Return to Transcripts main page


Hope for Avoiding the Fiscal Cliff; The Fight to Pardon the Wilmington Ten; Nelson Mandela's Granddaughters Discuss Grandfather's Health; Interview With Former Chairman of the FDIC Sheila Bair

Aired December 29, 2012 - 09:00   ET


ALISON KOSIK, CNN ANCHOR: Good morning, everyone. I'm Alison Kosik.

CHRISTI PAUL, CNN ANCHOR: And I'm Christi Paul. We're so grateful to have your company.

Randi and Victor are off today, but it's 9:00 on the East Coast, 6:00 am for all you early birds out West and we hope that Saturday's been good to you so far.

KOSIK: We've got just three days to go from possibly going over the fiscal cliff. But some hope -- there's some hope coming from Washington with negotiations going on this weekend between the two top Senate leaders. CNN Radio Capitol Hill correspondent Lisa Desjardins is in Washington.

Good morning, Lisa. You were on Capitol Hill yesterday for all of the political action between President Obama, congressional leaders.

Do you think we're closer to a deal? I'm hearing a little optimism from the president. Is that real or is that imagined?

LISA DESJARDINS, CNN RADIO CORRESPONDENT: Right. What do you say? Modestly or moderately optimistic? I think that's for real, Alison. I think the people have been wanting to get to this point to even have a chance at a deal. And that's where we are.

We don't have a deal yet but there is a chance for a deal. And let's go over where they're starting from.

We now have two senators being the principal negotiators, Republican Senator Mitch McConnell, the Republican leader in the Senate and then Democratic leader, the majority leader, Harry Reid.

Here's where Harry Reid is starting things. He said in a statement last night that we all received that he is going to craft a bill with some of these items in it. Let's take a look.

First of all, we know one of those starting point items is going to be extending income tax cuts for people making anything under $250,000 a year. Democrats have wanted that for a long time. That's where Harry Reid will be starting things today.

He also is planning to include an extension of unemployment benefits. You know, those unemployment benefits actually run out today. So that fiscal cliff we've already reached. That is going to be in this starting point deal.

Now, things we're less clear on: for example, the budget cuts that are impending for most of government, and also the debt ceiling. Those are two items that we think may not be in a deal. May be kicked down the road. Either those budget cuts will hit and will last, or there will be a different fix later. That's where things seem to be right now, but those are a little bit more up in the air.

KOSIK: Does that -- Lisa, does that extension for tax cuts for everyone over $250,000, is that for households or is that for individuals?

DESJARDINS: That $250,000 is for individuals.

KOSIK: OK, OK. I see. All right. So how long do lawmakers have to make a deal at this point?

DESJARDINS: Right. And I just want to make sure we're clear. They want to extend the tax cuts for people whose family income is under $250,000. And so people making above that would see their taxes increase under that potential deal.

So how long do they have? Well, until the very last minute, and maybe even beyond. The truth is, this deadline has always been seen as January 1st, Monday night, December 31st.

But they can actually keep going, because, of course, January 1st being a federal holiday, the market's closed. That buys them an extra day. And January 2nd, the markets reopen, but this Congress can keep working until actually the 3rd, Alison, because that's when the new Congress takes its seat, noon on January 3rd.

If this Congress wants to get this deal done, they have until then. But even after that, of course, the new Congress could take up the remnants of a deal. Unfortunately, we've got deadline after deadline; I know these folks would like to get this done in the next week, though.

KOSIK: All right. We shall see. Lisa Desjardins, thank you very much.


PAUL: They're known as the Wilmington Ten.


PAUL (voice-over): In 1972 they were convicted of firebombing a grocery store in Wilmington, North Carolina, during riots, sparked by the shooting of a black teenager by police.

