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CNN NEWSROOM

Craig Under Fire; War Briefing; Gauging Progress In Iraq; Gerri's Top Tips

Aired August 31, 2007 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


HEIDI COLLINS, CNN ANCHOR: Good morning, everybody. I'm Heidi Collins.
TONY HARRIS, CNN ANCHOR: And I'm Tony Harris. Stay informed all day in the CNN NEWSROOM. Here's what's on the rundown.

Will he resign? Sources tell CNN it is likely and it could happen today. A men's room sex sting looks ready to end Larry Craig's Senate career.

COLLINS: President Bush wading into the sub prime mortgage mess. Next hour, he'll throw a life line to some homeowners in a bind.

HARRIS: Smackdown in the WWE. Ten wrestlers on the ropes after failing drug tests.

It is Friday, August 31st, and you are in the CNN NEWSROOM.

COLLINS: A men's room arrest could end a senator's career. And sources say the end could come as early as today for Idaho Republican Senator Larry Craig. Congressional correspondent Dana Bash live from Boise for us now this morning.

Dana, what are you hearing there?

DANA BASH, CNN CORRESPONDENT: Well, Heidi, we do have fresh indications that Senator Craig could be on the verge of resigning. We are told that the Republican National Committee was poised to issue a statement calling on Senator Craig to resign, but party leaders got indications from Idaho that that was unnecessary on the one hand, because Senator Craig may already be heading that way, but also, we're told from another source familiar with these discussions, that if the Republican Party did that, it could backfire. It could be, in the words of the source I spoke with, "explosive" because they say -- people who know Senator Craig say that there has been such major pressure on a national level for him to step down, getting some kind of statement like that from the RNC, that clearly would have the backing from the White House, that would backfire. The source said it has to be Senator Craig's decision.

Now even as much as the national party, even for 24 hours, gave Senator Craig a little bit of breathing room, we, of course, saw something that could add to the political pressure Senator Craig is under, and that is the Minneapolis Airport Police Department, they released the audiotape of his arrest.

(BEGIN VIDEOTAPE)

BASH, (voice over): Upon arrest, Senator Larry Craig insisted he was innocent.

SEN. LARRY CRAIG, (R) IDAHO: I don't, ah, I am not gay. I don't do these kinds of things and ...

SGT. DAVID KARSNIA, MINNESOTA POLICE DEPARTMENT: It doesn't matter. I don't care about sexual preference or anything like that. He's your stuff back, sir. I don't care about sexual preference.

CRAIG: I know you don't. You're out to enforce the law.

KARSNIA: Right.

CRAIG: But you shouldn't be out to entrap people either.

KARSNIA: This isn't entrapment.

CRAIG: All right.

BASH: In this eight-minute combative interview minutes after his men's room arrest, officer David Karsnia read Craig his rights and asked for his side of the story.

CRAIG: I sit down, to go to the bathroom and ah, you said our feet bumped. I believe they did. Ah, because I reached down and scooted over. And, the next thing I knew, under the bathroom divider, comes a card that says, "police." Now, that's about as far as I can take it.

BASH: Over and over the officer told Craig he did not believe him.

KARSNIA: I've never had to bring anybody to jail because everybody's been truthful to me.

CRAIG: I don't want you to take me to jail and I think ...

KARSNIA: I'm not going to take you to jail as long as you're being cooperative. But I'm not going to lie. We ...

CRAIG: Did my hand come below the divider? Yes, it did.

KARSNIA: OK, sir. We deal with people that lie to us every day.

BASH: Sergeant Karsnia and Craig go round and round on what really happened in the bathroom.

KARSNIA: Did you do anything with your feet?

CRAIG: Positioned them, I don't know. I don't know at the time. I'm a fairly wide guy. I ...

KARSNIA: I understand.

CRAIG: I tend to spread my legs ...

KARSNIA: OK.

CRAIG: When I lower my pants so they won't slide.

KARSNIA: OK.

CRAIG: Did I slide them too close to your? Did I -- I looked down once, your foot was close to mine.

KARSNIA: Yes.

CRAIG: Did we bump? Ah, you said so. I don't recall that, but apparently we were close.

BASH: The officer accuses the senator of lying when Craig insists he reached under the stall divider with his right hand to pick up a piece of toilet paper and denied using his left hand to give a suggestive signal. It got even more combative.

