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Fed Cuts Key Rate; President Bush Remarks on Economy and Trade; Higher Fuel Prices Passed to Consumers; FAA Issues Directive to Enforce Mandatory Maintenance Checks

Aired March 18, 2008 - 14:00   ET

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

DON LEMON, CNN ANCHOR: Hello, everyone. I'm Don Lemon, live here at the CNN World Headquarters in Atlanta.
FREDRICKA WHITFIELD, CNN ANCHOR: And I'm Fredricka Whitfield, in for Kyra Phillips.

You're in the CNN NEWSROOM.

LEMON: All right, let's get right to it. At 2:15 Eastern, in about 15 minutes, 14 minutes or so, we expect the Fed to announce it's slashing interest rates yet again. So let's get straight to our senior business correspondent, Ali Velshi.

Ali, you heard Hillary Clinton talking about it, saying she wasn't satisfied. But they kind of had to save Bear Stearns. But this started a long time ago, and we need to get a handle on it in order to correct it for the future.

ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: You know, I heard somebody saying to me, Don, a few minutes ago, when we were doing "ISSUE #1," that think of it as a fire that -- you know, Bear Stearns going under was almost like a fire developing. You've got to stop it.

They had to stop it, and that's why while it didn't feel good, it needed -- that bleeding need to stop. And that's kind of why you're seeing that rally that we're seeing on Wall Street right now.

I think that's actually got more to do with Bear Stearns being around and Goldman Sachs and Lehman Brothers earnings coming out, and Wall Street basically saying, wow, this isn't all terrible. Now, some of it's got to do with the fact that we're expecting this rate cut, as you said, in about 15 minutes.

What happens when the Fed cuts rates? It's very simple. Money gets cheaper to borrow. Businesses will be able to expand and hire -- hopefully hire more people. People will save on lower interest rates, plus more people will have jobs.

So consumers will be able to spend more. That money goes into the economy, and everything is good. Right? Well, here's what happens. When the Fed cuts rate, the prime rate will immediately go down -- and we will fill you in on that all afternoon. But all the major banks will lower their prime rate within a couple of hours. And if you have an adjustable loan that is tied to the prime rate, that will go down. But one of the biggest problems that we're all becoming quite familiar with right now, Don, is the fact that the U.S. dollar has been dropping. The dollar will go down again, and that may mean that oil prices will go up, because there's a relationship between the dollar being weak and oil prices being high.

The other huge that question we're getting a lot of today, Don, is, do I lock into my mortgage right now? Mortgage rates -- now, here's the thing. The Fed cuts adjustable rates. It affects the prime rate.

Mortgages are set in the bond market, which is why, as you know, I'm often in Chicago when the Fed cuts rates. That's where bonds are traded.

Those long-term bonds, long-term interest rates, have not been coming down. So, the lower dollar is actually going to put those bond rates -- put pressure on those bond rates higher. So, fixed mortgages might actually go up.

Take a look at where fixed mortgages are right now. Even though you can probably do better than this, these are the Mortgage Bankers Association averages from last week -- 6.37 for a 30-year mortgage, 5.72 for a 15, and one -- for a one-year ARM, 6.72.

So, those rates have been going up. You can probably get a 30- year fixed for about 5.75 percent. You might see those rates start to edge up. So, remember, two different things. Your adjustable rates might go down, your fixed rates could actually go up.

LEMON: OK. So, Ali, I've got to ask you, why would the Fed be doing this then?

VELSHI: Well, because it does -- fundamentally, there are a lot of people that have to borrow at adjustable rates. That prime is very important to businesses. They want to encourage businesses to spend.

They don't want people saying, hey, this economy might be going down the drain. We're not going to expand. We're not going to open up a new plant. We're go start to pare back.

We saw Delta announcing it's looking to pare back 2,000 (ph) people. It's offering voluntary retirement to a lot of its workers. Voluntary severance. So, the fed is trying to say expand, don't contract. If businesses expand, the economy might be kept afloat.

LEMON: OK. All right, Ali. And we're going to be talking to you in just a little bit, as soon as that does happen.

Ali Velshi, our senior business correspondent. Thank you.

Rising prices, while they affect all of us, a brand new CNN/Opinion Research Corporation poll reflects that. It shows inflation is the biggest concern for most Americans, followed by the unemployment rate, drops in home values, and drops in the stock market. And again, we expect that rate cut -- we expect the announcement of a possible rate cut to happen in about 11 minutes.

We'll bring it to you right here in the CNN NEWSROOM.

