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The Situation Room
President Obama's Lifeline to Homeowners; More U.S. Troops Headed to Afghanistan
Aired February 18, 2009 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, CNN ANCHOR: And, to our viewers, you're in THE SITUATION ROOM.
Happening now: President Obama in rescue mode again. He's lending a $75 billion hand to homeowners. At the same time, two auto giants are pleading for even bigger bailouts.
Now, this hour, something new this hour, a top U.S. military commander warning of bloody days ahead in Afghanistan. As the president prepares to send more troops there, how long will they actually have to stay? And how many more will be needed?
And the first African-American attorney general sounds off on race relations, and says the U.S. essentially is a -- quote -- "nation of cowards" -- all that and the best political team on television.
We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.
President Obama today committing billions more to save Americans from economic disaster. This time, he is trying to help up to nine million families protect their biggest investment, keep a roof over their heads.
Let's go to our White House correspondent, Dan Lothian. He's got details on the president's dramatic word today.
DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf.
This administration is not saying that this plan is a magic bullet, but the president believes that this plan, which is $75 billion, will help to stabilize the housing market and keep millions of Americans in their homes.
(BEGIN VIDEOTAPE)
LOTHIAN (voice-over): Reaching into his doctor's bag, the president pulled out some medicine that he says will help cure the ailing housing market.
BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: If we act boldly and swiftly to arrest this downward spiral, then every American will benefit.
LOTHIAN: Under the housing plan, four to five million families with loans backed by Fannie Mae and Freddie Mac, where their homes are worth less than is owed, so-called under water, will be able to refinance to lower rates. The government is also putting $75 billion into helping three to four million homeowners with at-risk loans, giving mortgage lenders and servicers cash as incentives to modify those loans and lower monthly payments, and $200 billion in financial support for Fannie Mae and Freddie Mac, money already approved by Congress.
The president says this three-part effort is aimed at rewarding only responsible homeowners.
OBAMA: It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans.
LOTHIAN: This ambitious plan was rolled out near Phoenix, Arizona, a region hit hard by the foreclosure crisis. The median home price in Phoenix has dropped by 35 percent over the past year.
Esther Lee is a young homeowner, under water and trying to stay afloat.
ESTHER LEE, HOMEOWNER: Even if I tried to sell my house at this point, I'm upside down so much that it wouldn't be possible.
LOTHIAN: Lee hopes this new housing plan will help, even as the economy continues to crawl along on life support.
LEE: There are a lot of repercussions to going into foreclosures, and, you know, I don't want to end up with bad credit and have to work my way back up.
(END VIDEOTAPE)
LOTHIAN: This plan was initially expected to be in the $50 billion range. But Treasury Secretary Timothy Geithner felt that it needed to be in the $75 billion range in order to really work. Now, homeowners will get a chance to see some of the details when all the guidelines are laid out on March 4 -- Wolf.
BLITZER: Dan Lothian, thanks very much. We will see if that $75 billion is enough.
If you're suffering from bailout fatigue, today's screaming headlines about the auto industry won't help. GM and Chrysler now are asking for billions of dollars of additional aid from the federal government.
Let's go to CNN's Mary Snow. She's working this story for us.
The numbers keep going up and up and up.
MARY SNOW, CNN CORRESPONDENT: They certainly do, Wolf.
You can call this the auto bailout, take two. GM and Chrysler have outlined their progress report since accepting the first round of government money. Their message? Things are getting worse, and they need more money. (BEGIN VIDEOTAPE)
SNOW (voice-over): Two auto giants sending out an SOS. GM and Chrysler say they need more federal money, perhaps as much $21. 6 billion to survive -- $5 billion for Chrysler, $16. 6 billion for GM.
RICK WAGONER, CHAIRMAN & CEO, GENERAL MOTORS: Based on our analysis, we continue to believe that bankruptcy would be a highly risky and very costly process, potentially very time-consuming, that should only be undertaken as a last resort.
SNOW: Some who track the industry say the turnaround plans laid out by the automakers stop just short of declaring failure.
JEREMY ANWYL, CEO, EDMUNDS.COM, INC.: Some would argue that what they're suggesting is, in effect, a bankruptcy, and all but, you know, the legal construct. And I think that's probably true.
SNOW: For GM, restructuring plans include cutting 47,000 jobs this year -- about 20,000 of them are in the U.S. -- shutting down five more plants by 2012. It's also eliminating models. Saturn may be phased out if GM can't find a buyer. It's looking to sell its Hummer and Saab brands, and it's scaling back on Pontiac. Chrysler plans to eliminate 3,000 jobs.
Those cuts come on top of billions in bailout money given to automakers back in September. While it wasn't enough to save tens of thousands of jobs, some economists say the consequences of these companies filing for bankruptcy are far worse.
MARK ZANDI, MOODYSECONOMY.COM: If we don't give them money and they go into bankruptcy, it's going to cost us all in the form of a much worse economy, with a lot more -- fewer jobs and conditions that are just tough for everybody.
SNOW: Economist Mark Zandi says as many as three million more jobs could be lost if the automakers declare bankruptcy since they wouldn't be able to get financing, and it would have ripple effects on auto suppliers and the broader economy.
