[Tony Harris, Cnn Anchor:] It is Wednesday, December 10th. And here are the top stories we're following for you this hour in the CNN NEWSROOM.Busted and out on bail. Illinois Governor Rod Blagojevich accused of a stunning corruption scheme, which brings us to our e-mail question. Do you trust your local leaders? Deal or no deal? Congress could vote today on bailout loans for the automakers. And weather watch. A huge system moving from the Deep South to the Northeast. Heavy rains, severe storms and snow. Good morning, everyone. I'm Tony Harris. And you are in the CNN NEWSROOM. He may be down, but he is not out. Illinois's embattled governor, Rod Blagojevich, back at work just last hour, just one day after his arrest on corruption charges. The governor denies any wrongdoing, but the evidence seems damning. Prosecutors say they have him on tape clearly talking about how he can benefit from filling Barack Obama's vacant Senate seat.
[Patrick Fitzgerald, U.s. Attorney:] The most cynical behavior in all this, the most appalling, is the fact that Governor Blagojevich tried to sell the appointment to the Senate seat vacated by President-elect Obama. The conduct would make Lincoln roll over in his grave. The governor's own words describing the Senate seat, "It's a
[Sheldon Sorosky, Gov. Blagojevich's Lawyer:] Truly upbeat and very sad and disappointed that this occurred. He feels he didn't do anything wrong.
[Rep. Danny Davis , Illinois:] I was devastated. As a matter of fact, I thought immediately that, you know, this is a terrible day for the citizens of Illinois. But more importantly, it's a terrible day for the institution of government. And it undergirds and erodes confidence that people have in the government, and it's so unfortunate.
[Harris:] Well, the long list of charges against Blagojevich includes conspiracy to commit mail and wire fraud, as well as solicitation of bribery. A 76-page FBI affidavit says the Democratic governor was caught on court, authorized wiretaps over the last month. Blagojevich is still governor, however, so he still has the power to fill Barack Obama's now vacant Senate seat. Live now to our Susan Roesgen. She's in Chicago. And Susan, I'm just sort of curious, what are the local papers saying about all of this? And might the governor still appoint someone to fill Obama's Senate seat?
[Susan Roesgen, Cnn Correspondent:] Well, the local papers are saying, shame on you and resign. And as far as that Senate seat goes, Tony, there's been a lot of talk about that, because as you pointed out, he is still our acting governor here in the state of Illinois. And yet, the state attorney general says that he should not have the right at this point now to appoint someone to fill Barack Obama's Senate seat. So there's a lot of controversy here on whether they should do that or not. Now, we are here in his neighborhood. You know, Tony, he was arrested in his pale blue jogging suit yesterday. The neighbors here are used to seeing him jogging. I talked to one neighbor who said she remembered seeing him at Halloween this year taking one of his daughters around trick or treating. Most of the neighbors we talked to here this morning, Tony, said it's a nice family, they're nice people, but what's happened here is awful.
[Mary Malone, Neighbor:] I walk my dog by his house several times a day. They're great neighbors, but I think what's happened is deplorable. And the citizens of Illinois deserve better. They deserve better in every governor, and I don't know why we can't seem to have honest government in Illinois.
[Sherry Rosenblum, Neighbor:] It's depressing to see all the cameras here for this reason. It should be for a good thing instead of a bad thing. It should be because we just elected a president from here. And now to have this happen with the governor and, you know, we were enjoying something good about our city. We want our city to have a very positive image, and to have something like this happen makes it more more negative. And you don't want people to view us as that.
[Roesgen:] And, in fact, this is the governor's house here right behind me. One of the newspapers, Tony, had a shot of a tourist taking a picture of the governor's house. And certainly that plays to the fact that Obama has had so much positive publicity.
[Harris:] That's right.
[Roesgen:] I did a story on people taking tours of his neighborhood, taking pictures. And now we have I guess you go from famous to infamous. We do have a short statement from the governor's office, just a couple sentences. "The allegations do nothing to impact the services, duties or function of the state of Illinois. Our state will continue to ensure health, safety and economic stability for the citizens of Illinois." Now, what we don't know this morning is whether or not when the governor went to his office in downtown Chicago the staff said, "Happy birthday, Governor," because it is, you know, his 52nd birthday today Tony.
