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Issue Number One

Senator Clinton on the Economy; The Reverend Jesse Jackson; Credit Check-Up; Answering Your Questions; Quick Vote Results; Candidates On Housing & The Economy

Aired March 25, 2008 - 12:01   ET

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

ALI VELSHI, CO-HOST: The race for the White House is all about fixing the economy. New troubling numbers out today about the value of your home, while in one place, homes are being offered up for just $1.
And not to worry, there are still places to stash your cash right now.

ISSUE #1 is all about the economy, your house, your job, your debt, and your savings. ISSUE #1 starts right now.

Hello. I'm Ali Velshi.

In less than one hour from now, Senator John McCain will take the stage in Santa Ana, California, and he'll tell the nation his plan for fixing the economy. Now, this is just one day after Senator Hillary Clinton laid out her solution for issue #1.

So, we begin today with CNN's Dana Bash, part of the best political team on television. She is live in Santa Ana.

Hello, Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Hi, Ali.

That's right. Well, what we're going to hear in a little less than an hour from John McCain is his most extensive remarks to date on not just the economy, but specifically about the housing crisis.

He is a candidate who readily admits that he knows a lot more about national security than the economy, so it is going to be interesting to hear him talk about this as extensively as he is expected to do based on the remarks that we have. Now, he is going to be pretty tough in his analysis of what went wrong with the housing market, both on the lenders, who he calls irresponsible in lowering their standards, and also on Americans who he says simply bought homes that they could not afford.

Let me read to you an excerpt of part of what he is going to say today.

He is going to say, "Any assistance must be temporary and must not reward people who were irresponsible at the expense of those who weren't. I will consider any and all proposals based on their costs and benefits. In this crisis, as in all I may face in the future, I will not allow dogma to override common sense."

So, Ali, he's doing a couple of things there. First of all, saying that he is not going to allow dogma to override common sense. He's trying to appeal to those Independents voters that he very much going to rely on in order to do well, in order to potentially win the White House.

But the other thing is, he is -- although he is giving some parameters and guidelines for what he would and would not do for the housing crisis, this isn't necessarily, as we read this speech, going to be a specific plan. Again, just some sort of broad outlines of what he would and wouldn't allow.

And he is pretty tough on what he says he wouldn't allow. He says pretty specifically, in keeping with the Republican dogma, that he does not think it is the government's responsibility to bail out anybody who acted irresponsibly, from his perspective. That would be either the lenders or the borrowers.

But he also is saying that it is the responsibility of the mortgage lenders, for example, to get together to have some kind of summit and try to figure out what exactly to do had the future. And also calls for more transparency. That is something that is similar to what the Democrats are calling for -- Ali.

VELSHI: All right. Dana, we will check in with you obviously as we get closer to that speech and bring that to our viewers.

Dana Bash in Santa Ana, California.

Well, all three primary candidates have made issue #1, the economy, their key issue this election year. Actually, you've made it issue #1.

Why are they all coming out with their economic plans now, and what role will the economy play come November in the election?

Well, CNN's senior political analyst, Bill Schneider, is live with the CNN Election Express, my sometimes home. He is in Philadelphia.

Bill, good to see you. How's the bus doing?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, the bus is holding up very well. A little chilly here, but the bus is parked right in front of the Museum of Art. A lot of people are coming in and out and coming to visit us.

VELSHI: The economy is a major issue every day. All of the polls you've been looking at, all of what you've been following, the economy remains issue #1 for the candidates.

SCHNEIDER: It certainly does. And Hillary Clinton said in her talk yesterday here in Philadelphia that she's ready to be the commander in chief of the economy on day one. Well, that's a role that's not described in the Constitution. It says the president is commander in chief, meaning the military. Commander in chief of the economy is a fairly new role in the last, oh, 70 or 80 years.

The president has assumed -- but Americans want a president who knows what to do about the economy and who can quickly take charge. That was a problem with the first President Bush, who didn't seem to know how to get out of the recession of the early 1990s. And the question is raised, does this President Bush have any kind of plan for rescuing the economy?

The difference, of course, this President Bush is not running for re-election. John McCain is running as the candidate of the Republican Party. And the economy should be an issue that bogs him down as the Republican candidate in the November election.

But without any incumbent president running, that's not yet clear to most voters. So the result is that it looks like a tie between McCain and either Democratic candidate. The Democrats are going to have to make the argument that a victory for McCain would be a third term for George Bush.

VELSHI: All right. Bill, thanks very much. I know you'll continue to follow this for us. And we'll continue to bring issue #1 to our viewers.

Bill Schneider with the Election Express in Philadelphia.

Well, another government report and another round of fireworks to be expected. Trustees of the Social Security and Medicare trust are set to update the status of those funds this afternoon. Now, only small changes are expected in the estimates that were made last year, and that's that the Social Security trust fund would run dry by 2019. The date for Medicare, by the way, is even sooner.

Now, don't be surprised if both President Bush and the presidential candidates try to use this report to score political points.

Now you get to weigh in on issue #1, the economy. And for that, let's head over to the money.com set, Poppy Harlow, who's got today's "Quick Vote" question.

Hello, Poppy.

POPPY HARLOW, CNNMONEY.COM: Hi, Ali.

