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American Morning

Outrage Over AIG Bonuses; New Help for Small Businesses; Dick Cheney on Conditions in Iraq; Mexico's Bloody Drug War; Don Imus Has Cancer

Aired March 16, 2009 - 07:58   ET


KIRAN CHETRY, CNN ANCHOR: All right. Thanks, Thelma. Well it's 58 minutes past the hour. Here are the headlines we're going to be breaking down for you, coming up in the next 15 minutes. Overseas markets picking up where Wall Street left off on Friday. Both Europe and Asia right now in positive territory. It comes on the heels of Fed Chairman Ben Bernanke saying the recession could be over by the end of this year.

Also there is no end in sight to the outrage over AIG, the insurance giant paying millions of dollars in executive bonuses. Even as the insurance giant gets billions in the bailout financed by you. Congress and the White House trying to reverse that purse.

Also former vice president Dick Cheney giving his first out of office interview with CNN's John King. He says President Obama is putting America at risk by reversing many of President Bush's policies on war and terror.

Well, we want to tell you about a big commitment that CNN is making to covering the economy. This morning, we're kicking off a week-long series. It's called "Road to Rescue." It's all about explaining the money crisis the country is facing right now and also offering solutions to help you and your family. We believe certainly knowledge is power and we know that the economy is on your mind. So check this out.

It's CNN opinion research poll that was just released a few hours ago. 63 percent of people now say that the economy is the most important issue facing the country today, specifically unemployment. It's the thing that weighs most heavily on people's minds.

And bowing to political and public and pressure, insurance giant AIG is finally telling taxpayers who got that bailout money that they got from us. Two European banks along with Goldman Sachs and Merrill Lynch took the most, about $11 billion.

Meantime, Congress and the White House are bristling at the huge bonuses paid to AIG executives. Some $165 million. This after the struggling insurance giant lost a record $62 billion in the fourth quarter, and the news is not sitting well with Fed Chairman Ben Bernanke.


BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: It makes me angry. You know? I slammed the phone more than a few times on discussing AIG. It's just absolutely -- I understand why the American people are angry. It's absolutely unfair that taxpayer dollars are going to prop up a company that made these terrible bets, that was operating out of the sight of regulators, but which we have no choice but to stabilize or else risk enormous impact, not just on the financial system, but on the whole U.S. economy.


CHETRY: All right. Again, some words from Fed Chair Ben Bernanke. Elaine Quijano is following the story for us from Washington.

So there definitely is outrage there, but the big question is whether or not anyone in Washington can do anything about it.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Yes, you know. And that's the question that remains unanswered at this point. But as you noted, AIG lost a record $62 billion in the fourth quarter last year. But that has not stopped the company from handing out some big bonus checks.


QUIJANO (voice-over): Outrage over word that AIG is doling out $165 million in planned bonuses to senior employees despite getting $170 billion in government bailout money.

LAWRENCE SUMMERS, DIRECTOR, NATIONAL ECONOMIC COUNCIL: There are a lot of terrible things that have happened in the last 18 months. But what's happened at AIG is the most outrageous.

QUIJANO: In a letter to Treasury Secretary Tim Geithner, the company's CEO, Edward Liddy, explained, "Because of contracts in place before the bailout, AIG's hands are tied." And he warned of serious legal as well as business consequences for not paying the bonuses.

In other words, AIG says it could lose its top performers to higher paying jobs, the company could go under and the 170 billion taxpayer dollars, all for nothing. The Obama administration insists it did lean on AIG to pull back on the bonuses.

CHRISTINA ROMER, CHAIRWOMAN, COUNCIL OF ECONOMIC ADVISERS: We're the first people to be angry. So, absolutely, Secretary Geithner has been furious and has been pushing back, urging them to renegotiate this. We're pursuing every legal means to deal with this.

QUIJANO: The administration did get AIG to scale back some of the payments. Still, Main Street outrage is boiling, even among tourists just outside the Treasury Department.

UNIDENTIFIED MALE: I'm flabbergasted.

QUIJANO: West Virginia resident and Obama supporter Bernard Digregorio says the AIG situation smacks of injustice at a time when he and other taxpayers are worried about making ends meet. BERNARD DIGREGORIO, CHARLESTON, WEST VIRGINIA: If they have contracts, fine. It's like re-mortgage your house. That's what we have to do. Find a way but don't take it from me. I don't have it anymore.

QUIJANO: Laura Mechanic, another Obama supporter, has some sympathy for the administration. But for AIG, none.

LAURA MECHANIC, OBAMA SUPPORTER: I think it's deplorable. I think it shouldn't be done whether there are contracts beforehand or not. I think it just should be time for change. Things have changed, and they have to change that.


QUIJANO: Now, an administration official insists under AIG's restructuring agreement, taxpayers will recoup that bonus money. In the meantime, House Speaker Nancy Pelosi wants Congress to examine what legal options are available to recover taxpayer funds -- Kiran.

CHETRY: Elaine Quijano for us this morning. Thanks.

JOHN ROBERTS, CNN ANCHOR: And we're hearing from you this morning on those big AIG bonuses. Check out this iReport from Gary Kuhry.


GARY KUHRY, IREPORTER: AIG set to pay out $165 million in bonuses to its executives. The group of top 50 executives split $9.6 million. Damn! What the hell is your salary when your bonus is three to four times the average middle-class income?