KARSNIA: It's embarrassing.

CRAIG: Well, it's embarrassing for both. I'm not going to fight you.

KARSNIA: I know you're not going to fight me. But that's not the point. I would respect you and I still respect you. I don't disrespect you. But I'm disrespected right now and I'm not trying to act like I have all kinds of power or anything, but you're sitting here lying to a police officer.

BASH: Finally the incredulous officer told Craig he was disappointed in him.

KARSNIA: I expect this from the guy that we get out of the hood. But, I mean, people vote for you.

CRAIG: Yes, they do. (INAUDIBLE).

KARSNIA: Unbelievable. Unbelievable.

CRAIG: And I'm a respectable person.

(END VIDEOTAPE)

BASH: Now some argue that this helped, some argue that this hurts Senator Craig in terms of the legal position that he is in. But in terms of the political position, which frankly is what is most important here right now, is this certainly seems to add to the pressure that he is under to resign. And, Heidi, we are told that that could happen very soon. Perhaps as soon as today.

Heidi.

COLLINS: And in talking about that political situation very quickly, if in fact he does step down, there's going to be a seat to fill, obviously, in a very, very red state. What will happen?

BASH: What would happen is the governor would appoint somebody. The governor is, of course, a Republican. He would appoint a Republican. I spoke to the governor about this yesterday to see if he was trying to come up with a -- quietly come up with a list of names. He said, Heidi, he didn't have to. You know why? Because he said that because are already calling him because it seems pretty clear what's going to happen here.

COLLINS: Yes, looks like a couple of people are already fund- raising and everything. All right, Dana, we will stay on top of this with you. Thanks so very much. Live from Boise, today. Appreciate it.

HARRIS: War and the home front today. President Bush focuses on two of the nation's most pressing issues. This morning, the mortgage crisis. He will offer help to some Americans on the verge of losing their homes. The president's main focus, however, the war on Iraq. He and the vice president will get a briefing from their top military leaders. That meeting behind closed doors at the Pentagon, unvarnished, the key description. Here with a preview, CNN Pentagon correspondent Barbara Starr.

Barbara, good morning to you. What do you know about this?

BARBARA STARR, CNN CORRESPONDENT: Well, good morning to you, Tony.

Well, we expect the president here in the Pentagon in just a few hours. He will go to the room known as "the tank." And as a matter of fact, we should tell people that's about a two-minute walk down the hallway from our CNN office here in the Pentagon. He will go in this very secure conference room. He will be met by General Peter Pace, the chairman of the Joint Chiefs of Staff, and all of the chiefs.

What are they going to sit down and talk about, Tony? They're going to talk about the health of the force. President Bush, by all accounts, is going to get a very grim, realistic assessment from the chiefs about how the troops are doing.

Are they tired? Are they exhausted from the war? That 15-month tour of duty on the front lines in Iraq? How are the families doing? How are the families being taken care of? Are the troops being trained and equipped properly? The whole nine yards, if you will.

What the chiefs want to tell the president is that right now things are going good. The morale is high. The troops are doing well. But that the force is exhausted. That 15-month tour of duty is very tough, as one can only imagine, on these young troops. And the chiefs are going to say, it can't last forever. Eventually you have to bring the troops home, let them relax and let them start training for whatever the next contingency is coming down the road.

Tony.

HARRIS: We are hoping for the best thinking from "the tank," that unvarnished assessment.

Pentagon correspondent Barbara Starr for us.

Barbara, thank you.

STARR: Sure.

HARRIS: And we will have live coverage of President Bush's Rose Garden event. That's on mortgage assistance. It is scheduled for 11:10 Eastern Time this morning.

COLLINS: Well, it's gone now, but questions do linger, how did a potentially deadly chemical warfare agent from Iraq end up at a U.N. office in Manhattan. A poison gas called phosgene was taken from Iraq 11 years ago. U.N. archivists found samples of it at their weapons inspection office just a few days ago. The material has been flown to a military facility in Maryland now for disposal. Officials say it never posed a threat to anyone's health or safety. The U.N. promising to investigate.

