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Chrysler Auto Plants Shutting Down; SEC Investigates $50 Billion Wall Street Fraud

Aired December 17, 2008 - 22:00   ET


ANDERSON COOPER, CNN ANCHOR: Tonight, breaking news out of Detroit: dramatic announcements from Chrysler and Ford.
Starting Friday, Chrysler is closing all 30 of its manufacturing plants until January 19 or later. Forty-six thou employees will be affected.

Chrysler claims it's running on financial fumes and it will have trouble paying its bills after the 1st of the year.

Also today, Ford said it will idle 10 of its North American assembly plants for an extra week in January. Both announcements come just a week before Christmas, with Michigan's unemployment rate now the highest in the nation, reaching 9.6 percent last month, and no word yet from Washington on the emergency loans Chrysler and GM say they need to survive.

Joining me, chief business correspondent Ali Velshi and senior White House correspondent Ed Henry.

Ali, 46,000 people at Chrysler alone are going to be affected by the shutdown. It goes much deeper, though, than the people just at -- at those plants.


So, now we know that Ford -- usually, around this time of year, these plants should down for two weeks. That's their normal Christmas break. Chrysler is going to double that. Ford is adding a week to its normal shutdown schedule. And General Motors will be doing it over the first three months of the year, but individual plants could be shut down for between two and four weeks.

Now, here is the concern. The auto industry in the United States, it used to be that automakers had their own suppliers for parts. But, over the last several years, the Big Three share a supplier base. And, by the way, it's not just the Big Three. Toyota, Nissan, Honda, they all depend on the same suppliers.

So, the argument that the major automakers have been using is, let's say that -- that General Motors were to disappear. And that's not what they're saying, but this is a pretty serious development. Let's say they were to disappear. The same supplier base would have to supply the remaining automobile companies.

But these guys are in trouble, too. They have been in trouble with the car companies. So, what if the suppliers, one of the major suppliers, let's say, were to go bankrupt? Now you don't have supplies going to both of these two companies. And the danger in both of these cases -- and this is what Ford was saying -- is that they could just disappear entirely.

This could actually trigger bankruptcy. I actually was in Detroit when this news came down. I was sitting there with the CEO of Ford, and I was saying to him, you know, wouldn't that be interesting, if your competitors were to disappear? Isn't that a good thing for you?

And he was describing to me that that's actually a big nightmare for them, because, if their supplier base were to disappear, Ford could be in a lot of trouble. Listen to what he told me.


ALAN MULALLY, CEO, FORD MOTOR COMPANY: So, if any one of the OEMs, or one of the car companies gets in trouble, and would actually go into bankruptcy, that would affect all the suppliers, and actually a good probability it would take them into bankruptcy.


VELSHI: That's interesting, because Ford is relatively the healthy evident of those three Detroit automakers.


VELSHI: And he was talking about the fact that this could really affect everybody, and then you could be talking about three million people out of work.

COOPER: Ed, how much pressure is the White House under to do something about this? I mean, what happened to the White House agreeing to -- to bail out with other money that the Congress wouldn't pass?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: A lot of pressure, Anderson, on the White House tonight, but they're still not moving.

I mean, Dana Perino, the spokeswoman, put out a statement saying the automakers are very fragile, the president is considering various policy options to help, because, she said, a disorderly collapse would be bad for the economy.

Well, does that sound familiar? It should. Last Friday, Dana Perino put out a very similar statement, saying, a collapse would have a big impact on the economy. She said it would be irresponsible to further weaken, destabilize the economy. Almost a work week has passed.

The auto companies want to know, where is the action? And, when you think about what has played out over the last couple weeks in Washington, first, they -- lawmakers dragged up these Big Three chiefs, really hit them hard, made them testify, lay out their serious, detailed plans about how they're going to become more viable.

And, in the end, Congress couldn't get the job done. Then, it gets punted it over to the White House last week. They still haven't gotten it done. And, meanwhile, these companies are suffering big- time -- Anderson.

COOPER: Well, Ali, how much of this is this a game of chicken, though, between the White House and -- and the auto companies? I mean, there are some who might view what the auto companies are doing as, well, they're just trying to put pressure to get the money.

VELSHI: Right.

COOPER: They're -- they're extending this -- this shutdown.

VELSHI: Well, look, we know General Motors is in very real trouble. General Motors has said it may not make it to the end of the year financially.

Chrysler said that it has money until about March. What they're trying to do is, by not operating the plants, they save money. They hoard cash. And all of these companies have more cars than they need right now. So, you don't pay your -- some of your workers' salaries, you don't pay for those parts, and you're selling card.

It's actually not a bad thing for the companies to do to try and extend their life. But the problem, as I just said, is, it's a dangerous game of chicken. And if the suppliers start to get hurt, that's dangerous.

Now, I just got off the phone with General Motors, who said, look, there is nothing that is surprising us right now. We're not worried that, because Chrysler has extended its shutdown by a couple of weeks, that we're going to lose a parts supplier.

But bottom line is you know that they have to be considering all of these options right now. Things could turn very bad very quickly.

COOPER: Ed, is Obama the one who is going to have to deal with this? Is it possible the White House is just going to push off paying until the next administration takes over?

HENRY: It's possible, but can the auto companies last that long, at least one, if not all three? Can they last until January 20.

