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CNN Saturday Morning News

President Bush in Talks with Top Financial Ministers and Bankers; General Motors to Merge with Chrysler?; Barack Obama and John McCain Continue Campaigning

Aired October 11, 2008 - 09:00   ET

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

T.J. HOLMES, CNN, ANCHOR: So from the CNN Center in Atlanta, Georgia, hello to you all on this CNN SATURDAY MORNING. I'm T.J. Holmes.
BETTY NGUYEN, CNN, ANCHOR: Good morning, everybody. I'm Betty Nguyen. We want to thank you for starting your day with us.

Boy, take a big sigh of relief. It has been such a week on Wall Street, the ups and the downs. There is some new economic development that we want to tell you about this morning. We'll get into that. But listen to this, GM says no to bankruptcy. But yes to a big time merger? Really?

HOLMES: Yes.

NGUYEN: We'll have the latest on that.

HOLMES: Also, of course, we're covering politics here for you this weekend as always. Barack Obama in Philadelphia, he has four rallies actually planned. Four of them around the city just today alone. Also Sarah Palin in Pennsylvania, as well, and John McCain. This is not a good sign if you're booed at your own campaign rally.

NGUYEN: By his supporters?

HOLMES: His people booing him.

NGUYEN: Really.

HOLMES: We will explain why he's booed and have sound for that for you. But we will start with the economy and how to fix this thing. President Bush talking this morning with some top financial ministers and bankers from the globe's top industrial nations.

NGUYEN: Yes, and comments you heard here on CNN He said the global crisis requires a global response. And the Dow Jones closed this week down nearly 19 percent. It was the worst week ever for the Dow. The International Monetary Fund also meeting in Washington today on this crisis, and reports today say as we mentioned a little bit earlier that General Motors and Chrysler talking about a possible merger or even a buyout.

HOLMES: And the Treasury Secretary Hank Paulson hasn't really had a weekend off in a while now. He's also up early today and working. He met with the finance ministers, from other top industrial nations. A short time ago he talked about what they have to do.

(BEGIN VIDEO CLIP)

HENRY PAULSON, TREASURY SECRETARY: We finalized an aggressive action plan to address the turmoil in the global financial markets and the stresses in our financial institutions. This action plan provides a coherent framework that will direct our individual and collective policy steps to provide liquidity to markets, strength financial institutions, protect savers, and enforce investor protections.

(END VIDEO CLIP)

HOLMES: Those finance ministers are meeting again today. Meeting with them will be finance ministers and bankers from several other countries that are not members of the G-7. Members of the G-7 have pledged to work together to stabilize the frantic world markets. We'll keeping pace with this rapidly developing story are those two. They are busy trying to keep up with this thing.

Elaine Quijano at the White House for us this weekend. Also, business correspondent Stephanie Elam in New York. Stephanie, let's start with you. Are you having a tough time keeping up with all this going on?

STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: It feels like a Monday, T.J. The weekends don't feel like weekends anymore because so much is happening over the weekend. And the pressure is definitely on for the Treasury Secretary. Henry Paulson said last night that the U.S. government is working on a plan to buy stock in financial institutions with some of the funds authorized in that $700 billion bailout bill.

Paulson said the idea would be to develop a standard program to use taxpayer money more efficiently and have it go farther. He also said the Treasury's working to unveil the plan as quickly as possible. Still the government have yet to unveil any concrete plans and investors are hoping for more details before the Asian markets open Monday morning, which obviously would be Sunday here.

And it's clear nerves are short for investors. Yesterday's trading session was especially erratic with more than 1,000 point swing on the Dow. For the week, the losses total nearly $2.5 trillion. That's with the T. The Dow lost 1,874 point for the week. That is the worst weekly decline ever on both a point and percentage basis.

As you can see down there on the screen, over the last eight days, the Dow has lost 22 percent, NASDAQ shed 200 points despite ending its 7-day losing streak Friday, just barely. And the S&P 500 lost 200 points for the week, T.J. So obviously without any concrete details, it does feel a little bit like they're trying to get behind the problem instead of in front of it. Wall Street does not like that. They want to see action ahead of things.