ROBERTS: Gary is a disabled vet, by the way. He's a stay-at- home dad. He says his wife is working two jobs to make ends meet.

And another big story this morning. The leader of the Federal Reserve offering hope that the recession that we're all facing right now could end this year.

In a rare interview, an upbeat Ben Bernanke explained the massive amount of money that the government is committing to shore up the financial system is working. Here is what he said on "60 Minutes."


BERNANKE: We do have a plan. We're working on it. And I do think that we will get it stabilized. And we'll see the recession coming to an end probably this year. We'll see recovery beginning next year. And it will pick up steam over time.


ROBERTS: Fed Chairman Ben Bernanke in a rare interview. CNN's Suzanne Malveaux, live at the White House for us this morning.

And not just optimism that we're hearing from the administration on the economy now after so many weeks of telling us things were terrible, but also a new plan to help out small businesses.

What do you have on that for us this morning?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Absolutely, John. You're going to hear the administration talking about this. Because if you look at the studies, 70 percent to 90 percent of the new jobs over the last decade created by small businesses. So what are they going to do?

One of the biggest things here is to help out those banks, to increase the guarantees of the loans that they lend that money to small businesses as high as 90 percent of the money that they lend to those small businesses backed by the federal government. So that is going to be an increase. The hope is that this will give incentives for banks to make those loans, and that this will help those small businesses.

The second thing is that they are temporarily going to eliminate fees that these banks actually put on some of these borrowers. It's in the tens of thousands of dollars. They want to be able to give those small businesses a break.

These are just two of the things that they're going to be highlighting, John. But, obviously, talking about the need to help them out because of the fact that they create so many of those jobs -- John.

ROBERTS: Yes. Small business going to help drive the economy, if and when it happens.

MALVEAUX: Absolutely.

ROBERTS: So, all the help they can get. Suzanne, thanks with that this morning.

And logon to get your AMFix at work and on the go. Go to Check out our new blog. and let us know what you're thinking. You can also follow us on Facebook and Twitter, and sound off on our new hotline 1-877-myamfix. That's 877-692-6349.

Leave us a voice mail with your thoughts on the hot topics of the day. We'll start airing your comments on the show beginning tomorrow morning -- Kiran.

CHETRY: All right. Well, developing details this morning on the drawdown in Iraq. Iraq's Prime Minister Nouri al-Maliki telling the Associated Press that troop withdrawals, U.S. troop withdrawals must be approved and coordinated with the Iraqi government.

Also as we approach six years since the war began, former Vice President Dick Cheney in an exclusive interview with CNN's "STATE OF THE UNION JOHN KING" gave his assessments of conditions on the ground.


JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Is there anything that you wish you could have said during those debates or in response to those controversies that you feel free to say now?

DICK CHENEY, FORMER VICE PRESIDENT OF THE UNITED STATES: I guess my general sense of where we are with respect to Iraq, and at the end of now, what, nearly six years, is that we've accomplished nearly everything we set out to do.


CHETRY: All right. Well, Pentagon correspondent Barbara Starr joins us now to talk a little bit more about what the former vice president was saying. But also how al-Maliki's words are being received by U.S. commanders, the notion that anything we do with our troops, even withdrawals, needs to be approved by the Iraqi government.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, good morning, Kiran. You know, we've talked to a couple of U.S. commanders.

What they are pointing out, of course, is that the U.S. does not need Iraq's approval to do anything about U.S. troops. President Obama can move them around as he sees fit. But there will, in fact, be coordination with the Maliki government. The general feeling by U.S. commanders is Maliki is now making these statements to walk that fine line between showing he is in charge, but also reflecting still, in some cases, the very tenuous security circumstances in Iraq.

Just last week, of course, two major car bombs going off in Baghdad. Things are better, but security still a very significant problem in Iraq. What U.S. commanders are very quietly saying now is, in fact, they do expect some U.S. troops to remain in some city areas, especially in the city of Mosul and in Diyala Province past the June 30th deadline for the removal of U.S. troops from the cities because of the security situation. Things are better, but not good enough -- Kiran.

CHETRY: Barbara Starr for us this morning. Thanks.

ROBERTS: It's coming up now on nine minutes after the hour. And here are the new stories that we're tracking for you this morning. The members of the shuttle Discovery team are heading to the International Space Station this morning. They are scheduled to arrive tomorrow. And they're bringing the final set of solar wings for the ISS. NASA says the shuttle's launch was the prettiest it has ever seen.

Police are still trying to figure out what caused this model mayhem on the streets of New York City. Thousands of women waiting to audition for the reality show "America's Next Top Model" were caught up in a stampede. Police arrested two women and a man, and charged them with disorderly conduct and in sighting a riot. We'll have a full report on that coming up later on this hour.

And beginning today, the food you buy at the grocery store will have more information on the label. Some fruits, vegetables and other foods will now list where the food originated. And most fresh meats will now list where the animal was born, raised and slaughtered. Food safety groups have been pushing for the rules at least for years.

CHETRY: Well, where is rock bottom? Unemployment is over eight percent and climbing. And the predictions are dark, but there is light at the end of the tunnel. Christine Romans shows us what it will take to turn things around.