You will remember, a lot of this, politically, started on November 10, when Barack Obama first went to the White House as president-elect. And when he went to the Oval Office with President Bush, they talked about an auto bailout. And Barack Obama said: I'm not sure they're going to last until Inaugural Day. You may need to move on this.

And that's when they first talked about it, November 10. More than a month has passed, Anderson, and, as I said, there has been all this dancing on Capitol Hill, no action. Now the White House still looking at it more than a month later. And, so, the big question is, can these Big Three last, you know, one or more of them, until January 20? That's an open question.

VELSHI: And -- and, Ed, one other -- one last point here, and that is that the automakers, Chrysler specifically said today, the -- this development is that 25 percent to 30 percent of their sales have been eliminated, because people who are going into dealerships to actually buy cars can't get credit.

I have heard this story from General Motors. I have heard it from Ford. I have heard it from Nissan, which is a -- a healthy company. People are not able -- they're saying, this is not the legacy of problems that we have had. This is a new problem. Our buyers can't get credit to buy cars.

COOPER: All right, Ali Velshi, Ed Henry, thanks.

New developments in what may be the biggest scam in Wall Street history. This man, Bernard Madoff, was in court today, a hearing regarding his bail. He has put his fancy Park Avenue apartment and his homes in Florida and the Hamptons as a guarantee he won't run away. He has also been given an ankle bracelet and had his passport taken.

This is what happened when he headed home today -- take a look -- a crush of reporters pushing and shoving. He's accused of committing a giant Ponzi scheme. Take a look at this.


UNIDENTIFIED MALE: Bernie, hey, Bernie, give me one nice shot, buddy? Bernie, turn around, buddy. Come on.


COOPER: Well, I don't think they're his buddies.

Possibly defrauding investors of as much as $50 billion, that's what he accused of. Today, the head of the Securities and Exchange Commission, the Wall Street watch dog, Christopher Cox, vowed to uncover why his agency ignored allegations against Madoff going back a decade, tipoffs that could have stopped the fraud.

The question tonight, did Madoff act alone, as he allegedly claims, and how many other frauds have yet to be discovered?

Joe Johns has the latest.



JOE JOHNS, CNN SENIOR CORRESPONDENT (voice-over): Bernard Madoff made a brief appearance today, but it was dramatic, as he arrived home to a crush of cameras and pushing and shoving.

UNIDENTIFIED MALE: What would you say to all those people that lost money, Mr. Madoff? JOHNS: He's now under house arrest as a condition of bail.

The drama at the Securities and Exchange Commission was behind closed doors, an investigation under way to find out if anyone supposed to be watching the Wall Street cookie jar could have allowed Madoff to help himself.

CHRISTOPHER COX, CHAIRMAN, SECURITIES AND EXCHANGE COMMISSION: The reason for the investigation is to answer any questions on this score, but I want to emphasize that there is no evidence that anyone is aware of at this point that any personnel did anything wrong.

JOHNS (on camera): One guy who used to work there saw his name dragged through the mud, though.

Eric Swanson, a former SEC attorney, looked at some of Madoff's trading practices five years ago. Swanson left the agency two years ago. And, last year, he married one of Madoff's nieces. Is that a smoking gun? The SEC says no. Swanson never worked on the serious stuff involving Madoff.

(voice-over): One person familiar with Swanson's side of the story told CNN he hasn't done anything wrong. "What people are trying to do is find scapegoats here, and he is not the guy."

Still, it is pretty hard to fathom that one guy, even a Wall Street wizard like Madoff, could have pulled off a multibillion-dollar fraud unless he had help from someone. After all, insiders who took a hard look at Madoff years ago said his investment returns looked, well, surreal. And that was only one of the many red flags.

FRANK CASEY, HEDGE FUND DEVELOPER: So, a lack of transparency, black box operation, no independent chief financial officer, no independent clearing operation verifying that trade tickets were actually real. And, so, consequently, we had a situation here where most analysts would be raising red flags all over.

JOHNS: The SEC says it's going to move as quickly as possible to find out why it never caught Madoff. But now the agency has members of Congress breathing down its neck, and they plan an investigation of their own.

But is this the only alleged big scam out there? No. The federal government has charged hot shot New York lawyer Marc Dreier with fraud for allegedly scamming $113 million, selling fake promissory notes to hedge funds and securities investors. And get this. He's the managing partner of a 250-attorney law firm.

An SEC complaint says he set up a bogus real estate company, and distributed phony financial statements and audit opinions, and recruited accomplices to pose as representatives of legitimate companies -- another guy who everybody thought was on the up and up. His attorney declined comment.

Joe Johns, CNN, Washington.



One note on the SEC chairman, Christopher Cox, who had been criticized for his handling of various financial matters: He's going to be leaving the job after the Bush administration ends. We learned today president-elect Obama has chosen Mary Shapiro for the position. That is her. She's a former Securities and Exchange commissioner and briefly served as the agency's chair and -- acting chair in 1993.

So, do you think the government has a grip on the crisis? Join our live chat. It's happening now at Also, check out Erica Hill's live Webcast during the break.

Just ahead tonight: a credit card company that is getting $20 billion in bailout money, your tax dollars. So, the question is, why is it turning around and sticking its customers with huge rate -- rate hikes? We're "Keeping Them Honest."

Also, Caroline Kennedy on the campaign far outside of New York City. She wants Hillary Clinton's Senate seat. How did she go over with reporters today in her first face-to-face? You can judge for yourself.