HOLMES: You're right, not at all, it's been a big issue of confidence. Right now, we're seeing so many statements and what not. And we're talking about the G-7 and some of the things they're going to do. These five steps, one of them is take decisive action. Another one, take steps, unfreeze the market. What does that mean? And that right now, a lot of people waiting on those details.

Stephanie Elam for us, comparing it with a pinball we've been seeing on Wall Street instead of the roller coaster --

ELAM: I'm just tired of saying roller coaster. We've killed that word. We need a new one.

HOLMES: Well, we'll use that one on CNN SATURDAY MORNING -

ELAM: I like it.

HOLMES: At least all morning. Stephanie, good to see you. Thank you so much.

ELAM: Thanks.

HOLMES: Betty, back to you.

NGUYEN: All right. Let's get back to what does it mean by taking decisive action? What kind of action? Because all the talk is on this financial action, that's going on, in fact at the White House today. Our Elaine Quijano is there. She joins us now live. Elaine, should we be more confident this morning? We did hear the President speak. But again, all of us waiting for those details.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Yes. Well, the White House, Betty, is certainly hoping to boost confidence. But you're right, we did not hear details. Instead the White House clearly wanted an international show of force, if you will, on this issue that was the image that officials wanted to project today by holding this rare Saturday morning meeting at the White House with President Bush, top administration officials, and those finance ministers of the group of seven industrialized nations.

Now afterwards, in his remarks in the Rose Garden, President Bush basically reiterated what we heard from him yesterday, mentioning the steps that the U.S. government is taking in order to shore up the U.S. economy, including buying equity in banks that Stephanie was just talking about, but also emphasizing the coordination and cooperation among the world's major economies to tackle the global financial crisis.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We've all agreed that the actions we take should protect our taxpayers. And we agree that we ought to work with other nations such as those that will be represented this afternoon in the G-20 forum.

As our nations carry out this plan, we must ensure the actions of one country do not contradict or undermine the actions of another. In our interconnected world, no nation will gain by driving down the fortunes of another. We're in this together. We will come through it together.

(END VIDEO CLIP)

QUIJANO: You know, the bottom line, Betty, we didn't hear anything new, really, out of this meeting. But President Bush did find sort of a new way to say it. Standing there with representatives, again, from the world's major economies, trying again to reassure not only investors here in the United States, but investors around the world that his administration is taking a coordinated approach, a comprehensive approach to tackling this problem -- Betty.

NGUYEN: Yes, we heard from him yesterday. Again today, standing with the members of the G-7. So, obviously the message is, we are working and working feverishly on it. Again though, as they say the devil's in the details and we're still waiting to hear those details. Thank you, Elaine.

You know, all morning we've been asking how the economy has affected you and your family, so e-mail us at weekends@cnn.com. We'll read some of your responses in 20 minutes -- T.J.

HOLMES: Well, Betty, Alaska Governor Sarah Palin abused her power when she let a family grudge influence her. That is the finding of an investigative panel. The new report just coming out, the panel says the firing of a public safety commissioner after he refused to lay off Palin's ex-brother-in-law from the state police was legal. This panel says while it may have been a contributing factor, it was not the primary reason why that safety commissioner was fired.

However, the panel does say this is where Palin went wrong. He says she did violate state ethics laws when her husband Todd tried to pressure Monnigan, the state commissioner, tried to pressure him into firing the ex-husband, her sister's ex-husband, but Palin did nothing to stop her husband from trying to exert some influence there.

Well, her running mate GOP presidential candidate John McCain sticking up for Barack Obama, defending him against a misinformed supporter. Seriously. It happened at a rally in Lakeville, Minnesota, yesterday.

Take a listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I can't trust Obama. I have read about him and he's not -- he's an Arab.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: No, ma'am. He's a decent family man citizen that I just happen to have disagreements with on fundamental issues, and that's what this campaign is all about. He's not, thank you.

