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Auto Executives to Testify Tomorrow; Treasury's Bailout Blunder; Bill Clinton's Role in the Obama Administration

Aired December 3, 2008 - 23:00   ET


ANDERSON COOPER, CNN ANCHOR: We begin tonight with "Your Money, Your Future," and breaking news: late word from Senator Majority Leader Harry Reid that a loan package for the big three car makers using money from the $700 billion bailout fund would not pass if the votes were held today. Not enough lawmakers support it and according to a new CNN polling neither does the American public.
Tomorrow, as you know executives from Chrysler, Ford and GM are going to return to Capitol Hill, bringing new restructuring plans, the promise of union givebacks and according to our unscientific estimate, about 42 percent less arrogance and PR bungling. In other words they are ditching the corporate jets.

All three CEOs driving to D.C., that's the picture of GM's Sir Rick Wagoner in a black hybrid Chevy Malibu. He's actually in the passenger seat in this shot we're told he did drive at least part of the way. Good publicity, no doubt about that, but it's still a tough sell and according to our breaking news maybe an impossible one.

Ali Velshi has the latest -- Ali.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Anderson, it's not over tomorrow, the CEOs get to testify. They submitted their plan yesterday. Now, they get to explain to Congress how this is going to keep them afloat but boy, they have a tough road ahead of them.

Let me start with the problem of the math. The price tag when you add it all up is closer to $35 billion than $25 billion which is what they initially said they wanted. So somehow they didn't do the math on that one; $10 billion more than we thought it was going to be.

Number two, there has been a lot of skepticism about that original bailout, the TARP program, the $700 billion program. Just this week we've got a report from the Government Accounting Office, they say not enough oversight about how that money has been spent.

So people are worried about this, although you will notice that this auto industry bailout is being subject to higher standards than the other one was initially.

And number three, you've just mentioned it, public sentiment. Take a look at this CNN Opinion Research Corporation poll, about government assistance to major auto companies, 61 percent of people respondents and this was just on in the last couple of days oppose it. Only 36 percent are in favor. Although people maybe don't realize this isn't a giveaway. This is a loan to the auto industry. At this point it is an uphill battle. But they've got tomorrow to talk to Congress to try and convince them -- Anderson.

COOPER: There is also some going to be some bad whether is already job news out today. More expected on Friday, right?

VELSHI: Yes, Friday is going to be the big jobs number. The one we get every month. That will be the unemployment numbers for the month of November.

But we got a few things today that were sort of harbingers of that. And that's what we have to look at. Take a look at this is 2008, every single month has been job losses. It should be above zero line.

We've just been losing them and look how it is been going. And finally, 240,000 in October; on Friday we are expecting -- we're expecting to lose in one month 325,000 jobs. If you take everything from January to October it adds up to 1.2 million jobs lost in America. Add the 325,000 we're expecting, 1.5 million jobs lost in 2008.

We should be creating 100,000 to 150,000 jobs a month in a healthy environment. So we should be up about 1.5 million. And right now, we're down that much -- Anderson.

COOPER: And that is devastating. All right Ali thanks.

That CNN polling that Ali mentioned also reveals that only 29 percent of people believe taxpayers would be treated fairly in a bailout for Detroit, 70 percent say no. Not a lot of faith in the process.

As Ali said serious doubts about accountability; even more so now that CNN has learned that Treasury Secretary Paulson is actually considering asking Congress for the second big installment from that $700 billion bailout fund.

Now, they've already spent hundreds of billions. And tonight with want to see where it has all gone.

"Keeping them Honest" for us Joe Johns.


JOE JOHNS, CNN CORRESPONDENT: So what happened to that mountain of money Congress handed over to bail out the big banks and save the economy? Nobody knows.

PETER MORICI, UNIV. OF MD ECONOMICS PROFESSOR: We don't know how the money is being spent. There is no assurance that this money isn't just being spent to pay large bonuses to executives or that the banks are using the money to rework mortgages or make new loans or anything of that nature. They've basically been given an out of jail free card.

JOHNS: Here's what we know. Congress set aside $700 billion for the Treasury. $150 billion has been already been used to shore up the banks. And almost $200 billion more committed for various other purposes.

Problem is the money got handed out so fast the Treasury didn't track it or require the safeguards Congress wanted; like restricting dividend payments to shareholders and big bonuses and golden parachutes for executives.

The Government Accountability Office says federal officials have not even determined how Treasury will monitor future dividend payments and executive pay, a priority for many who backed the deal, including Barack Obama.

SEN. BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES: We're seeing some areas where we can be doing better in making sure that this money is not going to CEO compensation that it's protecting taxpayers and that the taxpayers are going to get their money back.

