New Tact to Thaw Frozen Credit Markets; Obama & the Economy; Black Friday Shopping: Will Consumers Come Out?
TONY HARRIS, CNN ANCHOR: It is Tuesday, November 25th. And here are the top stories we're following for you this hour in the CNN NEWSROOM. The federal government tries a new tact to thaw the frozen credit markets. The bottom line, another $800 billion to jump-start lending. President Bush live this hour from Fort Campbell, Kentucky. Live pictures here. A pre-Thanksgiving lunch with the 101st Airborne. And this...</s>UNIDENTIFIED FEMALE: If you need to cheat, just do it very discreetly.</s>HARRIS: How to cheat on a test. Students have come a long way since crib sheets. A step-by-step cheaters guide at the click of a mouse. Good morning everyone. I'm Tony Harris. And you are in the CNN NEWSROOM. If banks won't unchain lending, then the government says it will to the tune of $800 billion. Washington took steps today to make it easier for you to get a car loan, credit card, even a mortgage. The Fed will buy mortgages and bundled mortgage securities, not toxic mortgages, but good ones. Cost? Up to $600 billion. That move is designed to reduce the cost of mortgages and make them more available. What a number there. And the Treasury Department announced a separate program that in effect sets up a government bank. You, the consumer, won't get the loan directly. Rather, it will go to investors who buy securities backed by car loans, student loans and credit cards. That plan is expected to cost as much as $200 billion.</s>HENRY PAULSON, TREASURY SECRETARY: It's going to take a while this get this program up and going. And then it could be expanded and increased overtime. It could be expanded to include new commercial mortgage-backed securities that are highly rated, or new highly rated residential mortgage-backed securities. It can be expanded to just be bigger within the asset classes we've laid out. But the first thing is to get it up and going. And to get to your question in terms of timing, I wish, and I know you all wish, that there was just sort of one action we could take and all of this would end and the economy would turn around and the financial system would be in the kind of shape we'd like it to be. But that's not the world we live in today.</s>HARRIS: All right. Let's drill down on this. Personal finance Editor Gerri Willis is in New York. And Gerri, we're talking about $200 billion for consumer credit, $600 billion for mortgages. Let's start this way. Where is all the money coming from, Gerri?</s>GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, that's a great question, Tony. That's a whole lot of zeros, right? We talk so much about how so far, the current administration hasn't been helping individuals. Well, this is to answer, in part, that question. The $200 billion that you first mentioned goes to auto loans, credit cards, really consumers' day-to-day debt, that is a loan from the New York Federal Reserve bank of New York to folks who hold this kind of debt on their books. So this, again, is really going to banks and other financial institutions, but it's really to free up those market so that those folks begin to lend again. Now, the $600 billion, this is money we're going to borrow. This isn't money from TARP. This isn't money that, you know, the Treasury is getting from some -- this is money that we're actually going to borrow. And this, again, will be to buy up not toxic mortgages, but other mortgages that are healthier to get the mortgage market going again, because it has come crashing to a halt as well. So the goal here is to really get money flowing to consumers again. And to do that, they're really going to have to go after those intermediaries, those banks, give them cash, lend them money, so that they can start lending to consumers.</s>HARRIS: OK. So, Gerri, this is really, what, $800 billion dropped on the market? Tell me how this helps me in theory if I'm looking for a new mortgage, if I'm looking for a car loan. For example, I've got a 750 credit score. Can I get a loan today that I couldn't get yesterday?</s>WILLIS: Well, today is just raw (ph). OK? I mean, you just heard the treasury secretary say it's not going to start tomorrow.</s>HARRIS: Sure.</s>WILLIS: It's not going to start until February.</s>HARRIS: But you understand the question in theory?</s>WILLIS: Yes, I understand the question in theory. I want people to understand that this is not a tomorrow kind of thing.</s>HARRIS: Sure.</s>WILLIS: This is going to take some time. This is going to take not weeks, but months to get put into place so that money really starts flowing freely. But yes, ultimately, with a 750 credit score you should be able to get whatever kind of mortgage you want if you have enough money to put down. So it should move in the right direction. It's just going to take some time.