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Examining Predatory Lending; Bush Meets With New Australian Prime Minister; Deadly Prison Riot in Texas; Bob Casey Endorses Barack Obama

Aired March 28, 2008 - 12:00   ET


FREDRICKA WHITFIELD, CNN ANCHOR: All right. Self-professed straight-shooters there, Australian Prime Minister Kevin Rudo and the president of the United States, George Bush there. President Bush saying they both share commitments to the rule of law and human rights and the interests of what's going on in Iraq, Afghanistan, as well as Tibet. They kind of ran the gamut there talking about all of those issues.
But despite the fact Prime Minister Rudo had made it very clear before being elected as prime minister, he said that the Australian troops would be pulling out of Iraq and President Bush saying there that he still had a lot of respect for the prime minister because he "kept the campaign commitment" but he also consulted with friends.

Let's talk to Ed Henry there who is in the east room.

They clearly seem to be friends, even though they don't necessarily see eye to eye on everything, namely Iraq. But they do see eye to eye on a lot. Don't they?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Certainly. You may not have heard that in the very end but as an Australian reporter shouted out to Mr. Bush, how about the part about whether or not he is a man of steel. That's when Mr. Bush answered "heck yeah" because he had forgotten to answer that part of the question.

So yes they have some areas of agreement but I think it's also clear that when Mr. Bush says he appreciates Mr. Rudo kept a campaign promise on Iraq, we can all agree that's kind of a positive way of looking at the fact that the Australians did what the U.S. did not want, which is to commit to pulling out the remainder of their combat troops from Iraq.

I think where Mr. Bush did make some news was to keep talking and say that he believes this is a defining moment in Iraq right now given the violence we've seen not just in Basra but in Baghdad. The curfew now, the three-day curfew now. He was saying and insisting that in Basra Iraqis are in the lead, the U.S. will provide assistance but they're in the lead.

That seems to run counter though to what we're reading in this morning's papers, the dispatches from there on the ground in Iraq suggesting that the U.S. is taking on a larger share of this and that the Iraqis are moving back because perhaps they can't handle this operation in Basra. I think also Mr. Bush was very firm in saying yes there is going to be violence and that's sad, but this has to be dealt with.

He was very firm in suggesting the U.S. is in this for the long haul and when pressed on the next move, which is the most important part of this, the fact that on August -- April 8 and 9 we'll have General Petreaus giving his latest progress report, it's clear that Mr. Bush is not ready to commit to pulling out a larger number of U.S. troops.

That's going to be the defining question during his final year in office -- will he pull out more than just those five combat brigades that he's already committed to, is he going to pull out a lot more troops. If he doesn't, there is still going to be well over 100, 130,000, 140,000 U.S. troops on the ground in Iraq as we head into the election. That's going to be a very difficult equation for the Republican front-runner John McCain who is square with Mr. Bush on Iraq, Fred.

WHITFIELD: That's right, still the burning question this election year. Thanks so much, Ed Henry there in the east room at the White House.

TONY HARRIS, CNN ANCHOR: That's it. We're done.

WHITFIELD: I know. It went by like this, didn't it?

HARRIS: That's right. "CNN NEWSROOM" comes your way at the top of the hour. "ISSUE #1" is next. I'm Tony Harris.

WHITFIELD: And I'm Fredricka Whitfield. Have a great weekend.


ALI VELSHI, CNN ANCHOR: President Bush puts the focus on the mortgage meltdown. Hear about predatory lenders from a reformed predatory lender.

And why the economy when some people see recession, they think green? ISSUE #1 is the economy, your job, your house, your savings, your debt. ISSUE #1 starts right now.

The "Hope Now Alliance" was formed by the U.S. government, counselors, investors and lenders to help homeowners who aren't able to pay their mortgages. Now nearly six months after "Hope Now" was create, President Bush is revisiting the issue traveling to New Jersey in the next hour to visit one of the "Hope Now" call centers.

CNN White House correspondent is live at the White House is Kathleen Koch with more on this -- Kathleen?

KATHLEEN KOCH, CNN WHITE HOUSE CORRESPONDENT: Ali, the White House says this is an opportunity for the president to really raise awareness about the "Hope Now" program for consumers who may not have been aware of it, really highlight the program and the president will be going to nonprofit consumer credit counseling agency called Novadebt in Freehold, New Jersey. He'll tour their call center there and the president will get a chance to see firsthand how it provides counseling to prevent foreclosure, also how it works with creditors and financial institutions to help consumers manage their debt. The president will also be participating in a roundtable with members of Novadebt staffers, with other members of the "Hope Now Alliance," and also with individuals who have been helped by the "Hope Now" program.

The White House says they do already have some evidence that it is beginning to work. "Hope Now" is reporting that the number of borrowers having their loans modified is rising faster now than the number who are entering foreclosure. That's the so-called loan modification rate doubling in the fourth quarter of 2007 over the third quarter. So the White House again seeing some real positive signs there.