Plus, officials in Mexico discovering grim find. Bodies in a mass grave near the Texas border. This is an area that's been the center of a war between rival gangs, drug gangs and cartels. So what does Mexico need to do to get a hold of the situation now, and what does the U.S. need to do? It's 10 minutes after the hour.


CHETRY: Welcome back to the Most News in the Morning. It's the focus of our special coverage all week long. And there are new polls out this morning, in fact, just a couple of hours ago, that showed that no other issue is as important or on the minds of Americans as much as the economy.

Sixty-three percent say it's issue number one. And if you look down, everything else is pretty much in single digits. Nothing else even cracks double digits, of course, even something as dire as health care coming in second place but at 9 percent.

Breaking it down even more, it's about jobs. More than a third of those surveyed say that unemployment is really the most important economic issue facing us all today. By all accounts, the job numbers are expected to get much worse before they get better. Christine Romans joins us now.

It's interesting -- inflation the number two concern behind of the mortgage crisis.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Even taxes down. I mean, everyone always hates taxes and the problems with taxes.

CHETRY: Right. But the mortgage crisis is -- I mean, many say is the heart of all of this.

ROMANS: Because jobs is something that affects everyone. And frankly, what this is showing is that people are so pessimistic, actually getting more pessimistic about their ability to get a job or to find a new one. And before we get on the road to recovery, we need to know where we are in the jobs market.


ROMANS (voice-over): The headlines are grim. So how bad is it? 4.4 million jobs lost so far this recession. Behind each statistic, people.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I don't need to tell the people of this state what statistics like this mean.

ROMANS: It means a record number of Americans, more than 5.3 million, are collecting unemployment checks. The jobless rate is the highest in 25 years -- 8.1 percent. We asked the CEO of a large employment services company how bad could it get?

TIG GILLIAM, CEO, ADECCO: We could easily see 9 percent unemployment and just by the math, it could go to 10.

ROMANS: Four states are already there -- South Carolina, Michigan, Rhode Island and California, all tops 10 percent unemployment in February.

GILLIAM: We're losing jobs at a very rapid rate.

ROMANS: And you need to create at least 100,000 jobs every month just to keep up with population growth. Instead, we're losing hundreds of thousands. But when will it turn around?

GILLIAM: When we see temporary employment increase, when we see workweek hours increase, when we see professional skills begin to recover, then it will be a clear sign that the job market is coming back.

ROMANS: His best guess? Sometime in 2010. But economists agree there is no clear sign yet that the job market has bottomed out.


ROMANS: So, that's what we're looking for. This is when we're going to ring a bell for you all and say we found that month or two or three when we see temporary jobs increase, the workweek gets a little longer. Those will be the signs that things have turned around. Beware, the jobs market is what we call a lagging indicator. That means we will lose jobs even after the economy starts to turn around.

ROBERTS: So, get used to those bad numbers. But it still doesn't help people who lose their jobs either, does it?

ROMANS: No, it doesn't. It really is. But at least now we're starting to talk about when we'll be looking for that sign that it's turning around. Maybe some time next year.

ROBERTS: That's a much better thing to talk about than what we've been talking about.

ROMANS: Sure, sure.

ROBERTS: Thanks, Christine.

What do you do when you're laid off? All this week, as part of our "ROAD TO RESCUE SURVIVAL GUIDE," we're giving you the knowledge that you need to know. Ahead -- how to survive the dreaded downsizing. We'll tell you all about that. It's coming up now on 16 minutes after the hour.


ANNOUNCER: This is CNN breaking news.

CHETRY: And so we have breaking news to tell you about this morning. Getting word from CBS, from our local CBS affiliate here in New York, that radio host Don Imus has announced that he is battling stage two prostate cancer. CBS saying he announced it on his radio show this morning. There's no word, of course, on the prognosis at this time. This news just coming in.

He's 68 years old, Don Imus. And, of course, as we remember, he found himself at the center of a storm back in 2007 over some comments he made about Rutgers women's basketball team. He was then fired by CBS, but returned to the airwaves. He was rehired in 2007 by ABC.

But again, according to CBS, he announced this morning that he's battling stage two prostate cancer. By all accounts, usually limited to the prostate which, of course, increases your chances for being able to have it treated.

ROBERTS: Yes, the good news, it hasn't spread outside to other organs. So, definitely increases the chances of a successful recovery from it. Our thoughts and prayers certainly with Don this morning as we get that news.

All this week on CNN, an unprecedented television event "ROAD TO RESCUE: A CNN SURVIVAL GUIDE." It's a worldwide look at the global economic meltdown.

And new polls just out this morning show keeping your job is one of the biggest worries that you have got. Our personal finance editor Gerri Willis here to show you how to survive a layoff.

A lot of people looking for some tips today, Gerri

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: I know. And it's a very scary thing because you don't know if it's going to happen to you. What you need to know if you are laid off, number one, you have rights. Your first right is to any earnings that you are due right now whether that's overtime or maybe even commission and, certainly, wages.

Severance, sick pay, vacation pay, that's all at the discretion of the employer whether they pay that to you or not. Check your handbook, your employee handbook to find out.

And if you have problems collecting your money, call the Department of Labor, 866-4USA-DOL, if you think your rights have been violated. And of course, you want to get all the public assistance that you can. The average worker is unemployed for five months. But there's no guarantee how long it will take you to find a new gig.