(END VIDEOTAPE)
SNOW: Now, the president's newly appointed task force on autos will be reviewing the carmakers' plans. They must determine by March 31 whether the companies are viable in the long run -- Wolf.
BLITZER: Mary Snow, in New York, thank you.
She's going to stay on top of this story for us.
Let's go back to Jack Cafferty right now. He has "The Cafferty File."
The numbers keep going up, as I said.
JACK CAFFERTY, CNN ANCHOR: Well, the hits just keep on coming. Think about this.
The idea of nationalizing struggling U.S. banks is starting to pick up steam now, even among some Republicans. Go figure. Senator Lindsey Graham tells "The Financial Times" that many of his colleagues, including Senator John McCain, agree that nationalization of some banks should be -- quote -- "on the table." Graham says many people think it just doesn't make sense to keep throwing good money after bad when it comes to institutions like Citibank and Bank of America. Graham says people shouldn't get caught up on that word nationalization, that we cannot keep funding what he calls zombie banks without the public taking control.
Several people, including President Obama himself, have pointed out that's what the Japanese did back awhile ago, and they never really got credit flowing, not for a whole decade. The president has said he's leaning more toward a Swedish model on this subject, where they nationalized the banks and then auctioned them off once they were cleaned up.
The administration is opposed to nationalization in principle. Treasury Secretary Geithner has said -- quote -- "Governments are terrible managers of bad assets" -- unquote.
But the way things are going, there may be no choice. In fact, we're already on the road to nationalization when you consider how much money the government has already dumped into this nation's banks. According to the Treasury Department, 400 banks in 47 states have gotten government aid since the program began last October with that first $700 billion stimulus package, remember.
When the banks begin to report first-quarter earnings in a few weeks, the decision on all this may be made for us. The earnings will be horrible.
Here's the question: Is it time for the U.S. to nationalize its banks?
Go to CNN.com/caffertyfile and post a comment on my blog.
You know, if it wasn't for this crummy news, there wouldn't be any news.
BLITZER: Yes.
CAFFERTY: Man.
BLITZER: Unfortunately, there's so much -- did you notice that even Alan Greenspan, the former chairman of the Federal Reserve, told "The Financial Times" he thinks it may be necessary to nationalize these banks? This kind of crisis, he says, comes along once every 100 years or so.
CAFFERTY: The other thing I noticed is Larry Summers had his tap-dancing shoes on pretty good when you asked him about it.
BLITZER: Yes. Yes, he...
CAFFERTY: He didn't want to answer that question.
BLITZER: No, he was obviously in that non-answer mode.
All right, Jack, thank you.
(CROSSTALK)
BLITZER: Apparently, some Canadians think President Obama has the Midas touch.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Everything he touches is going to be golden. So hopefully that includes touching Canada.
(END VIDEO CLIP)
BLITZER: So, is the president's trip to Canada tomorrow a golden opportunity to charm an American neighbor?
As President Obama prepares to increase U.S. troops in Afghanistan, U.S. commanders predict a tough and very bloody road ahead.
And the nation's first African-American attorney general calls the U.S. -- and I'm quoting now -- "essentially a nation of cowards." He's directly addressing the most sensitive racial issues. We will talk about that, and more, right here in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: Is the situation in Afghanistan about to go from worse to even worse?
Let's go to our Pentagon correspondent, Chris Lawrence.
He's got the view of the new -- not new -- he's been there for awhile -- the U.S. military commander in Afghanistan, he is speaking out about what we can all expect in 2009.
CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Yes, Wolf, the top U.S. commander in Afghanistan is saying flat-out the insurgency won't win, but that fight is going to be tougher and longer than most Americans realize.
(BEGIN VIDEOTAPE)
LAWRENCE (voice-over): After a year of relative calm in Iraq, are the American people ready for Afghanistan?
GEN. DAVID MCKIERNAN, COMMANDER, U.S. FORCES AFGHANISTAN: ... that 2009 is going to be a tough year.
LAWRENCE: The top U.S. commander there predicts bloody days ahead.
MCKIERNAN: I would expect to see a temporary time where the level of violence might go up.
LAWRENCE: More American troops were killed in Afghanistan last year than any other time in the war. Now 8,000 more Marines will arrive in late spring, 4,000 Army soldiers by summer, and 5,000 support troops will follow them.
And they're heading south to fight the Taliban, where General David McKiernan concedes, the fight is stalemated.
MCKIERNAN: That's going to bring with it at least for a period of time an increased level of violence.
LAWRENCE: The second part of the mission, mentor the Afghan army. Iraq is smaller than Afghanistan, and less populated, but its army is four times the size of Afghanistan's.
JOHN NAGL, CENTER FOR A NEW AMERICAN SECURITY: And the real critical error we have made over the past seven years is that we haven't built host nation security forces, an Afghan army, an Afghan police, who are able to secure their country themselves.
LAWRENCE: By next year, the U.S. commander still wants to add another brigade dedicated to training Afghans and possibly another combat brigade. McKiernan says he plans a sustained campaign, not a temporary surge.
MCKIERNAN: For the next three to four years, I think we're going to need to stay heavily committed and sustain -- in a sustained manner in Afghanistan.