Well, now the group wants to be fully pardoned by North Carolina Governor Beverly Purdue. The convictions were thrown out more than 30 years ago because of perjury and prosecutorial misconduct, but their records were never cleared. Purdue has said she'll make a decision next week. And in New York City, police are asking for your help finding this woman. Please take a look at your screen here. She was seen running from a subway station Thursday evening after witnesses saw her push a man onto the tracks as a train entered the station.

The victim has been identified as 46-year-old Sunando Sen. It's the second time in a month someone has been pushed to his death in front of a train.


PAUL: All right. And back here at home, I guess you could call it the winter storm that just won't quit.

KOSIK: Will not quit.

PAUL: Yes. That's so true. You know, after a week of heavy rain, high winds, tornadoes and snow, some parts of the country are bracing for another round. And meteorologist Bonnie Schneider is tracking it all for us.

Do you have any good news?

BONNIE SCHNEIDER, AMS METEOROLOGIST: Yes, I do, for those of you that are snow lovers, most of the country is covered with it right now. And since the kids are still off from school, this might be a great thing, right? Sixty-five percent of the lower 48 covered with snow.

That goes as far south as Louisiana. And it's quite the contrast from where we were last year when we had less than half of the country covered with snow, even at the peak of winter.

So so far, we're looking at a snowy start to the season. That may not be the best news for those of you that are driving today.

I want to show you what's happening on our radar picture because we have a combination of rain, sleet and snow across much of the eastern half of the nation. Let's take a look. You can see some heavy thunderstorms through eastern North Carolina at this hour.

But really the big story of the day has to do with the snow. It's snowing from Chicago to Cleveland, and then it will advance further east. So we could be looking at a big snowmaker for the Northeast, specifically Boston.

Looking at the computer models, depending how close this area of low pressure gets to the coast, well, we are likely to see some heavy snow. Winter storm warnings are in place now for the Boston area, and accumulations are likely to be heavy. This is something you may be shoveling out tomorrow in the early hours.

So looking at the map you can see we have 3 to 5 inches through western Mass, really light snow for New York City. The advisories are only for the Five Boroughs, really not into Nassau or Suffolk County.

But we are looking at 4 to 8 inches or more for parts of Providence and into Boston and even the Cape, even though the Cape is looking at a little bit less snow, due to the warmer ocean temperature around it. So it's not over yet. Still got more snow to contend with.

PAUL: All right, Bonnie, glad you're on it. Thank you so much.


PAUL: Would you believe the whole world has been keeping up with the health of Nelson Mandela? And there's certainly been a lot of rumors. But his granddaughters would only speak to our Nadia Bilchik. You'll hear -- you're about to hear what they have to say about their grandfather's condition.


PAUL: All right. To a CNN exclusive for you now, new information on South African leader Nelson Mandela. This is coming right from his very own granddaughters. They contacted and spoke exclusively to CNN's Nadia Bilchik.


NADIA BILCHIK, CNN CORRESPONDENT: Over the last few weeks the entire world has been monitoring the treatment of your grandfather, Nelson Mandela. And he was released from hospital on Wednesday. I know the two of you saw him this week. How would you describe his condition?

UNIDENTIFIED FEMALE: We're just so happy that our grandfather is home after his hospital stay. He's doing extremely well. He's surrounded by the family. We actually just left this afternoon. We just saw him this afternoon with the kids, and he was happy to see the kids. So he's really, really been taken care of very, very well, very, very well.

And we'd just like to thank the whole world for sending us messages and keeping us in their prayers. We're just so happy. And we're happy that he's home. He's doing extremely well.

BILCHIK: And so, as you said, he was playing with the kids? So he's actually sitting up? Is he walking?

UNIDENTIFIED FEMALE: He's sitting up, but he was waving at the kids and he was smiling at the kids. He's very alert. And he's very aware what's going on. So, yes. He's doing extremely well. Extremely well.