WHITFIELD: Dogged by charges his former pastor is racist and unpatriotic, Barack Obama speaks out. In Philadelphia this morning, the Democratic presidential frontrunner said some recent comments by the Reverend Jeremiah Wright were wrong and Obama condemns them, but he's not disowning the man he considers like family.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I can no more disown him than I can disown the black community. I can no more disown him than I can disown my white grandmother, a woman who helped raise me, a woman who sacrificed again and again for me, a woman who loves me as much as she loves anything in this world, but a woman who once confessed her fear of black men who passed her by on the street, and who on more than one occasion has uttered racial or ethnic stereotypes that made me cringe.

(END VIDEO CLIP)

WHITFIELD: Our political roundtable will talk more about Obama's speech on race in America next hour, right here in the NEWSROOM.

So, if the presidential election were held right now, it would be a tossup between John McCain and whomever the Democrats nominate. Barack Obama leads McCain 47 percent to 46 percent in our latest CNN/Opinion Research poll. In a McCain/Hillary Clinton match-up, Clinton leads 49 percent to 47 percent.

So, after wrapping up his latest trip to Iraq, McCain says any hasty pullout of American troops would be a mistake. He says U.S. efforts to stabilize the country are working, but there's still a long way to go.

From Baghdad, the presumptive Republican nominee flew to Jordan for talks with King Abdullah. He also is visiting Israel, Britain and France as part of a congressional delegation.

Well, all the latest campaign news is available right at your fingertips. Just go to CNNPolitics.com. Plus, analysis from the best political team on television. That, and more, CNNPolitics.com.

LEMON: Swept into office by the Spitzer scandal, New York's new governor is coming clean about his own marital difficulties. David Paterson and his wife faced reporters today in Albany, revealing they both had affairs during what they call a difficult period a few years back.

The governor's admitting to several relationships, including one with a state employee. The Patersons say they eventually went to counseling and decided to give their marriage another shot.

(BEGIN VIDEO CLIP)

GOV. DAVID PATERSON (D), NEW YORK: I just felt that this -- some of this information apparently was out there. I didn't want to be compromised. I didn't want to be blackmailed. I didn't want to hesitate taking an action because the person on the other end might hurt me or my family. And, so, I just thought this was the time to come forward and reveal it.

(END VIDEO CLIP)

LEMON: Well, the story coming out just a day after Paterson was sworn in as governor a week after his predecessor, Eliot Spitzer, was publicly linked to prostitutes.

Well, there's a nasty new twist in the bitter divorce battle between former New Jersey governor Jim McGreevey and his estranged wife. Dina McGreevey is denying allegations she and her husband had three-way sex with one of the former governor's aides and driver.

Teddy Pedersen claims he and the couple started having threesomes while the McGreeveys were courting, and it continued after their marriage. Jim McGreevey says Pedersen's claims are correct. In 2004, McGreevey acknowledged he's gay and stepped down as New Jersey governor.

(WEATHER REPORT)

LEMON: Fred, we are waiting on what could be a huge interest rate cut by the Federal Reserve. We'll check in with our financial experts. They'll tell us what they think about another cut and what it could do for the economy.

WHITFIELD: And how can you make ends meet in times like these? We'll hear from a personal finance expert.

(COMMERCIAL BREAK)

LEMON: OK. Just a couple minutes away now from a Federal Reserve announcement, possible rate cuts. That's what we believe.

You see our experts there to the right of your screen. There's Mr. Ali Velshi at top, Stephanie Elam standing by at the New York Stock Exchange.

And you know what, Steph? Let's start with you as we go into this sort of wait-up until they make this announcement. How is Wall Street reacting so far?

STEPHANIE ELAN, CNN CORRESPONDENT: Early today, Don, we've been up in the green, solidly on the upside here all day long. In fact, on the Dow, we were up over 300 points, as much as 310 points today as we headed into this.

A lot of this though not so much about the Fed as it is about the good earnings news that we got from Lehman Brothers and Goldman Sachs. That's helping to lift the stocks. Right now sort of a holding pattern. You may be able to hear it behind me, but the floor is actually kind of getting a little quiet here as we await word.

LEMON: Getting a little quiet.

Ali Velshi, we're less than a minute away from that announcement. We're expecting -- as you said, we're expecting a cut, but a cut doesn't always mean a cut in rates when it comes to mortgages and loans.

VELSHI: That's right, this is a cut in adjustable rates, in the prime rate. We will see that immediately. Depending on how much the Fed cuts, that's the discount you'll get if you have an adjustable rate that's tied to prime. That is not necessarily what will happen with mortgage rates, as you and I have discussed -- Stephanie has got the rate cut now.

ELAM: We've got it. It's actually a cut of three-quarter-point -- it's a three-quarter-point cut that we've gotten here. So already I see that the Dow is starting to come back of off of where we were.