LAWRENCE: These moves come well before the Obama administration is expected to finish its review of Afghanistan's strategy. A former congressman and anti-war activist says the president should have waited, not thrown more troops at a problem that has no defined solution.
TOM ANDREWS, NATIONAL DIRECTOR, WIN WITHOUT WAR COALITION: The first principle when you find yourself in a hole is to stop digging.
(END VIDEOTAPE)
LAWRENCE: And, again, when you look at this strategy, the military says that these new troops, these more troops, the need for them was just urgent. Both Democrat and Republican senators, like Russ Feingold and John McCain, supported the increase, but they question the lack of new strategy that came with it -- Wolf.
BLITZER: Chris Lawrence, our man at the Pentagon, thank you.
According to the Pentagon, by the way, there are currently 146,000 U.S. troops in Iraq, 48,000 U.S. troops in Afghanistan. Here's how the two countries also stack up on other issues. Compared to Iraq's 28 million people, Afghanistan is more populated, with nearly 33 million. Annual GDP in Iraq is about $4,000 per person, while it's only about $800 per person in Afghanistan. Unemployment is very high in both countries, as many as 30 percent in Iraq and about 40 percent in Afghanistan.
President Obama travels to Canada tomorrow, his first foreign trip since taking office. Free trade is expected to dominate the talks there.
I spoke exclusively with the Canadian prime minister, Stephen Harper, just a little while ago earlier today. And I asked him, among other things, about President Obama's hints at eventually trying to renegotiate NAFTA, the North American Free Trade Agreement.
(BEGIN VIDEO CLIP)
STEPHEN HARPER, CANADIAN PRIME MINISTER: Obviously, we're always prepared to look at ways to make NAFTA work better. I think, quite frankly, NAFTA and the predecessor, Canada-U.S. Free Trade Agreement, have been very good for both countries. I don't think, in any way, we're each other's trading problems. We're the biggest trade relationship in the world. It has grown exponentially on both sides under this agreement. So, I think it's all very positive.
We're always willing to look at ways it can work better.
(END VIDEO CLIP)
BLITZER: We will have a lot more of that exclusive interview with the Canadian prime minister tomorrow here in THE SITUATION ROOM and then Saturday, our 6:00 p.m. Saturday edition of THE SITUATION ROOM, as well.
CNN's Zain Verjee is also taking a close look at how the Canadian people are getting to react to President Obama's historic visit to Canada tomorrow.
What are you finding out, Zain?
ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Well, they're extremely excited and very enthusiastic, Wolf. They're neighbors and allies, but even friends can disagree.
(BEGIN VIDEOTAPE)
VERJEE (voice-over): Canada's crazy about Barack Obama. He enjoys an 81 percent approval rating north of the border. Now Canadians are mixing up special presidential treats.
UNIDENTIFIED MALE: I have my own little style for my rum punch. So, I give it a little Obama flavor.
VERJEE: The capital, Ottawa, is buzzing ahead of President Obama's visit.
UNIDENTIFIED FEMALE: People are so excited about Obama coming here. UNIDENTIFIED MALE: It's exciting the have him. It's kind of like a Kennedy situation.
VERJEE: Canada's a traditional first stop for a new U.S. president. But, behind the scenes, there are some tough issues -- Afghanistan. Canada wants to stop fighting the Taliban.
UNIDENTIFIED MALE: Canada's been performing a combat role since it got in there in late 2001. Now it wants to withdraw from the combat role, still stay in Afghanistan, but work on the redevelopment side.
VERJEE: Meanwhile, President Obama's increasing U.S. troops there, and calling for allies to step up.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: My hope is that in conversations that I have with Prime Minister Harper, that he and I end up seeing the importance of a comprehensive strategy.
VERJEE: Another sticking point, Canadian oil extracted from the sands in Alberta. The Obama administration's is concerned at the environmental damage.
OBAMA: What we know is that oil sands create a big -- creates a big carbon footprint.
VERJEE: Also making Canadians nervous, the buy-America clause in the stimulus package.
UNIDENTIFIED MALE: A lot of concern in Canada that it's going to cut Canadian firms out, especially in the steel area.
VERJEE: Canada is the U.S.' largest trading partner. The Canadian government says more than seven million American jobs directly depend on trade with Canada. And Canadian officials say Ottawa will oppose any protectionist moves by the U.S.
But, for many Canadians, Mr. Obama can do no wrong.
UNIDENTIFIED MALE: Everything he touches is going to be golden. So hopefully that includes touching Canada.
(END VIDEOTAPE)
VERJEE: There are so many more issues between the U.S. and Canada, but one senior Canadian official says what's really important on this trip is to get the relationship with the Obama administration off to a solid start, and that this meeting they hope will create the basis for future discussions -- Wolf.
BLITZER: Yes, I suspect that Stephen Harper and Barack Obama will get off to an excellent start. The relationship is very strong.
You lived in Canada...
VERJEE: I did. BLITZER: ... for a few years.
(CROSSTALK)
BLITZER: You went to McGill University in Montreal. So, you know that country. Zain, thanks very much -- Zain Verjee reporting.
The nation's first African-American attorney general lets loose some harsh words about the United States.
(BEGIN VIDEO CLIP)
ERIC HOLDER, U.S. ATTORNEY GENERAL: Though this nation has probably thought of itself as an ethnic melting pot, in things racial, we have always been and we, I believe, continue to be, in too many ways, essentially, a nation of cowards.