JOHNS: The concern isn't just that CEOs will get richer on taxpayers' back, it's also that they need to change the way they do business.

MORICI: It seems as though they are continuing as they were before they got the money, and that is to diversify into other financial services, ignore traditional banking, pay their executives very large bonuses and continue with business as usual so we haven't gotten what we expected.

JOHNS: Why didn't the government impose safeguards before handing out the money? Treasury wouldn't talk on camera but says it is working on safeguards.

However, Peter Morici says, it's because the top guy at Treasury was giving the banks the benefit of the doubt.

MORICI: Henry Paulson is very naive about the conduct and motivations of his colleagues on Wall Street. He thought if he gave them the money they would do the right thing and they've let him down and made him look foolish.

JOHNS: Now, as Treasury Secretary Paulson reportedly weighs whether to ask for the second half of the $700 billion bailout money rather than leave it to the Obama administration, some in Congress are calling on Treasury not to unless there is some accountability here.

Joe Johns, CNN, Washington.


COOPER: It is amazing what's Joe has said. There are no safeguards in place and now they may want to spend the rest of the $700 billion before Barack Obama even takes Office. Let us know what you think. Do you think it's a good idea or not. Join the live chat right now at You can also watch Erica Hill's live web cast there during the commercial breaks.

And we'll be talking to Joe and David Gergen and Candy Crowley in a moment, so if you have some questions for them post them at

Later, a CNN exclusive: what Bill Clinton is saying about his wife's new job and his future role?


BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I think my involvement will be what our involvement with each other's work has always been, that is all the years I was governor and president, I talked to her about everything.


COOPER: Also the American cruise ship attacked by pirates. For the first time, the Americans onboard are speaking about what really happened when the pirates attacked.

And a new arrest in the case of that boy found shackled. We have new details about what police say happened to the teenager in this alleged house of horrors. One of the suspects is accused of holding the boy captive in chains, is actually a Girl Scout leader, if you can believe it.

"Crime and Punishment" when "360" continues.



OBAMA: It appears based on reports that we've seen that this time out the executives from these auto makers are putting forward a more serious set of plans.


COOPER: President-elect today with the big three big wigs getting ready for their second chance at lawmakers tomorrow. Mr. Obama said he is reserving further comment until he sees what they have to say. But as we reported the breaking news tonight, there's not enough votes to give them the money as of now.

Let's "Dig Deeper" with Joe Johns, Candy Crowley and senior political analyst, David Gergen.

So David, strategically and politically does Obama want this stuff dealt with now before he takes Office?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I think on the automobile industry, Anderson, he has no choice but to want to see some sort of resolution because if Congress does not act before January 20th, General Motors is saying essentially there's a good chance it will run out of money and go bankrupt.

So Congress has to make a decision now whether they want to provide at least some sort of bridge funding to get them into January until after Obama takes office or whether they want to let them go into bankruptcy.

That's a very hard call. These automobile -- I think going back and looking at your blog site, when those guys flew on those jet planes I think that was a turning point for this whole thing. People went nuts on the blog site against it. I think it turned sentiment against it.

COOPER: Candy, do you know how much conversation there is among camp Obama behind the scenes about the bailout situation, I mean, how involve are they? And clearly publicly he's kind of stepped back from it?

CANDY CROWLEY, CNN SENIOR CORRESPONDENT: Well, he has. But certainly, there are discussions on Capitol Hill with some members of the transition team. But Obama has made it very clear today and previously that he doesn't think the country can let the auto industry go down the tubes. He said, we need to do something.

Now, he today and again, previously has said that we can't just hand them money and have them continue with business as usual. They've got to come up with some future plans that says here's how we're going to make ourselves profitable going forward.

So he's very much said, no way we can let them go down but he has attached some of the same things that they are attaching up on Capitol Hill. Like, what are you going to do not to get in this position again?

COOPER: Joe, it's remarkable in the report that you did earlier, the "Keeping them Honest" report that we showed right before the commercial break about how the government is basically saying that there was been no oversight of the money that's been spent so far and no real coherent strategy for how that money was even distributed.

Mary Beth on our blog site asks this question: Why is Treasury so clueless? So what's the answer?

JOHNS: Well, it was an emergency that's what they say. And look it's been less than 60 days since you got in the situation where the President signed the bill. They say the first thing they wanted to do obviously, was calm the markets, get that money out there and buy up some preferred stock then go from there and that they're working on putting in those few safeguards that actually were put into the bill. So Treasury says, yes, give us a chance and we will make some of these changes that need to be made.