(END VIDEO CLIP)

NGUYEN: All right, so Obama talked about the incident just a short while ago in Philadelphia. He was at the first of several rallies planned for today. And this is what Obama had to say.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: I want to acknowledge that Senator McCain tried to tone down the rhetoric in his town hall meeting yesterday. I appreciated his reminder that we can disagree while still being respectful of each other. I've said it before, and I'll say it again, Senator McCain has served this country with honor. He deserves our thanks for that. But when it comes to the economy and what families here in Pennsylvania are going through, Senator McCain still doesn't get it.

(END VIDEO CLIP)

NGUYEN: All right. So playing nice kind of sort of. Barack Obama enjoying an advantage. Take a look at the numbers. Our latest poll of polls shows Obama with an eight-point lead over McCain, 49 percent to 41 percent with 10 percent of voters still undecided.

HOLMES: Wow. Well, after one of the nastiest weeks we've seen in a while with all the Ayers and the Keating stuff. A little love fest '08 going on now.

NGUYEN: But as you noticed, didn't last for very long.

HOLMES: Yes. It was nice to have, though.

NGUYEN: Exactly.

You know we're tracking the ten most wanted culprits, though, of the financial collapse.

HOLMES: And up today, a former CEO who is living the life.

(COMMERCIAL BREAK)

NGUYEN: All right. So, North Korea has released several pictures of Kim Jong Il. The health of the reclusive leader has been questioned in recent weeks because he hasn't appeared at events that he would normally attend.

HOLMES: And North Korean television said Kim visited a women's artillery unit but did not say exactly when that video took place.

NGUYEN: A State Department official says the Bush administration is preparing to remove North Korea from a terrorism blacklist. The announcement coming later this morning at the State Department. Now, diplomats briefed on the matter say taking the nation off the state sponsor of terrorism list is meant to save a nuclear disarmament deal. It's contingent though on North Korea allowing inspection of the its nuclear facilities.

HOLMES: Well, September 15th, you might remember that day, remembered well. That was the day that Lehman brothers filed for chapter 11 and everything kind of went down the tubes from there.

NGUYEN: And we have been watching the ride since then.

You know, the former financial giant is one of the 10 most wanted culprits of the collapse. And our Joe John's takes a look.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CORRESPONDENT (voice-over): Lehman Brothers former CEO Richard Fuld is living pretty, a multimillion dollar estate in Florida, a $21 million apartment on Park Avenue, another lavish estate in Greenwich, Connecticut. And it's no wonder, "Fortune" magazine said as CEO, Fuld was paid around $500 million. But now he's on the hot seat.

UNIDENTIFIED MALE: If you haven't discovered your role, you're the villain today. Your company's now bankrupt, our economy is in the state of crisis, but you get to keep $480 million. I have a very basic question for you. Is this fair?

JOHNS: Call it a half billion dollar question, but to Fuld, there's nothing wrong with getting paid for good performance.

RICAHRD FULD, FMR. CEO OF LEHMANN BROTHERS: When the company did well, we did well, when the company did not do well, sir, we did not do well.

JOHNS: Shawn Eagan evaluates companies like Lehman for investors. He says Fuld isn't the kind of guy to fall on the sword when things get bad.

SHAWN EAGAN: When the firm gets into trouble that he'd be the first in line to make the sacrifices to right the ship so to speak. He wasn't.

JOHNS: Fuld is the guy who ramped up Lehman's business in mortgage-related securities, at least until the bubble burst. But unlike many other firms, when the subprime market went south, he didn't pull back. Instead, he got in deeper.

UNIDENTIFIED MALE: Lehman wound up thinking people are making a mountain out of a mole hill and if we go in now when everybody else is in a state of quasi panic and buy up a lot of these things, we'll make a lot of money. And it was a bad bet.

JOHNS: The doom mounted quickly. In September, Lehman needed billions in cash to keep the company afloat. But according to the "Wall Street Journal," just five days before declaring bankruptcy on a conference call to shareholders, executives were talking about selling assets but didn't explicitly say anything about needing extra cash.

UNIDENTIFIED MALE: Did you mislead your investors? And may I remind you, sir, you're under oath.

