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American Morning
Dow Set For Big Fall; Dow Jones Deal; Mortgage Meltdown; Fast Track Slowed Down; Planet In Peril
Aired August 01, 2007 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN ROBERTS, CNN ANCHOR: Extra, extra! Rupert Murdoch gets his $5 billion baby. Overnight, News Corporation seals the deal for "The Wall Street Journal."
And sinking stocks pull more money out of your portfolio and a sinking mortgage company threatens huge new headaches.
A CNN exclusive.
(BEGIN VIDEO CLIP)
DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: My estimate at the time, and it was wrong, it turned out to be incorrect.
(END VIDEO CLIP)
ROBERTS: Vice President Cheney opens up on war, politics and what's next.
(BEGIN VIDEO CLIP)
LARRY KING, "LARRY KING LIVE": Would you ever run for office?
(END VIDEO CLIP)
ROBERTS: Questions and answers on this AMERICAN MORNING.
And good morning. Thanks for joining us as we kick off a brand new month. It is August the 1st. And people are wondering which way things are going to go this morning in the business world. I'm John Roberts.
KIRAN CHETRY, CNN ANCHOR: And I'm Kiran Chetry. Great to see you.
It certainly is a big day for big business. A lot of stories in the business world that we're following for you today.
First of all, the markets. We're watching the overseas numbers come it after a wild ride for the Dow yesterday. Our Ali Velshi is here. He has that. And also the big announcement that it is a done deal for "The Wall Street Journal."
Also, Gerri Willis joins us, taking a closer look at the collapse of a mortgage company that kicked off the Dow's troubles yesterday. So with all that bad news, it's hard to imagine there's actually some good news out there. But there is. Out of Detroit this morning, some profits. We'll have more on that as well.
First to Ali and the sell-off underway right now in the world stock market.
So what's going on this morning?
ALI VELSHI, CNN CORRESPONDENT: Well, we've got Hong Kong down more than 3 percent today. Tokyo is down more than 2 percent. And those markets are closed.
European markets are still trading right now. And across the board they're more than 2 percent lower.
This was kicked off yesterday by the Dow Jones, which looked fine in the morning. In fact, the Dow was up more than 138 points at one stage. And then all of a sudden around 1:00, things changed.
Why? American home mortgage. Gerri's going to tell you a little bit more about this. But take a look at what that stock did yesterday. The stock started the day at about $10. All of a sudden at the opening plunging to $5. And then by the end of the day halted in trade at about $1.
This is a mortgage company that says its lenders have refused to lend it money and have called back its loans. The fear on Wall Street is that if banks start pulling back on mortgage companies, well, there could be a lot more trouble.
Then later in the day, Bear Stearns, the big investment bank, is reportedly not redeeming investors money in a risky hedge fund, a risky fund that it has. That funds only worth about $1 billion, but it's the third fund that's in trouble. Bear Stearns has already closed two other funds. So there's this credit concern rippling around the world.
Then add to that oil prices. We have a barrel of crude oil closing or settling at an all-time high of $78.21. And that's my trusty oil barrel, which I don't have to bring out. I only do that every now and then when there's a new record. It is just 39 cents lower than the highest price that oil has ever traded.
So that's all the bad news. And then, well, for some folks it's good news that the owner of this newspaper is going to be the owner of "The Wall Street Journal." Rupert Murdoch at Fox News Corporation's parent -- Fox's parent News Corporation announcing with Dow Jones Corporation that they've arranged a deal. A $5 million takeover of the Dow Jones company. Obviously lots of concerns about that. And we will talk more about that through the course of the morning.
CHETRY: You, and it was either way. And people were taking bets.
VELSHI: Until yesterday it really was either way it could have gone.
CHETRY: And Rupert Murdoch certainly prevailed in this one.
VELSHI: He won.
CHETRY: Thank you, Ali. We'll be checking in with you throughout the morning.
In the meantime we have more business news with John and Gerri.
ROBERTS: Yes, as we mentioned, a big reason for the dropping Dow was the complete collapse of American Home Mortgage. The stock lost near its entire value. Just the latest in this sub prime mess that we keep talking so much about. Gerri Willis is here with this part of the story.
This problem has really grown beyond the sub prime market, hasn't it?
GERRI WILLIS, CNN CORRESPONDENT: You bet. You bet. You know, you just saw the stock chart. American Home Mortgage Investment announced yesterday that it can no longer fund home loans and they have to liquidate assets, putting one of the nation's biggest mortgage lenders at the brink of bankruptcy.
Now that comes after the company's financial backers essentially pulled the plug, leaving it without cash to fund the $300 million in home loans it's already agreed to make. Shares of AHM plunged 90 percent, or more than $9 on the news to $1.04 a share. Well that dragged down the rest of the market as well. The Dow tumbled about 150 points. Very big move.
ROBERTS: Gerri, why is it that the market reacted so violently to this news?
WILLIS: Well, you know, we've known a lot about mortgage problems, right? And it revived jitters on Wall Street about the quality of credit and the overall health of U.S. lenders. We've seen a lot of problems among sub prime lenders. Those who specifically cater to people with weaker credit.
But the news about American Home Investment is a sign that the problem is spreading beyond that sector, affecting the rest of the lending industry as well. And just last week the nation's largest mortgage lender Countrywide said its bad loans were no longer contained to just sub prime. So this is making lenders and creditors nervous and the market as well. We don't know where it's going next.
ROBERTS: So what does this all mean for consumers?