Well, with all the volatility in the stock market, you're probably asking yourself, what's a safe investment? Some experts say you should put your money in stocks, other say bonds. Some say cold, hard cash is really the way to go.

Weigh in on our site. Log on to cnnmoney.com to vote. Here's the question: Where do you feel comfortable putting your money right now -- stocks, bonds, a savings account, or under your mattress? We'll be back later with some answers.

And Ali, I also want to point out right now what people can get on our site. We have, of course, the top stories of the day, in-depth analysis in both videos and in articles. Also, you can track the performance of stocks you may have on our markets page.

So, a lot of information out there for people that they can get right on our site -- Ali.

VELSHI: And they can learn a lot about things that they can do in this investment climate.

Poppy, thanks very much. We will check in with you on the "Quick Vote" question a little later in the show.

Up next, we'll tell you about homes that are on the market for -- get this -- $1.

Plus, why you might want to set aside about $200,000 for a baby that's born this year.

And there is hope for your savings account. We'll tell you where you can stash your cash right now.

(COMMERCIAL BREAK)

VELSHI: The mortgage meltdown is leaving a lot of folks desperate for help. Unfortunately, that's usually the time that predatory lenders move in.

Now we're learning of a massive nationwide fraud indictment which claims more than a hundred homeowners/victims, many of whom lost their homes in the scheme.

Kelli Arena is live in Washington with details of what officials are calling Operation Homewrecker.

Kelli, tell us about the scheme.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, you know, Ali, officials say that the defendants would contact desperate homeowners offering to help them avoid foreclosure. And to make it look really good, they allegedly provided two options.

The first was a perfectly legitimate real estate transaction, but the terms and conditions of that deal were so stringent, that no one could qualify. And so they were all directed to option number two, which worked like this -- homeowners would agree to allow someone else, an investor, to be added to their home title. Now, that person would assume mortgage payments, and the homeowner would then pay rent to that person, usually less than they owed each month on their mortgage. Sacramento's U.S. attorney says that the defendants were very convincing -- Ali.

VELSHI: How did they even find these homeowners? Where were they that these predatory lenders would find them?

ARENA: Well, you know, getting back to the scam, in reality, of course, homeowners would sign over the ownership to their homes. And once that happened, the scammers then got new mortgages to pull all of the equity out of the home, they left the homeowners high and dry. But how did they find them? Well, you know, they went to the Internet.

They sent mass e-mails to potential victims. They also sent blast faxes to mortgage brokers. A very aggressive effort -- Ali.

VELSHI: Now, obviously, then the obvious thing to do is don't be looking for a mortgage on a mass e-mail that comes to you. But what are law enforcement saying about what you should do to avoid being a victim of this sort of scam?

ARENA: Well, first, obvious, be wary of strangers. If you did not initiate that contact, you have to be really careful. Ask for licenses and other such documentation.

Don't sign anything with blank spaces. As a matter of fact, you shouldn't sign anything at all under pressure. And if you're at all uncertain, you should definitely have a lawyer review that paperwork.

And, you know, Ali, as you know, in a previous life, you know, I was a consumer reporter. We had said this a thousand times for years. But it is still good advice -- if it sounds too good to be true, it is.

VELSHI: Yes. And a lot of folks just got into the subprime mess because they didn't even read the papers that they were in.

ARENA: That's right.

VELSHI: So, you know, this is one lesson for everybody -- just really know what you're signing.

Kelli, thank you for bringing us that story.

ARENA: You're welcome.

VELSHI: Kelli Arena in Washington.

Well, it's another rough day for the housing market. Aren't they all these days? A new report shows home prices fell more than 10.5 percent in January compared to a year ago. That's something called the Case-Shiller Index of 20 housing markets.

That's the steepest drop since the index first came out eight years ago. And that comes on the heels of yesterday's mixed report by the National Association of Realtors showing that sales of existing homes rose actually 3 percent from January to February, but the median sales price, the price at which half of homes sold for higher than that price and half sold for lower, is down more than 8 percent from a year ago. That's a lot of numbers to digest, but that's why we've got Mark Zandi of Moody's Economy.com. He's here to help us make sense of it.

Mark, good to see you. Thank you very much for being with us.

Mark, I want to talk to you a little bit about the fact that there is a good news/bad news story here. We've seen from last February to this February housing sales fall off a cliff. But we started to see some people get back in the market because maybe home prices are now becoming affordable enough and those mortgage rates are still low enough that some people are thinking it might be time to get back in.

Are you seeing any of that, or is this still all gloom?

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ECONOMY.COM: No, no, I think that's good news. I think the fact that home sales have stabilized -- and I think they are -- is the beginning of the end of this downturn.

You know, I think the downturn is going to be long, it's going to be tearful, but at least we are at the beginning of that process. And that's because home sellers, as you point out, are now capitulating. They're lowering their prices and housing is now becoming more affordable.

VELSHI: And if you look back to the peak of the market around 2006, July 2006, when the average -- the median price of an existing home -- it's almost $40,000 less now. It's sort of irrelevant to the buyer as to whether that price is going to get any lower over the course of the next year. We're now talking about, can people get into homes, you shouldn't be buying a home for a year anyway.