President Bush will be making a statement before he leaves New Jersey. He will also be asking congress to pass a law that would modernize FHA, but White House spokesman says at least today the president will not be making any announcement about any new programs, any new initiatives to help struggling homeowners, Ali.

VELSHI: All right. Kathleen, thanks very much. Kathleen Koch at the White House.

In the past hour, we had a surprise endorsement in the race for the Democratic presidential nomination. To put that in context for us, let's go to our senior political analyst Bill Schneider. He is live in Philadelphia with the Election Express.

Hello, Bill.


There was a surprise endorsement, Bob Casey, United States senator, Democrat, from Pennsylvania -- the other senator is a Republican -- has endorsed Barack Obama. The governor of Pennsylvania, the other major state-wide Democratic-elected official has endorsed Hillary Clinton. In fact, many of the leading Democratic politicians in Pennsylvania, the mayors of Philadelphia and Pittsburgh, have endorsed Hillary Clinton.

It looked like the entire Democratic establishment was lining up behind her. She is the front-runner in the polls by double digits here in Pennsylvania, but this could be a break-through for Obama because Bob Casey is the United States senator.

And by the way, there is an old rivalry between Rendell and Casey. They ran against each other in the primary, the Democratic primary, for governor in 2002. That may have factored if to Casey's decision.

VELSHI: Hey, Bill, we've been hearing -- it's been a busy week with speeches from all of the candidates, most of them on what we're calling issue number one, the economy. Any particular surprises this week for you? SCHNEIDER: No enormous surprise. Most of the candidates have been fairly predictable, but we did notice that John McCain gave a big speech and it was not about the economy, it was about his view of international affairs, his foreign policy positions.

He spelled them out. He does of course support the war in Iraq and President Bush's policy there, but on many nuances he was very careful to distinguish his view of foreign policy from that of President Bush. His is much more multi-lateral. Not as unilateral as President Bush's approach. He denounced torture, he said he would close the Guantanamo base and he never mentioned President Bush's name.

He mentioned Harry Truman. He mentioned John Jen Kennedy. Those guys were Democrats.

VELSHI: All right. Bill, less than a month to go until the Pennsylvania primary. You'll be keeping us up to date on what those voters are thinking as we head into it.

Bill Schneider, in Philadelphia.

Coming up next on ISSUE #1, why some folks out there look at a recession and they think green.

Plus, the final countdown to tax day, important changes that you need to know about this year. The CNN money team will answer your e- mail questions at the help desk. The address to send your questions,


VELSHI: Welcome back to ISSUE #1. We like to get outside of the studio and talk to folks about what they're really going through, how this economy affects them. We've been to truck stops, colleges, the unemployment office. Today we decided to check out a job fair of sorts for emerging workers in their 20s and 30s.

David Mattingly is live in Atlanta.

DAVID MATTINGLY, CNN CORRESPONDENT: This is called making it in the city here in Atlanta, and that is sort of a 21st century twist on the job fair. Not only are young professionals coming here looking for where they might find jobs, but they're also looking for advice on how to make good decisions in a possibly bad economy.

Because if you make a bad decision starting out when the economic conditions aren't so good, you could be making a mistake that will haunt you for years. They're coming here looking for those answers. We'll talk to a few of them later in the program -- Ali.

VELSHI: All right. The bright side of a tough economy, you can make those decisions and sometimes make changes. We'll get back to David Mattingly in Atlanta.

There is so much to talk about when it comes to recession. Are we in one? Are we not in one? General consensus seems to be that we're probably in one. Put aside all the negative effects you hear about a recession and you might find a positive one for the environment.

CNN's Jennifer Westhoven is here with a possible positive spin for the environment. What could that be?

JENNIFER WESTHOVEN, CNN CORRESPONDENT: Well, I mean it is kind of obvious in some ways we'd useless energy, useless gas but this is something because the United States as a country has only recently really gotten interested in the environment, we don't have a lot of evidence about what would happen in a recession. But some of it is easy to think about.

Here's the argument for "this would be good for the environment." We all slow our buying down, then factories stop pumping out gadgets around the clock. The United States, China, India all burn up fewer natural resources so less pollution, less greenhouse gases. You can easily follow that logic around the world, right?

Shipping slows down. That's less energy pollution. If we buy less stuff, that's less stuff in the landfills. Gadgets like cell phones and iPods, they have toxic chemicals in them, they can get into the ground and the water. That's the factory. What about if you drive to a family vacation in the mountains instead of flying to Italy, that's a lot less energy and pollution from planes. Same thing with cars. If we're driving less and we're buying smaller cars.

But this is not definitely good for the environment. The other argument is when people start getting worried about their money, the environment can go right out the window.

VELSHI: We've always talked about how it sometimes costs more to be green, to buy better food or buy less environmentally polluting things. When times are tough you may not give that priority.