Apply for those jobless benefits right away. They've extended up to 33 weeks of benefits and as much as 59 weeks for people living in those high jobless state. Also, you will be paid about $325 a week, and the first $2,400 that you earn in unemployment benefits are exempt from federal taxes. That's a big change.

Now, a great place for you to go for information, workforce security, That's a Web site for the Department of Labor that can give you details on how to collect this money. It takes two to three weeks for benefits to start so you want to apply right away. The government maintains local career centers where you can go for advice and help, even use a computer. Check out the Web site, It's a great place to go, John.

You can go there. You can actually see people working in different kinds of jobs. What their day is like, minutes and minutes, so that if you want to change professions, you want to get retrain, you know, at least a little bit about what it's like.

ROBERTS: So you get laid off. You're going to get unemployment insurance benefits. Obviously, a lot of people are going to have to tighten their belts to live off for that money. But a greater concern for many people is health care. What kind of advice do you have for people who are going to lose their health care when they're laid off?

WILLIS: This is a huge worry for people out here. One thing to do absolutely if you can't get on a family member's plan -- this is your cheapest option. And it doesn't have to be enrollment time for you to do that. If you lose your job, you can get on that spouse's plan right away.

If you don't have that option, apply for COBRA benefits. You have 60 days to do it. COBRA is an extension of your existing coverage under your employer, but you pick up the tab.

ROBERTS: Yes, it's quite a tab.

WILLIS: It's very expensive. The good news as the stimulus bill, the government will pick up 65 percent of premiums because bankruptcy, of course, is a huge problem for people who have health issues. So you definitely want to make sure you have some kind of coverage. Go to the Department of Labor's Web site, again, for help.

ROBERTS: Some good information there, Gerri. Thanks for that this morning.

WILLIS: My pleasure.

CHETRY: Well, "ROAD TO RESCUE: A CNN SURVIVAL GUIDE." In depth coverage all day.

Plus, drug cartel violence still ranging on the streets of Mexico and right here on our border. Mexico's cops outgunned, outmatched. What can be done to win the drug war? And should the U.S. get involved?

Also, they want to re-up for education benefits, for health insurance. Well, we've just heard the love of their country. So why is the navy sending sailors home? It's 22 minutes after the hour.


CHETRY: Welcome back to the Most News in the Morning. All this week on CNN, "ROAD TO RESCUE: A CNN SURVIVAL GUIDE." And in a moment, we're going to be taking you inside the Navy where some sailors say they are being told they can't reenlist because the military simply can't afford them.

But first, a grizzly discovery in Mexico. Nine bodies in a mass grave. The latest victims of the country's bloody drug war with Mexican police outgunned. Should the U.S. get involved, as the fighting inches ever closer to our borders?

Joining me now is a veteran reporter on the story, Sam Quinones. He's with the "Los Angeles Times."

Thanks so much for being with us this morning.

SAM QUINONES, "L.A. TIMES": My pleasure.

CHETRY: You have a great series, "Mexico Under Siege," for the "L.A. Times." You've been reporting about the growing violence, actually, inside the U.S. as well as a result of the drug cartels for Mexico. And you lived there for a decade in the mid '90s.

Why are we now talking about this escalating violence? What in your opinion has changed?

QUINONES: There's two things that are going on I think right now basically in Mexico. One is the cartels have been feuding -- begun to feud in the last several years as their top leaders have been taken off or killed. They've been feuding among themselves, and these are over routes that have been traditionally settled and kind of decided who gets what into the United States, while those routes are now kind of up for grabs, you might say. And they're fighting over Juarez, Tijuana, Nogales. There's also a place where they are fighting through the Arizona border.

At the same time, a new element in all this is that the government, Mexican government, is no longer facilitating the drug trade in Mexico. For many years, dating back to the '70s, the Mexican government either turned a blind eye or really, at times, facilitated the smuggling of drugs into the United States, and kind of organized these traffickers. This is particularly true in the 1970s and '80s. And so, that has changed.

The Mexican government now is saying, no, no more of that. We're going to go after you guys. This is a cancer, which they should have been doing quite a while ago.

CHETRY: Right. Yet, ironically, for the Mexico police force, some of them in these local towns are having problems either, A, because there are too many people are fearful. In other ways, you can't trust them. They're actually working for the cartels. So that's another huge issue. QUINONES: Right. One of the things this drug war is showing is that Mexico has a real weakness at the local level. You do not have well-paid, well-trained, well-armed and well-motivated police departments. And when cartels move in or drug traffickers move in often with remarkable weaponry and so on, these cops don't have much choice. Some of them are already maybe corrupt to begin with.

CHETRY: Right.

QUINONES: Others, even if they are not corrupt have really no choice, and they just have to choose a side or, you know, face death. This is a choice.


CHETRY: Right. If they're not getting the backing to know they can be safe, and their families can be safe -- you're right, often it's not a choice. The other interesting thing -- and we've done reporting on this -- is where these guns are coming from. Some of them or many of them are actually coming right from the United States. You know, when we say it's sort of not our problem.

I mean, we are talking about border towns situations in Arizona as well, where they are getting this weaponry. What do you do about that?