Where are we in your opinion in this home price cycle?

ZANDI: Well, you know, as you pointed out, prices have been declining for two years. I think we'll see another year worth of declines. We are down 10 to 13 percent from their peak. I think they'll decline another 5 to 10 percent between now and the spring '09 selling season. So it's not over. We've got a ways to go.

VELSHI: When you say we're down from the peak, we should remind people, we're probably at about 2004 levels for housing. So when you look back to 2000, 2001, it hasn't been the end of the world in the housing market.

Why has this prompted this whole economic slowdown that we're talking about? The fact that some people are now saying it's a recession. Why is this different from the past and how is it going to change? How are we going to get out of this to make it different?

ZANDI: Well, as you know, a lot of people bought homes in 2004, 2005, 2006, 2007. They bought with very little down. They didn't put much money into it.

House prices have declined, and now their mortgage balance, the amount of money they owe on their mortgage, is greater than the value of their home, which is a real problem, particularly if their income is disrupted by a job loss or a health care problem or anything else. And so we're seeing foreclosures surge.

That's undermining the value of mortgage securities which drives the financial markets, and all this is reverberating back on the economy and the housing market. And we're now in this self- reinforcing negative cycle which is getting increasingly difficult to get out of.

VELSHI: Which is why I like talking to you, because I don't think you sort of reside on either side of that thing. You've been negative when times have called for it, and you've been positive when times have called for it.

I was very surprised in the course of the last week to be reading articles and seeing a lot of reports about people talking about a serious and massive depression. Never mind recession. We've hardly decided we're in a recession and we're talking about a depression. It seems a little bit extreme right now.

For our viewers out there, it's a little scary, isn't it?

ZANDI: Yes, and they shouldn't be scared. You know, the best news -- the best thing that has happened over the last week or two is that policymakers, the Federal reserve Board, Congress, the administration, are now fully engaged.

They realize this is a very significant problem, and they're working very hard to resolve it. And you can already see the benefits of that. We're seeing that in the credit markets, and most people can see that in the stock market over the last week. So I think there is good news here, and that is the policymakers are acting.

VELSHI: Mark, good to talk to you.

Mark Zandi from Moody's Economy.com.

Now, all of this talk about home prices, the home inventory, hearing about homes that will -- you an buy for $1, that certainly got my attention.

Jennifer Westhoven is here to explain this phenomenon. And I'm asking her to send me details, because I believe there is somewhere where you can buy homes for $1 right now.

Tell me about this.

JENNIFER WESTHOVEN, CNN CORRESPONDENT: Yes. This is Syracuse, New York.

You know what? This is a city that, like so many cities across America, is facing all of these abandoned homes. And they're having reports of dogfights, drug deals, lots of crime going on behind those boarded-up windows.

So what did they do? How do you get these homes fixed up? How do you get families back in there paying taxes?

So this is a very creative local idea. I talked with Syracuse's mayor, Matt Driscoll. He said he wants to unleash private money.

He started this plan with nonprofits last year. It was taking a long time. So the city is now seizing these abandoned homes. That way there is no previous owner that you have to deal with.

They've got other incentives as well. And they're not just slums. Take a look at some of these homes.

This one I think is the five-bedroom home with a three-car garage.

VELSHI: Wow. For a buck?

WESTHOVEN: For a buck -- is the starting price on the auction.

VELSHI: Oh, so it's an auction. OK.

WESTHOVEN: Five acres.

There's another one that we might have -- seven bedrooms. And there's lots of really nice looking homes here.

And what's interesting is anyone can bid through this. You do have to go through the city. You're going to have to talk to a bank.

There's going to be -- you're going to have to basically promise to truly rehab this home. The mayor said, you know, I don't want somebody who is just going to throw up cheap paint and cabinets.

VELSHI: Right.

WESTHOVEN: That's not going to work here. There is going to be some standards.

But that way people can move in. They really want people to be in these homes, be active members of the community.

And the big picture here is there are economists that say this oversupply of homes, how we manage this -- meaning banks, cities, how the nation deals with this -- is going to make a big difference on the local level for every one of these neighborhoods, and nationally for the housing market and how fast it turns around.

VELSHI: Like the economy, it is much easier to save a neighborhood from going -- from deteriorating at the front end than to try and pull it back. One of the things Hillary Clinton said yesterday, that she'd like a fund that allows cities and municipalities to actually invest in some of these vacated homes. So thank you for that, and maybe we can bid on a house.

Jennifer Westhoven.

Listen, the cost of raising a baby is going up in a big way. We're going to tell you what you need to know. It is way more money than I thought.

And no matter what's going on with the economy, there are ways for to you save for the future. We're going to tell you where to stash your cash right now on ISSUE #1 when we come back.

(COMMERCIAL BREAK)

VELSHI: Well, it's expensive enough just to take care of your own life these days. And if you add in a child, the costs go way up. And now there is talk of that cost exceeding $200,000.

And if you're CNN Senior Correspondent Allan Chernoff, $400,000. Who better to tell us about the cost of raising children than someone with twins -- Allan

ALLAN CHERNOFF, CNN SR. CORRESPONDENT: Absolutely. And Ali, these are numbers from the U.S. Department of Agriculture. I can tell you, they don't really know the truth cost, but I'll tell you the numbers that they're estimating anyway.

