunday at 8:00 Eastern and what we're talking about is that there's nobody who has escaped this scathing market in 2008. But there are rules that you can follow and many people say this is the best time to start to re- invest. You don't think of yourselves as investors but more than half of Americans are. There are 401Ks, IRAs, mutual funds -

CHETRY: So if you're going to dip your toe back in that market and you looked at your 401K. You have seen it drop in value over the years.

VELSHI: It's gone.


VELSHI: It's daunting.

CHETRY: What are some tips?

VELSHI: All right. Basically, the first one and you've heard this a million times. You have to diversify. You don't keep all your eggs in one basket. People think that you don't keep your eggs in one basket because if the basket were to fall, all your eggs would break. But that's not actually the case. There are studies that show that by diversifying your investments, not only is it safer and less volatile, your return is actually higher than if you invest in any one asset class. But diversification is just a theory. What you have to do is you have to allocate your assets. If there are different asset classes. There's eight, not bonds and stocks, the whole bunch of different things. If you allocate, you don't want to put 10 percent on each one or eight percent in each one. You want to spread it out according to your risk and then you optimize it and then you find the best combination of stocks, bonds, commodities, currencies and international stocks that will get you the best return for who you are. And all of that can be done. You watch this show and you will consider yourself an investor at the end of it. You will understand enough to say I can get back into the market if it wasn't there to start with, I can get into it.

ROBERTS: You talk to a lot of smart people in this program. Robert Rice, former labor secretary, Chrystia Freeland of the "Financial Times," what are their outlooks for 2009?

VELSHI: Well that's interesting. They are not all on the same page about the outlook. They all agree that for the long-term you should be. ROBERTS: Truman wanted a one-armed economist, right?

VELSHI: You should be in the market for the long-term, but some feel look it's going to be very dangerous. Chrystia Freeland who you spoke with many times says she think we're in for a very, very rocky ride. Bob made the point that what is good for the consumer and the investor is not necessarily good for the economy. What's good for the consumer right now is to hold back and not spend too much. For the economy that's not going to be a great thing.

CHETRY: Right. Well, you got enough stuff in here to write a book. I love it.

VELSHI: Maybe that's a good idea.

ROBERTS: Maybe that's a good idea.

VELSHI: We'll try that.

ROBERTS: Slim Shady, good to have you back.

CHETRY: But in the mean time, --

VELSHI: It's good to see you both.

Hey listen, in two weeks I will be back with you for a week. I'll spend a week with you. But it's good to be back.

ROBERTS: Give me another one of those. Thanks. "Give me my money back." Here Saturday and Sunday at 8:00 p.m. Eastern. Right here on CNN. 41 minutes after the hour. We are back in a moment.


ROBERTS: 44 minutes after the hour, welcome back to the most news in the morning. Mark Felt better known as Watergate's Deep Throat has passed away, who is 95 years old. Felt knew where Richard Nixon's Watergate skeletons were buried. And information he shared with "Washington Post's" reporter Bob Woodward helped bring down the Nixon White House. Felt's identity as Deep Throat was a secret for more than three decades until Felt himself went public in 2005. Of course, Woodward's partner in the Watergate investigation for the "Washington Post" was Carl Bernstein and he joins me now. Good morning to you, Karl.


ROBERTS: So what are your thoughts on the occasion of Mark Felt's death?

BERNSTEIN: I think it's emotional even though he was 95 years old. He was integral to our coverage. He was one of many sources in Watergate who had both the intelligence and the courage to tell the truth. In his own organization, he was one of a very few and he was near the top. What his information enabled us to do was to confirm stories that we had really obtained elsewhere more than anything else rather than give us that much primary information. But it was invaluable and he performed a great act of courage and national service.

ROBERTS: The way that he was portrayed by Hal Holbrook in "All the President's Men" was he would give your partner Bob Woodward a little bit of a tease and say I'm not going to tell you more than that. You got to follow the trail. Was that an accurate portrayal?