</s>HARRIS: OK, Gerri. Appreciate it. Thank you. Gerri Willis, our personal finance editor. As Gerri just mentioned, home prices took a record plunge in the third quarter. The Case-Shiller Index fell more than 16 percent compared with the same period just a year ago. The 20-city index is off almost 22 percent from its high reached in July of 2006. Put another way, home prices are on average back to where they were in early 2004. And another strong sign the economy is indeed, as many fear, in recession. The gross domestic product, the broadest measure of economic activity, shrank a half a percent in the third quarter. That is the steepest decline in seven years. He is calling for big spending to jolt the economy, but today President-elect Barack Obama focuses on budget tightening. We will bring you his news conference live next hour. Ed Henry joins us now. He's in Chicago with a preview. OK. Ed, another news conference from the president-elect in just about an hour. What are we likely to hear?</s>ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, good morning, Tony. What's fascinating about this whole debate as the crisis deepens is the fact that the markets already seem to be treating the president-elect as if he's the president. We've seen the Dow essentially climbing ever since Friday, when the president-elect was indicating that he'd be picking Tim Geithner as Treasury secretary, Lawrence Summers, National Economic Council chairman. And Barack Obama, for some time, has been saying there's only one president at a time, but clearly there's a leadership vacuum right now with President Bush as a lame duck, and this week, for the first time we've really seen the president-elect sort of try and fill that vacuum a bit. Yesterday, officially rolling out his money team. Today we're going to see him bring in his budget chief, Peter Orszag. And he's going to be talking about belt-tightening, as you say, sacrificing the federal budget. But it's important to note that even as he talks about sacrificed budget cuts, so far we've learned almost no detail about exactly how the president-elect plans to back up his promise over the weekend that he'll either save or create 2.5 million new jobs. Largely, that should be coming from a stimulus plan, but he has not laid out how much it's actually going to cost. Various Democrats are saying it could be up to $700 billion. But again, we've heard no details from the president-elect, and also no details about how he plans to pay for that. Let's not forget, that $700 billion, if it reaches that high, will be on top of the $700 billion bailout he voted for as a senator this fall that's already on the books. You saw the Citigroup bailout added on yesterday. There's a lot of federal money debt, frankly, that's just piling up because of all these bailouts, because of -- this would, of course, be the second stimulus package. There already was one just in the last year -- Tony.</s>HARRIS: Hey, Ed, another question here. The briefing from the treasury secretary last hour, we know the incoming treasury secretary, provided he's confirmed, was right there at the table framing this new package from the New York Federal Reserve. To the extent this latest plan announced last hour is viewed as another bailout for the financial sector and the investor class -- hang on, I'm almost there -- doesn't the criticism that the Treasury has done too little for people facing foreclosure now stick to Tim Geithner?</s>HENRY: It could. I mean, obviously you heard the president- elect yesterday when he unveiled Tim Geithner officially, trying to play it as look, he's been in the room with Secretary Paulson, he knows the problems. He's been dealing with the crisis already, so he's very experienced. The flip side of that, of course, as you mentioned, is Tim Geithner may end up owning some of this crisis since he's been in the room.</s>HARRIS: Yes.</s>HENRY: And if you look at "The New York Times" editorial today, it's pretty blistering in charging that Tim Geithner has been in the middle of a sort of a herky-jerky response to this financial crisis, specifically letting Lehman Brothers fail, for example, and not bail them out, saying there had been enough bailouts, and then a few days later Tim Geithner, Henry Paulson and the others involved said, OK, we need to bail out AIG now. And so "The New York Times" essentially calls it in their editorial page, you know, a herky-jerky response to all of this.</s>HARRIS: Yes.</s>HENRY: So that's going to be interesting. You heard how the president-elect believes it shows he's experienced. On the other hand, he may end up owning some of this crisis -- Tony.</s>HARRIS: Probably a good question for some intrepid reporter next hour.</s>HENRY: Hey, that's a pretty interesting idea.</s>HARRIS: Thank you, Ed. See you next hour.</s>HENRY: Thank you.</s>HARRIS: Take care. And we will be bringing you that news conference live in the next hour of CNN NEWSROOM. All right. You're looking at live pictures now of Fort Campbell, Kentucky. President Bush on post. He is scheduled to speak in just a few minutes to the members of the 101st Airborne Division. We will bring you his remarks live right here in the CNN NEWSROOM.