From middle income families here, we're talking about $204,000 an average. Upper income, the USDA is saying closer to $300,000.

Now, "The Wall Street Journal" last year took these numbers that come out from the government every year. And they said, forget about it, the government doesn't have a clue.

The truer cost for an upper-income family, "The Wall Street Journal" said, $800,000 to begin with. And for parents who spoil their kids -- you know, a flat screen in the bedroom, ballet lessons, the whole works, they said $1.6 million. And that's before we even get to college -- Ali.

VELSHI: Before college. And those costs have been escalating.

Did the USDA offer some advice as to what you should do? Or just as a parent, don't eat and don't spend anything?

CHERNOFF: They said what you should do basically is just look at what you're spending. Number one, the biggest cost is housing. Number two, food. And then transportation.

So, consider, a lot of these numbers don't even factor in for many parents sending kids to private school. Right? This is pretty much for people who are generally sending their kids to public school.

So about $204,000, on average. Let me tell you, for a lot of people, it's way higher.

VELSHI: We wish you the best of luck.

Allan Chernoff.

Well, it's a question that so many people out there wan to know. With the mortgage meltdown, with the credit crunch, what do I do with my cash right now? Especially that cash I need to educate my kids? Katie Benner of "Fortune" is going to help us answer that question.

Katie, thank you for being with us.

What we've heard about from people concerned about where the market is going right now is, think about safety, think about protecting your money right now. So, the answers that are the safest aren't necessarily the ones that are going to get you a very good return.

KATIE BENNER, "FORTUNE": No. No, if you're looking for yield, you have to take risks.

VELSHI: Yes.

BENNER: So, with your cash you don't want to take risk, so you'll put it into a high-yield savings account, a money market account, or a treasury bill. They're insured by the government and they're the safest.

VELSHI: And they're insured up to about $100,000 per deposit, right?

BENNER: Yes.

VELSHI: So, if you're saving more than $100,000 people have said split it between two of those accounts.

BENNER: Of course. You can put it into different deposit accounts and have all of your money insured.

VELSHI: How long can you take that safe view for?

BENNER: Well, I mean, right now stocks are falling, only to fall further. And bonds are in turmoil. So nobody is really sure. But what you want to do is you want to preserve your capital so when there is a better investment opportunity you can take it. You don't want to keep it here forever, you know.

VELSHI: In this environment you can often get a little bit better of an interest rate if you lock into sort of a term. But we don't really know where things are going. So if you're trying to keep your money safe and you want to put it into, as you say, a CD, or a money market, or something like that, what kind of time period would you recommend people putting that money away for, for now?

BENNER: Well, maybe three months. Three to four months. I wouldn't do more, because otherwise you're not really -- a cash investment is liquid. You can get it whenever you want. And if it's in for more than three months, you can't get to it without paying a fine.

VELSHI: Now, in fairness, we should tell people, if you want to make that decision because you are uncertain about where the economy is going or where markets are going, it's not a logical long-term decision for most your money.

BENNER: No, because interest is growing at about 4 percent. So it's going to eat away at that investment. Because yield is about 3 percent or 2 percent right now. So this is a safety strategy. It's for preservation.

VELSHI: Do you have some clue as to how you tell people where to start to look at when these markets turn around? Because the problem is, you know, people sort of track where things go.

You want to get in when things start to move around.

BENNER: Exactly. Well, I think that -- you know, dollar cost averaging, going into a mutual fund, these are all very safe strategies. But the reason they're tried and true is because they work. So...

VELSHI: Dollar cost averaging is something we should always remember. That means putting an equal amount of money into your investment every month or every paycheck...

BENNER: Exactly.

VELSHI: ... and not really worrying about where the market is.

BENNER: Exactly.

VELSHI: Good piece of advice, something that you should look into.

Coming up next, the final countdown. We are just 30 minutes away from Senator John McCain's speech on housing and the economy. And Senator Hillary Clinton prepares for a town hall meeting on the economy one hour from now.

The best political team in television is all over it.

Plus, Gerri Willis live in Chicago with some very interesting comments from Jesse Jackson.

Your e-mails at the help desk. And we'll tell you why your next trip to the hospital might involve a credit check.

You're watching ISSUE #1.

(COMMERCIAL BREAK)

DON LEMON, CNN CORRESPONDENT: Hello, everyone. I'm Don Lemon, live here at the CNN world quarters in Atlanta. ISSUE NUMBER ONE continues in just a minute. But first we want to check on the stories making headlines at this hour.

Detroit's embattled mayor and his former top aide are set to be arraigned on perjury and other charges today. Kwame Kilpatrick and Christine Beatty are accused of lying under oath about an alleged affair. Both deny having had a romantic relationship. However, text messages retrieved from Beatty's pager appear to indicate otherwise.

A major mistake by the Defense Department. Four nose cone assemblies from ballistic missiles were shipped to Taiwan. They were non-nuclear and are now back in the U.S. It happened in 2006. The Pentagon says the blunder was discovered last week. An investigation into that is under way.