[Harris:] Boy. OK. Susan Roesgen some kind of a birthday present the last couple of days here in Chicago for us. Susan, good to see you. Thank you. There are no allegations against President-elect Obama in the Blagojevich scandal, but the governor's troubles are an unwelcome distraction, as you can imagine. Elaine Quijano is covering the Obama transition in Chicago. And Elaine, good to see you. What is the president-elect saying about all this?
[Elaine Quijano, Cnn White House Correspondent:] Well, good morning to you, Tony. Well, President-elect Barack Obama made it a point to talk about this yesterday after a meeting that he had with former Vice President Al Gore to talk about climate change issues. During that session, at the end of it, he was asked a question about whether or not he had any contact with or was aware at all of what was happening with his Senate seat. And here is how the president-elect responded.
[Sen. Barack Obama , President-elect:] I had no contact with the governor or his office, and so we were not I was not aware of what was happening. And as I said, it's a sad day for Illinois. Beyond that, I don't think it's appropriate to comment.
[Quijano:] Now, what he said there seems to contradict something that his senior adviser, David Axelrod, told a local TV reporter here in Chicago a couple of weeks ago, that Obama had had a conversation with Governor Blagojevich about his Senate seat. Well, late yesterday David Axelrod issued a statement correcting what he said a couple of weeks ago, saying, "I was mistaken when I told an interviewer last month that the president-elect had spoken directly to Governor Blagojevich about the Senate vacancy. They did not then or at any time discuss the subject." Now, I should make clear once again that U.S. attorney Patrick Fitzgerald said there are no allegations about the president-elect contained in the federal complaint filed yesterday. However, it is not clear yet, still very much an open question, Tony, who exactly on the Obama team may have had a conversation with either the governor or someone in the governor's office. Tony, we still don't know the answer to that question at this point Tony.
[Harris:] Yes. And Elaine, that just drives home the next point here. How much of a distraction really is this story, has this story been for Barack Obama? We're just 41 days until the inauguration and he's knee deep in transition.
[Quijano:] Right. Well, clearly, this is a huge headache for the Obama transition team. Yesterday, of course, the message of the day was to have been this high-profile visit by the former vice president, Al Gore, to talk about green jobs as a way to help boost the U.S. economy. Of course, this is all happening against the backdrop of the ongoing economic crisis in this country. So the message yesterday was really supposed to be about the economic recovery plan and the green jobs, and sort of pushing that idea forward. Instead, of course, transition officials having to deal, and even the president-elect himself feeling compelled to answer a question as the story developed yesterday of Governor Blagojevich's arrest. Certainly not what the transition team or the president-elect had hoped or planned to deal with just 41 days out from inauguration Tony.
[Harris:] Yes. Exactly. OK. Elaine Quijano in Chicago for us. Elaine, good to see you. Thank you. What does the Illinois governor scandal say about politics in America? We are certainly looking for you views on this. Josh Levs is tracking that for us. Josh, good to see you. Good morning.
[Josh Levs, Cnn Correspondent:] Yes, good to see you too. You know, this gets right at what we were just talking about in our morning meeting...
[Harris:] Yes, that's right.
[Levs:] ... actually today, the relationship between Americans and the people who represent us. The people that we pay and elect to represent us is so frayed. What does this kind of thing say? Do you trust your elected leaders? Let us know. Think about the people that you are electing them, whether you voted for them or not. Do you trust them? E-mail us, cnnnewsroom@cnn.com. Also, you can send us an iReport, ireport.com. We ask you to please include your name and the city where you live. I actually called downstairs to the fine folks at iReport, and they set this up as the top assignment right now. Do you trust your leaders? And when I get off the air here, I'm literally going to walk to the computer, start taking a look at your e-mails, your iReports. And Tony, I'll be back later this hour to show you what people are saying.
[Harris:] Can't wait. All right, Josh. Appreciate it. Thank you.
[Levs:] Thanks.