On the other hand there's a lot of skepticism around this town because everybody knows that the Bush administration doesn't really like a lot of regulations. And this would be more regulations imposed on these various companies that got so much of the government money through preferred stock.

So it's sort of a Catch-22 situation. It depends on who you believe. Bottom line, no, the safeguards aren't in place; maybe soon the government says.

COOPER: David, do you have confidence in how they're spending this money?

GERGEN: Well, first of all, let me just say on the automobile thing, I want to agree with Candy. It is unimaginable to me that the Democratic Congress and the incoming Democratic President will let the automobile companies go down.

I think there'll be some sort of way to -- they may structure bankruptcy in a way to protect jobs and protect sales.

COOPER: Even though right now, Harry Reid is saying that they don't have the votes.

GERGEN: Even though they don't have the votes. It's just unimaginable to me. You got 20 percent of people in Michigan right now, in some sort on governmental assistance. At least one out of eight in Michigan is on food stamps. They're not going to let that part of the country go down.

But coming back to the bailout of the financial institutions, this big $700 billion bailout and the way it has been done, I think Joe Johns is right, because it was a sense of emergency, the Treasury didn't have the kind of experts in hand they could assign to this. There were mistakes made and there was money probably misspent.

But that does not mean it was a bad idea. Without that bailout, you know, a lot of these financial institutions would have disappeared. And we would be heading toward a very rocky situation right now. And it saved some of those banks.

And the second thing is the international lending rates have gone down, the so-called Libor Rate has gone down. We don't have all the credit moving that should. But we could be in a much, much rougher situation had it not been for the bailout.

An imperfect bailout, Congress does need and I think Obama's signal today that he wants to make some changes if we go to the second half of this. He said specifically, he wanted to do something about home mortgages. And that not enough has been done.

They want to protect the automobile -- these Democrats want to protect the automobile industry and do something more about home mortgages.

But I don't think we ought to just write off this whole bailout and say that was a terrible deal. I think a lot was accomplished.

COOPER: Candy, Obama I think has taken off of his web site it was noted in the several ports, this talk of a several windfall profit tax against oil companies. Have they publicly commented about that? CROWLEY: They haven't publicly commented about it. But in some ways it is -- seems to be much the same thing as the question that has been asked of the President-elect repeatedly, which is are you going to move to raise the taxes of those people making over $250,000 as you said you would? And it now seems more and more likely that what the President-elect will do is just allow those tax cuts given by the Bush administration to expire in a couple of years.

And why? Because of the state of the economy, I mean, certain things that were said in the campaign were not said in the context of what's going on right now. And most people would argue including many Democrats that raising taxes is not the way to treat this sort of economy.

And so I think a lot of this sort of thing is being pushed back and that may well be the reason why the windfall profits tax could have disappeared from the web site. But he has not been asked that nor has he explained it.

COOPER: All right, we're going to have more from our panel coming up David Gergen and Candy Crowley and Joe Johns thanks.

Coming up, Bill Clinton talking only to CNN about what he is going to do once Hillary Clinton becomes Secretary of State. And can his foundation survive if he has to pull back from day-to-day responsibilities?

Later, more terror in India; an unexploded bomb left over from last week's attack; that's the bomb right there, it was discovered. New evidence that the massacre in Mumbai could have been a whole lot worse, the latest on that and the investigation in America's emergency mission to try to keep nuclear India and nuclear Pakistan apart.

Stay tuned.



B. CLINTON: And most of the mistakes I made, I made when I was too tired because I tried too hard and worked too hard.


COOPER: Candid moment today from Former President Bill Clinton in an exclusive interview with CNN. Mr. Clinton also spoke for the first time publicly about his wife's nomination as Secretary of State.

A new CNN opinion research poll out today shows that Hillary Clinton is a hugely popular choice; 71 percent said they are in favor of her running the State Department, 28 percent disapprove.

But how does Mr. Clinton see himself in the mix? That's the question. But in this interview today, he steered clear of even remotely suggesting anything along the lines of buy one get one free.

Tom Foreman has the "Raw Politics."


TOM FOREMAN, CNN CORRESPONDENT: In Hong Kong at a meeting for his international charity, the former president spoke for the first time about his wife's new position with Barack Obama. And in this season of giving he gave CNN's Anjali Rao a clear message.

ANJALI RAO, CNN INTERNATIONAL ANCHOR: How involved do you think that you will get in what -- in the decisions that your wife will have to make?

B. CLINTON: I'll just try to be a helpful sounding board to her. But I don't think I will do anymore than that unless he asks me to do something specific which I'm neither looking for nor opposed to.