We were up 288 points. Now we're at 249 points. So we did get that number coming in. That puts us at 2.25 percent now for this. So I'm going to keep listening and see if there's any more clues coming out of the statement, Ali. I'm sorry about that.

LEMON: OK. All right, Stephanie. Go ahead.

Ali, go ahead. Ali Velshi, you there?

VELSHI: Yes, just trying to get the information on what the Fed is saying. They are saying the outlook for economic growth has slowed down and spending has slowed.

They're concerned about labor markets. They are actually now saying something that we've been asking the Federal Reserve to say for so long, that there are problems that they are trying to confront with the economy.

This 75 basis points, three-quarters of a percentage point cut, is smaller than some were expecting, right around where others were. That takes, as Stephanie said, the Fed's Fund Rate to 2.25. And that makes the prime rate 5.25 percent.

We will start to see banks confirming over the next hour that they are lowering their prime rate, and that should have a direct effect on anybody who has got loans that are tied to the prime rate. So, you've got a 75 -- a three-quarters of a percentage point discount on your prime rate loans.

But, again, as I said, this will put pressure on the dollar, downward pressure on the dollar. We're starting to see the Dow dip on that news. As Stephanie said, it was up over 300 because people are concerned that a lower dollar is still going to create some inflationary pressures, and it is definitely going to put some pressure, upward pressure, on mortgage rates. So it's a mixed piece of news.

LEMON: Yes. I asked you this in the last -- if, then, the market is going to react like this, and it doesn't necessarily mean that it's going to be a cut in mortgages, Ali, then why would the Fed do this rate cut? We expected, what, one-quarter of a percent, and it's three-quarters -- or at least 1 percent, and it's three-quarters of a percent.

VELSHI: Well, part of it, Don, is this is -- as I've said before, the Federal Reserve is like driving a car that has a brake and gas pedal. And those are your options. You can speed it up or you can slow it down.

This economy that we're in right now requires a car that has a steering wheel and some gears as well. And the Fed doesn't have -- they've tried to. They've done a bunch of other things that indicate sort of that they might be steering and employing some gears. But fundamentally, rate cuts are about increasing the amount of money available to people and decreasing the interest rate, or decreasing the amount of money available to people by increasing the interest rate.

That's what they can do right now. And they've got to measure which one is more important? Do we make money cheaper so that businesses can borrow and hire people, or do we make it more expensive so that we don't have an inflation problem and we don't have oil going up and we can contain mortgages? Right now we're in that middle ground. This is not an easy decision for the Fed.

LEMON: So the Fed are looking for a long-term -- long-term stability, I guess that would be the way to put it. And if you're not going -- if you just want to affect the stock market, Stephanie Elam, then you may not do this, because the stock market will continue to rise if you don't, in fact, cut the rate.

ELAM: Well, right. And, you know, it's interesting, because I was just getting a little bit of more information in my ear as you gentlemen were talking. But it seems the Fed is suggesting that more rate cuts could be ahead here. So, that's some outlook there that could be positive the way some people may interpret it here on Wall Street.

And just to put it in perspective for you, since September the Fed has cut the Fed Funds Rate, this rate that affects consumers, five times. One of those times was a surprise cut in between two meetings. And then within eight days...

LEMON: I've got to ask you, then, if they've cut it five times -- and you said in the past nine months, is that correct?

ELAM: Yes, since September.

LEMON: Has it helped?

ELAM: Well, you know, some could argue that it has. Some people would argue as well that when the Fed comes out and does those surprise cuts, or the weekend cut that we saw just this past weekend, that it just brings (ph) the markets out more because it shows just how jittery the policymakers are.

LEMON: OK.

ELAM: Obviously some people were expecting this cut to be more.

LEMON: Hey, Steph -- hey, Steph and Ali, got to cut you off. Sorry about that. We appreciate your response to this.

We're going to get to President Bush now, who is in Jacksonville, Florida, also talking about the economy.

(JOINED IN PROGRESS)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: ... the vitality of the country. After all, it's over $150 billion that is going to be distributed. The plan was voted on. I signed it into law. But it hasn't been put completely into effect yet.

Our financial markets have also been subjected to stress. The Federal Reserve and the Treasury acted swiftly to promote stability in our financial markets at a crucial time.

It was action that was necessary. And I appreciate the leadership of Chairman Bernanke and Secretary Paulson, and they'll continue to closely monitor the markets and the financial sector. And the point I want to make to you is, if there needs to be further action, we'll take it, in a way that does not damage the long-term health of our economy.

In the long run, Americans ought to have confidence in our economy. I mean, there are some anchors that promote long-term -- that should promote long-term confidence. Let me give you a few. First of all, the unemployment rate is relatively low. Got a low unemployment rate here in Florida. Low in most parts of the country.