And inauguration controversy -- the president-elect inviting preacher Rick Warren to pray at his inauguration, but his opposition to marriage, equality for gays and lesbians has outraged some Obama supporters.

We will also show you how much A-list celebrities are now paying to get in the door at inauguration.



SEN. CHRISTOPHER DODD (D), CONNECTICUT: I have introduced the Credit Card Accountability, Responsibility and Disclosure Act, the Credit Card Act. This bill will stop abusive card practices that drag so many of our fellow Americans and their families further and further into debt.


COOPER: Well, that was Senator Chris Dodd back in April. The bill he was talking about to protect credit card consumers from abuse, that hasn't passed. It's stuck in committee.

And now, in the thick of recession, Americans, all of us, are more vulnerable than ever. Credit card companies are scrambling to limit their risks at the same time they're taking bailout money from the government. So, many are actually jacking up credit card rates, even for customers with great credit reports. So, is that how companies that are benefiting from your tax dollars should be treating you?

Drew Griffin tonight is "Keeping Them Honest."


DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT (voice-over): It arrived in Rich Stevens' mailbox a few weeks ago, the notice he and his wife were being rate-jacked on their Citibank Visa cards.

RICH STEVENS, CREDIT CARD HOLDER: In my case, 9.5 to 16.99 or 15.99. In her case, I'm not sure what her initial rate was, but it -- it went up to 18.99.

GRIFFIN: Stevens doesn't know why. He's got great credit. But, like thousands of credit card customers, he's been notified his rate is skyrocketing.

STEVENS: It almost borders on loan-sharking, from my perspective.

GRIFFIN: In the blogosphere, writers are livid at the instant skyrocketing rates, now dubbed rate-jacking. And Citigroup seems to be the target of most blogger venom, partly because Citigroup issues so many credit cards, and also because Citi began sending the notices right around the same time it was getting a huge government bailout, a $20 billion investment from you, the taxpayer.

(on camera): We couldn't find a single person at Citigroup, not one in that whole building, who would come out and talk to us on camera.

Instead, Citigroup sent us a statement, saying that, "To continue lending in this difficult credit and funding environment, Citi is repricing a group of customers."

(voice-over): Citi told us anyone unhappy with the new rates can opt out, continue paying the lower interest, but they must close their account when their card expires. It's all in the fine print.

New York Congresswoman Carolyn Maloney says she is sick of the fine print.

(on camera): The problem has been, credit card companies get away with whatever they want, as long as they put it in the fine print, right?

REP. CAROLYN MALONEY (D), NEW YORK: Exactly. They all have this provision that says they can raise the rate any time, any reason.

GRIFFIN (voice-over): In September, she got the House to pass the credit card holders bill of rights, that would have stopped rate- jacking and other fees that she says banks have been getting away with. It passed by 200 votes.

(on camera): Yours was the first House vote that went against these banks and credit card companies.

MALONEY: First in history. GRIFFIN: First in history.


GRIFFIN: You passed overwhelmingly, like you said, with a huge vote. It goes to the Senate. It goes nowhere. Why?

MALONEY: We have to keep working. We have to pass it. There is a lot of pushback from the financial industry.

GRIFFIN (voice-over): Critics say that pushback is because of greenbacks, money, donated to politicians, who pass -- or don't pass -- laws that regulate credit cards.

"Keeping Them Honest," we contacted the Senate Banking Committee, where Maloney's bill has just sat since September. The chairman of the committee is Connecticut Senator Chris Dodd. His staff told us the senator has his own credit card bill, with tough language to stop things like rate-jacking and shortening the billing cycles, all the things that make consumers angry.

But even his own bill seems stuck in his own committee, no action since July. Maloney won't criticize fellow Democrats, but does say the pressure from the financial sector is intense. And Dodd took in more than $4 million from that financial sector during his last campaign.

Dodd's office didn't respond to our questions about that, but did say that he's tried repeatedly to protect consumers, but "legislation has been met with stiff opposition by the credit card industry."


GRIFFIN: It makes you wonder who is running Congress.

Well, here is the kicker. Tomorrow, the Federal Reserve is expected to pass its own new rules on credit cards that could clamp down on rate-jacking and other anti-consumer practices. But we really don't know how strong the rules will be. And, according to Congresswoman Maloney, Anderson, they're not going to take effect until 2010 -- Anderson.

COOPER: Unbelievable. Unbelievable.

"Keeping Them Honest" tonight, thanks, Drew. Appreciate it.

Just ahead: Caroline Kennedy has one of the most familiar names in politics, and now she is no longer dodging the media. Today, she faced reporters, talks about why she thinks she should fill Hillary Clinton's seat. How did she do? Well, find out.

Plus, a medical marvel -- team of surgeons gives a severely disfigured woman a new face, the most extensive face transplant ever.

And we re-check in with that French patient who received the first transplant. That was her right after the surgery on the left. See what she looks like today.



CAROLINE KENNEDY, DAUGHTER OF PRESIDENT JOHN F. KENNEDY: ... candidates that the governor is considering. He has laid out a process, and -- and I'm proud to be in that process.

QUESTION: What can you say to New Yorkers that says that you're qualified?

QUESTION: Are you ready for this, Mrs. Kennedy?

Mrs. Kennedy, you're not going to answer questions at all?


COOPER: Well, finally official, Caroline Kennedy publicly talking about what she has been discussing behind closed doors for days now, her desire to replace Hillary Clinton in the Senate.