QUINONES: Well, maybe -- I mean, I'm not a policymaker. I don't know. But maybe the United States has an organization called the ATF. Maybe a deployment, a redeployment of that agency is in order. I don't know.

I mean, certainly, though, yes, lots and lots of guns are coming -- I would say the lion's share of these guys' weaponry comes from the United States, from border stores, from federal licensed firearm dealers in the United States. And these are assault weapons, these are sniper rifles. Of course, pistols and this kind of thing.

CHETRY: Right.

QUINONES: That kind of thing is fueling what's going on down there. And one of the things the United States could most do to prevent or to help Mexico and curtail this war is put a lot of more pressure than it's been putting on this gun traffic.

CHETRY: And before I let you go. The other thing is feeling this, of course, is U.S. demand. Demand for these drugs. And now there's been a renewed talk, if you will, about possibly legalizing some of the drugs.

Do you think that would make a difference?

QUINONES: It's hard to say. But let me say this about drug trafficking and, particularly, legalizing drugs. Marijuana is a gateway drug for users. It's also a gateway drug for traffickers. It's the drug that they use to break into the drug trafficking world, to gain their first capital, to learn the routes, to learn -- develop clients in the United States. So marijuana is the gateway drug. They don't have a bank to go to. The start-up capital that they get, that they need to get going. They earn it by selling marijuana in the United States. I'd leave it at that.


CHETRY: All right, I hear you. It's fascinating and for people that want to learn more, they got to read your series from the "L.A. Times," "Mexico Under Siege."

Sam Quinones, thanks so much for being with us this morning.

QUINONES: My pleasure.


ROBERTS: Thirty minutes past the hour. Breaking news to tell you about this morning. Talk show...

ANNOUNCER: This is CNN breaking news.

ROBERTS: Talk host Don Imus announcing on his radio program this morning that he is afflicted with stage II prostate cancer. Stage two cancer typically is limited to the boundaries of the prostate, has not metastasized outside of the gland, which increases the prognosis for a full recovery. We're working that story for you right now. We'll bring you more information as it becomes available.

Here are some of the other stories that we are following for you right now. Outrage growing over AIG's plans to pay out bonuses totaling $165 million. That is despite the fact the company received more than $170 billion from the government. The head of AIG, as well as the Obama administration, says there's nothing that they can do to stop it.

In a rare television interview, Fed chief Ben Bernanke said that the country's recession will probably end this year if the government can bolster our banking system. Bernanke told CBS's "60 Minutes" that the government has a plan to put the economy back on track and the recovery could start by next year.


BERNANKE: The unemployment rate is going to go higher than it is. But I think, again, that if we do succeed in stabilizing the financial system, that we will begin to see a slower pace of decline and eventually a stabilization that will set the basis for recovery.


ROBERTS: They are trained for war and they don't want to tackle this job market. With the economy in shamble the military is now being forced to thin its ranks even when so many people want to re- enlist. Our Pentagon correspondent Chris Lawrence joins us live this morning from Washington with more on this story. Hey, Chris. CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Hey, John. Yes, more people want to stay in the Navy at the same time, Congress is cutting its numbers. So these tough new reenlistment standards will open up some advancement opportunities for some and end the careers of thousands of others.


LAWRENCE (voice-over): This could be the last time Amanda Siren packs her sea bag.

AIRMAN AMANDA SIREN, U.S. NAVY: When they told me I couldn't reenlist it was like a kick in the face.

LAWRENCE: Siren works on aircraft weapons but too many other sailors do the same thing. The single mom is coming to the end of her first tour and her family tells her how bad the economy is.

SIREN: They want me to stay in the Navy so I don't get laid off as a civilian. But the Navy is laying me off as well.

LAWRENCE: She is one of many sailors facing the military's rough new reality.

VICE ADM. MARK FERGUSON, CHIEF OF NAVAL PERSONNEL: Where we see individuals reenlisting at greater than our required levels.

LAWRENCE: It's the highest retention rate in ten years. While private companies cut workers, some navy jobs have doubled the need in personnel.

And at one level, machinists mates are 389 percent overmanned. That means there is nearly four sailors for every one the navy needs. So the Navy is making it much harder to stay in. One official says "the measures we've put into place are based on performance, we're using a scalpel, not a hatchet."

CHIEF PETTY OFCR. WILLIAM HARDING, U.S. NAVY: I have no concerns, I think it's a great thing.

LAWRENCE: William Harding made the high rank of chief in 12 years. He says the Navy should be run more like a corporation.

HARDING: If you don't perform in the outside world, you get a pink slip. Well, that's pretty much where we're at in the Navy.

LAWRENCE: Some good sailors will be forced into new jobs but the Navy admits not all of them will be allowed to stay. Even though no bonuses are offered for her job, Siren would re-enlist in a heartbeat if she could.

AIRMAN AMANDA SIREN, U.S. NAVY: The money has nothing to do with it, I want to serve my country and I can't.

(END VIDEOTAPE) LAWRENCE: Well, she is one of many. The Navy expects to lose about 3,000 sailors this year and Congress has ordered the Navy to also trim down by another 3,000 soon. At the same time, Congress is adding troops to the Army and Marines to fight those wars in Iraq and Afghanistan. John.

ROBERTS: Would people who were in the Navy who couldn't be retained have any sort of preferential treatment if they wanted to enlist in either the - either with the Army or the Marines?