WILLIS: Well, it's going to be a whole lot harder to get money out there. We've been talking about this a lot lately. If you want to get a mortgage loan, you are going to have to put more money down, you're going to have to pay a higher interest rate. It's much tougher for everybody to get money.
John.
ROBERTS: Gerri Willis, thanks for coming in with that. Appreciate it. And got to take a look at what the markets are going to do today, but early indications are not good.
WILLIS: Yes, no, it's not.
ROBERTS: Yes. But, thanks.
Kiran.
CHETRY: So that may not be good news, but there is a bit of good news now. The Detroit's big three automakers seem to be bouncing back. GM joins Ford in posting second quarter profits. Together they made $1.65 billion. But most of that comes after some serious cutbacks, as well as restructuring and layoffs. Still, though, Wall Street cheered Detroit on. GM opens up 2 percent today. A little over $33 a share.
Other headlines this morning.
Secretary of State Condoleezza Rice and Defense Chief Robert Gates are expected to arrive in Israel within the hour for the latest stop in their diplomatic sweep. They're joining forces to shore up support in the region to help Iraq. The trip kicked off with meetings in Egypt and Saudi Arabia, where the secretaries say they want some assurances that there will be less interference with internal Iraqi politics.
Well, it is Wednesday morning and there is no word at this hour on the fate of 21 South Korean Christians held hostage by the Taliban in Afghanistan. This latest ultimatum set by Taliban insurgents has expired now. And still, again, no word. The families of the 21 who are being held are now begging the U.S. for help. In fact, they gathered with other protesters outside of the U.S. embassy in Seoul. The Taliban already killed two Korean hostages and is threatening to shoot more later today.
John.
ROBERTS: Senator Barack Obama is expected to shine a spotlight on the war in Afghanistan during a speech later today. The Democratic presidential candidate will propose sending two more U.S. military brigades to fight the Taliban in Afghanistan. He's also expected to recommend sending U.S. troops into Pakistan if there is good intelligence that terrorists are operating in that country.
We're hearing from the Rudy Giuliani campaign this morning steaming mad over a new article in "Vanity Fair" magazine that slams Giuliani's wife Judith Nathan. It characterizes her as an opportunist who hopes to some day be some sort of queen. Giuliani's people called the article a vicious smear job. We're going to be talking with the author of the article, Judy Bachrach and a close friend of the Giuliani's coming up in our 8:00 hour this morning.
A California truck driver lucky to be alive this morning. His FedEx delivery truck was crushed under beams from a collapsed highway overpass near Sacramento. Forty-five-year-old Robert Sylvester was trapped for two and a half hours before rescuers were finally able to cut him out.
(BEGIN VIDEO CLIP)
: The beam came across his lower extremities, pinned him inside there. It took us a little while to get him out of there, because we had to stabilize all the beams around us and make sure the rest of the bridge wouldn't collapse on us as well.
(END VIDEO CLIP)
ROBERTS: Remarkably, Sylvester came out of it with just a sprained ankle and some minor cuts. We're going to be talking with Robert Sylvester and the man who supervised the rescue effort coming up in our next hour.
Kiran.
CHETRY: It certainly is an amazing survival story. Thanks, John.
We have some breaking news now. We've just gotten word that Tropical Storm Erick has formed in the open Pacific. Rob Marciano is tracking our extreme weather. And we also have Chantal in the Atlantic Ocean.
Hi, Rob.
(WEATHER REPORT)
ROBERTS: To our terror watch now and how the government is trying to prevent another attack. A plan to help some airline passengers circumvent long security lines is now being questioned by the Transportation Security Administration. Jeanne Meserve joins us live in Washington.
Jeanne, what are some of the TSA's concerns about this?
JEANNE MESERVE, CNN CORRESPONDENT: Well, John, this program is called Registered Traveler. And here's the concept. Frequent travelers pay a fee and go through an extensive background check. Then when they get to the airport, they get a streamlined security check and avoid long lines.
The program has been underway at 12 airports and the private companies who run them want to expand to others. But at a congressional hearing yesterday, Kip Hawley, the head of the Transportation Security Administration, said the program isn't ready for prime time. He said it isn't effective in stopping so-called clean-skin terrorists. That is people who don't have criminal or terror related backgrounds but who want to hurt air travel.
John.
ROBERTS: What's the industry saying about all of this, Jeanne?
MESERVE: Well, Steven Brill, the founder of the nation's largest Registered Traveler program, charged the TSA with trying to stunt the program, of stiff arming it at every step. Brill disputed Hawley's charge that participants aren't getting the required in-depth background checks. And he says the Registered Traveler I.D. card is more sophisticated and secure than the one the Department of Homeland Security issues to its own employees.
ROBERTS: All right. Jeanne Meserve for us from Washington this morning.
Jeanne, thanks.
MESERVE: You bet.
CHETRY: Well, turning now to Senator Ted Stevens' corruption case. The Justice Department questioning the Alaska senator's bookkeeper. According to an attorney in the case, Barbara Flanders has provided some documents regarding the senator's bills.
FBI agents raided Stevens home in Gridwood, Alaska, Monday. They're looking at whether an Alaska oil company called Veco helped foot the bill for a renovation project back in 2000 that more than doubled the size of Stevens' home. The CEO is a friend of Senator Stevens and the company has won millions of dollars in federal contracts. The CEO recently pleaded guilty to bribing Alaska state legislators.