Who is watching your flight? An extensive CNN investigation into the Federal Air Marshal Service finds startling numbers. Less than 1 percent of daily flights have air marshals on board. That's fewer than 280 out of 28,000 flights every day. CNN's special investigative unit correspondent Drew Griffin also found flights out of Washington and New York have seen a big drop in air marshal coverage since the middle of 2003. Drew will have much more on his exclusive report tonight on "Anderson Cooper 360." That's at 10:00 p.m. Eastern.

Want to get you back now to ISSUE NUMBER ONE. I'll see you at the top of the hour. I'm Don Lemon.

ALI VELSHI, CNN ANCHOR: And welcome back to ISSUE NUMBER ONE. On this program, the CNN Money team covers all that has to do with the economy and your money. Less than 30 minutes from now, Senator John McCain will deliver a speech on housing and the economy. And just 30 minutes after that, Senator Hillary Clinton will hold a town hall meeting in Greensburg, Pennsylvania. That's just outside of Pittsburgh. And that's where we find CNN's Dan Lothian right now.

Hello, Dan.

DAN LOTHIAN, CNN CORRESPONDENT: Hello, Ali.

Well, unlike yesterday where Senator Clinton was really focusing on some of the broader issues of the economy, such as the mortgage crisis and the housing problem, today she's going to be more focused on savings. She will talk about how Americans aren't able to save enough for their futures. And so she's going to sort of lay out another plan. This plan specifically will focus on providing incentives for people to be able to save enough for their retirement.

She will also talk about strengthening not only Social Security but also Medicare. And she will have with her at this town hall meeting in Greensburg later this afternoon, family that is sort of -- will be kind of the example of the problem that she's trying to define. A family that has a child. A family that is thinking about how they can properly save for the future, for retirement, how they can take care of the education costs for their child, but also take care of their current needs. This is, obviously, an issue that will resonates certainly with a lot of the middle class voters here in Pennsylvania and with voters all across the country.

Ali.

VELSHI: Dan, thanks very much. You'll stay on that and we'll get back to you.

Dan Lothian outside of Pittsburgh, Pennsylvania. Well, the Reverend Jesse Jackson is no stranger to presidential politics. He's not running this year, but Reverend Jackson still has a great deal to say on what we call issue number one, the economy. CNN's personal finance editor Gerri Willis sat down with him this morning. She's live right now in Chicago.

We miss you here, Gerri, but good to see you.

GERRI WILLIS, CNN CORRESPONDENT: Good to see you, Ali.

I spoke with Jesse Jackson just a few moments ago about the subprime mortgage crisis. Now as you know, Jackson has been critical of lender practices, particularly in minority communities. Today he went further, blaming the mortgage meltdown on a complete failure by regulators to curb lender accesses. This is what he told me.

(BEGIN VIDEO CLIP)

REV. JESSE JACKSON, PRESIDENT, RAINBOW/PUSH COALITION: If fair lending laws had been enforced, it may have been able to save us from this whole mess. Fair lending laws were not enforced.

WILLIS: So, what, government was on vacation that week? What's going on?

JACKSON: The Department of Justice was basically inactive. And, of course, if my house in foreclosure, your house loses value. Matter of fact, one house, seven houses lose value. So the water may have come in on the black and brown side of the ship, but now it affects everybody.

(END VIDEO CLIP)

WILLIS: According to Jackson, a real solution would focus on helping all borrowers in both white and minority communities. He told me the solution needs to be focused on the people, not the banks. The lenders need to modify so-called toxic mortgages instead of a government plan that helps investment banks and lending institutions. Jackson was also insistent that solutions not assist speculators but go to regular old homeowners.

Ali.

VELSHI: Gerri, Jesse Jackson really has done a lot of work on this, but do the numbers back up his allegations?

WILLIS: Absolutely. According to a recent report by Genworth Financial, four in 10 mortgages made to minorities were subprime. More expensive mortgages. That's more than double the rate for white borrowers.

Ali.

VELSHI: All right, Gerri, thanks very much. We'll see you back here tomorrow on ISSUE NUMBER ONE.

WILLIS: That's right.

VELSHI: Coming up next, your next trip to the hospital could involve an examination of your credit history. We'll tell you what that's all about next on ISSUE NUMBER ONE.

(COMMERCIAL BREAK)

VELSHI: 120/80, 72 beats a minute. Numbers that you'd expect to hear in a hospital. What you might not expect to hear is your credit score. It's a new trend that's to determine how patients are able to pay their bills. How likely they are to pay their bills. Now you're probably wondering, is this even legal and could it happen to me? Credit.com's John Ulzheimer joins us now from Atlanta. He's the author of the book, "You're Nothing But a Number."

John, good to see you again. This seems absurd. They check your credit score to see if you can pay when you go to a hospital. How common is this?

JOHN ULZHEIMER, CREDIT.COM: It is very common, Ali. And they're essentially using the score as a payment projection and collection score. And what they're trying to determine is determine if, in fact, some of the services that you're having rendered are not covered fully by your insurance, than how likely are they to get pay-back by you personally.

VELSHI: It's an interesting question. It's an interesting question. Is anybody making decisions not to provide you with service you might need because your credit score indicates you might have difficult paying?

ULZHEIMER: Well, what we know so far is that there's a line drawn in the sand and that line is essentially the difference between whether or not they will or will not provide services. And no one has crossed that line yet and said, we will not provide services because of your credit.