[Harris:] And we're just getting some a new report from The Associated Press that the White House and congressional Democrats have come to a deal on the big three bridge loan. We'll get to Brianna Keilar in just a moment on this, but here are the major provisions of that agreement now. Cash-strapped automakers GM and Chrysler would get $15 billion in emergency loans. The president would then appoint a so-called car czar to be in charge of the process. That person would set the terms for the bailout loans and oversee the restructuring of the auto companies. CNN's Brianna Keilar is on the story. She's on Capitol Hill for us. And Brianna, it looks like, at least according to The Associated Press, there is some kind of a deal and agreement in place between the White House and congressional Democrats.
[Brianna Keilar, Cnn Correspondent:] Well, I think you could say, Tony, that things are certainly moving along. But you know how Capitol Hill is. Basically, there are a whole lot of cooks in the kitchen. So if you're talking about the House side of things, they definitely appear to be moving along there. House Majority Leader Steny Hoyer saying that Democrats in the White House came to an agreement scrapping a provision that was really a deal-breaker for Republicans in the White House, and that was prohibiting automakers from suing states that set their own emission standards. This is something that the Democrats gave up in these negotiations. According to Hoyer, this bill will be filed in the House, here in the next half-hour. So movement in the house. We're hearing there could be a possible vote today there, but we're not sure. It's very unclear at this point exactly what time that would be. But the Senate is very much a different story. Listen to Senate Minority Leader Mitch McConnell.
[Sen. Mitch Mcconnell , Minority Leader:] As of this morning, we still haven't seen a final version of the bill. Once we do, we'll review it and see if it meets our standard for support which will be the taxpayers' standard for support. But as I understand indicated, and the majority leaders already picked up on that, there cannot be a vote on the legislation today because we don't know what it looks like.
[Keilar:] And Senate Majority Leader Harry Reid opening the door really to talking about or discussions in the Senate on Thursday, on Friday. He's even left open the possibility of a weekend, of the Senate being here for the weekend, Tony, to discuss this. So you can see some movement in the House, but this is not a done deal. A lot of Republican senators who are still very much in opposition to this plan.
[Harris:] OK. And Brianna, if I could, it seems CNN has confirmed that there is at least an understanding, an arrangement, an agreement between the White House and congressional Democrats. But to your point, there is still a lot of opposition to this arrangement among GOP Senate Republicans. Brianna Keilar on Capitol Hill for us. Brianna, thank you very much. And we want to get you to the White House now, where Joel Kaplan is talking about where we are in this process right now. Let's listen.
[Joel Kaplan, Dep. White House Chief Of Staff:] ... to individual senators to try to win their support. We've also got the chief of staff, Josh Bolten, going up to address the Senate Republican conference in a couple hours. So, you know, we understand that this is a very difficult issue for everybody involved. We think we've come up with the right solution and we're going to try to persuade members of Congress from both sides that that's the case.
[Question:] How about President Bush? Is he going to get personally involved?
[Kaplan:] I expect you'll see the president talk to various members as he thinks it's necessary or the staff advises him. This is an important measure and we're going to try to get it passed. Yes, sir?
[Question:] What are the executive compensation restrictions?
[Kaplan:] There's a whole bunch of them and they're very significant. They track what you've seen in the TARP legislation and its implementation. There's a lot of them. And they apply to the top executives in the firm to make sure that they're not receiving bonuses that are not commensurate with the performance of the firm, especially while they're getting these loans. There's we can get them for you afterwards, what was in the TARP legislation, but I think everybody over the last few months has understood how important it is that there be very serious executive compensation provisions when the taxpayers' money is involved and the American people are being asked to support firms that up until now have not made meaningful, necessary, tough decisions.
[Harris:] And there you have it, the White House essentially saying we think we have come up with the right solution on the auto crisis. And I suppose the news there from Joel Kaplan is that the president will work for passage of this legislation. We will continue to follow this story throughout the day for you in the NEWSROOM. Your money, your life, your tough economic times. We're watching all the developments very closely.
[Unidentified Female:] I don't know what we're going to do, how I'm going to be able to take care of my kids.
[Harris:] This mother's despair as her financial debt gets bigger and bigger.