We're an innovative society with a flexible economy. There's a lot of research and development being spent here in America. There are new technologies being developed, productivity is on the rise. We have a strong agricultural sector. The small business sector is vibrant. And people are investing in the United States.

And so I understand there's short-term difficulty. But I want people to understand, that in the long term, we're going to be just fine. People will still be able to work.

You know, one of the interesting signs of strength is that we're the world's leading exporter of goods and services. I'm not saying we're second place or third place, we're the world's leading exporter. And that's positive, particularly if you're somebody whose job depends upon trade.

Now, we're in the middle of a debate here about trade, whether it's good or not. Well, anybody wondering about the stakes in the trade debate ought to come right here to Jacksonville, Florida, to the docks, to see whether or not trade makes sense.

(APPLAUSE)

According to the most recent data, you move more than eight million tons of cargo each year. This cargo doesn't move itself. Somebody has to move it from port to port.

I'm sitting -- standing in front of people that are all part of the process, good, hard-working Americans. They're putting food on the table for their families because of trade.

You handle most -- more than -- more automobiles than any American port. I don't know if the people of Jacksonville understand that. Think about that -- more automobiles are handled at this port than anywhere in the United States of America. You help support more than 45,000 jobs.

(APPLAUSE)

This port serves as a vital commercial and strategic link to our neighborhood, to our neighbors in Latin America and the Caribbean. Opening trade has been one of the high priorities of my presidency. See, I believe trade leads to good jobs.

LEMON: All right. There's the president in Jacksonville, Florida, of course talking about the economy.

The economy issue number one, Fred, for just about everyone. Of course, there was the rate cut. The Fed's trying to stave off a recession there. Three-quarters of a point the rates were cut today.

Some say that's going to do -- help in long-term stability of our economy, and others are saying for Wall Street, it's going to drive the markets down. So, there you go.

WHITFIELD: Yes. And we're going to delve into that a little bit more, what it means for you, what it means for your home, your credit cards, all that stuff. Today's three-quarter percent interest rate cut, how does it and what will it mean to you?

(COMMERCIAL BREAK)

WHITFIELD: All right, let's try to make some sense of this. You see the Federal Reserve cut the interest rate three-quarters of a percent, which really mostly applies to prime-rate loans.

But then, when that announcement was made, about 15 minutes ago, the Dow was up 270 points. Well, it has dipped slightly. It's still up, but now up by just 198 points. What's it all mean? And what does this mean for you and your home and your credit?

Let's ask personal finance editor Lauren Young from "BusinessWeek."

Good to see you, Lauren.

LAUREN YOUNG, PERSONAL FINANCE EDITOR, "BUSINESSWEEK": Good to see you.

WHITFIELD: This could all be so confusing, because as soon as you hear interest rate cuts, you're thinking, especially if you've got a mortgage, that maybe it will apply to your mortgage, no matter what kind you have. But really, it may only apply to those of you who have an adjustable-rate mortgage, right?

YOUNG: That's right. But you know what? That's a good thing, because there are a lot of people out there with adjustable-rate mortgages that a year or two ago we were really nervous that those rates were going to spike up and they weren't going to be able to cover their mortgage payments.

And we've certainly seen plenty of that happening out there. But for people who do have adjustable rate mortgages, this is a good thing, because those rates will be going down.

WHITFIELD: So what can you really do with this information? If you have an adjustable rate mortgage, that means it will automatically go down. But if you have a fixed rate, you really don't have any recourse to call your lender and find out if there's -- if now is a good time for you to try to, you know, lock in a good rate?

YOUNG: Well, actually, the most important thing is you do have one of those adjustable-rate mortgages, I would say this is -- if you haven't done it already, run, don't walk. Lock in a fixed rate.

We are not at historic lows in terms of mortgage rates. They actually have been creeping up a little bit in the past few weeks, but we're still very close to the bottom. And if you can roll over into a fixed-rate mortgage, you will sleep so much better at night.

WHITFIELD: And do you need to do the math to find out? You know, is it a matter of a percentage or two percentage-point gain if it, you know, behooves you to even do so?

YOUNG: Absolutely. I mean, it's complicated math, but there are good calculators online that you can go to. BankRate.com is one of my favorite Web sites. They have great calculators. And you can play around with the figures and also actually compare different mortgage rates, because remember, even though we have national rates, they're very local.

WHITFIELD: And how does this apply to credit cards? Sometimes is you have a credit card statement and we see there are adjustable rates and then sometimes we have fixed rates. Does this apply to you? This new or, I guess, three-quarter percent cut?

YOUNG: You know what? For credit cardholders, it's actually been a really good thing. People who carry a balance, and we know that the average American household has more than $7,000 in credit on balance, on their credit card, so it is a good thing for them because rates are going down. But they don't go very quickly.