VELSHI: This is legal? They, like others, can access your credit report?

ULZHEIMER: Yes, it absolutely is legal. The Fair Credit Reporting Act gives hospitals and insurance companies and lenders the full right to view your credit report because it is part of a legitimate business transaction and to collect a debt, if necessary.

VELSHI: Is this something that's done sort of the in the background or do you know it's happening? If it turns out that you've got a score that indicates you might have trouble paying, is somebody going to have a discussion with you and say, hey, we've run your credit. We don't know if you can pay for what's about to happen to you.

ULZHEIMER: Well, there's a couple of things that are going on here, Ali. First off, they can't pull your credit without your permission, but you should not expect a five-piece marching band and fireworks to go off with the disclosure. In this case it's usually hidden in the micro font. And, second, if your score is troubling to the point where they don't think that they're likely to get payment, they'll still provide services. However, you are going to be hounded aggressively for the payment versus someone who has a good credit score, who will be treated very, very differently because they should get payment with very little effort.

VELSHI: All right. It's a good piece of information. What, if anything, can anybody do about this preemptively? And many Americans have legitimate credit problems. Many Americans need health care. Is there anything that can be done about this?

ULZHEIMER: Well, look, this is very important -- what is predictive -- and this is important, OK -- what is predictive of consumer risk is the same as what's predictive of patient risk. So that means missing payments, being excessively in debt, shopping for credit all the time, those are going to hurt you not only from the lender's perspective, but also from the hospital service providers's perspective as well. There's really no difference.

VELSHI: So it's one of those things, that if you know you're going to be likely to be in need of health care and you may have to dip into credit facilities to get that health care, it's that much more important to try and keep your credit score, your credit report as clean as possible or rebuild your credit because you're going to need it -- you could possibly need it in your health care.

ULZHEIMER: Yes, absolutely. But remember, they're not going to refuse service. This is all about the back end, which is collecting the uncollectible or the money that they don't think that they're going to get paid voluntarily and then they're going to have to aggressively go after you for it.

VELSHI: All right, we probably feel like we talk about this a lot, but it's probably never enough to remind our viewers about what you can do wherever you are in the credit spectrum today about improving your credit score because I remember you telling us I think it was just yesterday that in order to qualify for a prime loan for a house, for instance, your credit score has to be so much higher than it would have needed to be a year ago or two years ago. What can our viewer do today that will have on effect on increasing their credit score and how long will it take? How long can you get an improvement in?

ULZHEIMER: Yes, the rules have changed. And if you're not showing off 750s across the board, then you're not getting the best treatment from lenders and insurance companies and now hospitals. If you want something -- a strategy that is actionable that you can take today and see improvement in your credit scores tomorrow, it's really the credit card debt. The negative information is going to be removed after seven years because of the law. You really can't accelerate that. However, the credit card debt, you can take some action to deal with it. Which means, get it down as low as possible. Endeavor to get your credit card debt to no more than 10 percent of what your credit limits are on all of your credit cards and then you'll be just fine. VELSHI: And the credit score is the kind of thing you can influence more quickly than you can your credit report is your credit report. That information stays there. But how quickly have you been able to see someone improve their credit score materially so that it puts them into a place where maybe they're not paying as much interest or something like that?

ULZHEIMER: Well, the beauty about credit scores is that they are dynamic systems. Which means they are realtime. The minute something changes on your credit report, it is immediately reflected in your credit score. So you're not saddled with a bad credit score for years simply because you've made some credit transgressions. If you can address the debt, not miss payments, stop shopping excessively, you can start seeing rapid improvement with your credit scores overnight or, at the very least, within 12 months.

VELSHI: John Ulzheimer, you know a lot about credit. You must have the best credit score in America.

John Ulzheimer is the author of "You're Nothing But a Number."

We're going to take a break on ISSUE NUMBER ONE. When we come back, we are going to turn the show over to you. We asked you for your e-mails. You've been great in sending them to us. We're going to answer some of your questions next.

Plus, a major policy speech is in the works. Senator John McCain will deliver remarks on the housing problems in this country and on the economy. The best political team is in place. It's all over this story. Stay with us. You're watching ISSUE NUMBER ONE.

(COMMERCIAL BREAK)

VELSHI: All right, welcome back. It's time now for our help desk on ISSUE NUMBER ONE. This is the part of the show that comes from you, answers to your questions that you e-mail to the CNN Money team. Greg Daugherty is a money adviser from "Consumer Reports." He's the executive editor. Laura Rowley is with Yahoo! Finance. And Allan Chernoff joins us as well, a senior correspondent.

We're going to go right to those e-mails. Welcome to all of you.

Ben in Ohio has written to us and he says, "why is nothing being done about credit card companies raising rates for no good reason? Especially at a time when the economy is down, a bank is allowed to railroad its customers?"

Laura, what do you think?

LAURA ROWLEY, COLUMNIST, YAHOO! FINANCE: Well, actually something is being done, Ali. There's a new bill. It's HR-5244, sponsored by Representative Carolyn Maloney. And it will deal exactly with this issue, of banks arbitrarily raising your interest rates.