Today, reporters hammered her with questions that she tried, for the most part, to dodge. You just saw that there. It was the first kind of frenzied give-and-take in a big-money, big-power campaign that is not without controversy already.

Erica Hill has more.


ERICA HILL, CNN CORRESPONDENT (voice-over): The first somewhat official day of an unofficial campaign for a New York Senate seat.

KENNEDY: As some of you may have heard, I have told Governor Paterson that I would be honored to be considered for the position of the United States senator. I wanted to come upstate and meet with Mayor Driscoll and others to -- to tell them about my experience.

HILL: Caroline Kennedy's stop in Syracuse this morning had all the markings of a politician: a meeting with the mayor, plenty of security, and an entourage closely controlling her every move and word.

QUESTION: What can you say to New Yorkers that says that you're qualified?

QUESTION: Are you ready for this, Mrs. Kennedy?

QUESTION: Mrs. Kennedy, you're avoiding the question.

KENNEDY: I'm following the process laid out by the governor.

QUESTION: The government told you not to talk to us?


HILL: Governor Paterson's office declined to comment on that question.

But Kennedy's camp tells CNN the governor did not ask her to be quiet. As for her experience, by the time she arrived in Rochester this afternoon, Kennedy was armed with an answer.

KENNEDY: I have had a lifelong commitment to public service. I have written books on the Constitution and the importance of individual participation. And I have raised my family, commitment to education in New York City, training principals, working for kids. And -- and I think I really could help bring change to Washington.

HILL: Republican Congressman Peter King is eying a 2010 Senate run in New York. He says, that's not what this job requires.

REP. PETER KING (R-NY), HOMELAND SECURITY COMMITTEE RANKING MEMBER: There is no evidence that she's qualified. And I'm not saying you have to be a politician, or to have held office to be a United States senator. But you have to be somewhere in the public arena. The fact is, she has a well-known name.

HILL: There is no denying the magic of the Kennedy name. But not everyone is convinced it's her only qualification. The Senate majority leader has already voiced his support, as have some of her fellow New Yorkers.

MICHAEL BLOOMBERG (I), MAYOR OF NEW YORK: And she has got as much experience as anybody else, in terms of the issues that a senator deals with.

HILL: Those issues are as diverse as the Empire State itself. There's more to New York than Kennedy's hometown of New York City. And, while this isn't an election, support in Upstate and Central New York is vital.

JEFF SACKMAN, RESIDENT OF WESTERN NEW YORK STATE: I just would like to have somebody that's a little bit more in touch with what's really going on in New York, certainly where I live, in the western part of the state.

ROBERT ZIMMERMAN, DEMOCRATIC NATIONAL COMMITTEE MEMBER: She has to earn this designation by the governor by showing how she can best serve this state and how she can best connect with and meet the needs of New Yorkers throughout this entire region.

HILL: Next step: answering the questions those New Yorkers are asking.

QUESTION: Can you tell us why...


HILL: And, as for whether or not New Yorkers would actually support her in that role, a new poll out today from Siena College found about 23 percent of New Yorkers, 28 percent of Democrats say they would like to see her in that seat.

But, Anderson, one thing to keep in mind, the poll was done before she officially announced her interest. And it also has her basically neck and neck with Attorney General Andrew Cuomo.

COOPER: All right, it's fascinating stuff. Erica, thanks.

Still ahead: Does Caroline Kennedy have unstoppable momentum? Is this already a done deal? Our panel tackles that in a "Strategy Session."

And later, a big party with big names -- wait until you hear how much people like Halle Berry, Samuel L. Jackson and other stars are shelling out to be at the Obama inauguration. That's Sharon Stone there.

The event is already causing controversy. Conservative Pastor Rick Warren going to be there, and that has outraged some liberal groups. We will have details on that ahead.

Plus, John Walsh speaking out again today about the stunning news that the killer of his 6-year-old son, Adam, has finally -- finally -- been identified, after 27 long years -- when 360 continues.


COOPER: Well, Caroline Kennedy's days of avoiding the media came to a crashing halt today, now that she has put herself in the running to take over Hillary Clinton's seat in the Senate. The media was all over Kennedy in Upstate New York, as Erica just showed you before the break. And it's guaranteed to stay that way for a while.

The question tonight, despite some criticism about her qualifications, is this already a done deal?

Let's talk strategy with political analyst and radio talk show host Roland Martin, Hilary Rosen editor at large for "The Huffington Post" and a CNN contributor, and Robert Zimmerman, a Democratic National Committee member and a CNN contributor as well.

Hillary, "The Times" described Caroline Kennedy's stop in Syracuse today as reminiscent of Sarah Palin's tightly-controlled campaign appearances. I'm guessing that's probably not how she wants that to be described. Is it fair that she is essentially running a stealth campaign?

HILARY ROSEN, CNN POLITICAL CONTRIBUTOR: What an unfortunate comparison. And let's be clear. The -- the national security requirements of a junior senator from New York are nowhere near the requirements of a vice presidential candidate.

But I -- you know, the problem -- this is a very odd race. Caroline Kennedy has -- has one voter here. And that's Governor Paterson. So, the question is, what helps Governor Paterson the most in making a decision about who to choose?

And, you know, I think that people -- "The Times" makes a good point in its editorial today, when it says, it might go a long way to helping Governor Paterson make this decision if she were to be more forthcoming about her position on some of the issues she would deal with as a New York senator.