HARRIS: More disappointment in the search for six men trapped in a Utah mine. A video camera was lowered into a seventh hole drilled into the mine. Federal officials say it found only a few feet of clear space and piles of rubble and mud. There's been no sign the of coal miners since the August 6th cave-in. Meanwhile, the Labor Department says a review will be conducted of the Federal Mine Agency's handling of the disaster.

COLLINS: Want to take a moment to head over to Rob Marciano now and take a look at that weather picture, which keeps on changing there.

What are we looking at now?

(WEATHER REPORT)

COLLINS: Steroids, drugs, and the WWE. Worldwide Wrestling Entertainment suspends 10 wrestlers for violating its drug testing policy. The move follows a New York investigation into illegal steroid sales. No names yet and so far no charges, but the WWE says it will begin identifying the suspended wrestlers in November. In June, pro wrestler Chris Benoit killed his wife and his son and then hanged himself. Investigators say there was a steroid and other drugs in his system.

HARRIS: Paying tribute to a princess. A memorial this morning honoring Diana on the tenth anniversary of her death. About 500 invited guests attended the service in London. Queen Elizabeth headed the guest list, along with Prince Charles. During the ceremony, Diana's son, Prince Harry, moved the audience, that's for sure, by calling his mom "the best mother in the world." And he talked about how he wants her to be remembered.

(BEGIN VIDEO CLIP)

PRINCE HARRY, PRINCESS DIANA'S SON: But what is far more important to us now, and into the future, is that we remember our mother as she would have wished to be remembered, as she was, fun- loving, generous, down to earth and entirely genuine. We both think of her every day. We speak about her and laugh together at all the memories. But put simply, she made us and so many other people happy. May this be the way she is remembered.

(END VIDEO CLIP)

HARRIS: Man, that is so good. Prince Charles's wife, Camilla, the woman Diana called the third person in her marriage, did not attend.

COLLINS: Stocks surged, investors betting on good news about the housing crisis today. We are following the numbers. Let's hope they keep having a plus sign, at least.

HARRIS: Yes.

Striking it rich. You definitely can if you happen to win tonight's Mega Millions lottery. The jackpot insanely large.

COLLINS: Progress in Iraq? We'll talk to a foreign policy expert back from his own fact-finding mission in just a few minutes.

HARRIS: So let me understand the rules now. You can run, but you can't chase. New school rules. Tag and you're out.

(COMMERCIAL BREAK)

COLLINS: Welcome back, everybody. I'm Heidi Collins. You are in the CNN NEWSROOM.

A senator arrested in a men's room sex sting. Now the police interview.

(BEGIN VIDEO CLIP)

KARSNIA: I don't care about sexual preference.

CRAIG: I know you don't. You're out to enforce the law.

KARSNIA: Right.

CRAIG: But you shouldn't be out to entrap people either.

KARSNIA: This isn't entrapment. All right?

(END VIDEO CLIP)

COLLINS: Sources telling CNN the bathroom bust will likely end the Senate career of Larry Craig. A developing story here in the NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: Boy, a close call for U.S. lawmakers visiting the war zone. Their military plane coming under rocket fire in a flight from Baghdad. On board, Senators Mel Martinez, Richard Shelby, James Inhofe and Representative Bud Cramer. Cramer commented that it's something "our men and women in combat face every day." The flight crew had to take evasive maneuvers, changing directions and firing flairs to avoid getting hit.

And a deadly day for Iraqi police. Four officers killed and five people wounded in a car bombing today. It happened near a convoy in the northern city of Samarra.

COLLINS: Gaging progress in Iraq. President Bush prepares to hear from the Joint Chiefs today and Congress getting a grim assessment from its Government Accountability Office. Michael O'Hanlon of the Brookings Institution was in Iraq just last month. He is with us now live from Washington.

Nice to see you, Michael.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: Good morning, Heidi.

COLLINS: I want to remind our viewers of the article that you wrote with Ken Pollack. It was in the New York Times. It was an op- ed, July 30th. Let's go ahead and put some of that on the screen for you. You guys said this. "We were surprised by the gains we saw and the potential to produce not necessarily "victory" but a sustainable stability that both we and the Iraqis could live with."

Do you still feel this way, Michael?