LAWRENCE: Yes. That has always been the case where you could cross over to one of the other services. The thing is sometimes for some of the people who are further along in their careers, they've already invested so much time and training in one job, it can be a little more difficult to, all of a sudden, switch to another.

ROBERTS: Got you. All right. Chris Lawrence for us this morning. Chris, thanks so much.

CHETRY: All right. Thirty-four minutes past the hour. We fast forward now to stories that will be making news later today. At 11:25 a.m. Eastern, President Obama and Treasury Secretary Tim Geithner will meet with small business owners and community leaders at the White House. That's what we will be focusing on a new initiative that will make it easier for small business owners to get loans.

Also actress Lindsay Lohan has a court hearing in Los Angeles in a few hours that is believed to be connected to a possible parole violation. Lohan is currently serving three years probation following two DUI arrests in 2007. Her attorney says the warrant was issued, "out of a misunderstanding." Lohan is not expected at the hearing.

And it's time to honor the world's best bloggers. The Bloggies will be announced this afternoon at a ceremony in Austin, Texas. The Web log awards are now in their ninth year. That's what we're following this morning.

ROBERTS: Well, she is building an empire that is bucking every trend in this economy and she is doing it in style. The queen of CEOs Lynn Tilton joins us next. If you own a small business or you're trying to hold on to your job, you want to hear what she has to say. It's 35 and a half minutes now after the hour.


ROBERTS: Thirty-eight and a half minutes after the hour. We're back to more of our "ROAD TO RESCUE," a special coverage of the economy. She has been described as part Warren Buffett, part Dolly Parton. She stands out in a roomful of suits and probably has a lot more cash than the guys that are in those suits.

We are talking about Lynn Tilton, an entrepreneur who has built an empire by saving jobs and rescuing companies. Right now, she is the CEO of MD Helicopters and brought that company back from the abyss. She's got a lot of other companies with her as well. Lynn Tilton joins us now with her advice for other businesses on the brink. Good morning. It's good to see you today.

LYNN TILTON, CEO MD HELICOPTERS: Good morning. Thanks for having me.

ROBERTS: So how do you do it? In this economy, you manage to take these companies, you turn them around, you make them a success and you manage to save people jobs in the process.

TILTON: The whole platform is built around that. And that is literally taking dust to diamonds, taking what other people would toss away and rebuilding and usually it's in a smaller form but it's in a smarter form.

ROBERTS: So how do you do it?

TILTON: We literally come in and we rip apart a company, like a tapestry, thread by thread and then we take the strong threads and we re-weave them together. You have to look at the mistakes of the past and really take a look at the truth and it's cold and hard, but it's the first point of hope in salvation and you rebuild around what makes sense.

ROBERTS: Now, I guess MD Helicopters is your big business success story. The one that got you the most attention. It built seven helicopters in 2005, 52 in 2008 and you've got orders for 75 this year. But it's one of more than 60 companies that you own. And I'm wondering are they all in that good of shape or are you taking a hit with this bad economy? Having to lay people off in some companies?

TILTON: Yes. I mean, look they all start out as desperate as MD and they are all in different states and some are even more successful than MD at the moment but we are taking hits all over. I mean, this is a global economic depression and, frankly, there are diminished revenues around all the companies and you're trying to rebalance very quickly. So you are definitely - survival is the noblest of causes. You're sustaining as many jobs as you can, but definitely you're choosing life over death and many over none.

ROBERTS: You just said the word depression. Do you believe this is a depression or a recession as so many other people say?

TILTON: I actually really believe this is a depression. I mean, but, then again, I predicted the banks would be insolvent two years ago, so I tend to be, you know, ahead of my time.

ROBERTS: Ahead of the curve a little bit, yes?

TILTON: I actually think this is going to be a terrible time for us if we don't start making the right moves.

ROBERTS: So how much is your persona helped you out in all of this? In a recent helicopter forum, you know, one of those places that sort of, I guess, a trade fair almost where people come to check out your wares. You went up to the podium in a leopard print dress and you said, "I don't have pretty slides but I'm wearing a sexy dress and I hope this will do for some of you."

TILTON: You know, look. I read an audience. By the time I got up to speak, there have been other CEOs, and people's eyes were glassy and half the seats were empty, and people needed something to smile about. And then I got very serious, talking about the economy, talking about the industry. I think it's important to be able to pull people to you so that you can make your point. In the end, you know, I try to -- you know, I use what I have to get people to listen but I think if I were not smart and serious in doing the right thing every day that my persona would just look like an aging old woman who is wearing a leather print dress.

ROBERTS: You certainly do make an impact, no question about it. So Ben Bernanke said he thinks that the recovery will take place maybe the end of this year. What would you forecast? Since as you said, you're such a crystal ball there.

TILTON: I respectfully disagree. I think that we will not see any recovery until job loss becomes job creation, and none of the spending we've used yet is getting money direct into our starving industrial base. And so until we do that, we will not see a recovery. I think it will be mid 2010 before we see things.

ROBERTS: Wow. Lynn Tilton, it's great to see you this morning. Maybe we can get you back to talk more about this.

TILTON: It will be an honor.

ROBERTS: A pleasure. Thanks very much.

TILTON: Thank you.

