Bush Bails Out Autos
CBS
Transcript
My economic advis advisers believe that such a collapse would deal an unacceptably painful blow to hardworking Americans far beyond the auto industry. It would worsen a weak job market and exacerbate the financial crisis. It could send our suffering economy into a deeper and longer recession. and it would leave the next president to confront the demise of a major American industry in his first days of office. More responsible option is to give the auto companies an incentive to restructure outside of bankruptcy and a brief window in which to do it. And that is why my administration worked with Congress on a bill to provide automakers with loans to stave off bankruptcy while they developed plans for viability. This legislation earned bipartisan support from majorities in both houses of Congress. Unfortunately, despite extensive debate and agreement that we should prevent disorderly bankruptcies in the American auto industry, Congress was unable to get a bill to my desk before adjourning this year. This means the only way to avoid a collapse of the US auto industry is for the executive branch to step in. The American people want the auto companies to succeed, and so do I. So today, I'm announcing that the federal government will grant loans to auto companies under conditions similar to those Congress considered last week. These loans will provide help in two ways. First, they will give automakers three months to put in place plans to restructure into viable companies, which we believe they are capable of doing. Second, if restructuring cannot be accomplished outside of bankruptcy, the loans will provide time for companies to make the legal and financial preparations necessary for an orderly Chapter 11 process that offers a better prospect of long-term success and gives consumers confidence that they can can continue to buy American cars. Because Congress failed to make funds available for these loans, the plan I'm announcing today will be drawn from the financial rescue package Congress approved earlier this fall. The terms of the loans will require auto companies to demonstrate how they would become viable. They must pay back all their loans to the government and show that their firms can earn a profit and achieve a positive net worth. This restructuring will require meaningful concessions from all involved in the auto industry, management, labor unions, creditors, bond holders, dealers, and suppliers. In particular, automakers must meet conditions that experts agree are necessary for long-term viability, including putting their retirement plans on a sustainable footing, persuading bond holders to convert their debt into capital. the company's need to address immediate financial shortfalls and making their compensation competitive with foreign automakers who have major operations in the United States. If a company fails to come up with a viable plan by March 31st, it will be required to repay its federal loans. The automakers and unions must understand what is at stake and make hard decisions necessary to reform. These conditions send a clear message to everyone involved in the future of American automakers. The time to make hard decisions to become viable is now or the only option will be bankruptcy. The actions I'm announcing today represent a step that we wish were not necessary. But given the situation, it is the most effective and responsible way to address this challenge facing our nation. By giving the auto companies a chance to restructure, we will shield the American people from a harsh economic blow at a vulnerable time. And we will give American workers an opportunity to show the world once again they can meet challenges with ingenuity and determination and bounce back from tough times and emerge stronger than before. Thank you.
Eye To Eye: Madoff Scam
CBS
Transcript
last week uh Thursday uh 3:30 or 4:00 uh somebody calls me and says have you heard that Mr made off SP a Ponzi scheme and I reacted that's ridiculous this is the most trusted man on Wall Street say about uh 30 years ago the company that I worked for had their profit sharing and pension plan plan invested with Mr mid off and when we sold that company everybody's distribution went into roll over Ira with uh Mr mid off that was probably in 1989 1990 I lost uh about uh a little bit under $8 million I'm I'm I'm broke I got uh maybe enough money to live all of next year and then after that nothing well you know this is just a such a deterioration of our system our checks and balances we can't believe anything that goes on anymore you get a slip of paper it says you bought 100 shares of AT&T it should be real this guy did not come out of the woodwork he's been on Wall Street since 1960 the SEC has been all over him for years okay I don't blame Mr mid I blame this the United States government for letting me down I have always been a model citizen I've been to I've worked since I'm young I've saved my money I planned for my retirement I did everything right and I paid all my taxes and now the government has allowed this to happen the worst part about this is President Bush uh president-elect Obama congressmen Senators where are you you know I started my retirement plan when I was 19 years old okay I'm 58 that's almost 40 years ago the government allowed one man to take it away well they could have stopped it they didn't stop it okay um probably the SEC should be abolished and closed okay there should be a new system of checks and balances but before we as people get on with the new we have to deal with the old okay and I don't think the system works now it's obvious the system doesn't work uh Mr mid off took the world okay he didn't take me he didn't take two people he took the whole world he took European Banks he took private placement funds he he fooled everybody can one man be that smart and can one government be that stupid well something has to be done because there's a lot of people in this country a lot of very famous people and a lot of people like myself who've never been in front of a camera until 3 days ago and we're fed up we're not going to take it anymore and I challenge President Barack Obama to contact me to speak to me about this situation