So, Fredricka, you know what? Play hardball with your credit card company. WHITFIELD: How?

YOUNG: When you get all those --

WHITFIELD: You always feel like you're at a disadvantage. How do you play hardball with them?

YOUNG: You -- you literally have to have an offer in hand from another credit card issuer. And you need to call them up and say, I am going to change over to this account, which is going to offer me 'X' rate, unless you will match it. And you have to have that rate in your hand.

WHITFIELD: In the mail?

YOUNG: Absolutely.

WHITFIELD: All that stuff you get in the mail, you want to go ahead and shred it up and throw it away right away, because you don't want another credit card. But if it says one percent, perhaps you use that to your advantage when you call your, you know, store credit card, whomever, and say, look, these folks are offering me one percent. Can you match?

YOUNG: Yes, so you have to have that offer in hand. So play hardball, Fredricka. Go out and do it right now.

WHITFIELD: OK. Sound advice. I appreciate it. So we need to take advantage of this. You know, some folks see the numbers. They kind of glaze over it and think it doesn't really apply to them, but really this can be applicable to just about everyone.

YOUNG: Yes, including your auto loans. They're also going to go down, too. So, you know, we're in a good low-rate environment in pretty shaky times, but it is good for people who do borrow on credit.

WHITFIELD: All right, Lauren Young, "BusinessWeek." Thanks very much.

YOUNG: Thank you.

WHITFIELD: Don?

LEMON: That was really good information there, yes. I enjoyed it.

WHITFIELD: Good idea.

LEMON: Yes. That's the idea. Good information.

Well, gas prices -- speaking of the economy, gas prices hitting record highs in parts of the nation. That means big tension for big- rig truckers and higher costs for you. But not just where you might expect.

Our Ed Lavandera went on a big-rig ride, ride-along. (BEGIN VIDEOTAPE)

ED LAVANDERA, CNN CORRESPONDENT (on-camera): For the drivers of these trucks, it is an incredibly tense time. They say that almost every time they drive out on to the road, they're losing money.

(voice-over): Massive gas-guzzling trucks rumble across the country's highways. It's a crucial link in the nation's economy. How else is someone in Denver going to enjoy a Florida orange? Someone has to drive through to the grocery stores.

MATTHEW SIMMONS, ENERGY ANALYST: Today in stores all around the world, you can go in and get food from all around the world: fish and poultry and meat and vegetables and fruits and so forth. The energy content of that luxury is unbelievable.

LAVANDERA: The latest government figures show there are about 3 million trucks on the roads every day. While the U.S. burns through more than 20 million barrels of oil a day, much of that energy is used to support daily business.

From florists delivering bouquets near Charleston, South Carolina, a jump in gas prices gets passed on to the customer: $10 to $15 per delivery, says florist Chris Williams.

CHRIS WILLIAMS, FLORIST: I have to raise my delivery charges according to the driver I have to pay. I have to pay gas, vehicle maintenance, and it's tough. It really is. It's tough on us all.

LAVANDERA: To moving companies loading furniture. Employees are forced to make less money on each job.

UNIDENTIFIED MALE: Competition for the moves is so great that our prices are -- basically have remained steady for the last seven years.

LAVANDERA: Some say the only solution is to fundamentally change how we do business.

SIMMONS: We really don't have an alternative to a shortage of oil, other than traveling less, growing food at home, producing goods where we use them. It's really reversing globalization.

LAVANDERA (on-camera): To give you a sense of the financial impact, not only the slowing economy and the rising gas prices has on these drivers, consider that every time one of these guys fills up their gas tank, it can cost anywhere between $750 and $1,000.

Ed Lavandera, CNN, just outside Columbia, South Carolina.

(END VIDEOTAPE)

LEMON: The economy, it's issue No. 1. And we'll bring you all the latest financial news all week long at noon Eastern, information you need on the mortgage meltdown, the credit crunch and much, much more. "ISSUE -- ISSUE #1," 12 p.m. Eastern. WHITFIELD: And some might say this is issue No. 2 -- violence in Iraq claimed six more lives today. A car bomb exploded outside the electronics store in Mosul, destroying the building, killing three people and then wounding 40. The roadside bomb in Baghdad killed three people and wounded 70 more. And four Iraqis were wounded in a separate roadside bombing in the capital.

The death toll is rising from yesterday's attack in Karbala, as well. Fifty people were killed by a female suicide bomber who apparently targeted Shiite worshippers before evening prayers. Seventy-four people in all were hurt.

LEMON: Horrifying accounts and images out of Tibet. China counts 13 people dead in five days of protest. Tibet's government in exile reports at least 80 deaths.