Stevens is the longest serving Republican in Senate history and he has denied any wrongdoing. And he said that he paid for all of the improvements by himself.
Chief Justice John Roberts is waking up in his own bed this morning. He smiled and waved yesterday when he was released from the hospital. He was taken by pontoon boat back to his summer home off the coast of Maine. Doctors have said that his seizure Monday is no cause for concern.
ROBERTS: Deadly flash floods in Arizona top your "Quick Hits" now. A 60-year-old man is dead after driving on to a washed out road in Tucson. High water overran several big roads yesterday. Firefighters rescued at least nine stranded drivers.
An oxygen leak in the cabin of the space shuttle Endeavor could postpone its upcoming launch. The leak was detected over the weekend. NASA thought that it had it fixed, but yesterday it appeared again. Endeavor is supposed to launch next Tuesday.
Vice President Dick Cheney admits making a mistake.
(BEGIN VIDEO CLIP)
DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: I think my estimate at the time -- and it was wrong, it turned out to be incorrect. (END VIDEO CLIP)
ROBERTS: Incorrect. We'll tell you what he was wrong about, coming up next on AMERICAN MORNING.
(COMMERCIAL BREAK)
CHETRY: Well, a mine rescue in China tops your "Quick Hits" now. Rescuers say all 69 trapped coal miners are safe today. State television says the miners came out blindfolded to protect their eyes against the light. The workers had been trapped in a flooded shaft for more than three days. Rescuers piped in oxygen to buy time to save them.
Well, they're using a new warning system now in Australia. Loudspeakers, like that one, 40 of them have been installed in Sydney to let people know what to do in the event of a terrorist attack or local emergency. Police say the system should be up and running in time for next month's Asia Pacific Economic Cooperation Summit.
ROBERTS: Fourteen minutes after the hour. A big interview for Larry King last night, making news this morning, with Vice President Dick Cheney.
CHETRY: That's right. He says he is still hopeful, the vice president says this, that things in Iraq will improve. But last night he spoke with Larry King and admitted that he had underestimated the insurgency in Iraq. Let's listen.
(BEGIN VIDEO CLIP)
LARRY KING, "LARRY KING LIVE": On this program, May of 2005, you said the Iraqi insurgency was in the last throes.
DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: Right.
KING: Why were you wrong?
CHENEY: I think my estimate at the time -- and it was wrong. It turned out to be incorrect -- was the fact that we were in the midst of holding three elections in Iraq. Electing an interim government, then ratifying a constitution and then electing a permanent government. That they had had significant success. We'd rounded up Saddam Hussein. I thought they were a series of these milestones that would, in fact, undermine the insurgency and make it less than it was at that point. That clearly didn't happen. I think the insurgency turned out to be more robust.
(END VIDEO CLIP)
ROBERTS: Wow, that's a rare admission.
CHETRY: Yes, it is. And he also said that he expects September's report from General Petraeus to show some positive results. Let's listen to that.
(BEGIN VIDEO CLIP)
CHENEY: Well, I think it's going to show that we will have made significant progress. The reports I'm hearing from people whose views I respect indicate that indeed the Petraeus plan is, in fact, producing results. Now, admittedly, I've been on one side of this argument from the very beginning. I've urged people to have an open mind, to listen to General Petraeus when he comes back, but also to look at what others have to say.
(END VIDEO CLIP)
ROBERTS: You know, and of course that op-ed piece earlier this week in "The New York Times" by Michael O'Hanlon from The Brookings Institution is helping to fuel this controversy over whether or not things are going better in Iraq. People on the left, opponents still saying no, no, it's not going well. Ken Pollack was the other guy who authored that. And people on the right, of course, supporting the war saying, more proof that things are going well.
The vice president also reignited a dispute between the administration and Senator Hillary Clinton, telling Larry King that he backed a Pentagon bureaucrat who has accused Clinton of helping the enemy in Iraq.
(BEGIN VIDEO CLIP)
KING: A member of the Department of Defense sent Hillary Clinton a letter saying she should not criticize because it helps the enemy. Do you agree with that letter?
CHENEY: It didn't say she should not criticize. She was demanding plans for withdrawal from Iraq.
KING: Do you agree with that letter?
CHENEY: And I agreed with the letter Eric Gatalen (ph) wrote. I thought it was a good letter.
KING: So you should not call for the plans for withdrawal?
CHENEY: No. There's an important principle here, Larry, and that is debate over what our policy ought to be perfectly legitimate. What we don't do is we don't get into the business of sharing operational plans -- we never have -- with the Congress.
(END VIDEO CLIP)
ROBERTS: So the vice president backs his deputy secretary of defense. The Clinton camp firing back this morning saying "it seems the right hand doesn't know what the far-right hand is doing. Senator Clinton calls on President Bush to set the record straight." I was chatting with their spokesperson last night. They're expecting a response.
CHETRY: Yes, they went on to say also that she asked a simple question and was personally attacked and her patriotism was called into question. So that is a fiery story we're going to continue to cover today as well.
Also, it is a big day on Capitol Hill because former Defense Secretary Donald Rumsfeld will be there. He is expected to testify about the death of Pat Tillman. The House Oversight Committee wants to know when Rumsfeld and Pentagon brass knew Tillman was killed by U.S. troops and not enemy insurgents. Just yesterday the military censured Retired General Phillip Kisinger, accusing him of covering up the fact that Tillman died from friendly fire.