WESTHOVEN: How can you buy organic food if you're just trying to get enough to eat? It is not just a personal level, for companies, too, how on earth can they afford if they are losing money, they are beholden to their stockholders. Projects for a green future are first on the chopping block. There is a lot out there.

VELSHI: Interesting, a little bit of silver lining around a recession plug. We probably don't want things to slow down too much but it is an interesting perspective.

Jennifer Westhoven, thank you so much.

All right. Dot those I's and cross those T's, it is tax time. Pay attention to our next segment.

Plus, predatory lending. Hear from one man who said he made a living out of predatory lending.


VELSHI: Don't be scared, it is getting really close. 18 days until tax day. But it doesn't have to be all bad if you know what you're doing. I don't. But if you listen to our tax attorney, Donna Cocovinis, it could actually seem almost like a friendly experience.

First of all, we've been talking about rebates. If you're one of these Americans who is going to get a rebate check as a result of the stimulus bill you aren't getting anything until you file a tax return.

DONNA COCOVINIS, TAX ATTORNEY: Absolutely. File it and file on time. If you don't file on the 15th, file for extension, you probably won't get the check until December. OK. You just have to file on time.

VELSHI: If you go to we have a schedule how you get your check. You aren't getting anything if you don't file on time. If you need to file for an extension, that is a relatively easy thing to do.

COCVINIS: Very easy process. You get it, six months, it is automatic. Print it out 1040-EX for extension. Send it in, get a receipt, you'll be set.

VELSHI: Now that's a one page simple form.

COCVINIS: Very simple form, and you can also file it online with an online service but not with the IRS.

VELSHI: If you owe money to the government, an extension doesn't give you an extension on what you owe.

COCVINIS: Right. An extension to file is an extension to pay. But you can set up an online payment option which is really great. It's web based. And they'll accept your information online and you'll find out whether you are accepted for a payment plan. That's terrific. But remember you know pay as much as you can when you do file for that extension, it cuts down on penalties and interest that you owe.

VELSHI: How do you generally know how much to pay?

COCVINIS: I would use last year's tax return unless things have changed very greatly. You also have your last W-2 -- sorry, last pay tub, your W-2, figure out how much income you have. It is a good faith estimate. There won't be additional penalties for being too low but you don't want to owe them too much.

VELSHI: We've known each other many years and every year we have the same discussion. I very rarely have filed a tax return on time. I usually have to go with the extension. People do file them on time. Some 75 million people have already filed their tax returns for 2007.

COCVINIS: Absolutely.

VELSHI: What if you make a mistake?

COCVINIS: If you made a mistake it is called a 1040-X, the x filing as I like to call it. And basically on this form you show them what you reported and what you want to change. Give them documentation. People worry if you file an amended return, are you going to get audited? No. They do look at them but if you submit the paperwork with the form so don't worry. It takes them a few weeks to at it.

You'll get either more money or you'll have to owe them a little money but be ahead of the curve. That's the most important thing. Especially when they owe you some more money, file that 1040-X.

VELSHI: If you file on time, two to four weeks to get your refund generally?

COCVINIS: Absolutely especially if you direct deposit. That's the best thing you can do.

VELSHI: All right. Over the years we've been talking, there's been a revolution in the do it yourself tax side of things. Is it the kind of thing that you would recommend for most people?

COCVINIS: Most people can do it online. Programs, things like that, in addition to cost can be deductible. A lot of them prompt you, remind you, a lot of them can pull information from your employer and help show you where your deductions should be.

VELSHI: What's the guide that says maybe you need to get advice?

COCVINIS: If you're making a lot of money all of a sudden. Also if you have a life change, buy a house, get married, have a baby. Sometimes it is a good time to do a financial checkup.

VELSHI: All right. Donna, good see you, a tax attorney.

Next a rare inside look at the practice of predatory lending.

Plus, what you need to know right now about your 401(k).

And we are answering your e-mails. The address,


DON LEMON, CNN ANCHOR: Hello, I'm Don Lemon at CNN Center here in Atlanta.

Time now for a check of the stories making headlines right here in the "CNN NEWSROOM."

We have some new information for you on a prison riot that broke out at a federal lockup in south Texas this morning. The Associated Press now reports one inmate was killed and 15 others hospitalized after a prison brawl at the federal correction facility in Three Rivers, Texas. A prison spokesperson says no guards were hurt and they are now back in control. It is the second such riot at the federal facility in Texas this month.

Police in Virginia say they have a suspect in custody for a series of shootings along I-64 earlier this week. Armed with a search warrant, police arrested 19-year-old Slade Allen Woodson this morning after a search of the suspect's home.


COL. STEVE FLAHERTY, SUPT. VIRGINIA STATE POLICE: He is considered a suspect in the Interstate 64 shootings that took place during the overnight hours of March 27. We are still awaiting ATF results of the analysis of the ballistic evidence that was collected at each of the scenes along I-64.