And I really care about a lot of these profound challenges that our country and the world are facing, but the decisions will have to be ultimately the President-elect Obama's decisions.


FOREMAN: That conviction may be hard to keep in the heat of the campaign, team Clinton called Obama's foreign affairs plan naive while Obama attacked Bill Clinton's signature trade deal, NAFTA. It all boiled up in an unforgettable moment.

SEN. HILLARY CLINTON, (D) NEW YORK: So shame on you, Barack Obama.

FOREMAN: But both the Clintons and Obama have since been emphasizing their shared vision of more peace in the Middle East, fewer nuclear weapons and stronger alliances with other nations.

The former president is giving up more, too. Letting the State Department review his future speeches and after long resisting releasing the names of 200,000 donors to his charity, many from other countries.

B. CLINTON: It's important to make it totally transparent. Say who the donors are and let people know that there is no connection to the decisions made by America's national security team including the Secretary of State.

FOREMAN: But Bill Clinton is not clamming up about everything. Asked about the economy, not his wife's area --

B. CLINTON: I don't think we can turn it around in less than a year because too much wealth has already disappeared. The stock market might come back in less than a year, but the shrinkage that has already occurred in investment wealth is going play itself out in the real economy.

FOREMAN: Tom Foreman, CNN, Washington.

(END VIDEOTAPE) COOPER: Could there possibly be a role for Bill Clinton in an Obama administration? In the interview in Hong Kong he put that question kind of back into play.

Let's talk "Strategy." Joining me again: Joe Johns in Washington, David Gergen in North Carolina and Candy Crowley in Chicago tonight.

So David, it's interesting hearing Bill Clinton say that he was neither seeking nor opposed to a role in the Obama administration. And that he also went far to say that he is going to remain in the background and let Hillary Clinton do her job. Do you actually think he could be called upon in some way?

GERGEN: I think it's possible Anderson. It's clear he will not be called upon for a full-time job. But it may be that he would be asked to take on a specific assignment especially in the Middle East.

As you know, Tony Blair was tapped to work on economic issues in the Middle East. And I could see Bill Clinton joining up with Tony Blair to work on trying to bring peace or trying to work on some of the negotiations if the president wanted him to do that. We could have the Bill and Tony show. That would be a fascinating new chapter.

But I think it's going to have be as he said at the President's request, certainly not at Hillary Clinton's request. And from my experience, presidents like to use other presidents only in limited, specific ways. They want to make it -- make sure it's pretty closely, OK, this is what I need you to do.

COOPER: Candy, how difficult though, is it going to be for Bill Clinton to agree to have almost every aspect of his professional life monitored by the Obama team?

CROWLEY: Listen, I don't think this was something he wanted to do or he would have done it during the primary. But it's very clear to me that he did it because otherwise his wife wasn't going to get this job.

So he is doing it. It is more than the law requires. He didn't want to do it. I can't imagine that it's a lot of fun to submit your daily diary if you will to the State Department and say, well, I'm going to give a speech here and I'm going to give a speech here and have people sort of judging it. But I believe he did it for his wife and he will follow through on it.

COOPER: Joe, yesterday Bill Clinton sent a message to supporters congratulating Hillary Clinton on her nomination. And he also put a link on there for people to donate to help her pay down her debt, which I think its more than $7 million at this point. When she is Secretary of State can she still be soliciting for dollars or can he be soliciting for dollars on her behalf?

JOHNS: She can't do it personally apparently because there is a Hatch Act problem there as you know. But the campaign committee that's still out there and in place can go ahead and raise money to try to retire that debt. It's, what, $6 million, $7 million or something like that. And I can tell you that she has a lot of really fine topnotch money people around her.

So they'll continue on that effort. Plus Barack Obama has said he will help, too. But the bottom line is she can't go personally and appear, if I understand the law correctly. That is a no-no.

COOPER: It's interesting, David, there's the CNN poll that show 75 percent of Americans approve of Obama's cabinet so far. Even more surprising in another poll, is that a majority of Republicans seem to be happy with his selections thus far. He ran a very liberal platform which scared a lot of Republicans. Is he proving to be a centrist here?

GERGEN: He is proving to have a very mainstream team. And after that rhetoric, a very heated rhetoric about they're going to have socialism in an Obama administration I think he's put all those fears to rest.

And Republicans are relieved. I think they are very relieved by the quality of the people on the economic team, how mainstream they are and they're extremely relieved on the national security side that Bob Gates is there and that Jim Jones, who was a good friend of John McCain's, is there in national security.

So I think that they also sense that this is a -- that this represents a true effort at greater bipartisanship.