ROBERTS: And the man nominated to head the Joint Chiefs of Staff says more troops and more time will not solve the problems in Iraq. Navy Admiral Michael Mullen faced confirmation hearings yesterday on The Hill. He said some progress was being made on security, but added it was meaningless without political progress.
(BEGIN VIDEO CLIP)
ADM. MICHAEL MULLEN, CHIEF OF NAVAL OPERATIONS: Security is critical to providing the government of Iraq the breathing space it needs to work toward political national reconciliation and economic growth, which are themselves critical to a stable Iraq. Barring that, no amount of troops, in no amount of time will make much of a difference.
(END VIDEO CLIP)
ROBERTS: If confirmed, Mullen would replace General Peter Pace, the outgoing chairman of the Joint Chiefs of Staff.
Another sponsor drops Michael Vick. Your "Quick Hits" now. Rawlings is the latest company to cut ties with the quarterback. It joins Nike, Reebok, and the trading card company Upper Deck. All have either dropped deals with Vick or stopped selling products with his name on them.
And it won't be another "Harry Potter" book, but J.K. Rowling has confirmed that she is working on two new novels. One is for children. The other is for adults. No word yet on when they'll be released or which one will be out first or whether both of them will get published. But definitely no Harry.
Well, trouble for Knut, the cute polar bear. His good looks being sidelined by his love of croissants and other fancy foods.
CHETRY: Are you supposed to feed a bear croissants?
ROBERTS: No! Is he a polar bear or is he becoming a walrus? Details of a bearish new diet next on AMERICAN MORNING.
(COMMERCIAL BREAK)
ROBERTS: Plenty of boos last night for Barry Bonds, but no bombs. Baseball history still on hold this morning as Bonds, Alex Rodriguez and Tom Glavine failed to reach their individual milestones.
CHETRY: That's right. Bonds remains at 754 home runs. That's one shy of Hank Aaron's all-time record. And he went zero for two in a quite unfriendly crowd last night. Two walks against the rival Dodgers. At times it was so loud every time he even came anywhere near the plate.
ROBERTS: You wonder how he could even think, let alone hit the ball.
The Yankees hit eight home runs in their win over the White Sox, but Alex Rodriguez went hitless, staying stuck on 499 homers. In fact, since he hit 499, he hasn't had a hit. Amazing.
CHETRY: Well, and also New York Mets pitcher Tom Glavine took a no decision in his attempt to win his 300th game. He left the game with the Mets ahead two to one, but the bull pen couldn't hold the lead. A-Rod and Bonds will try again for history tonight. Glavine is next scheduled to pitch Sunday against the Chicago Cubs.
ROBERTS: Good luck to them all.
CHETRY: Yes.
Well, one of the world's most beautiful and remote areas is slowly vanishing. The Carteret Islands near Papua New Guinea drowning a little bit at a time, forcing their people to head for higher ground. Dr. Sanjay Gupta is there. He has this post card from the edge. Part of our "Planet In Peril" series.
(BEGIN VIDEOTAPE)
DR. SANJAY GUPTA, CNN CORRESPONDENT: Hello from the Carteret Islands. This is one of the most remote places on earth. And it looks beautiful here. And it certainly is. But it took a lot to get here. Actually five airplane rides and one helicopter ride, and that was from starting in southern China.
It looks beautiful. But we're here as part of a "Planet In Peril" series. This island is sinking. It's disappearing. In fact, where I'm standing right now used to be part of a local village. You can see the tree behind me actually used to be on land and now it's on sea.
For sure, the island is disappearing. What's less certain is exactly why. Some say it's due to climate change, to global warming and the associated rising seas. Other people say it's less global and more of a local phenomenon. People actually taking the coral and building seawalls. People actually using dynamite for fishing. And possibly because the island is actually on a volcano and that volcano is sinking.
It is unclear exactly why, but we're going to investigate that over the next couple of days. In fact, look for us tomorrow to actually be diving down to look to the depths of the ocean to figure out what's happening here.
Back to you.
(END VIDEOTAPE)
CHETRY: Wow. It's so incredibly gorgeous. You can see all the way down to his toes in the water. It's so clear, beautiful.
Well, CNN's Anderson Cooper has been working all year on a documentary that has literally taken him around the globe. "Planet in Peril" will debut in October. You can find out more about it at cnn.com/planetinperil.
ROBERTS: Well, from cute and cuddly to rolly and polly, Knut the polar bear apparently is too fat. He's now up to about 130 pounds. And his keeper at the Berlin Zoo are putting him on a diet. That means no more croissants. They're cutting those out. Don't know exactly why they'd be feeding a polar bear croissants, but they're also cutting out other treats like extra portions of fish.
CHETRY: Maybe he just needs more exercise, you know. Next thing you know they'll install a treadmill for him to walk around on. Poor guy.
ROBERTS: I wonder when the animal rights activists are going to be back out again saying, look, you're making him fat, you're feeding him french food.
CHETRY: I would say croissants probably wouldn't be on the normal diet that a polar bear would run into, you know?
ROBERTS: Yes, I think you'd be safe saying that.
CHETRY: Yes, exactly.
Well also "On Our Radar" this morning, this is really heartwarming story. It's also sad. It's about Molly the flying dog. She was the beloved pet of one of the four pilots/reporters, chopper pilots who were killed this past week when they collided over the air in Phoenix covering a high speed chase. Let's listen.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Molly is here. We know that she's going to be taken care of and we know of a good family friend who's going to be coming and picking her up very shortly here. But she will be well taken care of. So all the viewers at home can know that.