China's premier blames supporters of the Dalai Lama for the escalating violence, which he calls organized and premeditated. The Dalai Lama says that's absurd.

(BEGIN VIDEO CLIP)

DALAI LAMA, TIBETAN SPIRITUAL LEADER: China's prime minister, they accuse me, all these things I started. Actually not. If prime minister come here and investigate thoroughly all our files, all reports, my speech, the prime minister will know. Then prime minister knows how much distorted by local officials. If things go out of control, then my only option is to completely resign.

(END VIDEO CLIP)

LEMON: The Dalai Lama later clarified he would step down as head of Tibet's government in exile but remain as the spiritual leader of the Tibetan Buddhists.

Conflicting reports about the true target of a mortar attack in the capital of Yemen. The State Department says the U.S. embassy there was the target and has closed its doors today, but Yemen's ambassador says the attack was a private dispute between a teacher and administrators at the school next door.

Mortars exploded by the school, killing a guard. Three other guards and three students were wounded.

WHITFIELD: Allegations that the Bush administration is delaying a decision that could save the polar bears, in order to protect drilling rights.

(COMMERCIAL BREAK)

WHITFIELD: Oh, they seem cuddly, don't they, and cute? Polar bears, well, they are at the center of a legal fight between environmental groups and the federal government.

And last week environmentalists filed suit, accusing the Bush administration of failing to make a decision about whether to declare the polar bear an endangered species. Some believe the government is stalling in order to protect drilling rights off the coast of Alaska.

CNN's Miles O'Brien has more.

(BEGIN VIDEOTAPE)

MILES O'BRIEN, CNN CHIEF TECHNOLOGY & ENVIRONMENT CORRESPONDENT (voice-over): No one knows polar bears better than scientist Steve Amstrup. He's been on the ice off Alaska, studying them for nearly 30 years, and he sees big trouble for the big bears as the ice melts beneath their paws.

STEVE AMSTRUP, BIOLOGIST, U.S. GEOLOGICAL SURVEY: The declines in the sea ice that are projected will bring about a loss of approximately two-thirds of the world's polar bears within the next 50 years, according to our studies.

O'BRIEN: Stark findings like that have put the polar bears on the waiting list to be officially classified as an endangered species. But environmentalists say the time for waiting is over, and they're now raising questions over why it's taking so long.

KASSIE SIEGEL, CENTER FOR BIOLOGICAL DIVERSITY: And that's why we filed this lawsuit, in order to force the administration to act.

O'BRIEN: Kassie Siegel is with the Center for Biological Diversity, one of three environmental groups suing the Bush administration for missing the legal deadline for a decision on the polar bears.

SIEGEL: The process has now dragged on for over three years, and it's supposed to be completed in no more than two years. This is because they've missed every single deadline.

O'BRIEN: The administration does not dispute it has missed deadlines. While no one would speak with us on camera, the head of the Fish and Wildlife Service told a congressional committee in January he's just trying to be thorough.

DALE HALL, DIRECTOR, U.S. FISH AND WILDLIFE SERVICE: I don't like to miss due dates. But I want to make sure that, when we roll out a package to the public, that it clearly demonstrates the well- thought-out process that we went through.

O'BRIEN: The decision over whether or not the polar bears should be classified as endangered was supposed to come in January. In the meantime, the government keeps pushing to finalize a $2.7-billion lease to drill for oil in the Chukchi Sea. That's right in the heart of polar bear country.

SIEGEL: Had the polar bear been listed prior to January 9, as the law required, that lease sale could not have moved forward, absent substantial additional review of impacts to polar bears.

O'BRIEN: "Keeping Them Honest," we asked a spokesman for the interior secretary if the oil lease had anything to do with the delayed decision. He claims not. And besides, the head of fish and wildlife says the lease does not pose any danger to the bears.

HALL: We don't have any substantial records that the oil and gas exploration have created an issue for the polar bear.

O'BRIEN: But if the polar bears were listed, it would very likely delay those leases.

(on-camera): That's Gus and Ida enjoying a fish (ph) snack here at the Central Park Zoo. The plight of polar bears in the wild has really struck a chord with the American public. More than 670,000 Americans have written the federal government, demanding the bears be protected now.

(voice-over): And science says now is not the time to delay.

AMSTRUP: I think that at some point I might be able go into northern Alaska and not see polar bears. That is -- that is kind of disturbing.

O'BRIEN: It is a watershed moment in the global warming saga. Those who care about the bears are watching and still waiting.

Miles O'Brien, CNN, New York.

(END VIDEOTAPE)

LEMON: Shuttle astronauts are getting ready for another space walk, the fourth of this mission. They've been putting together the giant Canadian-built robot named Dextre.