BILCHIK: This -- you know, there have been so many speculations. I mean, some people said he was released from hospital because there was nothing more they could do for him. And now, I mean, I've even heard, I mean, that he'll be waiting out his final days at home. And again, is some of the speculation, you know, anything you can tell us? I think the whole world just cares so much about him.

UNIDENTIFIED FEMALE: I think, you know, as a family we're very, very grateful for all the well-wishes that we get on a daily basis, especially when it comes to our grandfather's health, but at the same time, you know, I think it's important for people to remember that, you know, he is 95, after all, and that once in a while he needs, you know, medical care, medical attention.

And, you know, we're very -- we're very grateful, because he's surrounded by the best medical team. You know, he's very well taken care of and he's very comfortable and he's very happy. We spend a lot of time with him and we see him a lot.

And so, you know, we know that people worry and we know that people are concerned, but, you know, we just would like people to know that he's doing very well, and he's in good spirits and he's very cheerful and he's very, very well taken care of.

BILCHIK: And, you know, you've told me that some of the media reporting, especially social media, you've said, has not been 100 percent accurate. Can you give me some examples of where it hasn't been, and how that makes you feel?

UNIDENTIFIED FEMALE: You just said exactly now that he's going home, and he's in his last final days. That's absolutely not true. Our grandfather is well.

And it's just -- it can be very, very hurtful for us to hear these messages out there in the social media that our grandfather is going to go home and he's going to go die. It's just -- it's insensitive. And we just really would like to appeal to the social media and the media to just, please be -- just sensitive to our feelings and our grandfather's feelings as well.

He is very alert. And my grandfather still wakes up in the morning, reads the newspaper. So he's also aware of what is being said around him, about him. And so we just really would like to appeal to everybody out there to stop spreading these rumors. They're not true. Our grandfather is great and he's doing very well.

BILCHIK: (Inaudible) and Swati (ph), some of the thing, again, I've heard is that there's so much speculation because there's so much secrecy. Some people say, certainly reporters say, why don't we know what's really going on?

Do you think that's true?

UNIDENTIFIED FEMALE: I think the point is just to remember is that he is -- he has every right to his privacy.


UNIDENTIFIED FEMALE: And as the family, we call on people, and we urge people to give us the privacy to be able to deal with whatever we're going through as a family in private.


UNIDENTIFIED FEMALE: I think many people are afforded, you know, that simple right to just, you know -- if their family member is in the hospital, that they can deal with it privately. So I think that it just boils down to the fact that it's a private matter, and whatever goes on with him, especially when it comes to his health, should be dealt with privately, as a family.

BILCHIK: What happens to South Africa when your grandfather, Nelson (inaudible) Mandela, is no longer physically with us? What does happen to South Africa?

UNIDENTIFIED FEMALE: I think people need to remember that, you know, my grandfather played a huge role, and not only him; many other South Africans played a huge role to get us where we are now.

I think -- my grandfather said this when he was resigning from public life that, you know, it is now to South Africans to take (inaudible) and take this country forward, that a legacy like his should be carried by as many people as possible.


UNIDENTIFIED FEMALE: And then I think generations like ours and generations to come are responsible, and it's really up to us to really take it forward and take this country forward.

And I think that, you know, we are in a very -- I think that our government is very capable, and there are many people who are very capable to do that job and to carry this country forward.

So I have no doubt in my mind that as South Africa, we will be fine, and that we can't put the weight of our country on one person.

UNIDENTIFIED FEMALE: On one person, yes.

UNIDENTIFIED FEMALE: We're more than capable to take this country forward, and, you know, even as his grandchildren, you know, we want to be a part of that legacy in carrying our grandfather's legacy forward. We're very proud and we're very honored to come from this family and I think that people should just remember that they, too, can do something themselves.


PAUL: And of course, Nadia Bilchik, again, with that exclusive interview with Nelson Mandela's granddaughters.

KOSIK: And we're talking about the ripple effect of the fiscal cliff. Sure, mortgage rates are low. But will the bank loan you money if we go over the cliff? We're going to be talking with former FDIC chairman Sheila Bair coming up.