O'HANLON: Yes. I think that is the goal. It is not the preordained outcome. It's still very much in doubt. But I think that on the battlefield there is military momentum. And on that particular point, I have to be quite critical of the GAO. I look forward to seeing the full report. But whatever their views on some of the other 18 benchmarks, for their allegation that there's no progress whatsoever in the security environment to be true, would mean that every person I spoke to in Iraq was wrong about the trends that we saw at the time we were there.

COLLINS: Interesting. Can you elaborate a little bit more? To be specific, you know, they do say that all -- there were three benchmarks that were met, but there were 18 that they were looking at. So you're talking specifically about the security. Tell me what you did notice. What really stood out to you that seemed like it certainly was working.

O'HANLON: Well, if, first of all, when I say working, of course, this is a hedged conclusion in the sense that there is progress, but Iraq is still very violent. General Petraeus just gave an interview I think yesterday to an Australian paper in which he said that in Baghdad there could be a 57 percent reduction in sectarian killings since the wintertime. Now let's allow for the possibility that Petraeus' data isn't quite right. Let's allow for the possibility that I mean other parts of Iraq things could be a little worse perhaps. Still a 75 percent reduction is very striking. GAO, by contrast, is apparently saying no documented change whatsoever in the security environment. I just don't understand how that could be their conclusion. And I will look forward to their report. I hope it's a flaw in the draft that will actually be improved in the final result.

COLLINS: Fascinating. I want to bring up another report too because, obviously, there are quite a few of them out there and we're going to be seeing more in September. It was a commission that was headed by General James Jones. I'm sure you're familiar with this too. Basically calling for a do-over of the Iraqi national police, saying that it's still corrupt. There are still people loyal to Saddam Hussein who are working in the police forces. You too had doubts about the Iraqi police. What do you think of this plan to basically start all over with the 26,000-member national police force?

O'HANLON: Well, first, Heidi, you're right and the report I think is right to say that the police have been a major problem. There is more progress with the military, by the way, and that's worth underscoring. And I believe the Jones commission will reach that conclusion based on today's newspaper accounts.

But the police are a mess. There is way too much influence from Shia nationalists or chauvinists in the ministry of the interior. They prevent the hiring of many people from other sectarian groups. And as you say, there's also corruption.

The good news, if there is any in this report, is again, first, the army is looking better. And secondly, with the national police, they're not saying every single person has to be fired. They're saying you should fire a lot of the leadership and then reorganize the policemen. So it probably is a pretty serious recommendation that should be studied carefully. And my guess is they're probably right.

COLLINS: I'm not sure that people really understand the difference in the role between the Iraqi national police and then the Iraqi military. Because, of course, we're still seeing quite a bit of sectarian violence. And there's some questions here, at least in the GAO, that talk about whether or not the surge is doing enough to stop the civilian violence. What is the difference there? Who's protecting who?

O'HANLON: Heidi, that's a very good question. And I wasn't all that clear on that question before I went. I'll give you one example. Up in the northern city of Tal Afar, the army is largely patrolling the countryside. And they are doing checkpoints on the big highways out in the countryside. They are trying to detect movements of al Qaeda in Iraq or other extremist groups as they try to sneak up on the cities. And then it's the police that are manning the checkpoints within the city itself. So that's the division of labor up there.

But it's not always the same. And it can vary from one place to another. In al Anbar province, which, as you know is primarily Sunni, there's a third group of important people here, the volunteers, the people that we are trying to convince Baghdad to allow to be hired by the police. Baghdad has been resistant. But these volunteers are often helping us root out the salafist (ph) and al Qaeda extremists. So it does depend a bit from one province to another just how it's done.

COLLINS: Interesting. Maybe that causes some of the confusion.

Quickly, Michael, before we let you go. Put in perspective for us how important this GAO report is. I mean there will be several. And as I mentioned before, we've got General Petraeus' report coming in September. We've had the NIE. There's all of these reports out there. Is the GAO report something that is regard with more significance than some of these others?

O'HANLON: You know, I think highly of GAO, but I don't think this is their best work. And I think the fact they got the data wrong on security, as I see it, will actually come out next week in the hearings and will make this report fade away, I'm afraid, because there's probably some good work behind it.

COLLINS: Really?

O'HANLON: But I think they made some big mistakes.

COLLINS: You think that we will see a correction to the GAO report?

O'HANLON: I hope so.

COLLINS: Michael O'Hanlon, we appreciate your time here today, from the Brookings Institute. Nice to see you. Thanks.