Bush approves $13B auto loans for GM and Chrysler
CBS
Transcript
President Bush says he had no choice he approved $13 billion in emergency loans to prevent the collapse of GM and Chrysler and promised another 4 billion in February the money comes from the government's $700 billion bailout fund it should keep the automakers afloat until the end of March then it's up to the new Administration to decide whether to hand out more stocks rallied on the bailout news but then turned lower the DOW Industrials lost about 25 points while the NASDAQ Composite was up by 12 the treasury secretary says the auto loans tap out the first half of the bailout fund Henry Paulson wants Congress to release the final 350 billion once he makes the formal request lawmakers have 15 days to decide the feds want to know exactly how much money was caught up in the madeof fraud Scandal Bernard maof says it was a $50 billion scheme a judge ordered him to hand over a list of his assets and liabilities to see what's left for his investor and as the recession digs in demand for fuel continues to drop that's pulling oil prices sharply lower again crude dipped below $33 a barrel and gas is at a national average of .67 a gallon that's your money watch log on to cbsnews.com for more business headlines at the New York Stock Exchange I'm Alexis christopherus
Mortgage Rate At Lowest Levels
CBS
Transcript
are you ready to refi mortgage rates have fallen to their lowest levels in decades so maybe this is a good time to refinance joining us is Whitney Tilson of Tilson mutual funds good morning Whitney good morning thanks for having me thanks for being here I watched you on 60 Minutes this weekend and you had very dire predictions uh Bleak comments about the housing market but you did say it's a good time to refinance and when I saw USA Today this morning I understood what you were talking about mortgage rates the lowest in 50 years how low are they well they're right now they've crashed just in the past seven weeks they've been cleaning every week there now for a 30-year oh we're changing your bike here for a 30-year fixed rate mortgage they've declined to 5.2 percent which is a 50-year low so that's great news it's about the only good news in the housing market right now and they dropped to 5.2 from 5.5 in just like a week just a week ago and and it was over six percent a year ago so this is this is good news so it begs the question though if it drops so much in just a week should I hold out should I be greedy right it's sort of like trying to time the stock market I suppose um I will point out that it could get quite a bit lower soon because there's a proposal floating around in Congress the new Administration is certainly considering where the U.S government can borrow 30-year money at two and a half percent right now they can lend it into the banking system at say three percent and the banks can in turn lend it out let's say I've heard a Target about four and a half percent so it's a 5.2 now could go to four and a half percent if the new Administration Embraces this proposal hard to game the odds of that but it actually that's the Dilemma do you grab the 50-year low rate right now or wait a few weeks and you might get a chance to refinance at an even lower rate all right let's say that I decide I want to refinance today how do I know if I should for example if I have an adjustable rate mortgage I would think that I would want to jump on it and fix this rate sure um well normally there's quite a big spread you have to pay more to get rid of your interest rate risk into a fixed mortgage so adjustable rate mortgages usually have a quite a bit lower rate but the fixed rate has dropped so much that now the rates are the same so you're crazy not to refinance into a fixed rate mortgage get rid of your interest rate risk and lock in the super low rate for the 30 years but the important caveat is if you qualify if you were in a bad loan you're not going to qualify for a new mortgage that's right if you're underwater on your loan if you've missed some payments and all you probably won't qualify for the ultra low rates you're still going to benefit though because all of the mortgage rates are sort of pegged to the lowest conforming rate so there's there's some good news there if someone's in an adjustable rate mortgage in a area where home prices have crashed a lot they can they their rates are when their loan resets let's say they've got a two-year teaser it's going to reset to to a lower rate thanks to the overall declining mortgage rates and if you're a first-time buyer I guess that the same thing applies right I mean this is good news it gives you more spending power at a lower interest rate and so and that's good news for Sellers as well this this should home prices right now are still declining in the bubble areas like California and Florida they're still in free fall but this may help ameliorate the rate of decline anyway sellers are are so hesitant to sell right now they just can't come to grips with the reality that their home is worth so little and they wait and they wait and they wait you think that's a mistake yes very much so you can't anchor on what your home was worth a year ago or two years ago at the peak of the bubble you just have to be very realistic that home prices have declined substantially and the reality is if you just look at the delinquencies and foreclosures and all that are coming down the pike there's this huge inventory overhang more than 10 months of inventory of homes normally it's three or four months and that's putting downward pressure on home prices so home prices are almost certain to decline over the next year