LEMON: Police say more arrests are possible in that case.

Interstate 91 in Massachusetts is closed in both directions as firefighters try dousing a tanker truck which crashed outside Chicopee. A diesel fuel tanker and three other vehicles were involved. The tanker driver is reportedly hospitalized, but no word on his condition. We'll work on that story to try to get it for you in the "CNN NEWSROOM" at the top of the hour.

Those are the headlines right now. Brianna Keilar and I will be back at the top of the hour for the "CNN NEWSROOM."

For now, back to ISSUE #1.

VELSHI: All right. This is ISSUE #1.

Predatory lending is just as ugly as it sounds. It's the practice of convincing borrowers to agree to unfair and abusive loan terms. The obvious goal is to make money, and now the rare chance to hear tales from one man who said he worked in predatory lending.

CNN personal finance editor, Gerri Willis, has the story.


GERRI WILLIS, CNN PERSONAL FINANCE EDITOR (voice over): If you've ever bought a house, you know the dizzying process to seal the deal. Dozens and dozens of signatures, countless scribbling of initials. It all goes by very fast. How many of us actually read what we signed?

The case against Ameriquest started in Des Moines, Iowa. State Attorney General Tom Miller, who led the charge.

TOM MILLER, IOWA ATTORNEY GENERAL: A number of things come together here that made fraud so tempting. One is it's so complex. So you combine complexity, a vulnerable population, a lot of money to be made, and you have the formula for disaster.

WILLIS: Mark Bomchill peddled loans for Ameriquest in Minneapolis.

MARK BOMCHILL, FORMER AMERIQUEST EMPLOYEE: One of the things we had to do was constantly role play our cold-calling skills.

WILLIS: Let's do a couple of those then. I'll give you the objection and you tell me what they told you to say.


WILLIS: All right. So I just refinanced. Why would I refinance again?

BOMCHILL: Well, Miss Willis, often times when people refinance they're not able to get all their needs met. Were you able to get all your debts consolidated that you needed consolidated?

WILLIS: I'm not interested.

BOMCHILL: If I was able to show you how I could save you $60,000, $70,000, would you be interested then?

WILLIS: That's a compelling argument. Is it true?

BOMCHILL: Of course not. It's not true. Those people that fell for it are probably in -- I mean a lot of them are probably in foreclosure right now.

WILLIS: Do you ever feel guilty about having been there and having worked there? Did you put some of these people in these loans?

BOMCHILL: I don't think anybody that can seriously look back at their employment as Ameriquest, no matter what level, can honestly say or feel good about what they did to the customers.


WILLIS: We should tell you that Ameriquest no longer exists. It was bought out by Citigroup and Ameriquest's former CEO Roland Arnall passed away earlier this month -- Ali.

VELSHI: All right, Gerri, we'll be looking forward to seeing the rest of that and looking forward to having you back here in New York.

Gerri Willis in Atlanta.

Joining us now is Andy Serwer, managing editor of "Fortune" magazine. Also a big part of the special that will be on CNN at 8:00 p.m. Eastern tonight.

This sort of thing is one part of all of what contributed to the mortgage meltdown. What else do we need to know? What else happened that caused us to be in the mess that we're in?

ANDY SERWER, MANAGING EDITOR, "FORTUNE": There's blame to go around, as Gerri can tell you. And, you know, it's not just predatory lending, but it's also -- there also are homeowners out there who were getting themselves in the soup knowingly.

Wall Street played a part. Regulators, who were asleep at the switch, they also played a part. And as well as all kinds of people who were involved in this, bankers and such.

VELSHI: Gerri -- Gerri's still with us actually.

Gerri, you know, you spoke to this gentleman at Ameriquest. Does that kind of thing still happen? Do we think that now that there's a light shining on this predatory lending that there's a whole lot less of it or do you get the impression there's still that kind of thing going on, people are still being victimized?

WILLIS: Well, I think there's a lot less of it, Ali. But the problem is, what keeps it from coming back again? We're still waiting for the kinds of regulatory guidance, the kinds of rules, the kinds of laws that are going to make it impossible to do that kind of thing.

SERWER: Yes, what can we really see, though, on the horizon, Gerri, in terms of what's going on in the government? I get the feeling the government's being so reactive right now, trying to stem the tide on Wall Street, trying to figure out a way to bail things out. I mean is there anything really in the work at this point that you think is going on that can really be effective?

WILLIS: Well, you know, we have seen the federal government come out and try to put pressure on lenders to make the right decisions, but we've got a long way to go. You don't have to go far to find folks who are desperately trying to get that loan changed, the terms improved and find that they're not getting any help at all. You know, at the end of the day, I'm hearing more stories of frustration than I'm hearing stories of success.

VELSHI: Yes, one of the things that we're also been looking -- we've been listening to is the candidates and their plans. There have been some speeches this past week. Hillary Clinton, Gerri, really being out in front to try to deal with this issue in terms of how to deal with fraudulent mortgage issues and mortgage issues in general.