O'HANLON: Thank you, Heidi.

HARRIS: Still to come in the NEWSROOM this morning, to hot to handle. Senator Hillary Clinton returns tens of thousands of dollars in campaign contributions. We will tell you why.

GERRI WILLIS, CNN CORRESPONDENT: I'm Gerri Willis.

The one thing your debit card won't do for you and flights to Europe on the cheep. That's next on "Top Tips" in the NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: Let's take you to the New York Stock Exchange now. Take a look at the numbers on the big board. OK, we're still positive. We're up 76 points. Keep in mind, just the first hour or so of the trading day. Nasdaq, someone yell it at me, up 19 points at last check. We are following all of the business news with Susan Lisovicz right here in the CNN NEWSROOM.

COLLINS: Debit cards, debt and airfares the topic today as we sort through viewers e-mail. Here with answers, personal finance editor Gerri Willis.

Hi there, Gerri. Good to see you.

WILLIS: Hey, Heidi. Good to see you.

COLLINS: Happy Friday.

WILLIS: Indeed.

COLLINS: We've got lots of questions.

WILLIS: Let's go.

COLLINS: Let's get straight to them.

WILLIS: Yes.

COLLINS: The first one says this. "I have a debit card. Do I need to apply for a credit card to build a credit history. Can I build credit history from this debit card." Coming to us from Hassan (ph).

WILLIS: Well, Hassan, you can't build a credit history with a debit card. With debit cards, funds are deducted from your account whenever a purchase is made. If you don't have enough money in the account, you simply can't make the purchase. So you're not really being extended credit as you would with a traditional credit card. Now once you apply for a credit card, paying those bills on time and in full each month is really going to boost your credit history. But you'll have to have one to build that history.

COLLINS: OK. Very good. Let's move on to the second one here. It says this. From Geri ...

WILLIS: Not me.

COLLINS: Kind of spelled similar to you. One r. "Please let me know your thoughts on debt negotiating services. Are any of them the real thing? I don't want to make a bad situation even worse."

WILLIS: Great question. You want to steer clear of most debt settlement companies. Now these are companies that charge you a fee to negotiate your debts with creditors. What these companies don't tell you is that in many cases if they do negotiate with a creditor, your credit is usually trashed the same as if you had declared bankruptcy.

You may have trouble getting a loan for up to 10 years. Credit scoring models see debt settlement as negative. But there are consumer credit counseling companies that will work with you to set up a payment plan that will last about four years. It will take you four years to get out of this. Your interest rates may be lowered, though, and late payments forgiven. And at the end of the program, you exit clean as a whistle. Make sure the company you used is NFCC certified. That's what you want to -- that's the brand of distinction.

Heidi.

COLLINS: OK. Very good. Good thing to look for there. And the final one from Hendrick. He asked this. "Can you give me some great examples of where I can find the best deals online for the cheapest airfares to Europe?"

Give it up, Gerri.

WILLIS: Oh, I love this. Check out farecompare.com. On this site all you have to do is decide where you want to go and when you want to travel. The site shows you the lowest fares from a number of international carriers. Also check out sidestep.com. One of my favorites. If you're already on Europe, take advantage of those low fare carriers that you can take from city to city, flycheepo.com. Don't you like that name?

COLLINS: Yes, that's great.

WILLIS: Plug in where you're flying and your destination and you get a rundown of what airlines will take you there.

Heidi.

COLLINS: All right. Before we let you go, Gerri, a lot going on in the financial world today.

WILLIS: Yes.

COLLINS: We've got President Bush in the Rose Garden. He's going to be talking about the mortgage crisis. We've got Ben Bernanke out in Jackson Hole, Wyoming. Any possibility he's going to cut rates? Will we hear that today?

WILLIS: Well, let's start with Bush. OK. First of all, he's likely to say that he wants changes to FHA insurance. Now this means, under his proposal, borrowers who are more than 90 days past due on their loons, a lot of folks out there like this, they're going to be able to refinance with Federal Housing Administration Mortgage Insurance. The beauty of this is that they'll get a cheaper loan, a lower interest rate. It could save some folks. And people will be able to get lower interest rates, obviously.

