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Bernard Madoff Pleads Guilty; President Obama Meets With Business Leaders

Aired March 12, 2009 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: He says he always knew this day would come, and he's willing to pay for his crimes.

CNN senior correspondent Allan Chernoff is outside the courthouse in New York. He was inside the courtroom when it went down.

All right, Allan, how did it go?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Wolf, the level of tension inside of the courtroom matched the magnitude of this crime.

Victims who had lost millions of dollars were there to see Madoff admit his guilt and be sent to jail.

(BEGIN VIDEOTAPE)

CHERNOFF (voice-over): Bernard Madoff arrived at court for the day he said he had been anticipating for years. He grimaced, stepping into the courtroom, the most emotion he would display, appearing resigned to his fate.

"I am actually grateful," Madoff told the court in a clear voice, "to publicly speak about my crimes, for which I am so deeply sorry and ashamed" -- an apology that fell on deaf ears.

BURT ROSS, FORMER MAYOR OF FORT LEE, NEW JERSEY: That wasn't an apology. That was a lawyer-written statement delivered in a monotone, without any feeling whatsoever. The only thing he's sorry about, in my opinion, is that he got caught.

CHERNOFF: Madoff admitted that, since the early 1990s, he had simply deposited money from clients into the Chase Manhattan Bank, instead of investing it in the stock market.

When investors wanted money, Madoff would simply withdraw it from the bank.

"When I began the Ponzi scheme, I believed it would end shortly," Madoff claimed, "and I would be able to extricate myself."

Judge Denny Chin then read 11 criminal counts. In response to each one, Madoff said, "guilty." Within minutes, the judge remanded Madoff to the Metropolitan Correction Center, next to the courthouse. Madoff, a former chairman of the Nasdaq stock market, now occupies a cinder block cell, instead of his luxury penthouse, where he had been out on bail. That provides some, but not complete satisfaction to his victims.

BENNETT GOLDWORTH, MADOFF VICTIM: I would feel better if he was stripped of all his money and had to go through what all his victims or a lot of his victims have to go through.

CYNTHIA FRIEDMAN, MADOFF VICTIM: I think he should rot in hell. He's evil. He's evil. He's way up there with all the evil people in the world. He stole from charities, from pensioners. He's horrible. From friends, from widows. He's awful.

(END VIDEOTAPE)

CHERNOFF: More important to victims than seeing Madoff in jail is getting their money back. But the odds are that most victims will only get pennies on the dollar -- Wolf.

BLITZER: Allan Chernoff with that report for us, thank you.

Up until now, Madoff has certainly lived a life of luxury in a $7 million Manhattan apartment. Right now he's in a jail cell like this one over at the Metropolitan Correction Center in Manhattan.

The warden says inmates usually wake up at 6:00 a.m., then go to breakfast and to their work assignment. They're kept busy until around 3:30 p.m., with a break for lunch. It's an early dinner and then all lights out at 11:00 p.m.

That's what he has to look forward to over the next few weeks and months, until he finds a permanent home in another prison someplace else.

Let's get to President Obama right now. He's leaning harder than ever on state officials to make sure economic stimulus money is not wasted or abused. We will go to the White House.

Our correspondent, Dan Lothian, is watching this story, where the president is turning up the heat right now -- Dan.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: He really is turning up the heat. And we saw this last month. First, it was with the nation's mayors when they came here to the White House. Then a few days later, it was the nation's governors. They were also put on notice.

Now is it the money people, the people who will be in charge of figuring out how the stimulus money will be spent in their states. And the president and vice president were very clear today, laying out in plain English that you have to spend this money wisely, because, if you mess up, then the federal government will remember, and you may not get this kind of help anytime soon.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): Top officials from every state but one getting another stern warning before billions in economic stimulus money start flowing their way. JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: I want to be blunt with you off script here. The fact of the matter is, all that is legal is not acceptable, little hint, no swimming pools in this money.

LOTHIAN (on camera): Everybody's going to be looking over your shoulders.

WAYNE TURNAGE, VIRGINIA GOVERNOR'S CHIEF OF STAFF: That's exactly right. And we're ready.

LOTHIAN (voice-over): Wayne Turnage will help oversee how Virginia spends the Federal money it gets. He welcomes the scrutiny.

TURNAGE: We understand that just because you can do something, it may not be the appropriate thing to do.

LOTHIAN: As a safeguard, all the money won't come at once. For example, the Department of Energy is giving states $8 billion for weatherization and energy projects, but until states submit details on how they will spend the money, only $800 million will be handed out.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You've got to go above and beyond what I think is the typical ways of doing business.

LOTHIAN: Virginia has already received money for some road projects and officials have big plans to fix bridges, sewer systems and rail infrastructure. They set up a Web site to harness ideas from the public and help them track every dime.

UNIDENTIFIED MALE: We have to be very transparent.

LOTHIAN: But some on Capitol Hill don't think all this is enough. Senate Minority Leader Mitch McConnell wrote a letter to the government's top investigative office demanding regular audits, saying the American taxpayer will benefit from full transparency at each step of the process as these funds are disbursed.

(END VIDEO TAPE)

LOTHIAN: By the way, the only state that did not send a representative here today, Iowa. And the reason, at least according to a senior administration official, is that they simply didn't have the resources, Wolf.