KOSIK: Three days to go before the U.S. possibly crosses over the fiscal cliff, that's our focus this morning.


KOSIK (voice-over): And if lawmakers fail to reach a deal, that would mean spending cuts and tax hikes for 88 percent of all American households come Tuesday. In fact, most Americans will shell out an average of $3,500 a year in extra taxes.


KOSIK: But the ripple effect of the cliff won't just stop with taxes. Some fear banks will tighten up on consumer lending, meaning you may not be able to get that new loan for a new car or a home.

So with me now is Sheila Bair; she's the former chairman of the FDIC and author of the new book, "Take the Bull by the Horns."

Sheila, welcome. Thanks for coming on today.


KOSIK: I want to start with Washington. President Obama met with top party leaders on Friday saying, he was moderately optimistic. And with your Washington negotiation experience, where do you really think they are in the process?

Are you really any closer to a deal, or is this just more posturing?

BAIR: I think this whole mess is a really embarrassing spectacle. This should have been resolved long ago, and I do think, actually, they are going to get a deal, but I think it will be more along the lines of kicking the can down the road.

I don't think, at least from this point what I'm hearing, that we'll get meaningful deficit reduction, certainly not meaningful tax reform. I do think, though, that there will be perhaps a permanent extension of the lower tax rates for those making at least under $500,000.

The payroll tax cut, on the other hand, will go away, I think, is highly likely, and that is going to impact a lot of workers.

So I think they will be making some decisions this weekend. And I there's a good chance it will pass and become law. But I don't -- so that's the good news. And the bad news is I don't think it will have meaningful deficit reduction. And I think this is just going to keep dragging on and on.

KOSIK: In your book, you advocate for raising the capital gains tax, which could make Wall Street owe a lot more money than it does now.

BAIR: Yes.

KOSIK: Investors would owe more. So that's being discussed as part of a fiscal cliff deal.

But many believe that would actually wind up hurting the economy, giving a disincentive to invest money. Or is this --


KOSIK: -- that just focus on the real wealthy?

BAIR: Yes, I hear that argument a lot. And I guess number one is I'm really tired of our tax policy decisions, you know, everything, being made by what the market's going to do in the next quarter.

Look, this is an aberration in the tax code. It is grossly unfair.

I mean, you look at -- if they raise -- say they raise tax rates, the top tax rate to 39.6 percent for those making more than $500,000. That's going to mean that small businesses, a lot of small businesses are going to paying that nearly 40 percent marginal tax rate, where you have billionaire private equity funds paying 15 percent, 20 percent , or even 24 percent, depending on where they put it.

It's not an issue of penalizing investment income. It's an issue of penalizing labor, and those who make their income through wages. And they're both legitimate and they both should be taxed at the same rate.

So I do -- again, fundamental tax reform could solve this problem, but at least raising the capital gains rate would help address this anomaly.

And Susan Collins and Claire McCaskill have a proposal to try to give the small business owners, legitimate small business owners, some relief from those higher rates, because it's completely upside down that you'd have billionaire private equity fund managers paying 15 percent, 20 percent and small businesses who do create jobs paying 39.6 percent.

So I do think this is a source of unfairness; it's inefficient and it should be -- we should be taxing all income at the same rate.

KOSIK: You know, a fiscal cliff compromise likely won't happen without, you know, those special interests having their say and having their sway with these negotiations.

BAIR: Right.

KOSIK: I mean, how much do these lobbying groups really wind up kind of turning the negotiations in a certain way to really make things sort of end up where we just started? Sort of going over --


BAIR: Well, they do. I think -- again, capital gains is a good -- Wall Street is heavily involved in trying to keep these rates as low as possible. And so I think the lower capital gains rate is a good example.