Tax reform. The president wants to temporarily reform of tax code so it doesn't hurt people who are forced to sell their homes for less than their loan amount. Right now tax law counts this cancel mortgage debt on primary residences as income. OK, that wouldn't happen anymore.

That could go for a while, while we fix that problem. Finally, he wants to create a group to examine the industry, and look into all these problems, see where we all went wrong and get it fixed.

COLLINS: Another group.

WILLIS: Another group, yes. Well, the Fed chief, this is interesting, long speech today, did he promise a rate cut? No chance. No. But, he said that the Fed will act if need. He's closely watching the economy, because he says the housing crisis and the debt crisis in particular is affecting the overall economy. He says the Fed will be there if we need them, but didn't make any promises yet.

COLLINS: So I guess he thinks the cut in the discount rate was enough to spark activity.

WILLIS: Heidi, I got to tell you, it's the not even that clear. This is Fed-speak. You need an interpreter at all the times. He doesn't promise that he's only going to stick with discount, he doesn't say that he's going to hit the Fed funds rate. So we're going to have to wait and see.

COLLINS: As usual. All right. Gerri Willis, thanks so much.

WILLIS: You're welcome.

COLLINS: Good morning, once again, everybody 10:30 eastern time. I'm Heidi Collins, and I'm Tony Harris. Welcome back, everyone, to CNN NEWSROOM. Here's the question of the day -- at least one of them, is he stepping down? Several Republican sources tell CNN Idaho Senator Larry Craig is likely to resign very soon, perhaps as soon as today.

Craig is under fire over his June arrest in a Minneapolis airport men's room, in police tapes released yesterday, he accuses the arresting officer of entrapment, and denies signalling interest in a sexual encounter.

(BEGIN AUDIO CLIP)

KARSNIA: I am trained in this and I know what I am doing. And I saw you put your hand under there and you're going to sit there and ...

CRAIG: I admit I put my hand down.

KARSNIA: You put your hand and rubbed it on the bottom of the stall with your left hand.

CRAIG: No. Wait a moment.

KARSNIA: And I -- I'm not dumb, you can say I don't recall.

CRAIG: If I had turned sideways, that was the only way I could get my left hand over there.

KARSNIA: It's not that hard for me to reach. (INAUDIBLE) it's not that hard. I see it happen everyday out here now.

CRAIG: (INAUDIBLE) you do. All right.

KARSNIA: I just -- I just -- I guess -- I guess I'm going to say I'm just disappointed in you sir. I'm just really am. I expect this from the guy that we get out of the hood. I mean, people vote for you.

CRAIG: Yes, they do on a regular basis.

KARSNIA: Unbelievable, unbelievable.

CRAIG: And, I'm a respectable person and I don't do these kinds of ...

KARSNIA: And (INAUDIBLE) respect right now though.

CRAIG: But I didn't use my left hand.

KARSNIA: I thought ...

CRAIG: I reached down with my right hand like this to pick up a piece of paper.

KARSNIA: Was your gold ring on your right hand at anytime today?

CRAIG: Of course not, try to get it off -- look at it.

KARSNIA: OK. Then it was your left hand, I saw it with my own eyes.

CRAIG: All right, you saw something that didn't happen.

KARSNIA: I don't care about sexual preference.

CRAIG: I know you don't. You're out to enforce the law.

KARSNIA: Right.

CRAIG: But you shouldn't be out to entrap people either.

KARSNIA: This isn't entrapment. All right?

(END AUDIO CLIP)

HARRIS: OK. Craig pleaded guilty to a disorderly conduct charge. He now calls that decision a mistake.

COLLINS: President Bush today confronting two of the nation's most troubling topics -- one, the Iraq War. He and Vice President Cheney will attend a high-level briefing this afternoon, Defense Secretary Robert Gates and the Joint Chiefs of Staff will lay out their progress report. That meeting held behind closed doors. It's described as unvarnished assessment.

For the public the next hour, and even in the White House Rose Garden, we've been telling you about it here; the issue, the mortgage crisis. President Bush will discuss ways to help the growing number of Americans at risk of losing their homes. Many people can't afford to refinance their way out of the surging adjustable rate loans.

That will happen once again live here in the NEWSROOM. President Bush's Rose Garden event, it will be at 11:00 eastern this morning.