BLITZER: All right. Dan Lothian, thank you.

Just a short while ago, the president defended his ambitious agenda to business leaders. He told them long-term problems with health care and education must be fixed, along with the ravaged economy.

He met with dozens of CEOs, including some whose firms have received financial help or an outright bailout from Washington. The heads of General Motors, J.P. Morgan Chase, Citigroup, and American Airlines were on the guest list for the event. Wall Street adds to its hot streak, so-called. The Dow rallied for a third day in a row, closing up about 240 points. Spurring investors, renewed hopes that financial reporting rules from embattled banks will be eased and a smaller-than-expected credit rating cut for General Motors.

And people are heading back to stores. Are they? Yes and no. Auto sales took another big hit last month. But check it out. Sales were up for gas, clothing, electronics, and health products. Overall retail sales dipped last month because of the crunch in the car industry.

The Obama administration is firing back today after being labeled as deadbeat by the United Nations secretary-general. It's an update on a story we told you about yesterday. Ban Ki-Moon was lamenting that the United States owes the U.N. more than $1 billion. The U.N. chief tried to clarify his remarks today, calling the U.S. generous, and saying its support is needed now more than ever.

The White House press secretary, Robert Gibbs, apparently didn't get the message. Here's what he said about the deadbeat remark.

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I would note for the secretary-general that his word choice was unfortunate, given the fact that the American taxpayer is the largest contributor to the United Nations.

QUESTION: Would you like a retraction or a withdrawal of that remark?

GIBBS: I think, given the contribution that the American taxpayer makes, I do think it's -- it would be appropriate to acknowledge that role. And the president looks forward to working with the U.N. on mutual challenges.

(END VIDEO CLIP)

BLITZER: All right, diplomatic answer.

Let's go to Jack Cafferty. He's not always that diplomatic.

One day, he says the U.S. is a deadbeat. The next day, he says the U.S. is generous. We're talking about Ban Ki-Moon.

JACK CAFFERTY, CNN ANCHOR: Why don't they take the U.N. and put it in Ban Ki-Moon's backyard?

(LAUGHTER)

CAFFERTY: And let him -- you know, we pay for it. We maintain -- I mean, come on. Wear me out.

And that shark didn't attack anybody, by the way. He was curious. You have got four guys with spearguns. Can't you wait for something a little more aggressive before you start just killing this thing because it swims over to see what you're up to? I'm really annoyed by that story.

South Carolina's Republican governor has become the nation's first to reject some of the economic stimulus money. Mark Sanford says he will turn down about $700 million of his state's $2.8 billion share unless Washington lets him use it to pay down the debt.

He says the money would harm his state's residents in the long run by increasing the federal budget deficit and building expectations for government programs that cannot be sustained.

Funny, isn't it? It seems to me like the people in South Carolina are hurting quite a bit right at the present time. The state has the second highest unemployment rate in the country, having shed many jobs in manufacturing, tourism, construction, and retail. Its unemployment rate is 10.4 percent, second only to the state of Michigan.

Governor Sanford's one of several Republican governors who have criticized the $787 billion stimulus plan. However, other governors from both parties have said they would take any money that these states rejected. And, in the end, Sanford's move is largely symbolic, because the state legislatures can override governors and take the money anyway.

South Carolina Congressman James Clyburn, who is a Democrat, is blasting Sanford for rejecting the money that could help residents of South Carolina. Clyburn says Sanford -- quote -- "will sleep well at night because he's improved his conservative record and raised his national profile" -- unquote.

Probably worth a mention is the fact that Sanford is seen as a potential GOP presidential candidate in 2012.

Hey, with all the warm, fuzzy sympathy that he's displaying for the hard-pressed people in his own state of South Carolina, I wonder how he was ever elected governor.

Here's the question. What message does South Carolina's governor send by rejecting the stimulus money? Go to CNN.com/caffertyfile and post a comment on my blog -- Wolf.

BLITZER: Thank you, Jack.

You will see three of those divers tomorrow on CNN's "AMERICAN MORNING." And maybe they will be asked the question you raised.

(CROSSTALK)

CAFFERTY: I ain't going to set my alarm.

BLITZER: OK, Jack.

(LAUGHTER)

BLITZER: Thank you. Stand by. We will get back to you shortly.

Earlier, I said the CEO from American Airlines was at that meeting with the president. I meant to say the CEO from American Express.

Americans may take the economic meltdown to their graves. Some life insurance companies are looking for a bailout.

Also, a report says one in every 440 houses were hit with foreclosure last month. Are you or your neighbors affected? You are going to find out exactly where foreclosures are happening across the country.

And he's the man President Obama wanted to head the National Intelligence Council. He claims he's the victim of character assassination by what he calls the Israel lobby.

Stand by. We will have details.

(COMMERCIAL BREAK)

BLITZER: Some of the most well-known life insurers searching for cures to improve their financial health. They're companies that may provide your life insurance, like Hartford, MetLife, Prudential.

They're battered by tumbling financial markets. They're also hoping for something to ease the pain. Might that include a government bailout?

Let's go straight to our Mary Snow. She's working the story for us.