(END VIDEO CLIP)
BLITZER: So, what do you think of the -- what the attorney general had to say? We're going to discuss that and more.
Foreclosed homes are driving down your property value and neighborhood beauty. There's no doubt about that. Now there's a way you can fight back.
And a former Bush administration official harshly criticizes Hillary Clinton. He calls the secretary of state naive. You're going to find out who's saying that and why.
(COMMERCIAL BREAK)
BLITZER: Some controversial comments today from the attorney general of the United States, and it involves the very sensitive issue of race.
Our national political correspondent, Jessica Yellin, is looking into what the attorney general, Eric Holder, said.
It's causing a little bit of a buzz out there.
JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: It really is, Wolf.
The attorney general was speaking to the Department of Justice employees on the occasion of Black History Month. And in blunt language, he argued that the U.S. made great strides in electing the first black president, but that America is still struggling to deal with race.
(BEGIN VIDEOTAPE)
YELLIN (voice-over): Stinging words from the nation's first African-American attorney general.
HOLDER: Though this nation has probably thought of itself as an ethnic melting pot, in things racial, we have always been and we, I believe, continue to be, in too many ways, essentially, a nation of cowards.
YELLIN: He says Americans are afraid to talk about race.
HOLDER: Certain subjects are off-limits and that to explore them risks, at best, embarrassment, and, at worst, the questioning of one's character.
YELLIN: And he argues, while the workplace is integrated, our private lives are segregated.
Conservative bloggers are now slamming the comments as "reprehensible" and "smug." The facts suggest America is socially segregated. While the majority of African-Americans live in central cities, the majority of whites live in the suburbs.
A new University of Illinois study shows that white Americans are less likely to find a neighborhood desirable if they see African- Americans living there. And African-Americans have been hit harder by the subprime mortgage crisis and have a 5 percent higher unemployment rate than the nation as a whole.
HILARY SHELTON, NAACP: Well, it is provocative, but it's accurate. Very well, we don't talk about race in our country. And he's right when he talks about, even in the workplace, we have kind of learned to get along, but we have learned to get along by omitting things.
YELLIN: The attorney general says he wants to start a new conversation.
HOLDER: I think if we're ever going to make progress, we have to have the guts, we have to have the determination to be honest with each other.
(END VIDEOTAPE)
YELLIN: Now, Attorney General Holder says, for him, the work begins at home in the Department of Justice.
Under President Bush, the Civil Rights Division at the Department of Justice was found to be overly politicized and critics say it failed to adequately enforce civil rights laws. Attorney General Holder has said he will correct that.
And, Wolf, today he called on his own employees to help heal what he says racial understanding.
BLITZER: All right, thanks very much.
We're going to talk about this more later here in THE SITUATION ROOM.
Jessica, thank you.
President Obama's new plan to help homeowners is more aggressive and expensive than a lot of people expected.
(BEGIN VIDEO CLIP)
OBAMA: Through this plan, we will help between seven million and nine million families restructure or refinance their mortgages, so they can afford -- avoid foreclosure.
(END VIDEO CLIP)
BLITZER: The president explains his fix for the foreclosure mess in his own words. Stand by for that.
Plus, foreclosed properties going to seed. There's a way for angry neighbors to try to get neglected houses cleaned up.
And even the White House seems to be raising some questions about whether Senator Roland Burris has told the truth.
Stay with us. You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: To our viewers, you're in THE SITUATION ROOM.
Happening now: Switzerland's largest bank is admitting to helping American taxpayers hide money from the U.S. UBS has agreed to pay $780 million in fines and restitution.
Attorney General Eric Holder heads to Guantanamo Bay, Cuba, on Monday. He calls his trip to the U.S. detention center the first step in determining what to do with the detainees there -- all this coming up, plus the best political team on television.
I'm Wolf Blitzer. You're in THE SITUATION ROOM.
For anyone struggling to make mortgage payments or simply to keep their home, President Obama says help is now on the way.
In Phoenix today, the president explained a new $75 billion home foreclosure plan.
(BEGIN VIDEO CLIP)
OBAMA: The plan I'm announcing focuses on rescuing families who played by the rules and acted responsibility. By refinancing loans for millions of families in traditional mortgages who are under water or close to it, by modifying loans for families stuck in sub prime mortgages they can't afford as a result of sky-rocketing or personal misfortune, and by taking broader steps to keep mortgage rates low so that families can secure loans with affordable monthly payments.
At the same time, this plan must be viewed in a larger context. A lost home often begins with a lost job. Many businesses have laid- off workers for a lack of revenue and available capital. Credit has become scarce as markets have been overwhelmed by the collapse of security-backed -- securities backed by failing mortgages. In the end, the home mortgage crisis, the financial crisis and this broader economic crisis are all interconnected. We can't successfully address any one of them without addressing them all.
So, yesterday, in Denver, I signed into law the American Recovery and Reinvestment Act, which will create or save...
(APPLAUSE)
OBAMA: The Act will create or save 3.5 million jobs over the next two years, including 70,000 right here in Arizona.
(APPLAUSE)
OBAMA: Right here.