HARRIS: OK. Imagine this for a moment, an empty street in Iraq's triangle of death. U.S. troops make their move, tracking a shadowy enemy. "Anvil Of God," a riveting account of a historic battle.

COLLINS: Stocks surge, investors betting on good news about the housing crisis today. We're following the numbers for you.

(COMMERCIAL BREAK)

HARRIS: Fallujah, Iraq, is the site of one of the most intense battles of the war, the memory of it still crystal-clear in the minds of the Marines who fought thousands of insurgents there. CNN's Tom Foreman recounts that battle in tonight's special "Anvil Of God." Here's a look.

(BEGIN VIDEOTAPE)

TOM FOREMAN, CNN CORRESPONDENT: The cultural center a half mile in is a stronghold to be taken and used as an anchor for Bravo's charge. As they approach at sunrise, Sergeant Lonnie Wells is near the front. He's in his late 20s, always calm, the younger Marines naturally follow him.

LT. CHRISTOPHER WILKENS, U.S. MARINE CORPS: He's been around a while, he's older, he knows what he's doing.

FOREMAN: The wide road in front of the cultural center is comparatively quiet. Sergeant Wells starts running across, and the dawn explodes.

ASHLEY GILBERTSON, NEW YORK TIMES PHOTOGRAPHER: There were bullets coming in from every side of us. From the front, from the east and west, and then behind us. It looked, sounded and felt like a nightmare.

FOREMAN: The heaviest interlocking fire is coming from a nearby mosque and a building down the street. Shots, however, are all around, so Bravo cannot sit, the center must be taken. But in the middle of the street, Lonnie Wells is down.

SGT. JOEL CHAVERRI, MARINE COMBAT PHOTOGRAPHER: The first sign of combat is extremely confusing.

FOREMAN: Joel Chaverri, whose job is to record the battle for the military sees Wells fall. And as he lifts his camera, he sees a gunnery sergeant run to Wells' rescue, a medical corpsman not far behind. The gunny is shot and thrown several feet. The corpsman is hit, too.

CHAVERRI: It was like a movie, it was extremely surreal. I didn't think. You don't think. You don't have time to think. You just react.

(END VIDEOTAPE)

HARRIS: Joining us from Washington, CNN's Tom Foreman. Tom again, I've sent you notes on this, you and your team do such a great job of telling these stories of this war. Tell me this about Fallujah, what did the Marines find there once the insurgents were defeated?

FOREMAN: Well, what they found was exactly what the insurgents had claimed. This was the capital of their insurgency. Fallujah at this time in November of 2004 really was full of car bomb factories, places where they were holding kidnapped victims, places where they were torturing people. They were truly running the city with nobody standing in their way.

They were keeping lists of Iraqis they intended to get even with in the future for helping coalition forces. They were forging documents, All of this was going on in that town, and I simply can not say enough about the bravery of the 18 Marines Bravo Company. All the troops who were involved in this obviously took on an enormous challenge.

But the 118 Marines Bravo Company, who we profile in "Anvil of God" went right through the middle and met the most sustained combat that U.S. troops have faced in decades.

HARRIS: Hear hear, hats off. But I have to ask you, Tom, look, it's been almost three years since this battle. Why the heck do we want to look back at Falluja now?

FOREMAN: I think you have to look at Falluja, because the thing is, this war, as you know, Tony, day to day can seem like the same thing happening over and over again, but the truth is, there are milestones, and in the history of this war, Falluja absolutely will be studied over and over again, because it told us, one, that in head-to- head combat our troops are vastly superior to anything out there. This is the only time the insurgents in big numbers even tried to stand against us. and they were crushed, even though a lot of this was basically one-on-one fighting in small rooms where technology didn't help a lot.

But it also tells us about the enormous complexities of the political and social situation there that allowed Falluja to develop into what it was that we felt we had to go in that way. If you want to understand the Iraq war, I think you have to try to understand Falluja. That's why we did the show.

HARRIS: I can't wait. No kidding, I can not wait. Your team, again, does absolutely great work on this. Tom, appreciate it. Thank you.

And one other reminder here, you can catch Tom's special in its entirety tonight On "AC 360," "Anvil Of God: Battle for Falluja." That's 10:00 p.m. Eastern time.

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HARRIS: He's been acting like a presidential candidate for months. Now actor and former Senator Fred Thompson is ready to make it official.