or so so if you have to sell don't don't just sit there hoping that prices are going to rebound that's not very likely you got to live in the real world that's right so the takeaway today for all of our viewers 5.2 pretty good could go lower right up to you whether you want to risk it but either way it all depends on whether you qualify exactly if you if you qualify you want to start thinking about refinancing and either getting line right now or maybe wait a few weeks and see what happens with these proposals to drop it even more but but definitely you want to be thinking about refinancing you said gets aren't you going to like wait forever right well from what I'm hearing the people who are processing the refinancing applications are working 18-hour days to keep up with the demand because people are already rushing to take advantage but I think that there's the capacity there so it's if you want to refinance you you will be able to the question uh personally I would probably wait just a few weeks really and the new Administration is going to announce its economic plans and whether whether this proposal to drop rates is going to be part of that all right Whitney Tilson thank you my pleasure foreign
Bush Bails Out Automakers
CBS
Transcript
allowing the US auto industry to collapse is not a responsible course of action with that President Bush essentially wrote a 13 billion dollar Christmas check to the automaker's GM will get nine point four billion dollars within the next month Chrysler four billion Ford is okay for now the money will come from the tarp bailout fund the president-elect also called it a necessary step the auto companies must not squander this chance to reform bad management practices the loans will come with conditions the funds must be used to become financially viable there will be limits on executive compensation and wages and work rules must be made competitive with foreign automakers in the US by the end of next year why should we have to take a pay cut when we've been doing it John an assembly line worker at GM now makes twenty nine dollars an hour a little more than what a honda worker here earns and slightly less than a toyota employee makes but when you add in benefits pensions and legacy costs GM which has more than 430,000 retirees pays its average worker sixty nine dollars an hour twenty dollars more than toyota even with this loan analysts say the automakers have to take drastic steps that means a lot less jobs instead of laying off ten fifteen thousand a month it's going to be twenty five thirty thousand a month we got a huge amount of work to do over the next 90 days and beyond and when it's over Detroit may never be the same really 2008 was the death of the auto industry as we know it somewhere down the road in the future there is a there's a viable and vibrant auto industry it's just not going to be the one we've known for the past hundred years but on this dealer lot in Dallas the bridge loans seemed to restore some customer confidence it absolutely has had an effect on our showroom today we've sold five cars in five hours today the automakers are due to get another four billion dollars in February but this money will not solve Detroit's problems it's just a bridge loan to the Obama administration when they will almost certainly have to come back for more Katie and in fact Anthony the White House says the automakers have to prove they're viable by March 31st is that right or they'll have to pay back the loans now is that realistic it's not realistic and there's not a chance they're going to be able to do it I mean I think the Bush administration included this in the deal in a sense to make it more palatable to a lot of people but the reality is the Obama administration will be able to rewrite this deal if they want to and with the car market essentially collapsing Detroit is going to come back for more money for sure all right Anthony Mason Thank You Anthony
Time To Refinance?
CBS
Transcript
I think for now we should lock in. Mortgage brokers are enjoying some unexpected holiday cheer. Our phone volume has probably gone up by 300%. And I get a great rate when it's all said and done. An inquiry every 10 minutes from clients regarding refinancing. With mortgage rates falling to historic lows, dropping almost a point and a half since Thanksgiving, the phones are busy. What are you at right now? You're at six and a quarter. You can get it down to five and a half. Most calls are from homeowners like Lisa Snyder looking to refinance their mortgage to get a new loan at a lower interest rate. On a $200,000 mortgage, a one percentage point drop equals $125 a month in savings. That's $1,500 a year. Lisa is going from a six and three-eighths rate to a 5% 30-year fixed. This is how much you're going to be saving at the end. Wow. $137,000. But not everyone will benefit by the new loan. At lower rates, brokers tell us only about half of all callers will qualify to refinance under banks' new stringent standards. Come on, we're going out. Paul Hurley has had an adjustable rate mortgage that he got three years ago without having to document his income. Right now, his mortgage rate is only 4%, but it could go as high as 19%. I can't control my destiny. But the banks will not refinance Paul's mortgage now because he's self-employed and his sporadic income doesn't meet the bank's tough new criteria. I definitely feel trapped. To refinance at these rates, banks want proof of regular income, a credit score of 700 or higher. And if the mortgage is more than the house is worth, no deal. The banks are really right now gun-shy in lending to people who don't fit a certain criteria. So these people are actually left out in the cold. So while mortgages are now more affordable, banks are making them less available. And the savings on that. Still, some will have more cash in their hands every month, giving a boost to the struggling economy. Priya David, CBS News, New York.