ROBERTS: And tell us what you think. Check out our new blog, "AMFix." Go to and follow the link. You can also follow us on Facebook, Twitter and sound off on our hotline, our new hotline that is at 877-MYAMFIX. Kiran.

CHETRY: All right. John, thanks. The "ROAD TO RESCUE," name your price. A cafe tells customers to pay what they think is fair. So is it a new way of doing business? It's 43 minutes after the hour.


CHETRY: "ROAD TO RESCUE, A CNN SURVIVAL GUIDE." All this week, we're looking at people who are solving problems. So check out this restaurant in Ohio. It's actually letting people name their own price. The Java Street Cafe in Kettering, just outside Dayton. Last week, the owner erased the prices on the menu. That's right. No prices. It's all up to the customers who were having a little bit of trouble getting used to it. Take a listen.


UNIDENTIFIED MALE: How much would you like pay for it?

UNIDENTIFIED MALE: What's that. UNIDENTIFIED MALE: What would you like to pay for it?

UNIDENTIFIED MALE: You get to choose what you think is fair to pay for a small hot chocolate.

UNIDENTIFIED FEMALE: It's kind of awesome.


CHETRY: The owner says that sometimes people overpay, some underpay, so in the end it all tends to even out. Again, we're looking for solutions. So if you see something that seems to be working, drop us a line. Log on to and follow the links to AMFix.

ROBERTS: And continuing now with our survival guide, "ROAD TO RESCUE." Everyone is searching for bargains in this recession, and our very own recessionista, Lola Ogunnaike, found one that seems too good to be true. A store where everything is free.


LOLA OGUNNAIKE, CNN ENTERTAINMENT CORRESPONDENT (voice-over): It's a frigid morning in downtown New York but instead of hibernating at home, dozens of people are here waiting to walk away with the ultimate bargain.

UNIDENTIFIED MALE: If you want it here it is. Come and get it.

UNIDENTIFIED FEMALE: One person's junk could be my treasure.

OGUNNAIKE: That's especially true at the free store where everything is free. That's right. F-r-e-e. Free incense, free belt. Free bag. Free dish. Free. I wasn't the only skeptic.

UNIDENTIFIED FEMALE: This is New York, and you never get free anything.

OGUNNAIKE: What if you walk in there and you realize that there's no catch. That it's actually free.

UNIDENTIFIED FEMALE: Then I'm going to take the free items and be happy, OK?

UNIDENTIFIED MALE: The best things in life are free!

OGUNNAIKE: At the free store, the owners don't have to worry about turning a profit because the space is actually an art exhibition sponsored by several New York public arts groups. It's as much art as it is behavioral science.

UNIDENTIFIED FEMALE: There's a competition when there's a crowd.

UNIDENTIFIED FEMALE: People just sort of - that's when the grabbing, the frenzy is OGUNNAIKE: Customers are highly encouraged to take what they need when shopping. But many are as happy to give as they are to receive. So you all do not accept money at all?

UNIDENTIFIED FEMALE: No, we don't accept any money. Sometimes people try to offer it, but we say we don't accept it.

OGUNNAIKE (on camera): You're probably the only people in America saying "no, thank you" to money right now.


OGUNNAIKE: You got a lamp last week?

UNIDENTIFIED MALE: This week, I have a teapot.

UNIDENTIFIED FEMALE: A picture of the Brooklyn Bridge.

OGUNNAIKE: You're holding a DVD player.

UNIDENTIFIED FEMALE: Yes. I'm very excited. I've wanted one for a while.

UNIDENTIFIED FEMALE: This is really cute. I would pay a lot of money for this!

UNIDENTIFIED MALE: Hopefully next week, I'll get some knife and forks.

OGUNNAIKE: Are you surprised that something that cute could be yours for nothing?


OGUNNAIKE: You're ready to go back to work and brag?

UNIDENTIFIED FEMALE: Oh, I can't wait. People will say there is nothing there, it's no big deal but wait until they see this.

OGUNNAIKE: Is it better to give or receive?



CHETRY: She had to think about it for a second.

OGUNNAIKE: And she did. You know, I walked in very skeptical. I didn't think there will be anything there but one woman left with a DVD player as you saw and while I was there another woman was dropping off a VCR. So there are stuff to be had.

ROBERTS: I have a house full of stuff but, unfortunately, it's in another state that I can bring in.

OGUNNAIKE: You should drop it off, though. CHETRY: Or open up a new exhibit at your house.

ROBERTS: I could do that, too. Lola, thanks so much.

OGUNNAIKE: Thank you.

CHETRY: And we're following breaking news this morning. Don Imus announcing that he has stage two prostate cancer. But the future still looks bright. We're going to get more details, coming up next.


ROBERTS: Breaking news this morning. Talk show host Don Imus announcing on his radio show this morning he has stage two prostate cancer. Imus said he received a bone scan and indications are that the cancer is contained to the prostate and has not spread. He added that doctors said that his condition is fully treatable.


DON IMUS, RADIO TALK SHOW HOST: So I'm changing the name of the Imus Cattle Kids of Cancer to the Imus Cattle Ranch of Kids with Cancer and Me because, last Wednesday, was it last Wednesday? I was diagnosed with stage two prostate cancer. Yes.