BERNSTEIN: Yes. That's what we did. His knowledge gave us a grounding assurance that we were right in what we were saying and reporting. In uncertainty, you know in a situation where you had the leader of the free world attacking the press every day and making our conduct, Woodward's and myself, the "Washington Post" issue in Watergate rather than the conduct of the President and his men. And so Mark Felt confirming this information and occasionally he gave us some important information that we hadn't obtained towards the end elsewhere. It was absolutely invaluable.

ROBERTS: It was always Bob Woodward's intention to keep the identity of Deep Throat secret until the occasion of his death.

BERNSTEIN: Well we both kept - I knew who he was and the two of us knew.

ROBERTS: Was it was a surprise when he came out in 2005?

BERNSTEIN: To both of us, it was a total surprise. Even though I'm a contributing editor at "Vanity Fair" magazine, and they disclosed it. They scooped everybody on that one. And yes, we were surprised. Bob and I went out to San Francisco a few weeks ago. We had a speech out there and we went to see Mark Felt and we had a wonderful couple of hours with him. He knew we were coming and he was looking forward to it. He had been very ill. And it was a kind of closing of the circle. It was a wonderful experience.

ROBERTS: Was that the first time you had met him in person?

BERNSTEIN: The first time I had met him.

ROBERTS: Because I guess the contact was -

BERNSTEIN: Bob had met him as a young man in the Navy when he was a messenger at the Pentagon and had renewed the acquaintance.

ROBERTS: So what did you think when you met him in person?

BERNSTEIN: Well first of all I thought I was aware that he was 95 years old in the last stages of his life. But I was amazed at his relative vigor given the fact that he had been quite ill. I was also surprised that there were some moments of clarity that he had because he had dementia.

ROBERTS: Now his family when the news came out in 2005 declared him to be an American hero. Would you agree with that?

BERNSTEIN: Yes, I think obviously, he is. Look Watergate was a constitutional crisis in a criminal presidency. And he had the guts to say wait, the constitution is more important in this situation than a president of the United States who breaks the law. It's an important lesson, I think, for the country and for people in our business as well.

ROBERTS: He's a huge figure in history. Carl, it's great to see you.

BERNSTEIN: Good to see you, John.

ROBERTS: Thanks for coming in to share your memories. Appreciate it. Kiran.

CHETRY: Well help for Detroit could be on the way. The White House's plan to help the auto industry. Christine Romans has the breaking details next.


CHETRY: Just in to CNN. Breaking details now. We are finding out exactly how the government is planning to rescue the auto industry. Christine Romans joins us now. We are getting details of this as we speak. Bankruptcy looks like it's off the table right now.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: That's right. This is financing assistance to try to help these auto makers from the T.A.R.P., the troubled asset relief plan. That is that bailout that $700 billion bailout is about $15 billion left to use. And according to the White House fact sheet on this, 13.4 billion will go immediately into short-term financing from the T.A.R.P., to the auto manufacturers with an additional four billion available in February. To get that extra $4 billion, they got to go back to Congress and go back and ask for the second trench of troubled asset relief plan fund.

Now, it's very clear in here that the government wants to be repaid on this loan. They are trying to protect taxpayer money. They say the firms must be viable by March 31, 2009 or the loans will be recalled and all the funds returned to the Treasury and they go on to say what exactly constitutes viability but essentially they want to make sure that they can, that these companies can fully repay the government loans.

A couple of things here that are just like the House and the Senate plan. Limits on executive compensation, no more perks like corporate jets and debt owed to the government would be senior to all of the debts, meaning that the government taxpayers paid back first. But then here's some other things, eliminate the Jobs Bank. This was a real bone of contention for some time. This is autoworkers who if there isn't work from the automakers, they are still drawing down their salary and working in this jobs bank. Work rules that are competitive with transplant auto manufacturers by the end of next year, 12/31/09. That means these are the concessions that they were looking for the UAW and from auto workers about more wage concessions. It looks like at least from what we are seeing, right now, that the White House, that they have been able to hammer out a deal on that. We're going to hear for sure. We're going to hear everything at 9:00 in about 7 1/2 minutes. CHETRY: One thing that strikes me as odd, tell me if I'm wrong that they have to prove that they are viable in four months. I mean how do they go from being on the brink of bankruptcy and shuttering plants to being viable in four months?