Mary, what's the answer?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, for some, it might, because some of the biggest names in the insurance industry have asked for government bailout money. An administration official says the Treasury Department is closely looking at the situation, but no decisions have been made.

(BEGIN VIDEOTAPE)

SNOW (voice-over): Hartford Financial Services touts on its Web site it's provided insurance since 1810.

(BEGIN VIDEO CLIP, AD)

UNIDENTIFIED FEMALE: Obviously, it means coverage, like life insurance and car and homeowners. It can also mean a feeling, being confident about something, like your future.

(END VIDEO CLIP)

SNOW: But investors recently haven't been so confident about the financial strength of the insurance company themselves. Hartford Financial has applied for government bailout money. So has Prudential Financial. Another big insurer, MetLife, declined comment. The head of a trade group representing the life insurance industry says one dozen companies have applied.

FRANK KEATING, AMERICAN COUNCIL OF LIFE INSURERS: We need and we have a strong life insurance industry, but obviously a declining economy has an impact on everybody, including us.

SNOW: Those who follow the insurance industry say the portfolios of life insurance companies are taking a big hit.

OLIVIA MITCHELL, WHARTON SCHOOL OF BUSINESS: The life insurers are in fact holding some contaminated or toxic assets. And so that is something that's beginning to become evident, only little by little.

SNOW: Unlike insurance giant AIG, which had a financial products unit at the core of its trouble, economists say life insurance companies face a different problem. They have invested in corporate bonds, bonds which have declined. And they're also feeling the effects of the slide in corporate real estate.

One economist says he doesn't envision companies defaulting immediately or going bankrupt, but:

RICHARD PARKER, HARVARD KENNEDY SCHOOL OF GOVERNMENT: There might be a patch period of a couple of years, three to seven years out, where we could have real problems meeting all claim demands.

SNOW: Most insurers are regulated by states, which have entities similar to the FDIC that protect policy-holders in case of an insurer's collapse.

(END VIDEOTAPE)

SNOW: Now, as to how much money the life insurance industry is asking for, former Oklahoma Governor Frank Keating, who represents the industry -- you just saw him there -- says he doesn't have a figure, but says it would be a modest amount compared to banks -- Wolf.

BLITZER: Really important story. All right, a lot of people could potentially be affected.

Mary, thanks very much.

Here's another staggering sign of distress. According to a new report -- get this -- one in every 440 houses potentially up for foreclosure, John King, right now. And a lot of people are asking, where are these houses? They're all over the country.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: They are all over the country.

And let us show you to them. And let's have the context for you. You mentioned that's one in every 440 homes the organization RealtyTrac says was up for foreclosure just last month. Now, this is a map of foreclosures across the country.

Let me get rid of the numbers, so you can see it more clearly. The lighter the color means the higher the foreclosure rate, the higher the number of foreclosures. So, if a state is dark, there are fewer foreclosures. California, quite bright, that is a problem state.

But let's put it into better context. This map shows the number of foreclosures in a state per 5,000 homes. So, it takes population disparities into account. And you can see, if you look at this map, then, Nevada is the highest, nearly 16,000 homes in foreclosure just last month. That's 71 out of every 5,000 homes, or, more stunningly, one in every 70 homes.

Now, if you come just down here, in Arizona, Arizona was the number-two state last month, more than 18,000 homes in foreclosure last month, according to RealtyTrac. That's one in every 147 homes.

And the problem is worse out here in the West, because we will bring in the California numbers now, a much bigger state, of course, the nation's most populous, nearly 81,000 homes in foreclosure last month. That's 30 out of every 5,000 homes, meaning one in every 165 homes in California facing foreclosure.

Now, Wolf, I want to get rid of these numbers and come back to the national map, because what this has many people now saying is, if the number is still so high, 290,000 last month, number one, people are saying, are those federal programs and the state programs designed to help homeowners stay out of foreclosure, why aren't they working, or why aren't they working fast enough?

And another thing, Wolf, that you hear quite frequently from members of Congress and some people in the states is, if the problem is more located here, and out here, should there be more regional prescriptions, instead of national prescriptions, because many of the states don't have, of course, the high numbers?

Foreclosure is a problem across the country, but it is a very big problem out here in the West and down here in Florida -- Wolf.

BLITZER: John is going to a lot more of the magic map Sunday. He also has a major exclusive, the first interview, television interview, with the former Vice President Dick Cheney, who will be with John on "STATE OF THE UNION." It airs 9:00 a.m. Eastern Sunday morning.

The net worth of American households fell by the largest amount on record in the fourth quarter of last year. The Federal Reserve reports that net worth dropped by 9 percent between the beginning of October and the end of the year. It was the sixth straight quarterly decline.

They're spending trillions to turn the economy around, but the House speaker, Nancy Pelosi, leaves the door open to another stimulus package. Will the government ask for more of your money? Plus, critics claimed he was too close to Saudi Arabia, too close to China. Now he bows out of a top intelligence post, accusing Israel's supporters of character assassination.

And the treasury secretary goes to Capitol Hill to defend the administration's budget, and gets an earful, and not only from Republicans.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: A derailed nominee for a top intelligence post in the Obama administration is not going quietly.