But some of the comments, Judd Gregg, who is the Republican Senator from New Hampshire who follows the Red Sox closely, he said when Larry Summers and Tim Geithner were signed up, he said this is like signing up Manny Ramirez and David Ortiz all in the same day.

COOPER: Candy, do we know how the Republicans plan to play this out once Obama takes Office? I mean, their role on Capitol Hill.

CROWLEY: Look, it depends on how he plays it out. I think we have already heard from Republicans on the bailout plan from the financial industries and the financial sector. We've heard them on the bailout or the help for the big three. They are really questioning, in fact, whether any of this should happen.

So we already know that when it comes to spending and it comes to some of these government help for private industry they're going to oppose that. It depends on what he brings up. And certainly, there are enough Republicans in the Senate to stop bills as they come through.

But there are also moderate Republicans in the Senate that will see some of the things he puts in place and go for it. There are also Democrats I might add that could also block him.

So there's plenty of, look, there is the whole honeymoon period. I suspect Barack Obama, because of the state of the economy and because of two wars going on is going to get longer than that first 100 days. I think people are prepared and Republicans are prepared to give him some time to see what he's going to do.

COOPER: All right, we're going to leave it there. David Gergen, Candy Crowley, Joe Johns, thanks.

Another bomb discovered in India planted by the terrorists who struck last week on a day in which we learned new details about those terrorists and we saw new evidence about how Indian security forces bungled the response. We'll have all that ahead.

Also a Girl Scout leader is one of the suspects accused of shackling a 17-year-old boy and holding him captive for almost a year. It is a story as disturbing as it is bizarre and new developments tonight.

And why a Republican Congresswoman hung up on President-elect Obama twice. It wasn't a prank after all.

And later, the "Shot" it is weird, it's creepy, it floats around in the dark. Can you see it there? There it is. It has nothing to do with -- well, we'll tell you what that is coming up. We'll be right back.


COOPER: Protesters today outside of the badly damaged Taj Mahal hotel in Mumbai demanding India's leaders do more to stop terrorist attacks; some of the crowd calling for war with Pakistan. Anger also boiling over in Pakistan where protesters chanted anti-American slogans making it clear how they felt about Condoleezza Rice visiting India. With tensions between India and Pakistan dangerously high, the secretary of state met today with India's foreign minister.

This as Mumbai's police commissioner said he now has evidence that all ten attackers came from Pakistan and were trained by former Pakistani army officers. It has been a full week since the deadly terrorist rampage that paralyzed the city and today brought a stunning new example of the botched security response. A bomb discovered.

CNN's Nic Robertson has a "360 dispatch."


NIC ROBERTSON, CNN CORRESPONDENT: you're looking at a bomb, RDX military explosives, just now discovered in Mumbai's train station left by gunmen as they began their assault on the city. The fifth bomb could have killed dozens more, now finally defused.

And more new evidence at the tiny harbor where the gunmen came ashore from Pakistan. The president of this fishing community shows me a letter he sent to police Last august warning he had a tip that terrorists were using the harbor to import RDX explosives. He said the police did nothing.

He is angry, afraid there could be more explosives in the city, bitter the police did not secure the harbor and save lives. But the most startling new evidence comes from police headquarters; Muhammad Ajmal Qasab (ph), the only gunman captured alive seen here for the first time in police custody. Law enforcement and intelligence sources say Qasab had been polygraphed and questioned by the FBI.

Indian police say Qasab told them his training with the notorious Pakistani terror group, Lashkar-E-Taiba lasted a year and a half with handguns, automatic weapons, explosives, survival techniques, marine training and resisting interrogation and photographs learning entrances and exits of his target sites. He and the other gunmen had code names, didn't know what the others were studying.

Also new details about the attack on the Jewish center where two American rabbis and three others were killed. New pictures inside the Chabad House reveal the horror. Floors stained with blood and conflicting accounts of what happened inside. Several reports say the hostages were tortured before being shot to death. But a Mumbai doctor who examined the body says there is no sign of torture.

In the capital, New Delhi, demands for accountability. U.S. Secretary of state Condoleezza Rice urging Pakistan to clamp down on the terrorists within its borders.

CONDOLEEZZA RICE, U.S. SECRETARY OF STATE: We believe Pakistan has an essential role in this to make certain these terrorists cannot continue to operate and operate in this fashion.

ROBERTSON: She also warned of the coming threat in India and at home.

RICE: I can tell you that some seven and a half years after 9/11, we know that there are people still plotting and planning every day to try to bring off another successful attack.

ROBERTSON: Police view this attack as a watershed event, a sea change in terror tactics.