What it would require is that banks tell you in your agreement the reasons they might raise your rates. And then when they do, they have to give you 45 days notice versus 15 now. It would also get rid of some of the sneaky things you see in credit cards like double billing, double cycle billing and that sort of thing. And the most important is that universal default clause, which is when, you know, you default on some other bill . . .

VELSHI: Another credit card and your interest rate goes up.

ROWLEY: Another credit card and your interest rate goes up. So it would ban that. So, you know, if you feel very strongly about this, contact your representative and tell them to vote for 5244.

VELSHI: Allan, you look like you feel strongly about it.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: You know, and even if Congress passes a bill here, bottom line is, credit card companies are still grabbing your pocketbook. I mean the average rate right now on credit cards, about 13 percent. Come on.

VELSHI: And they can go so much higher. It is necessary, as John Ulzheimer said, to do everything you can to actually try and control your credit situation, your credit score to at least on your end try and protect your rate.

GREG DAUGHERTY, EXEC. EDITOR, "CONSUMER REPORTS": Our advice in the meantime on -- we find a lot of readers are very successful at calling their credit card company and asking them if they'll lower their rate or they'll move to some other credit card company. So don't wait for rates to come down. You can do stuff yourself maybe to bring your rate down. Shop around.

VELSHI: Gerri Willis often makes that point, that start with the phone call and see if it gets you anywhere. If it doesn't, it doesn't, but it was probably worth the effort of the phone call to try that.

Jacqua has sent us an e-mail. He says, "how much of these current recession 'symptoms' resemble that of the Stock Market Crash of 1929 -- if any at all?"

And we were talking about this earlier, Allan. I was saying to Mark Zandi (ph), one of our guests, that we started to hear talk about depression, which I think is a little extreme at this point.

CHERNOFF: It's not so much the analogy to the stock market, it's more the analogy to runs on banks. That's what we saw with Bear Stearns just a couple of weeks ago. There was a run on Bear Stearns. After the stock market crash in '30, '31, there were runs on banks and that really sent us into a depression.

It just so happens that the chairman of the Federal Reserve, Ben Bernanke, is one of our nation's top experts on the Great Depression. So he really, really is fighting to prevent us from falling into any sort of depression. That's why he was so aggressive in coming to the rescue or the bailout, whatever you want to call it, of Bear Stearns. He's trying to prevent any more runs on banks.

VELSHI: And he probably just as well there not be more articles and discussions about it.

ROWLEY: Well, absolutely. I mean, I think people see that because, as in the Great Depression, you had people speculating with borrowed money. Then the bubble popped in stocks. Today it popped in real estate.

But it's very different. In the 1930s, the international economy was in shambles. We have a lot of strength around the globe.

The other thing is, the Federal Reserve didn't have any -- it had a fraction of the power it has now and it said, and already done, very aggressive things to deal with the situation. In the 1930s, the government started something called the Homeowner's Loan Corporation. Exact same thing. A million owners defaulting on their mortgages. They took those loans over, they kept people in their homes. And when they finally liquidated that entity in 1951, it actually returned a profit to the Treasury. So I think this talk of a Great Depression is completely overblown.

DAUGHERTY: Well, and people have FDIC protection now that they didn't have then. I mean I -- we have . . .

VELSHI: Which means if you put up to $100,000 into a guaranteed account, like a savings account, you are protected by the government.

DAUGHERTY: That's right. That's right. I mean, I still have old bank books from my family from the Great Depression. You know, they were worthless. I mean they went into the bank, it meant nothing. And now at least we have that protection. So I think the parallels, you know, are pretty weak.

VELSHI: Let's take this one from Trudie. "Would a consolidation loan be the way to go if I have credit cards that I can only pay the interest on every month? How can I get a consolidation loan if I owe too much and my credit is not good?"

And that's one of the interesting conundrums we're in. The very people who may need these loans right now may not qualify for them. Or at least not qualify at a good great.

What's your advice, Greg?

DAUGHERTY: Well, good luck. I mean it's -- you know, to get a debt consolidation loan at a rate that's any lower than what you're currently paying can be very tough if you're in that situation. Go to the banks, shop around a little bit if you can. You may have to pay down some of those credit cards before you're able to get a consolidation loan. But don't get into a consolidation loan that's going to cost you more than having all those credit cards would have in the first place.

VELSHI: And sometimes the loan will be contingent upon that. They'll say they'll give you this money but you've got to close these accounts and you've got to pay them down. The Internet is a remarkable place for that right now. You can at least shop for those loans and see who might give you something.

ROWLEY: Right. I think you also have to be careful. It's a very dicey area. There's a lot of fly-by-night people in that space. You want to go to some place like the National Foundation for Credit Counseling First, nfcc.org, see if they can help you reorganize it. A debt consolidation loan is not going to eliminate your debt. You know, it's not going to make it go away. It's maybe going to make it -- consolidate it and make it easier in one payment, but it's not going to make it go away. So start with credit counseling. And if you're in that much debt to start with, maybe you want to look at Debtors Anonymous too.

VELSHI: Yes, that's a tough line, though. People don't necessarily want to admit that their debt problem is a very serious debt problem. That's something people are going to have to come to terms with.

Number four, from Bernie. "I have the ability to pay off my mortgage, $300,000 -- at this time. Should I?"