(END VIDEO CLIP)
ROBERTS: Now she was the pet of one of the pilots, right, and used to fly every day in the helicopter, but wasn't in the helicopter that particular morning. Why?
CHETRY: Well, we're going to find out more about that. Those stories when AMERICAN MORNING comes right back.
(COMMERCIAL BREAK)
CHETRY: John, get off that congo line and come sit back down. It's going to be hot today, which is why we're playing that music. It's shaping up to be a high of 90 degrees today in New York City. There's a beautiful shot from our tower camera.
ROBERTS: I'm not in the conga line, but I am considering making a steel drum out of Ali's oil barrel. I think that might be all right.
What do you think?.
VELSHI: It resonates well.
CHETRY: That's a creative use for it. When we're not showing that oil is at a high, you can borrow it for the steel drums and then give it back to him.
ROBERTS: Flip it over is all you need to do.
CHETRY: Right.
Well, welcome back once again. It's Wednesday, August 1st. I'm Kiran Chetry.
ROBERTS: And good morning to you. I'm John Roberts. Thanks for being with us.
CHETRY: Well, the sell-off now at world stock markets. It's happening and it looks like the Dow is getting set for another big fall as well. Ali Velshi has a look at the futures.
Not looking good.
VELSHI: You and I are talking because Roberts is over there trading his stocks. He's getting ready to buy, and he should be.
CHETRY: He's dumping them all.
VELSHI: This Dow might be headed to 13,000 again. We're just a couple a hundred points above that. The Dow took another fall yesterday, 146 points lower, but it wasn't looking that way when we started the day. The Dow was actually up almost 140 points. Then around 1:00, this company that I bet you most of you have never heard of, turned it all around -- American home mortgage.
Take a look at this stock. It hasn't been doing well lately. Started the day at $10, then immediately plummeted to $5 when the company announced that its lenders -- because these mortgage lenders, they lend you money, then borrow it from other people -- its lenders are calling in its loans saying they don't believe this company can pay its subprime loans back.
Look what happened to that stock. During the course of the day it came apart and took the Dow with it. Because investors are worried about these companies that have risky loan portfolios not being able to pay back.
Bear Sterns, there's a company you've heard of. It also announced yesterday -- it didn't announce. We have reports that it said it is not redeeming some of the investments in a big billion dollar fund. They've already lost two funds because of risky investments. This is spreading around the world.
Right now, world markets, Hong Kong has closed more than 3 percent lower. Tokyo has closed more than 2 percent lower. All through Europe, markets are also lower. The Dow is looking to be about 100 points lower at the open. That's all over the place. Not helping the situation.
The situation is my famous barrel of oil over there, which I don't bring that out all that often. I only bring it out when there's a record to talk about. What? We have a record, $78.21, if you want to pick one of those up on your way home.
CHETRY: We haven't seen prices that high since the Israeli- Lebanon war.
VELSHI: That's right. And that was a war. This is just supply and demand. So this is something to watch. A lot of things working against the market today.
ROBERTS: You might as well make it into a steel drum because you won't be able to fill it anymore.
VELSHI: That's right. It's going to be too expensive to fill.
ROBERTS: Thanks, Ali. See you soon.
Also this morning, thousands of American weapons missing in Iraq. A newly released report says the Pentagon cannot account for $19 billion worth of weapons and supplies that were headed for the Iraqi military. The report recommends adding staff and technology to help keep better tabs of military equipment.
The United Nations is launching a new assault on the endless violence in Sudan's Darfur region. After years of pressure the United Nations Security Council just announced plans to triple the security force on the ground there. It will soon include 26,000 U.N. troops as well as African Union soldiers. Fighting between government-backed militias and rebel groups has killed more than 200,000 people in Darfur. It has forced another 2 million from their homes.
A wildfire in Montana is growing and that's pushing more people out. Sixty more homes had to be evacuated as the fire near Helena grew to about 23,000 square miles. The U.S. 2 was reopened on Sunday. But fire officials warn it could be closed again soon.
CHETRY: The CEO of Northwest Airlines is apologizing to passengers about flight delays and cancellation. Thousands had their trips and vacations ruined this summer. The problem that keeps popping up at the end of the month, pilots have hit their quota for flight hours and they can't fly anymore. Northwest says it will try to fix the problem by hiring more pilots and cutting back on scheduled flights. An Atlanta car dealer is accused of killing two of his employees because they kept asking for raises. That person is now being held without bail. The 38-year-old Lithuanian native is accused of shooting a man and woman who worked for him. He says they were continually pressing him for more money and he snapped from the pressure of keeping the business afloat.
An incredible story to tell you about now. Six-year-old Josie Dressendorfer is once again healthy and playing with friends after a two-year illness caused by accidentally eating the sticker from a piece of fruit?
(BEGIN VIDEO CLIP)
SARAH DRESSENDORFER, MOTHER OF JOSIE: I was so scared that it was something serious like, you know, God forbid, cancer or a cyst or something we couldn't do anything about.
(END VIDEO CLIP)
CHETRY: As it turns out, it was that. You see that on any apple, orange, pear that you eat. Somehow that produce sticker, when accidentally eaten, got lodged in her lungs. Her body rejected it. That caused an infection and mucus buildup. Once the doctors saw the stickers on the x-ray, she had to have surgery to remove it. But after that entire ordeal Josie is healthy again. She says she'll always peel the stickers off of her fruit from now on.
ROBERTS: Probably a good idea.