Later this afternoon they'll use a robot arm on the International Space Station to attach Dextre directly to the orbiting outpost. The new robot is designed to help with future space walks and eventually take over some of the maintenance work. That was interesting to see those pictures. I love seeing them. Love seeing them.

Well, you've heard of dodging the bullet? Well, how about dodging buzzards?

WHITFIELD: Oh.

LEMON: Man. Richard Roberts, private pilot, was flying home to Sacramento when a buzzard crashed through the passenger side of his windshield. You saw it there. If it had hit the pilot's side, he could have been killed.

Roberts finished the flight and ducked under the control panel. He was afraid the whole windshield would collapse. The buzzard, well, didn't have a chance, sadly.

WHITFIELD: A surprising end to a high-speed chase. Why the suspect was fleeing police.

LEMON: Oh, my gosh.

WHITFIELD: And what he was hoping to do with the wad of cash. My goodness. What do we see? All next, straight ahead in the NEWSROOM.

(COMMERCIAL BREAK)

LEMON: All right. Faulty planes at Southwest Airline's surprise inspections, all of that, this appears to be having a ripple effect across the industry.

Our special investigations correspondent Drew Griffin broke the story for us, I believe it was last week, right here in the CNN NEWSROOM. And he's here to tell us about a crackdown now, Drew.

Tell us what's going on?

DREW GRIFFIN, CNN SPECIAL INVESTIGATIONS CORRESPONDENT: Well, I don't think that the FAA would characterize it as a crackdown, Don, but certainly, that is going to be the effect. What they're doing is telling all of its inspectors to double-check whether or not the commercial airlines they inspect are complying with all of the air worthiness directives. These are the specific, mandatory safety checks that are really rules of law in the aviation industry.

While not mentioning Southwest by name in its letter releasing this information, certainly, they do mention a recent lapse in the air worthiness directives. And that was Southwest Airline, which had dozens of planes in the air that had gone beyond those mandatory safety checks. And more importantly, Don, for the FAA is that the FAA supervisor who oversaw Southwest Airlines apparently allowed it to happen.

So, this directive from the FAA's acting director comes out in the wake of the Southwest Airlines thing, and it's basically telling all its inspectors, "Hey, shape up. We want to make sure all of these airplanes that are out there, carrying passengers, are following all of the air worthiness directives that we have on them."

LEMON: May be a bit of a concern for the airlines, but it's definitely, Drew, good news for fliers.

GRIFFIN: Yes, I would think so.

And we should point out that Robert Sturgell, the -- the director says, "While the data tells us flying is safer than ever, prudence dictates we take this additional precaution and conduct a special emphasis review."

There's a political motive here, Don, that we should also point out. Congress, the House and the Senate, getting ready to hold hearings on what some have called this major, major gaffe by the FAA, the regulatory agency that handles airline safety.

So in anticipation, I'm sure, of those hearings, where there's going to be tough questions about how the FAA conducts its business, that they are taking this proactive look at both the safety and its own monitoring of the safety of aircraft.

LEMON: Special investigative unit correspondent Drew Griffin. Drew, thank you.

GRIFFIN: Thanks, Don.

WHITFIELD: Two weeks after Eve Carson lost her life a mile from campus, the University of North Carolina will remember her with an afternoon service.

The senior and student body president was found shot to death on a residential street in Chapel Hill. School officials held off on a memorial till students returned from spring break.

Two suspects have been charged with Carson's murder, and yesterday a grand jury indicted the younger man, 17-year-old Lawrence Lovette, for the January murder of a Duke University grad student.

UNC has set up a memorial fund in Eve Carson's name. Her family will help determine how contributions are used.

Lauren Burk will also leave a legacy. Auburn is creating a scholarship in her name. Burk was found dead March 4, the day before Eve Carson was killed. An Alabama man has been charged with her murder. A memorial scholarship has also been established at Oglethorpe University in Atlanta, her parents' alma mater.

LEMON: All right. This is definitely the video of the day, everyone's been paying attention to. Take a look at that happen. It is a high-speed chase. A wad of cash. There it is being handed off, and there it is being dropped. And a lot of police are watching police in Houston arrest Elwood Evans (ph) on an alleged parole violation.

Evans' girlfriend is under that tangle of arms and legs, too. You saw her being handed the wad of cash. She was on the phone with Evans when police tried to stop him. She says, instead of pulling over, he hit the gas, vowing to give her the rent money before his arrest.

Well, police say Evans handed several hundred dollars to the woman, all of which was confiscated as evidence.

So I guess they got all of it back. But we were wondering, because it was blowing everywhere. There it is.

WHITFIELD: Well, name that religion. People put to the test, not doing so well when it came to at least one presidential candidate's faith.