Charles Freeman tells CNN he's the victim of character assassination by influential pro-Israeli lobbyists.

Let's bring in our foreign affairs correspondent, Jill Dougherty. She's working the story.

He was up for a really sensitive job in the intelligence community.

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Exactly, Wolf.

And let's take a look at the wall and you can see how this works over here. The National Intelligence Council coordinates intelligence from 16 different agencies, including the CIA. That -- Charles Freeman, right there, was to be the chairman. And he would pass on sensitive data to Dennis Blair, who's the director, and then on to President Barack Obama.

But now Freeman is out and he claims he was forced out.

(BEGIN VIDEOTAPE)

DOUGHERTY (voice-over): A seasoned diplomat in the eye of a political tornado, President Obama's pick to head the high-level National Intelligence Council forced to bow out, Charles Freeman charging character assassination from what he calls the Israel lobby.

He tells CNN's "FAREED ZAKARIA GPS" right-wing elements have a hammerlock on public debate about Israel.

CHARLES FREEMAN, MIDDLE EAST POLICY COUNCIL: They do not admit, but it is a fact that they had engaged in a truly libelous campaign of selective misquotation and distortion and fabrication of facts that are absolutely not real.

DOUGHERTY: AIPAC, the main pro-Israeli lobby group in Washington, tells CNN it did not actively seek his ouster. But pro- Israeli bloggers are buzzing over his work for a think tank funded by the Saudi government.

And, on Capitol Hill, some say he's in the pocket of China for serving on the board of a Chinese government-owned oil company.

SEN. JOSEPH LIEBERMAN (I), CONNECTICUT: There are statements that he's made that appear either to be inclined to lean against Israel or too much in favor of China.

DOUGHERTY: Freeman is a longtime China expert, translated for Richard Nixon in Beijing, former ambassador to Saudi Arabia.

And veteran "Washington Post" columnist David Broder says, this is "an ignominious end to one of the most distinguished international careers in American government."

(END VIDEOTAPE)

DOUGHERTY: So, what's the White House think of all about this? Well, so far, they're not coming to his rescue -- Wolf.

BLITZER: There's sort of a thunderous silence coming from the White House, although Dennis Blair did defend him when he was testifying yesterday.

DOUGHERTY: Right.

BLITZER: All right, Jill, thanks very much.

You can hear, by the way, Fareed's interview, exclusive interview, with Charles Freeman on "FAREED ZAKARIA GPS." That airs this Sunday, 1:00 p.m. Eastern, right here on CNN.

It sounds too good to be true, a beach house that costs $1. Guess what? There's a catch.

And stand by to hear the president explain to state officials why they would be better off watching their own back, and watching their stimulus money, where it's going, making sure it's not being abused.

And we're going to chew out this -- we're going to assess this I- Reporter's beef with the president.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: But now just -- just stop it. It's obnoxious. Just -- just stop it. It's really impolite. Stop stealing our stuff.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now: close call in space. A bullet-sized chunk of metal zoomed by the International Space Station at 20,000 miles an hour. The crew had to huddle in an escape capsule for safety.

It's not the Sears Tower anymore. Chicago's landmark building is getting a brand-new name, the Willis Tower, after a London-based insurance broker that's moving in.

And an iconic beach house designed by a world-famous architect sells for $1. There's one catch: The buyer has to spend $100,000 to move it from the Jersey Shore to New York.

All of this, plus the best political team on television. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Today, the president delivered a special message to people sitting on the economic front lines.

Let's get some more on our top stories right now. The president talked to people from every state, but one who will have a hand in how the stimulus money is spent.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I want to emphasize that all of you are at the front lines of what is probably the most important task that we have in this country over the next couple of years, and that's getting the economy started again.

I think all of you, in your respective roles, are hearing stories of people who are going through extraordinary hardship in your respective states.

And we passed this American Recovery and Reinvestment Act because we strongly believe that this is an opportunity not only to deal with the immediate crisis, but also to lay the foundations for long-term growth and prosperity in this country.

And, you know, the American people are behind what we're doing, and the question then becomes are we going to be able to deliver for them? They are going to be watching very carefully.

(END VIDEO CLIP)

BLITZER: In his talk, the president said the state officials who will be handling the stimulus money are up to the task.

(BEGIN VIDEO CLIP)

OBAMA: And there are those who believe that government doesn't have a role to play in this recovery.

There are those who believe that we should be focusing exclusively on Wall Street when it comes to this crisis and that we don't have time to worry about infrastructure and we don't have time to worry about our health systems and we don't have time to think about how we're going to improve our educational systems.

And, you know, all of you, what you do in the coming weeks and coming months, over the next couple of years, is going to make a huge difference in whether or not the trust that the American people have placed in us is justified. So my main message to all of you is I think you're up to the task. I think you guys will do extraordinary work with -- using these precious tax dollars that the American people have given up in order to deliver on the kind of economic growth -- short-term and long-term and job creation -- that's going to be so important.

(END VIDEO CLIP)

BLITZER: Meanwhile, the president's talk was not without a stern warning about going above and beyond.

(BEGIN VIDEO CLIP)

OBAMA: But we're going to need to work really hard. And we're going to have to make sure that every single dollar is well spent. We've got to go above and beyond what I think is the typical ways of doing business in order to make sure that the American people get the help that they need and that our economy gets the boost that it needs.