Police say they intend to bring terrorism charges against Qasab and they have 90 days to do it. When his case goes to court they will ask for the maximum sentence, death by hanging. They expect the trial to be over in a year to a year and a half.

Nic Robertson, CNN, Mumbai, India.


COOPER: Coming up for the first time, we'll hear from some of the American tourists who survived an attempted pirate attack on a U.S. cruise ship; a vacation that took a terrifying twist.

Erica Hill has details but first she joins us for the "360" Bulletin" -- Erica.

ERICA HILL, CNN CORRESPONDENT: Anderson, in a Chicago courtroom today, a prosecutor said Jennifer Hudson's brother-in-law killed the Oscar-winning actress's mother, brother and 7-year-old nephew in a jealous rage because he believes his wife was dating another man. 27- year-old William Balfour denies the charges. He was denied bail at today's hearing.

Wal-Mart hit with another lawsuit stemming from that deadly stampede for bargains on Black Friday. The family of the Wal-Mart worker trampled to death in New York claims the stores failed to control the crowd on one of the busiest shopping days of the year.

A word of advice; you may want to be careful who you are hanging up on. Today Florida Republican Congresswoman Ileana Ros-Lehtinen hung up twice on what she thought were prank calls from local radio stations. It turns out the actual caller was none other than President-elect Barack Obama. The third time was actually the charm. The president-elect said he thought it was pretty funny.

COOPER: That is pretty tough, hanging up on the president-elect.

HILL: It is.

COOPER: Time now for our "Beat 360" winners, our daily challenge to viewers to come up with a caption for a photo better than what we can come up with.

Let's take a look at the photo. First Lady Laura Bush giving the media preview of the White House decorations. The theme this year, a red, white and blue Christmas.

Our staff winner tonight, Kirk -- his caption: "Bright colors ensure that Cheney doesn't fill you with buckshot."

HILL: I like it.

COOPER: Our viewer winner is Charles from Harbor Springs, Michigan who wrote, "Laura Bush leads the White House staff through a final performance of "I'm a Little Teapot."

HILL: Also very clever.

COOPER: Also very good. Charles, your "Beat 360" t-shirt is on the way.

You can check out all the entries on our blog and play along tomorrow on

HILL: "I'm a Little Teapot" is going to be stuck in my head all night now, by the way.

COOPER: You can sing it to your baby.

HILL: Short and stout.

COOPER: Coming up, the American tourists who never imagined their luxury cruise ship could be attacked by pirates until it was. Tonight, they're talking about their terrifying close call with bandits on the high seas.

Also ahead, new details in a disturbing story unfolding in California. A teenager apparently held hostage for about a year, shackled, tortured even, practically in plain sight. One of the suspects in custody, get this, is a Girl Scout leader. Stay tuned.


COOPER: So they were sailing through the world's most dangerous waters but American tourists on this massive luxury liner thought they were safe from a band of pirates; they were wrong. Their ship the Nautica was attacked over the weekend.

Tonight it's safe in the Port of Oman after outrunning the pirate. And for the first time we're hearing from American passengers who lived through the terror.

Erica Hill has their eyewitness accounts.


HILL: for the first time passengers on board the Nautica, the luxury cruise ship that outran its would-be pirate attackers in the Gulf of Aden Sunday are talking.

MARILYN MACHUM, TOURIST ON NAUTICA: We went up to breakfast. We just sat down and the captain said there were suspicious boats following us. Would we all just go into the corridors or into our cabins?

UNIDENTIFIED FEMALE: It was a surprise that they attacked. And they did fire shots.

HILL: "They" are the pirates who have already attacked nearly 100 ships off the Somali coast this year and hijacked at least 35, collecting an estimated $150 million in ransom. Until now, the targets have mainly been tankers and cargo ships.

Doug Burnett is a maritime lawyer and retired naval officer.

DOUG BURNETT, MARITIME ATTORNEY: For the pirate, a cruise ship is really a floating cash register or ATM. And it offers essentially a double payday, because if they are able to board the cruise ship they, one, would be able to, obviously, rob all of the passengers of their valuables and jewelry. Two, you have a fantastic opportunity for ransom.

The fact that they tried to take the Nautica the other day shows that, as far as the pirates are concerned, this is a viable target.

HILL: Oceana Cruises, which owns the Nautica, isn't changing course, telling CNN today, quote, "We plan for this. Every ship has a very highly trained security team on board and a whole network of security consultants on the ground in the region."

But the company would not say whether its security teams are armed.

There are international warships patrolling these waters, but the area they need to cover stretches over a million square miles. The pirates are not deterred.