LEMON: Dangerous duty for some first responders in California, rounding up and swatting at least -- at millions of bees. And, no, this isn't a scene out of a Hollywood movie. This is for real.

(COMMERCIAL BREAK)

LEMON: Like many Americans Barack Obama takes his faith seriously.

WHITFIELD: But that's not stopping others from finding humor in the confusion over exactly what religion he practices.

Here's CNN's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): You don't have to be a whiz kid to get through this quiz.

(on-camera): What religion is Barack Obama?

UNIDENTIFIED MALE: Muslim.

UNIDENTIFIED MALE: American.

UNIDENTIFIED MALE: Muslim.

MOOS (voice-over): The correct answer is...

UNIDENTIFIED FEMALE: He's a Christian.

UNIDENTIFIED MALE: Christian.

UNIDENTIFIED FEMALE: He's a Christian from a Muslim father.

MOOS: But in a recent NBC News/"Wall Street Journal" poll, 13 percent still thought Obama is a Muslim.

UNIDENTIFIED FEMALE: Muslim.

MOOS (on-camera): Did you really think that?

UNIDENTIFIED FEMALE: Yes. Well, that's what I heard.

MOOS (voice-over): Heard where? On a parody show?

STEPHEN COLBERT, HOST, "THE COLBERT REPORT": Barack Obama is a secret Muslim!

MOOS: just in case anyone missed Stephen Colbert's joke...

BILL MAHER, HOST, HBO'S "REAL TIME": Is Obama Muslim? No, he isn't.

MOOS: And yet of the 65 or so folks we interviewed in Times Square...

(on-camera) What religion is Barack Obama?

UNIDENTIFIED MALE: Oh, jeez whiz.

MOOS: No, "jeez whiz" is not a recognized religion.

UNIDENTIFIED MALE: Jeez whiz is not...

MOOS (voice-over): Out of 65, 10 said...

UNIDENTIFIED MALE: Muslim.

MOOS: One couple was split.

UNIDENTIFIED FEMALE: Muslim.

UNIDENTIFIED MALE: Christian.

UNIDENTIFIED FEMALE: I think he's Muslim.

UNIDENTIFIED MALE: I know he's Christian.

MOOS (on-camera): Why do you think he's Muslim?

UNIDENTIFIED FEMALE: Because that's what everybody says.

UNIDENTIFIED MALE: Barack Hussein Obama.

MOOS (voice-over): Ah, that name.

At least Hillary got the answer right when "60 Minutes" asked, you don't believe Barack Obama is a Muslim?

SEN. HILLARY CLINTON (D-NY), PRESIDENTIAL CANDIDATE: No, there is nothing to -- to base that on, as far as I know.

UNIDENTIFIED FEMALE: Oh, as far as I know.

MOOS: And on the streets, some added a dollop of doubt.

UNIDENTIFIED FEMALE: He says he's a Christian.

UNIDENTIFIED MALE: He says he's a Catholic, but I think he's a Muslim.

MOOS: So how is it that 13 percent of Americans still think Obama is a Muslim?

UNIDENTIFIED MALE: Because 85 percent of the American people are ignorant.

UNIDENTIFIED MALE: Stupidity.

UNIDENTIFIED FEMALE: They don't read!

UNIDENTIFIED MALE: Americans are rednecks. We watch race cars go around, and we eat fast food.

MOOS: By the way, there was another rumor about Obama racing around Times Square.

UNIDENTIFIED MALE: Actually Barack Obama's Irish.

MOOS: That's O'Bama with an apostrophe.

UNIDENTIFIED MALE: Can we really afford to trust our country to a leprechaun? MOOS: But will the leprechaun offset the native Somali costume?

MAHER: Provocatively dressed as a Latin.

MOOS (on-camera): How can people not know that he's not Muslim?

UNIDENTIFIED FEMALE: I think they want to believe it, and so they -- we hear what we want to believe.

UNIDENTIFIED MALE: Some people never said he's going to be in office to be kind of like a spy for Muslims.

MOOS (voice-over): Hey, at least hardly anyone is accusing him of being a...

UNIDENTIFIED MALE: A Scientologist.

MOOS: Imagine Tom Cruise taking the call.

UNIDENTIFIED MALE: If the phone rings in the White House at 3 a.m., do you really want a leprechaun answering the call?

MOOS: Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

LEMON: OK, cheaper money, well, the feds appear ready to take a knife to interest rates one more time. How deep will it slice?

WHITFIELD: A delicate balancing act for Barack Obama. After days of searing headlines about his former pastor's racially-charged comments, the senator makes a bid to move the nation beyond its racial division.

(COMMERCIAL BREAK)

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