And so I've said before -- I know Joe emphasized this to you earlier -- if we see money being misspent, we're going to put a stop to it. And we will call it out. And we will publicize it.

On the other hand, if the money is being spent as it needs to be spent -- to rebuild our roads and our bridges and our schools and making sure that we are putting in place the kinds of infrastructure foundations that are necessary for economic growth over the long-term, then I think all of us will benefit. And our voters and our constituents and the people we work for are going to be extraordinarily grateful.

(END VIDEO CLIP)

BLITZER: And while we're on the issue of spending, we've been reporting on this notion, there's a lot of confusion out there, as well, of perhaps another stimulus package, in addition to the $787 billion economic plan that was just signed into law.

Let's turn to our senior Congressional correspondent, Dana Bash.

She's on Capitol Hill -- Dana, I understand you got a chance to ask the speaker of the House, Nancy Pelosi, about a second Obama stimulus plan.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That's right. I asked her about the fact, Wolf, that she personally left the door open to a second plan and that her Democratic chairman of the Appropriations Committee told CNN he's already working on it.

Well, today, Nancy Pelosi responded by saying she does not think a second stimulus plan is in the cards right now.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: I don't think you ever close the door to being prepared for what eventuality may come. But I think that is not a near, near thing.

(END VIDEO CLIP)

BASH: And let me tell you a little bit about what's going behind- the-scenes here, Wolf. I'm told by Democratic sources is that there's considerable pressure, at least was pressure, on Pelosi to clean this up.

Why?

Because of the fact that, according to one senior Democratic source I talked to, it undercuts everything we have done so far. Talking about a potential need for another stimulus package undercuts what we heard from the president and the White House today, that they understand it was a big plan, it was an expensive plan, but please be patient and give it time to work.

BLITZER: At the same time, Dana, the Treasury secretary was on the hot seat up on Capitol Hill today. Lawmakers had a chance to grill Timothy Geithner.

How did that go?

BASH: There was real skepticism, Wolf, in that hearing room today about the president's $3.6 trillion budget. And what was really notable about it was it wasn't just Republicans who were grilling him.

(BEGIN VIDEOTAPE)

BASH (voice-over): The Treasury secretary came to defend President Obama's budget. This is how he was greeted.

SEN. KENT CONRAD (D-ND), BUDGET CHAIRMAN: When I look at this budget, I see the debt doubling again. And that gives me great concern.

BASH: And that's a Democrat, the chairman of the Senate Budget Committee, who also ripped into the president's 600 plus billion dollar request to start reforming health care.

CONRAD: Some of us have -- have real pause about the notion of putting substantially more money into the health care system when we've already got a bloated system.

TIMOTHY GEITHNER, TREASURY SECRETARY: The soaring cost of health care is hurting families, businesses and our long-term budget prospects.

BASH: Timothy Geithner responded that government spending on everything from health care to energy is critical to improving the economy, despite the debt and deficits.

Republicans didn't buy it, accusing him of sounding like the president's political strategist, not Treasury secretary.

SEN. JEFF SESSIONS (R), ALABAMA: You need to get out of the campaign mode. I know you have responsibilities to the administration, but it sounds a lot like David Axelrod to me, rather than a -- a fundamental appraisal.

BASH: Geithner also took a bipartisan beating about continuing to bail out insurance giant AIG.

SEN. JIM BUNNING (R), KENTUCKY: I don't understand how one company is worth propping up to $180 billion worth of taxpayers' money.

BASH: And gave a blunt and dire answer to a critical question.

SEN. RON WYDEN (D), OREGON: Does the government have adequate legal authority to prevent future AIGs?

GEITHNER: No.

(END VIDEO TAPE)

BASH: A pretty alarming answer there -- no, the government does right -- does not right now have the ability to prevent another company like AIG from putting the whole financial system at risk.

But, Wolf, he actually gave a little bit of news. He did say that he hopes to have some what he called concrete proposals to deal with this issue out there in the next couple of weeks.

BLITZER: Dana Bash up on the Hill.

Thank you.

Is President Obama stealing someone's toys?

An iReporter has a very unusual take on the stimulus plan. The best political team on television is standing by to weigh in.

Plus, the economic meltdown goes from Wall Street to Main Street to "Sesame Street." Jeanne Moos tells us what it means.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: We're going to be out of this recession or you'll have somebody else speaking to you in 2013.

(END VIDEO CLIP)

BLITZER: We're back with the best political team on television.

Right now, let's assess what we just heard from the president.

Our senior political analyst, Gloria Borger is here; our CNN contributor, Steve Hayes, of "The Weekly Standard;" and our CNN political analyst, Roland Martin. They're all part of the best political team on television. It's a fair point, if this recession isn't over by 2013, he's almost certainly not going to be reelected.

Is that right, Gloria?

GLORIA BORGER, SENIOR POLITICAL ANALYST: Yes, I think so. I mean it's kind of an obvious point. Everybody in this country wants the economy to get better. He knows that while he keeps on telling us that it's a problem that he inherited, it's now his problem to solve.