"BOYAH", SOMALI PIRATE (through translator): The Indian Ocean is vast and huge. And these foreign warships who say they will protect the ocean cannot do so. No ship has the capability to see everything.

BURNETT: Right now the pirates have the upper hand. No question about it. And until there is a downside to the pirates, until all ships pursue good vessel security plans and the navies and governments put some political will to suppress the piracy, they will continue to flourish.

HILL: An unwelcome prospect for the thousands of ships that travel these waters.


COOPER: There was some good news. One ship was released?

HILL: That is a bit of good news. A Yemeni ship was released and interestingly enough, without a ransom. But people I've spoken to say this isn't a turning tide there for the pirates. Sadly.

COOPER: It's a huge business. All right. Erica, thanks.

Still ahead the Obama family getting ready to move to Washington. We have new details about what their life in the White House may be like. Yet to be resolved: who's going to feed them? The search for the White House chef is on.

Plus, it is almost impossible to imagine: a 17-year-old boy shackled inside this home and held captive. That's what the charge is. Another arrest has been made in the case. A Girl Scout leader is among the accused.

Tonight, we'll have details on the arrest and what happened inside that house of horrors. "Crime and Punishment" next.



UNIDENTIFIED FEMALE: He said, "Hide me. They're coming to get me."

I said, "Go ahead. Go ahead and go behind the front desk." He was holding here and shaking and I could see his poor little head, peeking to make sure no one was coming to get him.


COOPER: The woman is describing the 17-year-old boy who ran into the gym where she works two days ago, clearly terrified. The teenager told police he was tortured, shackled for a year, practically a stone's throw from the gym.

The twisted story is full of shocking details. One of the three suspects now in custody is a Girl Scout leader. Another is the boy's aunt. She was arrested today, the latest disturbing development. We also have new details about how the boy managed to break free and get help.

Randi Kaye has the latest in tonight's "Crime & Punishment" report.


RANDI KAYE, CNN CORRESPONDENT: Monday at this gym in Tracy, California, an emaciated teenager appears at the door, dressed only in boxer shorts. He is bloodied and begs for help.

The club manager approached the boy. Here's what he told CBS News.

CHUCK ELLIS, GYM MANAGER: It looked like he was about 90 pounds. He was very thin. He was filled with dirt. She noticed that there was blood on him and there was injuries to his head, to his arm. And he was asking, "Please help me. Hide me, hide me, please." And he was just telling me, "They're coming for me. Please don't let them take me. Don't let them take me."

KAYE: So begins a horrifying story that seems almost impossible to believe. The boy says he was held prisoner for almost a year inside this home just a few hundred feet from the gym. He claims he was brutalized, shackled and tortured.

MATT ROBINSON, TRACY POLICE SPOKESMAN: He was chained, as we know. He had a chain around his ankle. He was dirty. He was bloody. Basically, what he was living in, how he was living, we really can't -- detectives aren't commenting on that yet.

KAYE: The boy told police he had been chained inside an SUV. He broke free, climbed through a rear window, and jumped the fence between the yard and the fitness center.

Under arrest, three suspects: Karen Ramirez, who police say might be the 17-year-old's aunt; Kelly Layne Lau and Michael Luther Schumacher, husband and wife. They live in the home, along with their children, where the teen was allegedly held hostage. All three are facing charges of kidnapping, torture, and false imprisonment.

Police say they don't have attorneys. The boy is in protective custody.

Adding to the shock, the fact that one of the prime suspects, Kelly Layne Lau, is a Girl Scout leader. One neighbor who says she saw the boy outside sometimes, describes a conversation she had with Lau.

RACHEL PORTILLO, NEIGHBOR: I go, "How is he? Is he growing? Where is he? I haven't seen him for a while." "Oh, yes, he's doing well."

Well, then a couple of weeks ago I see him out there, and he's taller, and it's like, oh, he's growing. But he's thinner and a little more pale.

KAYE: All of this is the latest chapter in a troubled childhood. Several years ago the boy was removed from his own home because of an abusive father. He was placed in the care of his aunt who was later charged with beating him. She was sentenced to five years' probation.

Randi Kaye, CNN, New York.


COOPER: Hard to believe.

Just ahead, the Obamas moving to Washington. Now they're searching for a chef. A new First Family means a new White House menu. So what do the Obamas like to eat and what does it take to land the job of White House chef? Get your resumes ready.

Plus, what's more alien than a flying saucer? You're looking at the answer. Can you figure out what that is? "The Shot" is just ahead.



LAURA BUSH, FIRST LADY: Good morning, everybody. Happy holidays. Well, this is our last year...