And Barack Obama this week also coming out and saying what he's planning to do. We haven't heard that from John McCain just yet, but I'm imaging at some point the idea that letting the market rule will be overcome by having to deal with this problem.

SERWER: Well, that's right, Ali. And so far John McCain is sort of a traditional Republican/Democrat split, which the Democrats are calling for invention of various kinds. Hillary Clinton a little bit more than Barack Obama. But John McCain saying, let's let the market do their thing, which is sort of a traditional Republican fix.

I think that his advisers will be telling him post haste that that is, A, not prudent and, B, and most importantly, not what America wants to hear. I mean some of what he was saying is realistic, like he's pointing the finger at homeowners saying, hey, some of you all screwed up. Again, maybe not the right message. He's right, but it might not be the right message.

VELSHI: Right, but right now that's not what everybody necessarily what to hear.

SERWER: That's right.

VELSHI: Andy, thank you very much.

Gerri Willis, thank you.

We're going to -- actually Andy's going to stick around. He's going to help us on the help desk in just a bit with your e-mails. But make sure to catch Gerri and Andy tonight at 8:00 p.m. Eastern on CNN's Special Investigations Unit, "Busted: The Mortgage Meltdown," 8:00 Eastern tonight right here on CNN. Definitely worth catching.

Well, entering the workforce can be a scary thing and changing careers after five or 10 years can even be more scary. But there are resources out there to help folks make those moves. CNN's David Mattingly is at what's being called a Lifestyle Job Fair.

David, what is a lifestyle job fair? You're in Atlanta right now, I guess.

MATTINGLY: Well, Ali, it's all about making good decisions in a not-so-good job market. That's what this event is all about. And there are a lot of young professionals here feeling a little frustration about what they're finding out there. They're coming here looking for advice, looking for answers on how to kickstart their careers.

Got a few of them here with me. All of them have felt the pinch in the economy in some respect or another.

Natasha (ph), 23-years-old. You graduated a year ago. How's the job market been for you?

NATASHA, ATTENDING THE LIFESTYLE JOB FAIR: It's been well. I've got some contract work but I haven't really found anything permanent.

MATTINGLY: But not a full time job like you were looking for.

NATASHA: Exactly.

MATTINGLY: What's happening with the employment that you have right now?

NATASHA: Well, actually my company is downsizing their marketing department and they are relocating everything to their main headquarters in Winston-Salem, North Carolina. And come July, we won't be having an office suite to go to anymore.

MATTINGLY: And so whatever decisions your employer makes trickles down to you as well.

NATASHA: Pretty much.

MATTINGLY: Also here, Alexandra (ph), 23-years-old, I'm sorry, over this way. You are a junior still in school. You were trying to come out and look for an internship and you're having trouble with that as well.

ALEXANDRA, CURRENTLY SEARCHING FOR A JOB: In the Atlanta market right now, I'm trying to find an internship in this summer with the hopes of a job offer after I graduate. And it's very hard to find a paid internship right now. A lot of companies aren't paying anymore and it puts me in a risky position to accept an internship that's unpaid right now.

MATTINGLY: So if you don't get that internship, you don't get the professional experience to take you into the job market the way you want to. What are people saying to you when you come and ask?

ALEXANDRA: You know, people are saying an internship is a great opportunity. That's the way into the job market, except that if it's not paid. That's the best thing you can do right now. And that's a hard decision to accept.

MATTINGLY: Over here, 21-year-old Ruth (ph). You've been in the job market for a year now. You graduated a year ago. What's been happening with you?

RUTH, ATTENDING THE LIFESTYLE JOB FAIR: Well, it's really becoming a life choice when you're choosing a job. When you're choosing to live in a certain city, you're not just choosing a job, you're choosing your apartment rent and, you know, it's how you can live your every day life. So it's really a struggle to know if I should live in Atlanta or other metropolitan city like New York or L.A. where the cost of living is just so much greater than Atlanta is.

MATTINGLY: What kind of answers are you getting when you're looking for advice here?

RUTH: Everyone's just saying network, network. Constantly meet new people. Put yourself out there. Be yourself. And, I mean, it's really helpful. It's nice to talk to people who are reassuring that the job market, even though the economy is in the shape that it is, is still looking for new and innovative people.

MATTINGLY: Twenty-three-year-old Dajon Hugh (ph) has been out for a year. He was not able to find a job in his chosen career path. You had to take a job just to make ends meet. Is that working for you?

DAJON HUGH, ARTIST LOOKING FOR STEADY WORK: That's correct. A starving artist. You don't initially get the money that you should get firsthand, so you have to pay the bills. So being responsible, and I am, I came on to the Atlanta Syphon Hall (ph) just to get a job.