CHETRY: You don't even think about stuff like that. Of all the things to worry about in the world, stickers on your fruit.
ROBERTS: Pretty incredible.
Kid Radio is on the air. That tops your quick hits now. A group of kids in Clearwater, Florida, have started their own radio station. It broadcasts only a short distance on an FN signal but features news and weather, among other programming. WKID could soon begin streaming on the worldwide web.
How is this for a novel idea? A classic plan to push gang members away from public bus stops in Tacoma, Washington. The city is installing speakers that will play classical music. Officials hope that Bach and Mozart will clear out the unwanted teens that have taken to hanging out the teens. How long do you think those speakers will last? A day, two?
CHETRY: Yes, exactly.
ROBERTS: Two Border Patrol agents sentenced to more than ten years in prison for shooting a drug smuggler on the border with Mexico. The case sparking national outrage. We'll speak with one lawmaker on the push to get President Bush to pardon these guys.
That's next, on "AMERICAN MORNING." (COMMERCIAL BREAK)
ROBERTS: Welcome back to the most news in the morning here on CNN. The case of two U.S. border guards who shot a drug smuggler on the Mexican border is parking fireworks on Capitol Hill. Those guards have been sentenced to more than ten years in prison. A number of lawmakers say that's outrageous. They slammed the punishment during hearings yesterday on the hill. Take a listen.
(BEGIN VIDEO CLIP)
REP. DANA ROHRABACHER, (R), CALIFORNIA: What should have been a reprimand of agents and supervisors has been transformed into a prosecutorial debacle.
(END VIDEO CLIP)
ROBERTS: Our next guest agrees with that and wants the president to pardon the guards. Representative Ed Royce is joining us now.
Thanks very much for joining us. You want the president to get involved here. Why do you want him to get involved?
REP. ED ROYCE, (R), CALIFORNIA: I think it is only appropriate. This administration oversaw the prosecution here, a prosecution in which these two Border Patrol agents, frankly, were presented with a situation where you had a drug smuggler who was given immunity, given a card that allowed him to go freely across the border. Subsequently, again, ran drugs into this country. And that was withheld from the jury. We have his own family saying he wouldn't have moved drugs unless he had a gun on him.
Now, the cartels control this part of the border. They smuggle $140 billion of drugs a year into the U.S. Isn't it about time we looked at the disproportionate sentences here, the fact that murder carries in federal penitentiary, on average, a much shorter timeframe than 11 and 12 years for these two Border Patrol agents? That's why we want a pardon from this president.
ROBERTS: It is being pointed out that Ramos and Compean, the two border agents in question, did shoot at this fellow as he was running away from them. That brings into question the circumstances surrounding the shooting.
But let me ask you this question. Yesterday, the House Foreign Affairs Committee, where you appeared, a lot of questions raised about the role that the Mexican government might have played in this prosecution and communications between our Department of Homeland Security and the Mexican government. Where are your suspicions running on this front?
ROYCE: I think we are quite sensitive about our relationship with Mexico. You heard the administration witnesses talk about the good relationship we have with Mexico.
In point of fact, the Mexican government, the degree of corruption going right up to the top as a result of drug cartels is a real problem. We're not getting real cooperation, nor did we get cooperation from this individual.
He, in the past, talked about putting together a band, a shooting party to go after Border Patrol agents, gave us no cooperation on that, gave us no cooperation in terms of the cartel he worked for, who picked him up in the getaway car after this altercation and so forth.
What we have here is a fellow who only cooperated on one issue. We've got his side of the story. But the Border Patrol agents have a very different side to what happened here. And the thing we know for sure is he subsequently again brought drugs back into the country when he got this immunity and this free pass from the government to go over the border.
So this is why Congress is angry. This is why we're saying that we should have this sentence commuted.
ROBERTS: Is this another case where Republicans and President Bush are on opposite sides of an issue?
ROYCE: Absolutely. All the Republicans I talked to about this issue in the House, or almost all of them, are really pressing the president on this issue, signing letters to him.
You know, you saw in the hearing yesterday the degree of concern. And so I think there's bipartisan support here asking -- asking for a pardon for these two Border Patrol agents. They've served enough time. One of them has already been severely beaten. They're both in solitary confinement. Let's have some justice here.
ROBERTS: We'll watch this story. I know this is something that our colleague, Lou Dobbs, looks at just about every night. A lot of eyes will be on this.
Congressman Ed Royce, thanks very much for being with us.
ROYCE: Thank you, John.
CHETRY: It's 42 minutes past the hour. August 1st, and the heat is on across the nation. Rob Marciano has more.
We're looking at 90 degrees and 71 percent humidity here. I imagine it will be hotter in Atlanta where you are this morning.
ROB MARCIANO, CNN METEOROLOGIST: You better believe it.
(WEATHER REPORT)
CHETRY: Boy, it does seem like a very quiet storm season so far, Rob.
MARCIANO: So far so good.
CHETRY: I like the no numbers. A very minimalist map. Don't give too much information out this early. MARCIANO: Modern chic, isn't it?
CHETRY: Rob, thank you.
MARCIANO: Thank you.
CHETRY: Out in Las Vegas, a class of second graders learning the power of democracy. Majority rules even when it comes to banishing green beans from the lunch room.
So the kids at Wright Elementary School read a story about a boy who wanted to boycott his cafeteria. It got the real-life kids thinking about the lunch room and how much they hated the green beans. There they all. We all remember those, don't we?