COOPER: Roland...

ROSEN: I don't think that's a -- kind of an unusual thing to ask.

COOPER: Roland, is it just up to Governor Paterson -- Governor Paterson? Obviously, he's the one who makes the decision. But does -- should she also have to announce, or, you know, at least have some interaction with the American public?

ROLAND MARTIN, CNN CONTRIBUTOR: Well, first of all, there's -- again, let's go back to what is the requirement, and what it is somebody might advise.

I mean, there is no doubts, I believe, that her people will say, look, we have to be able to begin to articulate our views on various issues, because you are still playing to a general audience, as well, because you want them also to have some influence on Governor Paterson.

But, at the end of the day, this boils down to him. What she also has to do is solidify her support, if you will, with Democrat stalwarts around New York, who are also weighing in with Paterson. Remember, if she runs a 2010 special election, or even 2012, there are people who are running along with her. They want to make sure that she can also carry voters to ensure Democrats are strong in that state come 2012.

COOPER: Robert, you have been quoting as saying -- and I want to get it right -- that Caroline Kennedy has -- quote -- "not demonstrated the qualifications or the experience for the position."

She hasn't held a 9:00-to-5:00 job. She has served on boards and charities and has raised a lot of money for education in New York.

ZIMMERMAN: She has also written an excellent book.

COOPER: She has written books.


COOPER: I mean, is -- is she qualified?

ZIMMERMAN: She is going to have to make that case.

And, remember, she's...

COOPER: To -- to whom? The American -- to the New York citizens, or to the governor? ZIMMERMAN: Well, first of all, to Governor Paterson.

And, obviously, by her tour in Upstate New York, it's very clear that one of the ways she is going to make that case is by trying to inspire confidence that she has the drive, the determination, the leadership to represent our state in the United States Senate.

She has extraordinary skills. The question is, do her skills fit this particular position? And, remember, she is not just the only person under consideration. There is a wide spectrum of candidates, from the labor movement, from the private sector, from the public sector, who really have shown how they have served the state and the country.

COOPER: You know, Roland, I think, in the past, you have said, well, look, you know, Hillary Clinton had about the same qualifications as she has had.

But Hillary Clinton, you know, underwent a -- a grueling race. I mean, she, you know, submitted herself to public scrutiny. She -- she talked -- you know, she was in debates. She actually ran a race.

There's a big difference between this kind of race...

MARTIN: Of course.

COOPER: ... and what -- and what Caroline Kennedy is doing.

MARTIN: First of all, if I recall, she also had the Democratic primary. That whole thing was just opened up for her. So it wasn't like she had to run in a primary in the Democrats.

A lot of qualified Democrats got out of the race to make way for her. Yes, she did run in a general election. Those are the differences.

But the point that I was making is when you look at this whole notion of qualifications, Senator Hillary Clinton was a lawyer, worked for various children's issues, also was first lady.

You look at Caroline Kennedy, has been involved in public policy in her own way, whether it's education, whether it's the arts. Her whole issue becomes to privacy and the Constitution. And so the problem here is qualifications are always subjective.

So I think it's wrong to say, well, she doesn't have the qualifications. You've got people right now in Congress who are teachers, lawyers, doctors. They're all kinds of...

ZIMMERMAN: Roland, I hate to -- I hate to ruin a good spin, Roland, but Caroline Kennedy is not running against Hillary Clinton. Caroline Kennedy has to make her case to the Governor of New York state.

MARTIN: I understand that. ZIMMERMAN: And the point is, this election this case is not decided in Manhattan or amongst political pundits. It's decided by how effectively an individual can relate to the laid-off workers in Lackawanna, New York.

MARTIN: I agree.

ZIMMERMAN: And how she can connect with workers and homeowners in Elmhurst (ph) who are facing foreclosure.

MARTIN: But Robert, the mistake we continue to make is we act as if to be an effective politician you must have already served in office. What I'm saying is...

ZIMMERMAN: No one is drawing that conclusion but you.

MARTIN: ... public policy beyond just a traditional politician.

COOPER: Hilary, do you think it's already a done deal?

ROSEN: I think it's getting pretty close. But I think -- look, I know for a fact that sources have told me that Governor Paterson has asked other candidates in the race not to drop out. He wants to have a choice, a group of people to choose from. And so that must be for a reason. He's not sure who he wants.

That's, I think, one of the reasons that we see Caroline Kennedy going around the state and trying to make this case. Because in essence, he's told her she's got to prove something to him. Other people, I think, are -- have been doing the same thing.

ZIMMERMAN: That's very much the case. I do take Governor Paterson at his word that I think he's got a very open mind, and I think there is no favorite candidate at this point. That's very clear by everything we've seen.

COOPER: And more from our panel ahead.

Also, a French woman who received the world's first face transplant in 2005 held a press conference shortly after the surgery. She's made remarkable progress, this on a day where the -- we have new details on the first face transplant. We'll show you -- that's the first woman on the left right after her surgery. We'll show you how she looks now.

Plus, inauguration controversy growing tonight. President-elect Obama selected evangelical Pastor Rick Warren to pray at the inauguration. Warren spoke out in support of Proposition 8. Now gay rights groups and others are furious. Our panel weighs in.

Also, Samuel Jackson, Halle Berry, Sharon Stone, all the Hollywood "A" list paying big bucks, tens of thousands, to see Obama sworn in. So what exactly does a $50,000 ticket get you? That's ahead.