MATTINGLY: So you're getting that, you're getting your paycheck just to stay out there, but you're still working in the job market trying to find something better?

HUGH: Exactly.

MATTINGLY: What's the one big question you have coming here?

HUGH: The one big question I have is, how can I progress if my career? What's the next step that I can take and who can help get me there? MATTINGLY: OK.

Ali, you hear it, there's a lot of frustration, a lot of questions and a lot of questions about their future in a shaky job market. Back to you.

VELSHI: Yes, David, and they're all excellent questions. I wish them all well. And while the economy is in a downturn now, these things happen in cycles. So for these young people, it will be a good thing to sort of ask these questions for their future.

David Mattingly, thanks very much. He's at a job fair in Atlanta.

Coming up next, saving for the future. We've got solutions for your 401(k) right now. These are things you can do to help yourself out. We are answering your e-mail questions. Your response has been incredible. Keep the e-mails coming,


VELSHI: All right, if you've got a 401(k), and I know a lot of you out there do, you've got to be wondering how to make the most of it, how to maximize that money right now through the good times but also through these tough times. Walter Updegrave is a senior editor at "Money" magazine. I'd like, you know, he's my own sort of 401(k) guru.

Walter, good to have you here. You know, one of the things we've been doing on ISSUE NUMBER ONE, we're not talking about the stock market. Most of our viewers out there are invested, maybe you don't even know it, they're invested in the stock market. We're not trading stocks on a daily basis. They're in 401(k)s. And they've got to be wondering how all of these gyrations in the market are affecting their long-term investment. First of all, are they?

WALTER UPDEGRAVE, SEN. EDITOR, MONEY MAGAZINE: Yes. Oh, definitely. I mean, when the stock market goes down and you have money in stocks and your 401(k), you'll feel it. The thing is, though, that usually the money in a 401(k) is a very long-term investment.

And what you're really focusing on is how much money you're going to have at retirement, not how much you have at any given moment. So you don't want to react too much to these sort of ups and downs of the market.

VELSHI: Well, what reaction should you have? What should you do? When you're looking at the markets up and down and then you look at your 401(k) balance and you see it might be up or down more or less, what should you be doing? What should you be thinking?

UPDEGRAVE: OK. I think the first thing you want to be doing is continuing to invest in your 401(k). I mean most people have a match, it would be very silly to give that up just for this.

VELSHI: It's kind of free money.

UPDEGRAVE: Yes, it is free money. And the other thing you want to do is you want to step back and say, gee, do I have the right mix of stocks and bonds here because it's possible that when the market's doing very well, people get very, you know, ebullient and they start investing much more aggressively. And then when the market goes down, they start to get worried.

So you want to step back and say, do I have the right mix here? And we have some tools on our web site, for example, an asset allocation tool. You just go, answer a few simple questions and it will tell you like how much should you have in stocks, how much should you have in bonds. And then once you get that mix, you pretty much want to stick to it. At the end of the year, re-balance. If stocks have done well, sell some of your stock portions and put into bonds and that way you keep that balance.

VELSHI: And that's a tough one, though. What you're tell people to do when you re-balance is sell those things that have done well and possibly purchase those things that haven't done as well.

UPDEGRAVE: It's a very tough thing for people to do emotionally, which is why it's a good idea if your 401(k) plan has an automatic re- balancing feature, you should use it.

VELSHI: Then it's not your problem. You let them do it.

UPDEGRAVE: And more and more plans are offering this.

VELSHI: One of the things I've actually heard a lot from people these days, they are concerned with the companies that are getting into trouble, about how invested you should be in your own company. My feeling is that if you spend a lot of time working at the company that you work for, be careful about how much that represents of your investments in your retirement.

UPDEGRAVE: Well, there's two -- you have two risks here. One is that the stock might go down. And the other is that you could lose your job or not get the raise that you're thinking. So as far as investing in your own company stock in your 401(k), generally speaking, no more than 10 percent, if that. And if you don't have to do it, I don't really think you should. It's just not a good -- you don't get enough extra return for putting a lot of your money into one stock.

VELSHI: All right, Walter Updegrave, thanks for being with us.

Walter Updegrave is a senior editor at "Money" magazine.

Coming up next, get ready for the help desk. You e-mailed, you asked questions and now we're going to answer them. The address, You are watching ISSUE NUMBER ONE.


VELSHI: All right, the help desk is open for business. We asked you to send us e-mail questions. You responses have been incredible. We want to get you some answers very quickly. To help us do that, "Fortune" managing editor Andy Serwer, best-selling author Lynnette Khalfani-Cox, and CNN correspondent Susan Lisovicz.

Welcome to all of you. Thank you for being with us.

I'm a bit of a dawdling with these e-mails, so I'm going to get right to it because we have a lot of them. James in Florida wants to know, "does breaking a rental lease hurt your credit score?"

Lynnette, what do you think?