And, you know, speaking to the Business Roundtable today, he was trying to instill a sense of confidence in those folks, that, in fact, he's going to do something to fix the banking system in this country, which is something they really care about.

BLITZER: Look at these poll results in "The Wall Street Journal," Steve, because "The Wall Street Journal" asked a whole bunch of economists to give us their grades for both the president and his Treasury secretary, Timothy Geithner.

And if you look at these results, 42 percent of those economists give Barack Obama an F. Forty-nine percent give Timothy Geithner an F right now. That's not very encouraging.

STEPHEN HAYES, SENIOR WRITER "THE WEEKLY STANDARD": Jeez, I gave him a D yesterday. I guess I'm not a very tough grader.

(LAUGHTER)

HAYES: Look, I think this is...

(LAUGHTER)

HAYES: This has to concern them, really. I mean the most -- one of the most important things that the Treasury secretary needs to do is inspire confidence in the markets and people who tend to the markets, like these economists who were part of this survey.

If Timothy Geithner in particular doesn't have the confidence of these economists and others, I think it sends real troubled signals about what's going to happen in, you know, in two months, in four months, in six months.

BLITZER: You know...

ROLAND S. MARTIN, CNN POLITICAL ANALYST: It will...

BLITZER: Roland, hold on a second, because Robert Gibbs, the White House press secretary, he had a good reaction to that "Wall Street Journal" poll.

MARTIN: Right.

BLITZER: He pointed out where were all these economists six months ago or a year ago?

They didn't -- they weren't predicting the kind of economic disaster the country is going through right now.

So are they really qualified to give the president and the Treasury secretary a grade?

MARTIN: Well, obviously, that -- that's going to be the White House response. They want to sort of knock this thing down. If "The Wall Street Journal" had a great result, As and Bs, they would be singing the praises.

But I've got to say this, Wolf, I remember being in my economics class at Texas A&M and the professor said what we're teaching you in this class isn't used in the real world.

The first thing I said was, well, why in the heck are you teaching it?

So I listen to economists -- you know, look, half of them are right and half of them are wrong. The reality is he is going to be judged, really, by the American people and not a set of economists.

That's why his comment about 2013 is so important. He knows that he is judged solely on this issue when it comes to a second term, pure and simple.

BLITZER: And he's going to have a judgment call even before then, two years, 2010, the midterm Congressional elections. The American people are going to have a chance to offer a grade as well, Gloria.

BORGER: Yes, they absolutely will. But getting back to the -- to the banking crisis, I mean you heard that in Dana Bash's piece in the Budget Committee today. You heard this in the complaints in "The Wall Street Journal" piece from these economists. They want to see Tim Geithner step up to the plate and the president step up to the plate and specifically outline what they are going to do to save the banks.

It's not a popular thing to do. We don't like to bail out the folks who were -- made mistakes and who were profligate with their money. We don't want them to be profligate with ours. But we have to do it. It's a tough political thing, but he's got to do it or else those economists are not going to have any faith in him.

BLITZER: And here's a -- here's an iReport video that we got. We asked our viewers to send us in some iReports.

This one came in from Michael -- I hope I'm pronouncing his last name right -- Mignogna of New York.

But let's listen to what he says.

(BEGIN VIDEO CLIP)

MICHAEL MIGNOGNA, IREPORTER: If I was a little kid and I'm sitting and playing with my toys and you came along and you took half of them to give to every other kid, I'd tell you to just stop it. Stop it. Stop stealing our stuff.

(END VIDEO CLIP)

BLITZER: Roland, what do you think about that?

MARTIN: One, that's cute. But, you know, look, we can have extremely simplistic answers to some of the issues that we face. But look, the bottom line is you can criticize tax structure on the city level, the school district, the hospital district, the county, the state, the federal government. But the bottom line is in order for our country to grow, it's going to be based upon taxes, OK?

And we recognize that we are dwindling resources all across this country. But it still has to be fair in terms of how it is applied.

And so maybe that's what he was talking about. But, you know, this whole notion in terms of my toys and everything, I'll tell you what, if he doesn't have a job and no health insurance, I guarantee you, he wants somebody else's toys.

BLITZER: All right, Steve, did the president make a good point today when he met with those CEOs from the Business Roundtable when he said 95 percent of working American families are going to get a tax cut right away and the 2 or 3 percent of the richest Americans -- they're not going to get a tax increase for the next two years -- that tax increase will only come in the year 2011?

Is that going -- is that going to fly?

HAYES: Well, I think there are two problems with it -- one is economic, one is political.

The first, the economic problem is 2011 is when many economists project us to be coming out of the recession -- precisely the wrong time to raise taxes on those wealthiest in the country who are likely to provide the jobs.

The political problem, I think, is that he keeps making this argument. But if you look at the deficits that his own administration has projected out through 2019, he's going to have to do more than raise taxes on the top 2 or 3 percent, because we just can't cover it. They -- the richest Americans just can't cover all of the spending that we've seen in the first six weeks of the Obama administration.

BLITZER: All right, guys. We've got to leave it there, unfortunately. But we'll do it again tomorrow.

Thank you.

South Carolina has the second highest unemployment rate in the nation, but its governor is now rejecting some federal stimulus money.