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

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



COOPER: It's comments like that from Pastor Rick Warren that made the Internet and blogosphere light up with outrage today when it was announced that President-elect Obama's asked the popular conservative preacher to give the invocation at the inauguration.

Now, Warren was a big supporter of Proposition 8, which took away marriage rights from gays and lesbians in California.

And late today, an Obama spokeswoman said that, while the president-elect disagrees with Warren on gay rights issues, he wants this to be the most inclusive inauguration ever.

Let's dig deeper with Hilary Rosen, Robert Zimmerman and Roland Martin.

Hilary, Andrew Sullivan wrote today on his blog, he said, "It's true politics, but if anyone is under any illusion that Obama is interested in advancing gay equality, they should sober up now."

Is this a slap in the face to the gay community?

ROSEN: You know, from what I gather, every gay person who paid attention to this today felt like we were kicked in the stomach. This is just kind of outrageous, that you could choose such a divisive figure to speak out in a blessed prayerful moment at, you know, at a day of bringing the country together. I think it's kind of an outrageous mistake on the part of the Obama campaign.

COOPER: Roland, of all of the pastors to choose from, why choose someone controversial?

MARTIN: OK. Well, how about choosing Reverend Jeremiah Wright, who actually supports the issue of gay marriage?

Look, Obama believes in marriage is between a man and woman. Is that controversial?

Not only that, you have two people who have speaking today who are preachers. You have Rick Warren, who is against gay marriage, giving the innovation. You have the Reverend Joseph Lowery, who is for gay marriage, giving the benediction. ROSEN: This is not a -- this is not a policy difference. This is not even about gay marriage. That can be as political or policy difference that, obviously, Barack Obama has with many gay and lesbian people.

This is about the way that Pastor Warren has used homosexuality as a weapon, that he uses religion as a weapon to suggest that gay relationships are akin to...


ROSEN: ... and pedophilia and other things. That's the problem. It's not a matter of a policy difference. It's a matter of using this sort of moral religious authority to divide one group from another.

ZIMMERMAN: ... the point.


COOPER: Let Robert in here.

ZIMMERMAN: Thank you, Roland, for the opportunity. Here's the -- here's the point. There's no question, Reverend Warren's comments are divisive and ignorant and I, for one, personally believe in the rights of both gay and lesbians to marry. It's a moral right that should be protected by the law.

But I believe the inauguration of Barack Obama is much bigger than Rick Warren. And I think, obviously, the goal here is to try to bring everyone together, to bring people to the table who we differ with, so that we can try to, in fact, bring them around. It's very important to note how the evangelical community has stood up on issues such as world poverty or the AIDS pandemic or environmental causes.

How we're seeing, in fact, progress made in vote after vote to bring the vote around for the rights of gays and lesbians to marry.

MARTIN: That's the point there.

ROSEN: It's not a political negotiation. That's not what this is for. If you want to have a political negotiation, have it. If you want to talk about issues that evangelicals and progressives can agree on, do that.

But what this is, this is a symbol to America about the kind of people that we respect and want to be, and the messages that they deliver.

MARTIN: But here's the problem...


ROSEN: Roland, I'm kind of outraged. I'm outraged, Roland.

MARTIN: I understand the outrage. But here's the point that I am making. Your viewpoint is, you disagree with him, obviously, on issues when it comes to the homosexuality, gay marriage.

The point I'm making is, this is the same pastor who was called a conservative pastor who is a whole different view, using religion when it comes to AIDS, when it comes to...

ZIMMERMAN: That doesn't justify it, Warren.

MARTIN: Hold on -- it goes beyond that. I'm not justifying.

ZIMMERMAN: You're excusing it.

MARTIN: I am making the point, depending upon your view, you can either agree or disagree on his view of religion.

COOPER: I want to read out what the Obama spokesperson has said about this, in reaction to this conference. They said, "The president-elect certainly disagrees with him on lesbian, gay, bisexual and transgender issues, but it has always been his goal to find common ground with people with whom you may disagree on some issues."

What -- Hilary, what does this say, though, about how Obama is going to rule? I mean, it does -- you know, to his supporters who don't mind this, they will say, "Well, look, this shows he is reaching out to people of different faiths, of different perspectives, and, you know, showing that it's a big tent."

ROSEN: Look, I would make two quick points about this. First, the glibness about, well, you know, it's a bunch of gays being unhappy that don't agree with him is wrong.

You know, the one time the Bible was used to justify slavery. If this was a preacher out there using moral weapons against African- Americans, we wouldn't even be having this conversation.

So second of all, the fact that we're actually having this conversation means that this is a mistaken choice. This is a day when people are to be brought together. There are hundreds of preachers across the country with stature and thoughtfulness and other ways to bring this country together on an inauguration day for the new president.

COOPER: I want to give you...

ROSEN: That's the choice he should have made.

COOPER: I want to give you each a final thought -- Roland.

MARTIN: Well, the bottom line is, Rick Warren is one of the most respected pastors in the country. There are people who obviously agree and disagree. But the bottom line is you've got two preachers that day: one who is for gay rights, one against gay rights.

ROSEN: It's not about gay rights.

ZIMMERMAN: This is not about gay rights.


MARTIN: The whole argument, the whole segment has been on that issue.

COOPER: Let Robert give his final thought.