LYNNETTE KHALFANI-COX, "AUTHOR, YOUR FIRST HOME": It can if your landlord decides to report your breaking that lease to the credit bureaus. And sometimes people are shocked at some of the things that wind up on your credit report. I've heard of cases where people who have parking tickets that are overdue, library books that are overdue, believe it or not --

VELSHI: No kidding?

KHALFANI-COX: Yes, actually wind up on your credit report. So the deal is, pay all your bills. If you can avoid it, don't break that lease.

SUSAN LISOVICZ, CNN CORRESPONDENT: And if you can be on good terms with the landlord, that's always helpful. Because sometimes these things end up in court and that kind of thing can weigh . . .

VELSHI: And judgments definitely end up on your credit report.

SERWER: If you're just renting from some guy down the street, it's not a big deal. If you're renting from a big company, more likely.


VELSHI: All right. Let's go to e-mail number two. Rick says, "would it be smart to refinance now due to home values going down or wait?" Never a bad opportunity, Andy, to remind people that you've got a special on CNN at 8:00 about the mortgage meltdown.

SERWER: Did I ever tell you, you're the man?

VELSHI: Oh, stop!

SERWER: Listen, I think that it has less to do with housing meltdowns and more to do with interest rates. I mean, that's the key. You've got to do the math. You crunch the numbers.

And right now it probably -- for a lot of people it is because interest rates are down, they're come down. If you're in some sort of exotica, which is to say some kind of twisted ARM, as we call them, you might want to re-fi into something longer term. I think it's always good, run the numbers. It's very easy to do. VELSHI: If you've got good credit, under 6 percent for a 30-year fixed. But, Susan, as you know, that doesn't mean that housing prices aren't going down. Maybe that shouldn't be part of your equation.

LISOVICZ: Well, to Andy's point. I mean, when I refinanced, I was really looking about, would it cost less in the future? Would this monkey on my back get any lighter. And so if you can get a better deal, take it.

SERWER: And there's the security, too, of the long-term, on the security end (ph).

VELSHI: Of knowing what you're going to pay.

All right. We've got an e-mail from Illinois. "Is it better to pay off your mortgage or keep the current interest rate for a tax writeoff? I have six years left to pay on my mortgage?"

Lynnette, really good question because you do get some benefit from having the mortgage and paying the interest.

KHALFANI-COX: Right. You know, but I think -- a lot of people think, oh I'm going to keep that mortgage in order to get the tax deduction. I don't really think that's a smart personal finance strategy.

VELSHI: As my father says, that's the tail wagging the dog.

KHALFANI-COX: Exactly. You know, you don't do things just for the tax benefit alone. Frankly, if it's going to give you some peace of mine, if you have the lump sum money to be able to pay it off, obviously this person's been paying on the mortgage for some time, I say keep, you know, chopping away at that mortgage debt, even though it is a form of good debt, so to speak. But don't just, you know, do it just for the sake of, oh, I'm going to keep the mortgage interest deduction. I don't think that's a wise move.

LISOVICZ: Right. And I think bully for you, if your -- six years. I mean you can really --

VELSHI: Right, that's a good problem to have.

LISOVICZ: Absolutely. But two things to consider. What are you paying now? And is it locked in? You know, those are important. And if you've got a low rate and it's locked in, you might want to use that money and get a better return.

VELSHI: Do something else with it.

LISOVICZ: Absolutely.

VELSHI: Joe in New York says: "So much attention is being placed on foreclosure, but what happens to the folks who are kick out of their homes? In order to rent, most people have to have a credit check performed. Are people evicted from their homes able to get an apartment?" And this is -- it's a really good question, Joe, because we talk about all these numbers about people being evicted or foreclosed upon. They actually are real people who then don't have a home.

SERWER: Well, let's hope Joe's asking about a friend and not himself. You know how that always goes. But I'll tell you, it's actually a very good time to rent right now, if you look at the difference between what it costs to rent and what it costs to buy. But it is true, you know, you get your FICO score or you get your credit rating hurt, you're going to have a tough time getting a landlord.

And the one thing I'd like to mention too. There's so many mistakes in these FICO scores. We just did a story about Warren Buffett's FICO score and it turns out he has a terrible --

LISOVICZ: What was it?

SERWER: Five hundred and eighty or something. He has a terrible FICO score. And it was because there was a mistake in it. There's so many mistakes that people are having made.

KHALFANI-COX: And here's the deal. You know, the Consumer Federation of America has found that there are 70 percent of all credit reports have mistakes. That's a huge number of mistakes and it costs people money because you could be paying higher interest rates on everything, from your car loans, your student loans, your credit cards, obviously your mortgage and it's simply not fair. Something needs to be done.

VELSHI: And it takes a while to fix these things.

SERWER: And who put these people in charge, that's what I always say. Who put these people in charge?

VELSHI: Check your credit report. I mean at least everybody's entitled to one free one now.