Good problem to have, Allan.

CHERNOFF: Absolutely. It really depends what his interest rate is on his mortgage. You know, if he's got a great rate, a fixed rate, maybe below 5 percent, that's actually pretty good and he could probably do better by either investing or even putting it into some bonds. You know, you can probably do better. So, in that case, I'd say hey, just leave the mortgage alone. But if he's got an adjustable rate and it's going to be adjusting upward, then he really might want to do that.

VELSHI: And he gets an interest -- he may be able to get the deduction for the interest he's paying right now. So it's probably one of those things, if you happen to be in that guy's situation, determine what you can make elsewhere and determine whether you're making some money off it right now. That's sort of not a one size fits all piece of advice.

DAUGHERTY: Right. And make sure your job is secure or you have a good emergency fund or something because you don't want to tie up all your money in the mortgage if you're going to lose your job next week.

VELSHI: All right, Greg, Laura and Allan, thank you very much for joining us. Thank you for your questions.

You're looking, by the way, right now at a live picture from Santa Ana, California. Senator John McCain is about to deliver remarks on housing. A big component of issue number one. Stick around. We've got this covered on ISSUE NUMBER ONE.

(COMMERCIAL BREAK)

VELSHI: Time now to get the results of today's quick vote question. For that let's go over to money.com and Poppy Harlow.

Hey, Poppy.

POPPY HARLOW, CNN CORRESPONDENT: Hi, Ali.

Well, it looks like people are really playing it safe these days when it comes to their money. We asked people, where do you feel comfortable putting your money right now. Now of the more than 20,000 people that weighed in, most said in their savings account or under their mattresses. Check out the numbers there. Only 9 percent of people want to put their money in bonds. Twenty-six percent want to put their money in stocks.

And there's still time to vote. Just log on to cnnmoney.com to do that. And also, while you're on our site, check out some of the other useful tools we have. You can manage your portfolio, track your investments, also get some in-depth analysis of the day's biggest business stories. Ali, it's all right on our site, cnnmoney.com.

VELSHI: I don't want to skew the voting, but, you know, the first $100,000 in a savings account is insured, so get rid of the mattress idea.

Thanks, Poppy.

We're just minutes away from Senator John McCain's speech on housing and the economy. I want to bring back Dana Bash. She's part of the best political team on television. She's in Santa Ana. Gerri Willis, personal finance editor, is in Chicago.

Gerri.

WILLIS: Well, hello there, Ali.

Yes, this is going to be a fascinating speech this afternoon. I think we're all eager to hear what John McCain is going to have to say. He has been part of the Republican idea that nothing should be done, the market should clear this all out. But as the economy has deteriorated, I think it's forced a lot of people to reconsider. It will be interesting to see if he opens the door here for change.

VELSHI: All right, Dana, what's it looking like right now? We're starting on the speech. It's going to be mainly about housing?

DANA BASH, CNN CORRESPONDENT: It is. It's going to be, at least the remarks that we've been given at the beginning, are going to be almost entirely about housing. And that's certainly the plan. And the proposal that the McCain campaign is giving right now.

But I've got to tell you, what Gerri just said about the Republican philosophy, it does seem in reading the remarks, the prepared excerpts that we've gotten from the McCain campaign, that he is going to sort of generally sticking with that idea. He makes very clear that he does not think that the government should be involved in rewarding or I should say helping to lift back up either the lenders or the homeowners who are in this crisis. He's pretty clear, pretty tough in blaming both the lenders and the homeowners for acting irresponsibly and getting into this crisis. But I think those people who are looking for a specific plan from John McCain for how he, as president, would get the country out of this housing crisis, they're going to be left wanting because that is not what this speech is. It's very much focused on guidelines and the principles, parameters, of what he would and would not do as president but does not give specific policy proposals for how to get out of this crisis. So that's not in at least what we've gotten in these prepared remarks.

VELSHI: And that sort of stands in contrast to yesterday where Hillary Clinton came out with sort of a four-point proposal. But one thing that John McCain apparently is going to talk about is how he's not going to let the dogma and that dogma of not saving people from their mistakes get in the way of solving what is a very serious problem at this point. So it will be interesting to see how he phrases that, Dana.

BASH: That's right. He is going to say specifically that he's not going to let dogma -- "I will not allow dogma to override common sense." It seemed to me in watching McCain and talking to McCain advisers in their approach broadly to this election, to this campaign, what he seems to be doing there is appealing to independents, saying I'm not going to be the kind of person who's just going to dig in on Republican philosophy and not be open to ideas that Democrats or independents might have to solve this crisis. That seems to be where he's going with that particular statement.

But again, in terms of the kinds of ideas, the kind of proposals that he might have, we're not going to hear it, at least in the prepared excerpts that we have right now.

Ali.

VELSHI: You'll be there. I'll join you there for coverage of that.

Dana Bash, thank you very much.

Gerri Willis, thank you.

Don't forget, across the America, the economy is number one. We'll be back, same time, same place, all this week, noon to 1:00 p.m. Eastern right here on CNN.

Time now for your latest headlines. And for that, we turn things over to Don Lemon and Betty Nguyen in the CNN "Newsroom."

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