(APPLAUSE)
OBAMA: Doing the work America needs done.
And we're also going to work to stabilize, repair and reform our financial system to get credit flowing again to families and businesses. And we will pursue the housing plan I'm outlining today.
And through this plan, we will help between 7 million and 9 million families restructure or refinance their mortgages so they can afford -- avoid foreclosure. And we're not just helping homeowners at risk of falling over the edge, we're preventing their neighbors from being pulled over that edge, too, as defaults in foreclosures contribute to sinking home values and failing local businesses and lost jobs.
But I want to be very clear about what this plan will not do. It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans. It will not help speculators...
(APPLAUSE)
OBAMA: It will not help speculators who took risky bets on a rising market and bought homes, not to live in, but to sell.
(APPLAUSE)
OBAMA: It will not help dishonest lenders who acted irresponsibly, distorting the facts...
(APPLAUSE)
OBAMA: ...distorting the facts and dismissing the fine print at the expense of buyers who didn't know better. And it will not reward folks who bought homes they knew from the beginning they would never be able to afford. So...
(APPLAUSE)
OBAMA: So I just want to make this clear. This plan will not save every home. But it will give millions of families resigned to financial ruin a chance to rebuild. It will prevent the worst consequences of this crisis from wrecking even greater havoc on the economy. And by bringing down the foreclosure rate, it will help to shore up housing prices for everybody.
(END VIDEO CLIP)
BLITZER: President Obama announcing his home foreclosure plan earlier today.
They're in every city, in every state in the country and their numbers are simply exploding -- foreclosed homes, many falling into disrepair and becoming neighborhood eyesores. Now residents are taking matters into their own hands.
CNN's Ted Rowlands has details -- Ted.
TED ROWLANDS, CNN CORRESPONDENT: Wolf, how would you like to live next door to this house?
This is a foreclosure that is vacant. It has been for more than a year. And it is obviously deteriorating.
For homeowners, it's a real problem.
Not much really you can do about it, right?
Well, Mark McKinzie here lives in this neighborhood and he did do something about it. And he wants other people to join him.
(BEGIN VIDEOTAPE)
ROWLANDS (voice-over): The people living next door to Mark McKinzie moved out almost two years ago. Now, weeds are actually growing out of the garage.
MARK MCKINZIE, RUNS WEBSITE LENDEROFFENDER.COM: I said, well, what can I do?
Well, I can create something that might call attention to the problem and give frustrated residents a voice out here.
ROWLANDS: Last month, McKinzie created LenderOffender.com, a Web site where people anywhere in the country can post for free information about neglected foreclosed properties. For each entry, there's a photo, a few comments and the name of the lender or bank that owns the home. If the property is cleaned up, McKinzie takes it off the site.
He says this house down the street has been vacant for months.
MCKINZIE: Look at the lawn. I mean, that is -- that is black, dead lawn. So no one in this neighborhood deserves to live next to this property. And homeowners in this area deserve to know who owns this property, too. ROWLANDS: Citibank own this house. They told CNN it became vacant in late November and is now in escrow. As for the lawn, they said: "We did not sod the lawn because it moved in the market very quickly."
One lender, Wells Fargo, actually cleaned up their properties listed on the Web site. In a statement to CNN, they said, in part, they are: "very concerned with preserving the condition of homes in neighborhoods" and added they'll keep watching the Web site.
Delores Conway, a professor at the University of Southern California specializing in real estate, says LenderOffender.com may push others to act.
DELORES CONWAY, PROFESSOR, UNIVERSITY OF SOUTHERN CALIFORNIA: It may help to nudge the lenders along a little bit in terms of coming out and putting in the proper maintenance to the property.
ROWLANDS: McKinzie is hoping she's right -- especially when it comes to the house next door.
(END VIDEOTAPE)
ROWLANDS: Mark McKinzie says he invites anybody who lives near homes like these to take a few pictures and add them to his Web site. Of course, Wolf, he's hoping that eventually the problem will be taken care of so he doesn't need his site at all.
BLITZER: A real eyesore.
Ted Rowlands, thank you very much.
A controversial new senator tries to explain himself again.
(BEGIN VIDEO CLIP)
SEN. ROLAND BURRIS (D), ILLINOIS: I am the real Roland. If I had done the things I've been accused of, I would be too embarrassed to stand up here in front of you.
(END VIDEO CLIP)
BLITZER: But Roland Burris is under new fire for his changing story.
Plus, one governor says he may not take those stimulus dollars his state is getting -- smart move or political ploy?
I'll ask the best political team on television.
Stick around.
You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
HOLDER: Though this nation has proudly thought of itself as an ethnic melting pot, in things racial, we have always been and we, I believe, continue to be, in too many ways, essentially a nation of cowards.
(END VIDEO CLIP)
BLITZER: The attorney general of the United States speaking bluntly on this day, part of Black History Month here in the United States.
Let's talk about this and more with our senior political analyst, Gloria Borger; our political contributor Steve Hayes of the "Weekly Standard;" and Roland Martin, our political analyst -- Roland, what do you think of what Eric Holder had to stay?
ROLAND S. MARTIN, CNN POLITICAL ANALYST: I think -- I think the attorney general was dead on with his comments. I mean, look, when you look at -- our schools are segregated. Our neighborhoods are segregated. You look at our churches are segregated.