KHALFANI-COX: Get a free one every 12 months from each of the big three, Transunion, Equifax and Experion.

SERWER: That's worth doing, isn't it?

KHALFANI-COX: Absolutely.

VELSHI: For nothing. Yes, for free. And check it and see if -- do we have time for one more question?

If I can, I want to take one more from Rick in California: "If the value of my home has dropped so much, how come I am still paying the same amount of property tax as I was when my home was worth more? Wouldn't it help people to keep more money to live on if the government adjusted tax rates to mirror our home's value?"

This is a conversation we were just having earlier. LISOVICZ: Ali, reality bites. I mean there's something called inflation, right? I mean, you know, a lot of your property taxes, they're wrapped up in, what, the police department, education, all of that, garbage pickup.

SERWER: Coming at you, health care.

KHALFANI-COX: And property taxes tend to lag.

LISOVICZ: And, guess what? The prices aren't going down. I mean the . . .

SERWER: It's not going to stay the same. It's going to go up.

LISOVICZ: Exactly.

VELSHI: And why when there are all these foreclosures, not only do they lag, but there's a smaller property base. So one of the -- both Hillary Clinton and Barack Obama have made suggestions about money to help municipalities that get stuck or states that get a lot of foreclosures in them.

I think I might have time for one more? I don't, I'm sorry. Well, we will continue to try to answer your e-mails and your questions. Andy, Lynnette and Susan, thank you so much for joining us. Stick around.

Coming up next on ISSUE NUMBER ONE, get ready for a roller coaster ride. How theme park workers are paying the price for tough times in this economy.


VELSHI: All right. When you think of a struggling economy, theme parks, like the ones you're looking at right now, don't necessarily come to mind. But past the popcorn and the roller coasters and the cotton candy, theme parks can actually offer a very good snapshot of the health of the economy.

CNN's Brooke Anderson explains.


UNIDENTIFIED FEMALE: I have a nine-year-old sister who loves Disneyland. I personally love Six Flags Magic Mountain. Both of those happen to be very expensive and the economy is going down greatly.

BROOKE ANDERSON, CNN ENTERTAINMENT CORRESPONDENT, (voice-over): Audranet Rauls is one of many Americans feeling the economic pinch and potentially cutting back on her leisure activities.

UNIDENTIFIED FEMALE: You spend a little cash every now an then to kind of lift yourself up, entertain yourself. You just can't do it that afternoon.


ANDERSON: The Taylor family says going to theme parks is one of their favorite past times.

BETH TAYLOR, MOTHER: I have two sets of twins. These are the oldest and then I have little ones that are five. So theme parks are a big attraction for us.

ANDERSON: However, if the economy continues to worsen, Beth will make fewer trips to the park.

B. TAYLOR: It's an extra. It's not a must. Theme parks are not a definite thing to do.

ANDERSON: Last year, U.S. theme parks attracted more than 300 million guests who spent more than $10 billion. Economist Christopher Thornberg says this year will likely be a different story.

CHRISTOPHER THORNBERG, PRINCIPAL, BEACON ECONOMICS: My feeling overall is the industry will take a hit.

ANDERSON: Ohio-based Cedar Point took a hit, reporting a $4 million loss in revenue last year after an $87 million profit the year before. Thornberg says this trend could spell disaster for young people counting on park jobs.

THORNBERG: A lot of kids who may have found summer employment won't find it this year.

ANDERSON: Theme park insiders, like Six Flags CFO Jeff Speed, rejects this claim.

JEFF SPEED, EXEC. VP/CFO, SIX FLAGS INC.: Spending is continuing to show increases and our attendance is showing increases. The business is not immune to the economic cycles, but we feel like we're essentially resilient.

ANDERSON: International Theme Park Services president, Dennis Speigel, agrees.

DENNIS SPEIGEL, PRESIDENT, INTERNATIONAL THEME PARK SERVICES: People decide not to take the long vacations and to stay closer to home. And when they stay closer to home, they visit those smaller amusement parks, theme parks, water parks and other leisure attractions that are in their area.

ANDERSON: That's what some, like Los Angeles student Chris Rausch, feels.

CHRIS RAUSCH, STUDENT: We're going to still keep going.

ANDERSON: Others have alternatives in mind.

RAULS: Be cheep and go to the beach. Either way, have you fun.

ANDERSON: Whether on the beach or in a park, the state of the economy is a roller coaster ride for all.


ANDERSON: Now the average ticket price for visiting a theme park is currently about $42, according to International Theme Park Services. That excludes Disney and Universal, which are a bit higher. Now in terms of finding a job at a theme park, there are still opportunities. Ali, the CFO of Six Flags told me they are currently hiring for the summer season.

Back to you.

VELSHI: A little hot in those costumes though, Brooke. Good to see you. Thank you so much.

ISSUE #1 will be back next week at noon Eastern.

"CNN NEWSROOM" with Don Lemon and Brianna Keilar starts right now.