They organized a letter writing campaign to the school district expressing their dislike. All but a couple of kids were on board. Take a listen.
(BEGIN VIDEOTAPE)
CNN CORRESPONDENT: What was your favorite?
UNIDENTIFIED CHILD: The corn.
CNN CORRESPONDENT: What was the worst?
UNIDENTIFIED CHILD: Green beans, frozen.
CNN CORRESPONDENT: What was your favorite?
UNIDENTIFIED CHILD: Green beans, frozen.
CNN CORRESPONDENT: You like the green beans frozen?
UNIDENTIFIED: Yeah.
CNN CORRESPONDENT: But you didn't?
UNIDENTIFIED CHILD: No.
CNN CORRESPONDENT: What was wrong with it?
UNIDENTIFIED CHILD: I didn't have that much taste and it was kind of mushy to me.
CNN CORRESPONDENT: What was good about it?
UNIDENTIFIED CHILD: It was the same as my mom makes it.
(END VIDEOTAPE)
ROBERTS: Oh, poor kid.
CHETRY: He didn't mean to say that. Well, that one got vetoed because the school says they're listening to the green bean haters. They will limit the number of times that the green beans are served. It is funny, the cafeteria food. I still remember as a kid, I loved the fish cakes. All my friends hated them. I'd have a pile of fish cakes on fish cake day.
ROBERTS: Nothing like a mushy green bean. Mushy peas is one thing. But a mushy green bean.
CHETRY: It's the way my mom makes them.
ROBERTS: No thanks. Thanks, mom.
Do you know who owns your home loan? Gerri Willis is in the house with surprising answers coming up next.
Plus, the little dog who should have been on board a fatal helicopter flight, the twist of fate that helped keep her alive. The outpouring of emotion for her now, just ahead on "AMERICAN MORNING."
(COMMERCIAL BREAK)
ROBERTS: It's 48 minutes after the hour. A memorial service in Phoenix for two of the four journalists killed last week when their local news helicopters collided.
CHETRY: Hundreds of mourners attended the joint ceremony for KTVK pilot Scott Bauerbank and photographer Jim Cox.
ROBERTS: Separate memorials for the other victim's, KNXV pilot Craig Smith and photo journalist Rick Krolak will be held tomorrow and Saturday.
A big outpouring there in Phoenix over all of this.
There's this story that has captured the hearts of just about everyone in Phoenix. It is really incredible.
CHETRY: This little dog who is alive because she was left behind. Her name is Molly. And she belonged to one of the two pilots in the helicopter that day.
Jeanne Moos has the bittersweet story.
(BEGIN VIDEOTAPE)
JEANNE MOOS, CNN NEWS CORRESPONDENT (voice-over): She may be called the flying dog...
CRAIG SMITH, PILOT, MOLLY'S FORMER OWNER: Ready to go flying, Molly? Ready to go flying?
MOOS: She tended to fly with her eyes closed.
SMITH: A lot of times she likes to ride in the back seat and sleep. That's a pretty routine deal, but she occasionally sits up in my lap.
MOOS: Molly was not in her owner's lap when two news choppers collided while covering a car chase in Phoenix.
UNIDENTIFIED NEWS ANNOUNCER: We do have two helicopters down.
MOOS: Because the chopper left in a hurry to cover breaking news, Molly was left back at the hangar waiting for KNXV pilot Craig Smith to return.
UNIDENTIFIED ABC 15 NEWS CORRESPONDENT: Molly is here. we know that she's going to be taken care of and we know of a good family friend who is going to be coming and picking her up very shortly here, but she will be well taken care of. So all the viewer at home can know that.
MOOS: And viewers cared. The West Highland terrier had become a morning TV fixture aboard ABC 15's chopper.
Molly's name is sprinkled throughout the station's poster condolences webpage, alongside the names of a pilot and cameraman who died. Comments like "Please take care of Molly, too. I'm sure she knows something is not right."
She and pilot Craig Smith were described as inseparable.
SMITH: She's my companion and my buddy.
MOOS: Craig used to call her his cantankerous Westy.
VLADAE ROYTAPEL, DOG TRAINER: Molly was a little terrier.
MOOS: That's Vladae, the Russian dog wizard. Craig hired him to train Molly.
ROYTAPEL: You say, "Molly, come. Come on, baby." Molly comes.
MOOS: He got her used to being strapped in the chopper suited up.
(on camera): She wore headphones?
ROYTAPEL: Yes, she did.
MOOS: The Russian dog wizard told Craig to use a special treat when Molly flew.
ROYTAPEL: I told him to use American cheese or polish Russian Kielbasa with garlic. He had these every time when she threw with him in the helicopter.
MOOS: Vladae offered to adopt Molly, but Craig's wife says the terrier will be living with Craig's mom.
ABC 15 once did a profile of Molly imagining her doggy dreams.
(BEGIN VIDEO CLIP)
NARRATOR: The wind in her fur. (END VIDEO CLIP)
MOOS: Molly, the flying dog is now grounded, moping around without Craig, but okay.
ROYTAPEL: Wonderful couple, which we will never see in the sky anymore.
MOOS: Man's best co-pilot.
SMITH: We have a good time together, don't we, Mol? Huh? Yes.
MOOS: Jeanne Moos, CNN, New York.
(END VIDEOTAPE)
ROBERTS: Such a sad story.
CHETRY: It is. It is. And, you know, she was really a fixture. Everybody knew about her in the Phoenix market. A lot of concern for her. As that reporter said, a family friend was going to pick the dog up and make sure she's taken care of.