ROBERTS: He sounds relatively upbeat about it. As he said, the doctor said that it's fully treatable. Again, stage two prostate cancer. Stage two meaning that typically that it is limited only to the prostate gland and has not spread to areas outside. So we certainly wish him all the best and our prayers are best as he goes for treatment for it and hoping for a full good recovery.

CHETRY: Definitely. All right. Well, right now, Hollywood is enjoying a box office surge and the strong sales might not be in spite of the economy. But actually because of this. Here is CNN's Kareen Wynter.

KAREEN WYNTER, CNN CORRESPONDENT: John, Kiran, a trip to the movies has now turned into the ticket of choice for many looking for a break from the economic blues.


WYNTER (voice-over): Even in the bleakest of financial times, it seems escapism has no price tag.

UNIDENTIFIED MALE: You're on a budget from now on.

WYNTER: Take this Clark Gable classic released in 1934. It was a box office hit in the midst of the Great Depression. Back then, cash-strapped consumers still enjoyed a seat at the cinema. Now with the country in the midst of another severe economic downturn, experts say it's no surprise that movie ticket sales are booming, even as families tighten their expenses. PAUL DERGARABEDIAN, HOLLYWOOD.COM: This is the biggest box office year that we've ever seen.

WYNTER: The first billion-dollar January, according to box office expert Paul Degarabedian led by "Watchmen," "Gran Torino," and "Mall Cop." Revenues are up 17 percent from last year. Attendance has jumped 15 percent.

DERGARABEDIAN: What movies offer is an escape. A place where people can go for a couple of hours and forget their troubles and for $10, that's a bargain, especially in this economy.

WYNTER: Box office revenues also rose in five of the last seven recession years tracing back to the 1960s according to the National Association of Theater Owners.

CARLA GUGINO, ACTRESS: Art always thrive I think in difficult economic times because that's an outlet for people and in history, it's always been that way.

JEFFREY DEAN MORGAN, ACTOR: You get the two hours where you're not wondering you know how you're going to put food on the table or you know get your mortgage paid off, you know? It's a good way to disappear, I think.

WYNTER: And forget about all the bills that are due, say these newlyweds visiting Hollywood out of town. They are willing to spend a few bucks on a movie, just not that costly bucket of popcorn.

UNIDENTIFIED FEMALE: Sometimes we bring our own!

UNIDENTIFIED MALE: I don't think you're supposed to tell them that!

UNIDENTIFIED FEMALE: To cut back and save money. We'll usually eat beforehand so we're not hungry there.


WYNTER: After the economy stabilizes, the industry hopes people will continue going to the movies for those few affordable hours of entertainment. John, Kiran.

ROBERTS: It's Kareen Wynter for us. So, you're paralyzed for 20 years. You get bitten by a spider, you think it's bad or you think it's good. We'll tell you, coming right up.


CHETRY: Welcome back to AMERICAN MORNING. Some of the top videos before we say goodbye right now at We've been talking about bank implosions, right? In the midst of the financial crisis. Well this one is literally a bank implosion. Check it out.

And down it goes. That was a bank building in Houston reduced to rubble. The construction company says that all the steel and concrete will be recycled.

So if you want to look sharp while possibly avoiding getting shot, go to Harrods in London. They have just the thing. It's a designer bullet-proof jacket, among other things. The material light and flexible enough to create a fashionable look but strong enough to stop a bullet. Would you test it out?

I don't know if I would.

ROBERTS: I think I would test it out and hope for the best.

CHETRY: It's nice and thin.

King Abdullah of Jordan as well as Venezuelan President Hugo Chavez are said to wear them.

Also, a real-life Spider-Man. A motorcycle accident left this man paralyzed for 20 years. Then he was bitten by a brown recluse spider. He went to the hospital. He said it's because of that spider bite that the nurse noticed that the nerves in his legs were actually responding to reflex tests. And now as you see there, he is able to walk. Those are the most popular videos right now on

ROBERTS: You know, when it comes to bulletproof vests I kind of like the one that I was wearing in Iraq with the big sappy plate in the front and back.

CHETRY: Exactly. You know that one work.

ROBERTS: You want some good ceramic there covering your vital organs. We want to tell you about a cool new feature that we are rolling out here at AMERICAN MORNING today. Our brand new hotline, it's a way for you to get your voice on the air. Call the show at 1- 877-MY-AMFIX. That's 1-877-692-6349. Leave us a voice mail with your thoughts on the hot topics of the day. We got lots of phone calls this morning and we will start including your comments on the show tomorrow.

Also, check out our new blog, AMFix, when you get to work, And that's not all. You can also follow us on Facebook and Twitter, too. Johnrobertscnn is my Twitter. So you can log on to Twitter and follow us around.

CHETRY: That's right. Mine is, what? Kiranchetrycnn?

ROBERTS: OK. You got one, too?

CHETRY: But we're linked. You and I, both of our Twitters are also linked to AMFix...


CHETRY: So, oftentimes we Twitter either as ourselves or as AMFix depending on whether we're on our BlackBerries or here in the NEWSROOM.

ROBERTS: I have to follow your tweets.

CHETRY: Yes, got a following.

ROBERTS: I'll do that this morning. Thanks so much for joining us this morning. We'll see you back here again bright and early tomorrow.

CHETRY: Right now, here's CNN NEWSROOM with Heidi Collins.