MARTIN: That's the whole argument you've been making.

ZIMMERMAN: Roland, this is not about the issue of gay rights. This is about individual respect for humanity and human decency, and Reverend Warren's comments disqualify him from that. He uses faith to preach fear.

And I think what's critical here to note is -- and this is what my hope is that inauguration day represents, is a chance to open up dialogues that haven't existed before. And by opening up these dialogues, we can bring people together around common ground and respect for one another.

COOPER: OK. We're going to have to leave it there. Well, Hillary, final thought.

ROSEN: Well, it's just that's a conversation the country ought to have. This is not the day to do it. This is a day to make everybody feel good about the new president and the new direction of the country. And with this choice today, he's making a lot of people feel lousy.

MARTIN: And some folks will feel good or feel bad, but I guess the millions who've read "The Purpose Driven Life" or "The Purpose Driven Church," they somehow don't count, right?

COOPER: Hilary Rosen, Roland Martin...

ROSEN: You could find people everybody likes.

COOPER: ... Robert Zimmerman.

ZIMMERMAN: I doubt that these days.

COOPER: The conversation continues online, Join us there.

More on the inauguration ahead. Don't expect the historic event to be a low-budget affair with some of the biggest names in Hollywood shelling out big bucks to get there. We'll tell you details ahead.


COOPER: Seen around the world, the Iraqi journalist who hurled his shoes at President Bush is being hailed as a hero by some, but it looks like he's going to be treated as a criminal.

Jill Dougherty joins us live from Baghdad on the latest.

Jill, what are the charges now against this guy?

JILL DOUGHERTY, CNN CORRESPONDENT: It is assaulting a foreign head of state, Anderson. And you know, you have to say, this seems to be moving ahead very quickly on the legal track.

He has already met with an investigative judge. That judge heard his story. That happened, actually, Tuesday night. And at that session, they had a lawyer, and also the prosecutor, and this is going to be moving to trial. It could be pretty quickly.

COOPER: There's -- a lot of tension erupted in Iraq, across the Arab world, also, over his detention. What are the chances -- I mean, what is the trial process? How long is this going to take? What could he possibly serve time for?

DOUGHERTY: Well, as we understand it, it could be five to 15 years, but it really depends upon the court. That's what we heard yesterday from court authorities. So we'll have to see, ultimately, when it goes to trial.

Actually, his brother said they were called back. The judge said come back in eight days for a trial. So we'll have to see whether that happens.

But, you know, the -- repercussions could be serious, depending upon whether he is freed or found guilty. And we've already had demonstrations, as we've been reporting. A lot of them, you had allegations over a beating. His brother has been saying, without any concrete proof, but he has been saying, "My brother had his arm broken," et cetera. The court has been saying, no, he's been in good health so far. So that's one thing.

The demos -- you also had the parliament in an uproar just yesterday, where the speaker said he was going to resign. Not only over this, there were other issues, but it was one of the exacerbated points.

And then also, we had an incident yesterday in Fallujah where U.S. soldiers were at the Fallujah Business University, and -- at an event, and a crowd about 200 people started throwing sticks and stones and shoes. Significantly.

COOPER: There's other important news out of Iraq. British Prime Minister Gordon Brown said today that he's going to pull British troops out of Iraq, I think, by what, the end of 2009. What does that mean for the U.S. position in Iraq? Or when was the exact date that he said?

DOUGHERTY: Yes. Mid-2009. Yes. Missions will be finished by the end of May, and then by the end of July, that's it. They should be out of there.

You know, in a sense, it -- in a physical sense, doesn't make a whole lot of difference. There are 4,000 troops, British troops, but they've already pulled back to their bases. Essentially what they do is they train the Iraqis. And the American troops have been coming in and taking over, at least down in Basra, some of those -- those jobs. So, you know, you'd have to say the next step, where do they go after that, because the next question, of course, is Afghanistan.

COOPER: Jill Dougherty, live from Baghdad. Jill, thanks a lot.

Coming up, photographs surfaced today. They're unlike any of Barack Obama we've ever seen. Hip, cool. From decades ago. It's our "Shot of the Day." We'll show you that ahead.

But first Erica Hill joins us with the "360 Bulletin" -- Erica.

ERICA HILL, CNN ANCHOR: Anderson, OPEC will soon slash production by 2.2 million barrels a day. This is the biggest cut ever for the oil-producing cartel. That dramatic move aimed at halting falling oil prices.

The host of "America's Most Wanted," John Walsh, is praising investigators for closing his son's murder case. On Tuesday, authorities said a serial killer who died in prison years ago murdered Adam Walsh in 1981.

Well, today, Walsh had more to say on the enormity of this moment for both him and for his family.


JOHN WALSH, FATHER OF ADAM WALSH: It's about justice. It's not about revenge or vigilantism. It's not about closure. We'll always -- everybody always says, "We'll have that hole in our heart for the rest of our lives." But it's about justice, and yes, today ended that chapter of our life.


HILL: The first face transplant patient in the U.S. said to be doing well. Today, the lead surgeon who performed the operation at the Cleveland Clinic said the patient was so disfigured she had a hard time eating or breathing on her own and, in fact, was so humiliated -- often so humiliated in public that she rarely went out.

Her identity is not being released at this point.

But you may remember the world's first face transplant in France three years ago. Well, look at the before and after. It's really pretty incredible. This is the transformation, and she at this point, Anderson, is said to be doing great. So hopefully, it will be the same in a couple of years for this other patient.