ROBERTS: Hopefully she'll go to a good home.
CHETRY: I'm sure she knows something's not right though.
ROBERTS: Yes, dogs have a certain sense about that.
CHETRY: They do.
We're going to take a quick break. When we come back, we're going to talk about the subprime mortgage woes. Gerri Willis is standing by with some advice on what you can do if you're in that situation.
ROBERTS: We'll be back in just a minute here on "AMERICAN MORNING." Stay with us.
(COMMERCIAL BREAK)
CHETRY: Welcome back; 55 minutes past the hour. We're closely monitoring the mortgage industry this morning. Troubles are shaking the foundations of the market.
CNN's money saver, Gerri Willis, is joining us with more details on the troubles going on with the mortgage industry.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: You bet. There's big news about one of the nation's biggest lenders that shows just how troubled the industry is. We told you about American Home Mortgage which announced it can no longer finance home loans. But there's another big story. A dramatic jump in foreclosures. RealtyTrac says foreclosures rose 58 percent in the first half of the year, year over year. People are suffering. CHETRY: Those numbers are really high. Can homeowners do something about it? Can they try to negotiate with the lender to make sure that doesn't happen to them?
WILLIS: Yeah, a lot of lenders are willing to do it. There's a fly in that ointment. While lenders are helping many folks negotiate terms, some homeowners can't figure out who owns their loan.
CHETRY: What is the best way to figure that out and to navigate that?
WILLIS: It is tricky. You should understand that people need to look at their loans and see who their servicer is. Then maybe their servicer can tell them who owns that loan.
This isn't the old mortgage industry. The S&L doesn't own your loan anymore. Your loan could be owned by an investor in Hong Kong perhaps, or it could be anywhere in the world, a hedge fund based in New York.
The mortgage business is so complicated now that an entire industry has sprung up specializing in collecting mortgage payments.
Critics of the industry say they don't want to work with borrowers face to face. Fewer still want to offer mortgage relieve because sometimes those payments come from their pocket.
CHETRY: You have some tips for people to be aware of?
WILLIS: Yes. Here's some ideas. If you're in this situation, you're worried, 90 percent of the service agreements say in the event of a default, the company you make payments to can make changes to that loan no matter what they say. And whether or not they do modify your loan terms, well, it's up to them.
Here are some resources for you. Call HUD Foreclosure Counseling, 1-8--568-4287. There's also Hope Homeownership Preservation Foundation hotline, 1-888-995-HOPE. There is hope for people out there. They can talk to their servicer. Get on the horn, call people, get some help.
CHETRY: Looking at those numbers, those two phone numbers will probably get a lot of ringing.
WILLIS: I hope so. I hope so.
CHETRY: Because it's a tough situation right now for people.
WILLIS: You bet. It really is. But you can make a difference.
CHETRY: Gerri, thanks so much.
WILLIS: You're welcome.
ROBERTS: Stories coming up on our radar in our next half hour, here on "AMERICAN MORNING." You know, everybody -- when you look at a soft drink or any kind of snack food or anything really, there are these labels on the back to tell you what the nutritional content is. For example, this particular one, zero fat; 30 milligrams of sodium; carbs, none; protein, none. We haven't had those same labels on...
CHETRY: Things like -- yes, wine, beer and...
ROBERTS: Wine and all that.
CHETRY: This is your gin. I got this from your office.
A lot of people are saying, and the government is making a push, to try to get these type of labels on bottles of wine, beer and alcohol because they say that people don't know how much calories, how much other things are in -- even the alcohol content although you can look really -- sometimes it's in fine, fine print. We're going to explain why a lot of wineries and breweries are opposed to this legislation and don't want to see it happen.
ROBERTS: Is that something the consumer should have? We'll examine that.
And the next hour of "AMERICAN MORNING" starts right now.
Market madness. New signs stocks could take another big drop today. And another big bite out of your portfolio.
Plus, the FedEx fighter. An overpass collapses right on top of a delivery truck, but the driver manages to survive and shares his story that's absolutely, positively remarkable, on this "AMERICAN MORNING."
Good morning. Welcome back. Thanks very much for joining us. It is Wednesday, the 1st of August. I'm John Roberts. People are wondering when the Dow bell sounds at 9:30, is it going to be off to the races or the fire alarm.
CHETRY: Right. The futures don't look good.
Thanks for being with us this morning. I'm Kiran Chetry.
Our Ali Velshi has been following that for us. He's going to update us momentarily.
But we begin this hour with Larry King's exclusive interview last night, making news this morning, with Vice President Dick Cheney.
Cheney is standing firm on Iraq while also saying that he was wrong when he told Larry two years ago that the insurgency was in its final throes.
Then he made some more predictions about the report due next month from General David Petraeus.
(BEGIN VIDEO CLIP)
DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: I think it's going to show that will have made some significant progress. The reports I'm hearing from people whose views I respect indicate that, indeed, the Petraeus plan is, in fact, producing results.
(END VIDEOTAPE)
CHETRY: All right. For more now, we go to CNN's Elaine Quijano. The president promising not to comment on Iraq until after the Petraeus report is released but we were hearing from the vice president.
Hi, Elaine.
ELAINE QUIJANO, CNN NEWS CORRESPONDENT: Hello to you, Kiran. The vice president weighed in even as President Bush has been urging lawmakers to reserve judgment essentially on the surge until General Petraeus's report.
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