The reality is we don't like to confront the issue of race -- even right now. All the conversation going on about this cartoon in "The New York Post" and people saying, oh, you shouldn't talk about this issue of race, we've gotten over that.
He nailed it. We have to confront the conversation on and not just play around with it and avoid it like we always do.
BLITZER: It's almost self-segregation that's going on around the country. It has been like that for a long time, Steve.
STEPHEN HAYES, SENIOR WRITER AT "THE WEEKLY STANDARD": Well, I think, to take Roland's point about this cartoon in the "New York Post," which depicted police officers shooting at chimpanzee and then some people have construed that to be a reference to President Obama -- it actually speaks to attorney general Holder's point.
I think people have become afraid of being accused of being racist and are, in some ways, less likely to say things that they might otherwise say, for fear of being accused of being racist.
BLITZER: Is it too hot to handle, Gloria?
GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: You know, no, I don't think so. I think you have an African-American president who started a conversation about race during the campaign. He didn't want to do it, by the way. But he was kind of forced into it by the Reverend Wright situation. And now you have the first African-American attorney general making a very blunt statement here.
And I think what this means is that as the attorney general, his office of civil rights is probably going to be very aggressive. And he's just sent a strong signal that these are the kinds of issues and the kinds of cases that he wants to talk about in this country, because we need to do it.
So more power to him.
BLITZER: Roland...
MARTIN: And (INAUDIBLE)...
BLITZER: Roland, go ahead.
MARTIN: (INAUDIBLE)...
BLITZER: I was going to say, how offended were you by that "New York Post" cartoon?
MARTIN: Well, first of all, I've seen this ridiculous explanation by the editor and I've seen it by the actual cartoonist, as well. And when a person understands America's history, then you understand how those things are connected.
Just like when you understand the history of America when it comes to sexism, why certain things you say are looked at through a different lens. That is a reality.
And so the point here is I think that we -- as a man, I need to be sensitive to things that I say and do as it relates to women because of the history. Just like somebody has to be sensitive to the same thing when it comes to Hispanics, Asians and African-Americans.
And so we should be able to talk about it, but somebody shouldn't say, oh, no, with this cartoon, I wasn't talking about the president.
BLITZER: Let's...
MARTIN: ...I was talking about Congress. Oh, give me a break.
BLITZER: Well, let me -- let me show you the cartoon in "The New York Post" that ran, because it's causing quite a stir out there -- Steve, take a look at the cartoon. And you can see these two cops. They shoot a chimpanzee. And, obviously, a chimpanzee because of that horrible incident in Connecticut. But the reference being to the person who created the stimulus bill. And the assumption being, at least among some, that these cops are shooting, in effect, the president of the United States.
HAYES: Well, look, nobody knows what was in the cartoonist's head other than the cartoonist. But it strikes me as entirely plausible that when he says we're going to have to get somebody else to write a new stimulus bill that he was, in fact, talking about Nancy Pelosi.
I've been making this argument on this show for more than a month that the number one problem with the way that Barack Obama handled the stimulus was that he outsourced it to Nancy Pelosi...
BORGER: Well, if...
HAYES: ...so that she could do the writing.
BORGER: Well, was this a...
HAYES: It's an entirely plausible argument.
BORGER: Was this a female chimpanzee?
Do we know that?
(LAUGHTER)
HAYES: I don't think we know.
BORGER: Did it have a string of pearls around its neck?
I mean, you know, look, this is -- this is obviously very sensitive. And you have the cartoonist's explanation here. But I think we also have to understand the sensitivities of people here. And I don't think it's going overboard to say what was this...
BLITZER: All right...
BORGER: What was this guy thinking?
And by the way, it wasn't even funny, OK?
The cartoon was not funny.
MARTIN: And, Wolf, as somebody who's run three newspapers, if a cartoonist brought that to me, I would say, are you talking about Congress?
If so, will you hang a sign around the chimpanzee's neck that says Congress. You don't leave it up to people to sit here and say wait, who is he -- who exactly was he talking about?
And so this whole notion of let's figure out if it's about Congress -- no. I'm not buying it.
BLITZER: All right. Let me change the subject -- stimulus package. Bobby Jindal -- he's a rising star in the Republican Party. He's going to give the Republican response to the president's address to a joint session of Congress next Tuesday.
As far as the economic stimulus, money for Louisiana, it's supposed to get about $4 billion, he says this. He says: "We'll have to review each program, each new dollar to make sure that we understand what are the conditions, what are the strings and see whether it's beneficial for Louisiana to use those dollars."
He's leaving open the possibility, Steve, he might say thanks, but no thanks.
HAYES: Well, I think it's an entirely appropriate position to take. What I think a lot of people don't understand is that when you get these federal grants or loans, oftentimes they do come with strings attached. So you'll get a loan for $900,000 that requires you, as a state or as a municipality or a county, to put in $100,000 of your own money and also pay the interest on borrowing money that you don't necessarily have.
So it's the fiscally responsible position. It may also be smart politics.
BORGER: Wolf, if you would...
MARTIN: And it is smart politics. It's a Republican talking point, because the day before, Rick Perry, the governor of Texas, used the exact same language and the exact same words to describe this. So don't think politics is not involved here.