COOPER: Just incredible. Erica, thanks.

Hollywood's coming to Washington. Despite the controversy we just talked about, the inauguration of Barack Obama, each of the stars, well -- there's Samuel Jackson -- paying top dollar. Fifty thousand dollars for a package with all the perks, four tickets to the swearing in, plum spots on the parade route, and all-access passes to the inaugural ball.

Where does the money actually go? We try to figure that out, ahead.

And do you know who this guy is? OK, well, he looks a little different these days. A younger, perhaps cooler Barack Obama. Our "Shot of the Day." Some pictures we've never seen before. Stick around.





COOPER: Dan Aykroyd behind the Queen of Soul, Aretha Franklin. She is just one of the big names expected to perform at President- elect Obama's inauguration. I don't think Dan Aykroyd is going to perform there.

Millions of people are expected to crowd the streets of Washington, of course. But to get a front-row seat to the festivities, you need connections and a lot of cash.

Samantha Hayes has the list of big-bucks contributors who -- which, frankly, reads like the who's who of the entertainment industry. Take a look.


SAMANTHA HAYES, CNN CORRESPONDENT (voice-over): It promises to be a premier like no other. Marquee performances like Aretha Franklin, Yo Yo Ma, Itzhak Perlman. And the Hollywood "A" list is snapping up top-dollar tickets. In the audience for change, Halle Berry, Jamie Lee Curtis, Jamie Foxx, Sharon Stone, Samuel L. Jackson.

GARRETT GRAFF, EDITOR-AT-LARGE, "WASHINGTONIAN": What we've certainly seen in this inauguration, I think, is just unprecedented levels of entertainment industry interest and Hollywood interest.

HAYES: For red-carpet treatment, all of those stars have paid 50,000 to Obama's inaugural committee. So what does 50 K get you? Four tickets to the swearing in, plum spots on the parade route, and four tickets to the ball of their choice.

It's a measure of the excitement around Obama, that the stars are themselves star struck.

GRAFF: We've never seen this before, especially coming off eight years of President Bush, where there just hasn't been that much interest in Hollywood in Washington and the Bush administration.

HAYES (on camera): It may sound like a velvet rope sweet deal for the stars, but the truth is, the Obama inauguration has dramatically cut the ability of the rich and famous to get insider access.

(voice-over) Linda Douglass, the top spokesperson for the inauguration committee, tells CNN, "We have placed stringent restrictions on fund-raising: no funds from lobbyists, corporations, unions or PACs, and a $50,000 limit on individual donations, far below some limits in the past."


HAYES: The last time around, for example, the Bush inaugural committee took donations of up to a quarter million dollars, and corporate money was welcome.

This time, the privately-raised funds will also buy things like JumboTrons and sound systems so people without tickets can see and hear what's happening.

Samantha Hayes, CNN, Washington.


COOPER: Up next, Barack Obama back in the day. The photos that he never likely thought would be seen by the world. It's our "Shot of the Day."

And at the top of the hour, breaking news: Chrysler and Ford both extending their holiday work stoppage. Thousands of workers affected. Details ahead.

And Caroline Kennedy seeking Clinton's Senate seat. Out and about today, talking with reporters and New York voters.

We'll be right back.


COOPER: Time for "The Shot." It's a never-before-seen look at a younger and some would argue maybe cooler President-elect Obama. These black and white photos were taken in 1980 when Obama was a freshman at Occidental College in Los Angeles.

The president-elect is seen wearing a hat and striking a couple poses and he's also seen smoking, which a habit, I guess, he's still sort of trying to quit.

Lisa Jack, the photographer who took the photographs, ran into Obama at a campus cafe, asked to take his picture for her portfolio. The photos are part of "TIME" magazine's "Man of the Year" cover story. No surprise Obama is the Man of the Year.

Lisa Jack told "TIME," quote, "He was really cute," but what else does a 20-year-old girl remember? There are the photos.

HILL: Kind of cute, actually. But she doesn't remember anything else from the photo shoot, just he was kind of cute. COOPER: But imagine, like you know, having these pictures taken 20 years ago and then, like, forgetting all about them? And all of a sudden...


COOPER: It's interesting to see.

All right. You can see all the most recent "Shots" at our Web site,

Coming up at the top of the hour, the latest on the breaking news out of Detroit. Chrysler and Ford saying they're going to idle dozens of plants. Tens of thousands of workers are affected. What does it mean for them and for Washington? We'll look at that.

And Bernard Madoff, the guy allegedly behind a $50 billion Ponzi scheme in court today and under house arrest as the investigations deepen. Did he act alone, or did he have help? Stay tuned.


COOPER: Tonight, breaking news out of Detroit. Dramatic announcements from Chrysler and Ford. Starting Friday, Chrysler is closing all 30 of its manufacturing plants until January 19 or later. Forty-six thousand employees will be affected.

Chrysler claims that its running on financial fumes and will have trouble paying its bills after the first of the year.

Also today, Ford said it will idle ten of its North American assembly plants for an extra week in January.

Both announcements come just a week before Christmas, with Michigan's unemployment rate now the highest in the nation, reaching 9.6 percent last month, and no word yet from Washington on the emergency loans Chrysler and GM say they need to survive.

Joining me now, chief business correspondent Ali Velshi and senior White House correspondent, Ed Henry.