COOPER: The first lady, her last holiday tour. In what's become a tradition all its own, Laura Bush took cameras inside the White House today to showcase the decorations. She says this year's theme is a red, white and blue Christmas.

Sixty thousand people are expected to stream through the White House over the next couple weeks. If they're lucky, maybe they'll get to sample the official holiday reception menu. Take a look: it's got an assortment of cheeses, a lobster salad, smoked salmon. It goes on and on. There are desserts, too: bread, pudding and pumpkin pie, red velvet cake. We've got the same stuff here at the 360 office party. An impressive menu, no doubt about it, for the Bushes' last big bash.

Next month, when the Obamas move in, whoever is the chef is going to have a whole new set of meals to prepare. The search is on for a new chef.

Up close, here's CNN's Samantha Hayes.


SAMANTHA HAYES, CNN CORRESPONDENT: They like everything, from the local deli...

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: I ordered this corned beef.

HAYES: ... to high-end Mexican food. Their favorite restaurant is itself a mouthful, Chicago's Topolabampo. And for the big post- election day, it was the four-star Spiaggia.

The Obamas' taste in food ranges from tacos to tilapia. The kids, mac and cheese, please. So their chef better have a big menu.

Former White House chef Walter Scheib who cooked for presidents Clinton and George W. Bush, says the key to pleasing presidential palates is get to know the family.

WALTER SCHEIB, FORMER EXECUTIVE WHITE HOUSE CHEF: One of the things, first and foremost, is to really get a great relationship with the first lady and the first family. Understand what they're looking for and how you can make their dreams in terms of the cuisine and entertaining style come true. Almost to know what they want before they know it themselves.

HAYES: Tip two: lose the prima donna attitude chefs are so famous for.

SCHEIB: It's a job that's low key. You check your ego at the door when you work the White House. It isn't about you; it's about the family. So you are very discreet and don't talk about your job too much.

HAYES: For now, the first kitchen is in the hands of Cris Comerford, the first female top chef. Whether she stays or goes is up to the Obamas.

SCHEIB: Mrs. Obama will be the one who will set the tone for the house. It really is Mrs. Obama letting the chef and letting the resident staff know what she wants. It's their job to make it happen.

HAYES: The first family is fit and healthy, and you can expect the ingredient list to reflect that. But there's one food the first chef might be wise to skip: beets. The president-elect hates them.

Samantha Hayes, CNN, Washington.


COOPER: Up next, not a space alien, but what is it? Can you figure it out? The answer in just a moment.


COOPER: All right, Erica, time for "The Shot." It is creepy; it's cool and kind of weird. Take a look at this. It is believed to be a relative of the squid, called a Magnapinna --I'm not sure how to pronounce that. The spooky creature has elbows, enormous fin-like ears, and tentacles that dangle some 20-plus feet. HILL: No. Not for me.

COOPER: Not for you?

HILL: Do not want to encounter that thing.

COOPER: I have encountered some folks like this one the subway. The video was shot from an oil company's remote-operated submersible in the Gulf of Mexico, then posted on

A lot of researchers say they have never seen anything like it.

So there you go. That is creepy.

HILL: It is creepy.


HILL: But they should talk to you, because I wouldn't be surprised if you ran into that in the subway.

COOPER: I don't like spindly legs.

HILL: Right there with the large rat.

COOPER: I have spindly legs just like that creature.

HILL: TMI, my friend.




You can see all the most recent "Shots," all the most -- all the creepiest creatures we have at You can also check out lots of stuff and read the blog and whatever.

HILL: I mean, anything you want. Really, the possibilities are endless. Go ahead. Make yours.


Time now for a programming note. We are not going to be on this time tomorrow night to make room for chief international correspondent Christiane Amanpour's documentary, "Scream Bloody Murder," profiling heroes who protested against evil and lived to tell their stories.

Here's an excerpt.


CHRISTIANE AMANPOUR, CHIEF INTERNATIONAL CORRESPONDENT: No one can forget these images. Throughout 1988, Saddam Hussein slaughtered Iraq's Kurds with bombs, with bullets and with gas. The Reagan White House saw it as a ruthless attempt to put down a rebellion. But Peter Galbraith, who worked for the Senate Foreign Relations Committee, believed that it was something worse.

PETER GALBRAITH, WORKED FOR SENATE FOREIGN RELATIONS COMMITTEE: The light went off in my head. I said Saddam Hussein is committing genocide.


COOPER: You can watch Christiane's report, 9:00 p.m. Eastern, followed by a 360 special, "Extreme Challenges," at 11 p.m.

That does it for this edition of "360." Thanks for watching. Have a great day.

"American Morning" (sic) starts right now.