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HARRIS: He may be the best-known non-candidate in the race for president, but he appears ready to make it official. Former Republican senator Fred Thompson will announce his presidential bid next week. His campaign says he will post it on the Internet at midnight on September 6th, and then he goes on a five-day campaign swing, Iowa, New Hampshire, South Carolina and Florida. Thompson created a fundraising committee back in June. The former Tennessee senator and actor is known for his role on the hit TV series "Law & Order."

COLLINS: Contributions, the lifeblood of any campaign, but some Democratic candidates, including Hillary Clinton, are returning thousands of dollars to one fundraiser.

CNN's Brian Todd explains why.

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BRIAN TODD, CNN CORRESPONDENT (voice-over): She says she's not reverting back to the days of campaign donors staying in the Lincoln bedroom ...

SEN. HILLARY CLINTON, (D-NY) PRESIDENTIAL CANDIDATE: I don't think it's analogous at all.

TODD: ...but Hillary Clinton is dumping $23,000 donated to her campaign by Norman Hsu, a top Democratic fundraiser who's also a fugitive in California. The state attorney general's office tells CNN that Hsu's been wanted for 16 years since he skipped out on a sentencing after pleading no contest to grand theft in a fraud case, but Hsu's also involved in questionable fundraising for Mrs. Clinton.

As part of a practice called bundling, packing together donations from others after you've reached your legal limit, Hsu got the family of William Pau (ph), a mailman who live in this house near San Francisco, to contribute to the Clinton campaign. Despite seemingly modest means, records show the Pau family gave more than $45,000 to Mrs. Clinton since 2005, more than $200,000 total to Democrats. Records also show Norman Hsu once listed the Pau's home as his own address.

(on camera): Bundling is not illegal, but if Hsu reimbursed the Paus for their contributions, it would be. Hsu's lawyer tells us he never reimbursed the family and says the Paus could afford the money they gave.

(voice-over): We couldn't reach the family for comment. Hillary Clinton says her campaign simply can't catch everything.

CLINTON: When you have as many contributors as I'm fortunate enough to have, we do the very best job we can based on the information available to us to make appropriate vetting (ph) decisions, and this one was a big surprise to everybody. TODD: But should it have been, given the Clintons heavily investigated practices in the 1990s, when some big donors with checkered pasts got access to the White House?

JIM VANDEHEI, POLITICO.COM: The last thing they want to be seen as is sort of giving access to people who are giving a lot of money, because that's what people were tired of in the 1990s.

TODD: When we asked if the campaign would also return money from the Pau family, a spokesman for Mrs. Clinton said they're always reviewing contributions and if they find a basis to return any, they'll do it.

On his fugitive status, Mr. Hsu issued a statement saying he's surprised there's a warrant for his arrest. And, "I have not sought to evade any of my obligations and certainly not the law." But he says until this matter's resolved, he won't do any more fundraising.

Brian Todd, CNN, Washington.

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COLLINS: Hillary Clinton isn't the only Democrat giving back money from Norman Hsu. Barack Obama's campaign says it is giving to charity about $7,000 Hsu donated. Senate candidate Al Franken (ph) also returning contributions and so are representatives Mike Honda (ph) of California and a Joe Sestek (ph) of Pennsylvania.

HARRIS: From the White House to home foreclosures in your neighborhood, President Bush discusses help for people struggling to pay their mortgages, in the NEWSROOM.

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T.J. HOLMES, CNN ANCHOR: Hello there, everybody.

You may think Nascar is for the good old boys, but take a look at this. The checkered flag's going upscale: high heels and boots, just a few of the Nascar items coming soon to a store near you. We'll have all the details.

Plus, tonight's the drawing for another 300 plus million dollar jackpot. Tune in tomorrow to see if anybody's going to be able to tell their boss I quit.

UNIDENTIFIED MALE: And you have no idea how long the troops will be here?

UNIDENTIFIED MALE: No, I wouldn't comment on that at all. We're prepared to stay as long as the situation demands.

HOLMES: Next week marks the 50th anniversary of one of the turning points in civil rights history. Nine black students were escorted into the all white Litte Rock Central High School. We will talk to some of the students involved.

"CNN SATURDAY" and "SUNDAY MORNING," beginning tomorrow at 7:00 Eastern.

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