What message does that send?

Jack Cafferty with your e-mail, coming up.

And "Sesame Street" meets some cold, hard reality -- our Jeanne Moss has a Moost Unusual report on some cost-cutting measures. And the Muppet takes off -- take-offs -- they are inspiring on the Internet.

(BEGIN VIDEO CLIP, COURTESY PHILLIP WILBURN, BIG NEWS, WWW.FUNNYORDIE.COM/PHILLIPWILBURN)

PHILLIP WILBURN, "SESAME STREET": Hi oh creaky frog here. Thank you so much for coming out today.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Coming up at the top of the hour on "LOU DOBBS TONIGHT," a vote of no confidence in the president and his Treasury secretary -- both being given failing grades by economists. The administration responds. Apparently it believes it just has a P.R. Problem.

Also, the death of free speech in America's colleges and universities -- professors telling your children what to think. Best- selling author David Horowitz joins me with his explosive new book, "One Party Classroom." He'll also reveal his dirty dozen of the worst, most offensive colleges in America.

And billions of your dollars going to the destruction of and then the rebuilding of sports stadiums all over the country. We'll be reporting on what is a growing scandal of using public money for private profit in sports.

Also, the markets rallying for a third straight day. Tonight, I'll be joined by three of the country's best economic thinkers to tell us where this market and our economy is headed.

Please join us for that and a great deal more, all of the day's news, at the top of the hour.

THE SITUATION ROOM with Wolf Blitzer will be right back.

(COMMERCIAL BREAK)

BLITZER: Just to be clear, on our stock report earlier, it was General Electric that took a smaller hit in its credit rating than many people expected, helping to push the Dow up for a third straight day. We always want to be precise.

Jack Cafferty here once again with The Cafferty File -- Jack.

CAFFERTY: Wolf, the question this hour -- well, there are two, actually. The first one is what message does South Carolina's governor send by rejecting the stimulus money?

J.C. writes: "He's more concerned with proving that the Republicans are right than he is with helping the poor people in the state of South Carolina." Michael in South Carolina: "I live here. The unemployment rate one of the highest in the country. We have the poorest, most outdated schools in the U.S. Governor Sanford would rather watch the poor people in his state suffer and just pursue his political aspirations."

Stacy in Leesburg, Virginia: "Congratulations, Governor Sanford. You strut around like an ideological rooster in a broken farm and proclaim that your party is more important than your people. South Carolina is rife with poverty and poor education consumes your youth, while unemployment continues to rise. Your brain is writing dogmatic checks that your real world tush will pay for come election time."

Earlier, I expressed a certain amount of disgust of what I viewed as some gratuitous video of four guys with spear guns killing a shark who appeared guilty of nothing more than swimming up out of curiosity to see what they were doing.

A lot of you responded to my outrage and wrote some of these e- mails.

Kristen Cookie Monster) in Washington, D.C.: "I'm with you. Those divers killed that shark needlessly. Thank you for stating so passionately what we are all feeling."

Eileen in Florida writes: "Thank you so much for your comments on the shark video. You expressed my feelings exactly. What a selfish waste of a life of a beautiful unthreatening creature, just to be able to make a video. Some people just don't get it."

Sue in Mississippi: "Thanks, Jack, for your comment on the four divers who killed that tiger shark. If the shark just swam close to them, that does not qualify as an attack. Also, after they shot it the first time, why did they shoot it six more times and then spend two hours killing it? That sounds a lot more like sport than self-defense. It makes me sick."

Diane in Virginia: "Thanks for your comments R.E. the tiger shark. I'm outraged. Humans interfere in the shark's territory. Due to the shark's curiosity, humans kill it. Dreadful. We need to allow animals to live and let live and be themselves. At times like this, I'm ashamed of my own species."

Mike in Naples, Florida: "If you saw that shark, Jack, you would pee in your pants."

And John in Missouri writes: "Jack, set your alarm on those divers and when they show up at CNN tomorrow morning, shoot them with a spear gun. You can claim you were worried they were going to attack Wolf."

I strongly agree with your sentiment.

(LAUGHTER)

CAFFERTY: If you didn't see your e-mail here -- I'd save you, Wolf... BLITZER: Thank you.

CAFFERTY: ...go to my blog at CNN.com/caffertyfile.

I mean we're going around -- we just go around and kill things. And it -- and it bothers me.

BLITZER: I see.

CAFFERTY: (INAUDIBLE) when I was a kid. But I just -- I just -- I watched that video and it's disgusting. (INAUDIBLE)...

BLITZER: And you gave some good material to John Roberts and Kiran Chetry. They're going to be interviewing those divers on "AMERICAN MORNING" tomorrow morning. And I think they got -- they've got some good questions to ask thanks to you, Jack.

CAFFERTY: Well, yes -- and thanks to our viewers. They seem to agree.

BLITZER: I told you yesterday I read your new book that's coming out in a few days.

Here's what I loved especially about the book. Two things. The personal stuff, which is really, really compelling and moving; but, also, the writing style which is very similar to the first book. When you read it, you're hearing and you're seeing Jack Cafferty.

There is the book cover. "Now or Never

Getting Down to the Business of Saving Our American Dream".