ROMANS: Here is the rub. They've been saying we are doing these major restructuring and we didn't have the credit crunch, we would be able to get there. And so the government is saying all right. We're going to give you these short-term loans, now prove that you really are able to get there and you really are viable.

ROBERTS: If you are not financially viable in three months, how are they getting the money back? That's the question. Christine, thanks.

Keeping your kid's closet hip in today's economy, is no easy task, but this morning, we got some great advice on how to keep the kids looking good without breaking the bank. We'll tell you how. It's 53 minutes after the hour.


ROBERTS: With the economy putting a squeeze on your wallet, dressing your kids in the latest trends may be on hold for now, but that doesn't mean that your kids have to sacrifice style. Our own recessionista Lola Ogunnaike is here now with some great shopping tips for you.


LOLA OGUNNAIKE, CNN ENTERTAINMENT CORRESPONDENT: I don't know if that's going to fit you, honey. What do you think? Maybe.

UNIDENTIFIED FEMALE: It goes up to my knees.

OGUNNAIKE: And this is only $30.


OGUNNAIKE: We got to find more stuff. This is a party dress.

UNIDENTIFIED FEMALE: And it comes with a scarf.

OGUNNAIKE: $35? We are doing it.

UNIDENTIFIED FEMALE: We're working behind.

EVA DORSEY,M JANE'S EXCHANGE CHILDREN RESALE: Someone will drag someone in here kicking and screaming. I only want something new for my brand new infant baby. And they get in here and they end up with handfuls of clothes.

DARCIE SHIELDS, CUSTOMER: In this economy consignment shopping is the only way to go. It JUST makes sense.

MARGORIE INGALL, CUSTOMER: By the time your kid is two, you're going to figure out that they are going to trash everything that you put them in and so you know, used stuff is a really great buy.

OGUNNAIKE: OK. So what are you thinking? OK. So you like the dresses?

UNIDENTIFIED FEMALE: Yes. I like this and this and this.

UNIDENTIFIED FEMALE: I want to try that on.

OGUNNAIKE: You are a shopper, aren't you?


OGUNNAIKE: I knew it.

MARCIE AO BOHAN, STILL HIP RESALE SHOP: A lot of people have concerns about quality control when things are secondhand. So there are things like the Consumer Product Safety Commission that you can check for weekly e-mails about recalls and definitely talk to the storeowner about it.

OGUNNAIKE: All right, girls. I think we are ready to go on try on clothes. Yea!


ROBERTS: They are so, so cute.

CHETRY: Adorable.

OGUNNAIKE: So adorable. Our producer's Jane's little girls Dellia and Beatrice and of course the other one who is flinging the red scarf.

ROBERTS: Our business producer -


ROBERTS: She is very, very cute

OGUNNAIKE: She is so smart too.

ROBERTS: They had a lot of fun, the kids going to the used clothing store.

OGUNNAIKE: You know those little girls are very stylish and they have very good eyes. They picked out most of those things. So I was very, very impressed. And they knew how to look for a bargain.

CHETRY: Starting early. Is this mini skirt too small? The answer is always yes from your parents.

ROBERTS: Here's the question though of course, you know, clothing little girls or little boys is one thing, but as they get older, they want the Abercrombie or the Aeropostale or whatever. The used clothing stores, they can satisfy those demands? OGUNNAIKE: Absolutely. A number of these vintage places actually have a number of the name brands and the cool thing about that is that you do get it at a significantly lower price. And a lot of these kids, there is no stigma attached to shopping trends for them at all. It's cooler than actually going to the real Aeropostale store.

CHETRY: That's right. And we actually have an e-mailer from Montana writing in saying so glad you guys did this piece. I let my daughter pick out anything she wants. She and her friends are very creative about putting their outfits together. So you know, smart.

ROBERTS: Great way to save some money and some great tips. Thanks so much for that.

OGUNNAIKE: Thank you. Happy holidays.

ROBERTS: Same to you.

CHETRY: You, too. And thanks so much for joining us on this AMERICAN MORNING. We'll see you back here on Monday.

ROBERTS: Right now CNN NEWSROOM with T.J. Holmes straight ahead and President Bush announcement on the auto bailout. Stay with us here on CNN.