I think the lobbying pressure is significant, but also just the polarization, the political polarization we've seen in our country. There's no governing middle right now in the country. There -- that -- the center, where you find the compromises and bill consensus to move forward, we just don't have that governing coalition here.

And the president has tried to work with congressional leadership, and I understand that, but the congressional leadership really are dealing more with their kind of hard-line partisans. They're not negotiating from the middle, either.

You know, I look back to the 1980s when I worked in the Senate and we had Ronald Reagan as president and my old boss, Bob Dole, as the majority leader. And we did have governing coalitions then. We had something called the Reagan Democrats.

And Tip O'Neill worked with Ronald Reagan. But one of the reasons he did that -- Tip O'Neill was the Speaker at the time -- was that he knew that there was a good chunk of centrist Democrats who would switch over and vote with the president.

So finding that middle, you know, if I were President Obama, I would be up on the Hill. That's what Reagan used to do. He'd go up there; he'd meet those moderates, those swing state moderates in both the House and the Senate, go to their offices, ask for their votes.

That's the kind of leadership we need. You know, people like Susan Collins, Mark Warner on the Democratic side. Those -- I think those are the folks that will provide the centrist core that we need to have a governing coalition in this country so we can move forward.

KOSIK: OK. Let's talk about how consumers are going to be affected here. The Federal Reserve is currently keeping rates at historic lows, trying to encourage borrowing.

But if we go over the cliff, right now banks are hardly lending as much as they really should be. What else can be done to get banks to lend, especially if we do go over the cliff?

BAIR: Well, I do think the monetary policy, perversely, can discourage lending, because if you're a traditional bank, you take deposits, you make loans. Making a loan into an uncertain economy, at these low rates, is -- that's a challenges thing. It does make you risk averse. And I think, you know -- so I actually think letting rates bump up a little bit, let the market determine, at least.

And I think the market would put those rates up a little bit, could actually help lending. It's counterintuitive, but I do think -- and I think more borrowers might come in if they realized rates are going to start going up.

So I don't think monetary policy is well-intentioned but I think it's hurt lending, it's not helped them. And also I think, for the large institutions, they're taking a lot of their cheap money and just putting it in trading operations, they're not lending. So that's something else that both the Fed and the other supervisors need to deal with.

KOSIK: OK. Some good thoughts there. Thanks for coming on this morning.

BAIR: You bet.

KOSIK: Sheila Bair.

BAIR: Thanks for having me.

KOSIK: We'll have more on the politics of this fiscal cliffhanger in our next hour. These negotiations are raising questions about leadership in the House. Could Speaker John Boehner be at risk of losing his position? At 10 o'clock we'll ask our Washington panel.

One last look at some headlines are coming up next.


PAUL: We want to check some top stories for your right now. An incredible video we just got in I want to show you.


PAUL (voice-over): A passenger plane overshot the runway at Moscow airport as it was trying to land -- this was just a little while ago. You see the plane broken in half there and see some smoke billowing from it as well. We know two of the 12 people aboard were killed. At least three others suffered serious injuries. The Russian Red Wings Airlines flight had taken off from the Czech Republic.


PAUL: We want to update you now on the investigation into the killing of two firefighters who were ambushed as they battled a fire in upstate New York on Christmas Eve.


PAUL (voice-over): Police arrested the gunman's neighbor, Dawn Nguyen. Authorities say that the 24-year-old woman bought a semi-automatic rifle and a shotgun for suspect William Spengler, who later killed himself. Nguyen faces federal charges that she lied to authorities. Spengler couldn't buy the guns legally because he was a convicted felon. He had them with him during the attack.


KOSIK: And thanks for watching today. I'm going to see you back here at the top of the hour. It's been fun, Christi.

PAUL: It has been so fun, so good to have you here in Atlanta.

Well, I want to wish you a Happy New Year to all of you out there. "YOUR BOTTOM LINE" starts right now, and then as she said, Alison will be back with you for the next couple of hours. Go make some great memories.