We just gave you a little review of the new book. We want to get our viewers excited -- Jack.

CAFFERTY: Well, I appreciate it very much. It's available on the -- at the online booksellers. And I think it's in some of the bookstores, but it doesn't officially come out, I don't think, for about another week.

But thank you very much for the kind words.

BLITZER: It will be a huge best-seller.

CAFFERTY: Let's hope so.

BLITZER: Thank you.

CAFFERTY: I'll take you to lunch.

BLITZER: Good.

Now a report on a Moost Unusual lesson from "Sesame Street." Here's the lesson -- L is for lay-offs.

Here's Jeanne Moos. (BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP FROM "MAD TV," COURTESY FOX)

UNIDENTIFIED MALE: C is for cookie.

(END VIDEO CLIP)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Forget cookies, C is for cutbacks. And when the producers of "Sesame Street" announced them, the parodies weren't far behind.

(BEGIN VIDEO CLIP, COURTESY PHILLIP WILBURN, BIG NEWS, WWW.FUNNYORDIE.COM/PHILLIPWILBURN)

WILBURN": Usually we have sunny days at "Sesame Street." But today, unfortunately, is not one of those days.

(END VIDEO CLIP)

MOOS: This is not the official announcement. This is the voice of viral video comedian, Phillip Wilburn, delivering the bad news.

(BEGIN VIDEO CLIP, COURTESY PHILLIP WILBURN, BIG NEWS, WWW.FUNNYORDIE.COM/PHILLIPWILBURN)

WILBURN: Reducing our job forces by 20 percent.

(END VIDEO CLIP)

MOOS: Sixty-seven out of the 355 staff positions are being cut. On Muppet blog, sadness reigned. Wall Street is one thing, but "Sesame Street?"

The world is coming to an end.

Count von Count...

(BEGIN VIDEO CLIP FROM "MAD TV," COURTESY FOX)

UNIDENTIFIED MALE: One. One (INAUDIBLE).

(END VIDEO CLIP)

MOOS: ...seemed worried his days were numbered.

(BEGIN VIDEO CLIP, COURTESY PHILLIP WILBURN, BIG NEWS, WWW.FUNNYORDIE.COM/PHILLIPWILBURN)

WILBURN: Yes?

UNIDENTIFIED MALE: How many jobs are we talking?

One?

One job. Two?

Two jobs.

(END VIDEO CLIP)

MOOS: The real producers of "Sesame Street" wouldn't specify which jobs will be cut. Repeat after me, kids -- L is for lay-offs, R is for recession, F is for foreclosure.

(BEGIN VIDEO CLIP FROM "MAD TV," COURTESY FOX)

UNIDENTIFIED CHILD: Bird, why aren't you in your nest on "Sesame Street?"

UNIDENTIFIED MALE: The big bank took it when I defaulted on my adjustable rate mortgage.

(END VIDEO CLIP)

MOOS: Actually, this comedy bit foreshadowed the "Sesame Street" layoffs. MADtv did it months ago.

(on camera): U is for uninsured.

(voice-over): So when the Cookie Monster's insulin levels dropped...

(BEGIN VIDEO CLIP FROM "MAD TV," COURTESY FOX)

UNIDENTIFIED MALE: Cookie no have health insurance, so Cookie have to cut off own foot. Oh. D is for diabetes.

(VIDEO CLIP)

(END VIDEO CLIP)

MOOS: Despite the attempts at humorous headlines, Oscar the Grouch gets canned. It's a safe bet the 20 percent of positions eliminated won't include the star characters.

(on camera): S is for sorry -- we're sorry to be making fun when we know real people are losing their jobs.

(voice-over): But losing our sense of humor wouldn't help -- though there are worse things to lose.

(BEGIN VIDEO CLIP FROM "MAD TV," COURTESY FOX)

UNIDENTIFIED MALE: I lost one of my cookies.

(END VIDEO CLIP)

MOOS: Jeanne Moos, CNN...

(BEGIN VIDEO CLIP FROM "MAD TV," COURTESY FOX) UNIDENTIFIED MALE: Calories is what is wrong with cookies.

(END VIDEO CLIP)

MOOS: ...New York.

(END VIDEOTAPE)

BLITZER: And speaking of "Sesame Street," Michelle Obama spent a little time with Kermit the Frog today. He was on hand as the first lady read to schoolchildren at Fort Bragg, North Carolina.

Climate change protesters get creative -- we're going to show you what we mean.

That's coming up in today's Hot Shots.

(COMMERCIAL BREAK)

BLITZER: Here's a look at our Hot Shots.

In Brussels, demonstrators use penguin costumes and refrigerators to make their point about climate change.

In Germany, the chancellor, Angela Merkel, and French President Nicolas Sarkozy, go for a walk.

In Indiana, a man leads his camels at sunset.

And in Hungary, the foreign minister celebrates the tenth anniversary of the country's admission to NATO.

Tomorrow, President Obama will outline some rules on how states can spend the stimulus money.

Do you think your state government should be able to spend the money as it sees fit?

You can submit your videos to CNN.com -- iReport.CNN -- iReport.com/situationroom.

Let's go to Lou in New York -- Lou.

DOBBS: Just in time, Wolf.

Thank you very much.