BORGER: Well, but if you decide as a governor to reject this federal money, you know, you can also be overridden by your state legislature. So if some of these Republican governors say, you know what, I don't think we need that $4 billion because this Head Start program is not stimulative or it's going to cost us $100,000 here and there, you know, the legislature has every right to say we're going to force you to take the money.
BLITZER: All right. I'd be pretty surprised if any of these states turned down the cash...
BORGER: I would, too.
BLITZER: Because I think almost of all them are...
MARTIN: Not going to happen.
BORGER: Not going to happen.
BLITZER: A couple of states maybe have a little bit of a surplus. But almost all the others need the money. And I know Louisiana needs a lot of money.
BORGER: Right.
BLITZER: They've still got enormous problems in that state from Katrina and the other hurricanes.
Guys, thanks very much.
MARTIN: Thank you.
BLITZER: Let's check in with Lou to see what's coming up right at the top of the hour -- Lou, what are you working on?
LOU DOBBS, CNN ANCHOR: Thank you, Wolf.
Tonight, we'll have much more on the president's bold and controversial plan to work on our worsening housing crisis. Helping nine million homeowners is the plan. It's the most aggressive action so far by our government to deal with the origins of this economic crisis. Also tonight, a new assault on your Second Amendment rights to buy, to own guns. Two leading defenders of the Second Amendment join us here.
And graphic video of the out of control drug wars raging just south of our border with Mexico. We'll have the very latest for you.
And outrage after attorney General Eric Holder declares we are a "nation of cowards" on the issue of race. We'll examine the attorney general's outburst.
Is it really ring and rung political theater?
We'll find out.
Join us at the top of the hour for all of that and a great deal more, as well as, of course, all the day's news -- Wolf, back to you.
BLITZER: See you in a little while, Lou.
Thank you.
He's under increasing fire, but now the new senator from Illinois says he's not going anywhere.
(BEGIN VIDEO CLIP)
BURRIS: I've done nothing wrong and I have absolutely nothing to hide.
(END VIDEO CLIP)
BLITZER: Still, there are new questions about what Roland Burris said and when he said it.
Plus, lefties love the left-handed president. But something in his style sets him apart. And only CNN's Jeanne Moos is able to take a "Moost Unusual" look.
(COMMERCIAL BREAK)
BLITZER: The "Chicago Tribune" has an editorial that simply says: "Roland Burris Must Resign." But -- and there are growing calls for the Illinois senator to step down amid perceived inconsistencies in his story about getting President Obama's old Senate seat.
And just a short while ago, the White House press secretary, Robert Gibbs, weighed in.
(BEGIN VIDEO CLIP)
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: And I think that the people of Illinois deserve -- deserve to know, based on some the things that have happened over the past few days, deserve to know the full extent of the of any involvement. I think that's likely to come out as part of some of the investigations that are now ongoing. (END VIDEO CLIP)
BLITZER: He spoke aboard Air Force One, on the president's flight from Phoenix back to Washington.
Let's go to Chicago right now.
CNN's Susan Roesgen is working this story for us.
And it's escalating, seemingly, every day -- Susie, what's latest?
SUSAN ROESGEN, CNN GULF COAST CORRESPONDENT: Oh, every day. You're right, Wolf. Just about every hour, too.
The White House, now some other members of Congress and the Senate Ethics Committee all want to know the same thing that businesspeople here in Chicago wanted to know at a luncheon today -- and that is what is the full story from the real Roland Burris?
(BEGIN VIDEOTAPE)
BURRIS: I am the real Roland. If I had done the things I've been accused of, I would be too embarrassed to stand up here in front of you, because you all are my friends.
ROESGEN (voice-over): Senator Burris defended his reputation and his political life.
UNIDENTIFIED MALE: Come on, back up.
UNIDENTIFIED MALE: Come on, guys.
UNIDENTIFIED MALE: (INAUDIBLE) behind, you guys. Be careful.
UNIDENTIFIED MALE: Keep moving.
ROESGEN: Senator Burris blames the media for the controversy over what he did and who he talked to before his Senate appointment. But his own changing story fuels the fire.
First, he said he didn't talk to anyone in the governor's inner circle about his appointment. Then he said he remembered that he did get three calls from the governor's brother asking for money before he was appointed. Now he admits that he offered to raise money for the governor, but says no cash came out of it.
BURRIS: I did not give one single dollar to the governor.
ROESGEN: Still, with each new revelation, critics are demanding a full answer to this one specific question.
PAUL M. GREEN, ROOSEVELT UNIVERSITY: Was it wrong of you to solicit funds for Rod Blagojevich at the same time he was considering you for the Senate? BURRIS: As I said in my statement, we will not make any responses to those type questions. I said it in my statement. And we're not making any responses to that question.
(END VIDEOTAPE)
ROESGEN: And Wolf, while that question hangs out there without an answer, already here, people are thinking about, if -- if Senator Burris is removed from the Senate, who might replace him?
A couple of candidate names already, Wolf -- the state treasurer, Alexi Giannoulias here, and the state attorney general, Lisa Madigan -- Wolf.
BLITZER: Boy, they're waiting out there to see what happens.
All right, thanks, Susie, for that.