FULD: No, sir. We did not mislead our investors. And to the best of my ability at the time given the information that I had, we made disclosures that we fully believed were accurate. EAGAN: Either he should have known that the company was in difficult circumstances, or if he did know and didn't tell, it creates another problem. So on the one hand, he is either a liar or else on the other hand he was stupid.

JOHNS: Most people know the rest. Lehman Brothers goes down, the largest bankruptcy in U.S. history. Helping spark a financial panic that continues today. And that's why Lehman Brothers and CEO Richard Fuld are one of our ten most wanted culprits of the collapse.

Joe Johns, CNN, Washington.

(END VIDEOTAPE)

HOLMES: All right. That's a heck of a picture there, wasn't it? That's just one down. Find out more about the ten most wanted culprits of the collapse all next week on AC "360," where else are you going to find that but here on CNN?

NGUYEN: Let's talk about some severe weather today because it is out there in the form of a hurricane named Norbert. Reynolds Wolf has been tracking all of it for us and he joins us now.

Boy, look at that thing, Reynolds.

REYNOLDS WOLF, CNN METEOROLOGIST: Yes, I know, it continues to spin just off Baja, California. That's a cross over land and they move into the Gulf of California. Right now, it's a category 2 storm. It's not a major hurricane, it has weakened a little bit. It is expected to continue its march across parts of central and northern Mexico into New Mexico where it could become a big rainmaker, possibly producing some flash flooding in parts of west Texas also.

So it's something that we're going to watch for you very carefully. Another huge weather story that's going to affect at least half of the nation is going to be due not just from Norbert, but also from this area of low pressure that's going to settle over part of the central Rockies. It's going to be an atmosphere conveyor belt, pulling a little bit moisture in from the Pacific. It's going to tap into some gulf moisture as it pulls it farther north, it's going to stay mainly in the form of rainfall, but when it hits the higher elevations, the Rockies.

You have the cold air coming in from the north, it's got a transformation going from rain to snow. And at times, it's still could be specially heavy. We're talking about areas like Billings, Montana, where you could see anywhere from say one to two feet of snowfall, but a bit farther to the south, in just the west of Casper, we're talking about the potential of say three to four feet, maybe even higher amounts in the higher elevations, in places like (INAUDIBLE), Yellowstone. Yes, it could get heavy in those areas.

That is the latest we've got for you. We're going to continue to track this system and show you what to expect as it moves a little bit more to the east.

Let's send it back to you, Betty, and T.J.

NGUYEN: All right. Thank you.

HOLMES: All right. Thanks.

NGUYEN: You know it was another bumpy ride on Wall Street this week. It seems like we keep saying that over and over again.

HOLMES: That was pretty bumpy, the worst we've seen in the Dow in its history. Well, CNN's Gerri Willis is going to join us to talk more about what a lot of people are wanting know about their 401(k)s right now and that free falls --

NGUYEN: What's left of them.

HOLMES: Yes.

(COMMERCIAL BREAK)

NGUYEN: Well, with all this economic talk, are you looking for a silver lining? Well, along with the market, gas and oil prices. They are taking a dive. And for most of us, that's a good thing.

HOLMES: Yes. Because AAA now reporting, you're paying $3.29 a gallon for regular this morning. That's a six cent drop just overnight. The oil plunged almost $9 yesterday. So listen to this, $78 a barrel, it wasn't that long ago we were up in the what $120s, $130s, $140s. Some experts think that the prices will continue to come down, actually.

Also this morning reports that the auto giants, General Motors and Chrysler are in merger talks.

NGUYEN: Can you believe it? But the "Wall Street Journal" says those talks have been stalled by the turmoil in the markets. We'll continue to follow that story for you.

HOLMES: And of course, Ford Motors now. We all know about the financial trouble they have been facing but (inaudible) the shares it holds in Mazda Motors. Earlier, Japanese media reported a deal had been reached to do just that. But Mazda is denying those claims. Ford owns a third of the shares in the Japanese motor company.

NGUYEN: OK. Eventually this financial fiasco will end, but in the meantime, what about your 401(k)? And what happens if the company managing it goes under? Here's our personal finance editor Gerri Willis with some answers.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hi, Betty, we've all been getting the 401(k) statements in the mail and the results are not pretty, but don't panic, the money that you do have is safe if the company that manages it goes out of business.

It's held in a trust that nobody can access, not even bankruptcy courts. And your money is held separately from the institution that manages it. It's not co-mingled with profits for any company. So take heart if the company that's in charge of your 401(k) goes under, your assets are safe and you're going to be able to get your money.

Now, it's been a rough few weeks for the Dow and 401(k)s, that is, has been hit hard, but there is no insurance against investment loss. But remember, diversity, asset allocation are as important now maybe even more so than ever before. Check out your portfolio, make sure you don't have a lot of company stock and spread your risk around in a number of different investments.

Coming up on "OPEN HOUSE," the best places to stash your cash right now, teaching your kids about money, and slash those heating bills. We're winterizing and saving you money. That's "OPEN HOUSE," 9:30 a.m. Eastern -- Betty.

NGUYEN: That's money. That's why we love Gerri. Especially in this economy. Speaking of it, how are you coping?

HOLMES: A lot of people have to give something up, a lot of people making sacrifices. You know sitting around that dining room table trying to get the bills straight. Well, we've been asking you how the financial crisis had been affecting your life. You've been sending us some responses. We'll share some responses. Stay here.

(COMMERCIAL BREAK)

NGUYEN: You know, we don't have to tell you that people losing their homes, businesses. Some say they're even losing their marriages in this economy.

HOLMES: We'll share some of these e-mails we're actually getting. Josh Levs, we're been asking them to tell us how this economy is affecting their lives. There's really some tough stories out there.

JOSH LEVS, CNN CORRESPONDENT: Yes. It is. It's really depressing. But you now what, it's also very real. I mean this is how this stuff hits home. Let's zoom right in to the board and I'll show you some of these e-mails we're getting.

We're starting it off with this one. A military guy, he is an active army soldier with 19 years of service. I find it difficult to retire from the military, to find a stable civilian job, to continue supporting my family. As much as I would like to, I will not be able to even if that means another long tour to Iraq or Afghanistan which would be my fifth tour, total. Family comes first. We got that this morning from Henry Rodriguez.

This one now from Susan Roquermore. We car pool, take our children to practice and stay there. So we don't have to drive four times. Our challenge recently has been with the grocery bills. We keep cutting out items. It's been frustrating. With colder weather coming, we'll be getting the blankets out as we have to keep our house pretty cool due to the high heating bills.

Let's get another one here. We own a restaurant, and are down in sales, have fewer employees. Our portfolio for investments is down over 30 percent and so are the college funds for our two high school aged children. How are we going to pay for their college and continue to pay for our employees? Too many politicians on both sides have forgotten the people and have looked out for their own purposes. That's from Tony Mellencamp in Berne, Indiana.

I tell you guys he summarizes what a lot of people are feeling. They're feeling a lot of frustrations with politicians these days on both sides. They're saying they're not seeing solutions and that's what they want to see.

You can send us your e-mails, just go ahead and keep them coming this morning. Weekends@CNN.com. How has the economy affected you? Including your name and the city you live. We're going to keep sharing some throughout the weekend. Because I'll tell you guys, these stories as you can see, they're pretty powerful.

NGUYEN: Absolutely. Affecting people all walks of life too. OK. Thank you, Josh.

HOLMES: Thanks, Josh. We are talking about the economy and health care. How many people do you know struggling with cancer, devastating car accident, or in one man's case ALS, Lou Gehrig's disease.

(BEGIN VIDEO CLIP)

STEVE DIEKHOFF, ALS PATIENT: There are a lot of people that get killed every day. They don't get to say good-bye. They don't get to prepare. They don't get to mend relationships. And in a way, maybe I've been given a gift.

(END VIDEO CLIP)

HOLMES: An amazing attitude for this man here. And he's actually trying to raise two girls. And he's worried about taking care of them. He's not alone, a lot of Americans right now facing the same set of dire circumstances. An important discussion next hour, you don't want to miss on the rising cost of health care. Make sure you stick around for that.

NGUYEN: But first, "OPEN HOUSE" with Gerri Willis starts right now.