Let's check in with Jack Cafferty once again for "The Cafferty File" -- Jack.
CAFFERTY: You know, when you got down to where it's -- you've got to start blaming the media, you're out of bullets. I mean, if that's all he's got is well, this is the media's fault, then that's a wrap and it's time for him to pack up his stuff and head back to wherever he came from.
The question this hour: Is it time for the U.S. to nationalize its banks?
Leroy in Jersey City writes: "You can't use the "N" word. If we "N" word the banks -- nationalize -- then comes socialism and Marx. We might as well lay down our arms and fly the Russian flag. Never, never, never should we nationalize the banks. Now maybe we could restructure the banks -- that is, take over the insolvent financial institutions that fail the stress test, fire the management that created the mess, sell off the positive assets in an orderly fashion, trash the toxic assets and send the shareholders packing. Then eventually resell the healthy bank back to the private sector. It's a far better solution than trying to prop up the private zombie banks that don't have the nation's interests at heart."
Cali in Tennessee: "Let the banks go belly up and the car companies go with them. We'll learn to live without our credit culture only if this is done."
Bob in New Jersey: "It would only take one nationalized bank as a warehouse for the toxic assets and a conduit for putting taxpayer provided funds into the credit market in order to break the logjam and get the private banks lending again."
Robin writes: "The banks should have been nationalized immediately. All assets of CEOs and higher-ups should have been frozen, all monies received from illusionary profits should be returned. Why are taxpayers bailing out these banks when the proceeds from the disaster are sitting in the perpetrator's bank accounts?" There's a question.
And finally, Jim in North Carolina: "Jack, if CNN's ratings drop below sea level, I promise that you and Wolf will be looking for another SITUATION ROOM. You guys would not be bailed out. The same goes for every facet of our society. If the truth be told, the American people don't believe in rewarding failure. Unfortunately, that's exactly what we're seeing every day."
If you didn't see your e-mail here, go to my blog at CNN.com/caffertyfile and you can look for yours there, among hundreds of others.
You haven't heard anything about THE SITUATION ROOM, have you?
BLITZER: I have heard that we're doing just fine and there's no need for any bailouts.
CAFFERTY: Good. Good, because I'm too old to go looking for work.
BLITZER: No, you're in good shape. Thanks, Jack.
Some advice for President Obama on his penmanship. CNN's Jeanne Moos has more on the president's Moost Unusual signature. You'll see it when we come back.
(COMMERCIAL BREAK)
BLITZER: If you watched that bill signing ceremony yesterday, you may have noticed that President Obama has a "Moost Unusual" signature.
Jeanne Moos tells us why.
(BEGIN VIDEOTAPE)
JEANNE MOOS, CNN CORRESPONDENT (voice-over): It's not just what he signs, but how he signs it.
UNIDENTIFIED MALE: That contorted whatever.
UNIDENTIFIED MALE: He's got the curve, hand over.
MOOS (on camera): He goes like this.
UNIDENTIFIED MALE: And he really curls.
MOOS (voice-over): And if it curls your toes, well, you're obviously not a lefty. Lefties for Obama love having one of their own in the White House. But President Obama's signature style is a bit more hooked than that of most lefties.
UNIDENTIFIED FEMALE: He never learned how to hold his pen and he looks like Joe Cocker.
(VIDEO CLIP)
MOOS: But lefties have an explanation.
UNIDENTIFIED MALE: I think it's because he doesn't want to smudge the ink, because when -- if you go like that, then you're not going to run over your signature.
DR. SAMUAL WANG, NEUROSCIENCE PROFESSOR, PRINCETON UNIVERSITY: It would be kind of embarrassing to find a nearly $800 billion stimulus bill and then smear the ink.
MOOS: Neuroscience professor and author, Sam Wang, says righties only use one side of their brain to process language. But lefties...
WANG: One in seven lefties showed activity in both sides of the brain.
MOOS: Six of the past 12 presidents have been lefties, including presidents Clinton and George Bush Sr.
But before you lefties start gloating about having higher SAT scores...
WANG: They are also overrepresented among criminals and among the mentally retarded.
MOOS: His FBI profile says Osama bin Laden is a lefty. Maybe you're left wondering -- how many pens does it take to sign a bill?
OBAMA: I've got to use 10 pens.
MOOS: The president often signs his signature in bits so he can use more pens, which he then hands out as souvenirs.
UNIDENTIFIED MALE: I want the guy to be a success. I don't care if he writes with his foot.
MOOS: But lefties worried about a twist in the president's wrist have some advice for him.
UNIDENTIFIED FEMALE: Turn the paper. Turn the paper, not your wrist.
MOOS: These days...
(on camera): Which hand do you use?
OK. Now let's see...
MOOS (voice-over): Lefties like Eve don't get much flack from teachers. Forty or 50 years ago...
UNIDENTIFIED MALE: They had me bring in a tie of my father's. And I used to have to sit in school with my left hand tied to my leg.
MOOS: Now that sounds like the kind of torture a lefty president should outlaw by signing a bill.
OBAMA: There you go.
(APPLAUSE)
MOOS: Jeanne Moos, CNN, New York.
(END VIDEOTAPE)
BLITZER: All right, that's it for me.
Let's go to Lou in New York -- Lou.
