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Bright Spots; The Next Generation; Answering Your Questions; Quick Vote Results; Peer-To-Peer Lending

Aired April 11, 2008 - 12:01   ET


ALI VELSHI, CO-HOST: One presidential candidate wants you to have a say in executive pay.
And by the way, you can forget about recession talk in some U.S. towns. We'll show you some bright spots.

Also, get a loan without going through a bank.

ISSUE #1 is the economy. ISSUE #1 starts right now.

Welcome to ISSUE #1. I'm Ali Velshi. Gerri Willis will be here in just a moment.

We begin with the controversy over what some people are calling executive -- excessive executive pay. Democratic presidential candidate Barack Obama says he wants Congress to pass legislation that would give shareholders a say in how much executives earn. He and Senator Hillary Clinton have both been pushing an economic agenda in an effort to connect with voters who say the economy is issue #1.

Well, as the race heats up in Pennsylvania, Senator Obama is appealing to a powerful organization for some support.

CNN Senior Political Analyst Bill Schneider is live from Washington, D.C.

Hey, Bill.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Hi, Ali. Well, Obama is trying for an upset in Pennsylvania by appealing to that state's powerful blue collar voter constituency. And he's got some very important allies.


SCHNEIDER (voice-over): The Teamsters and Barack Obama, is that a fit? Here's Teamsters president Jim Hoffa leading a convoy across Pennsylvania.

JIM HOFFA, PRESIDENT, TEAMSTERS UNION: I believe in a Barack Obama, and I believe that we can change this country.

SCHNEIDER: Obama, who has not been doing well with blue-collar workers, took his own tour across Pennsylvania.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: And I met folks in factories and on farms and in bars and at...


OBAMA: ... bowling alleys.


SCHNEIDER: These are voters who desperately want change.

HOFFA: There's a despair out there that we can't change things. We have been beaten down.

SCHNEIDER: On Wednesday, the Teamsters convoy made its way to Reading, Pennsylvania, where the York Peppermint Pattie factory is shutting down, moving more than 250 jobs to Mexico. Your Peppermint Pattie will be wearing a sombrero. The target of the workers' anger? NAFTA.

HOFFA: People remember Clinton and NAFTA. And I think, when we talk about changing NAFTA, I think that Barack Obama has more credibility.

SCHNEIDER: Obama's running as a Washington outsider.

OBAMA: That story of diminishing opportunity starts in Washington. It's not an accident.

SCHNEIDER: Many workers see Hillary Clinton as a Washington insider, part of the system that gave them NAFTA.

UNIDENTIFIED MALE: When her husband was in office, he OK'd NAFTA and the other trade agreements.

SCHNEIDER: Obama suddenly reminds voters that he's not part of that system.

OBAMA: For over two decades, what we have heard from President Bush has been the so-called ownership society, which really means, you're on your own.

SCHNEIDER: Two decades? Wouldn't that include the Clinton years? Yes, it would.


SCHNEIDER: Obama is counting on his outsider appeal more than his lifestyle to appeal to those -- to break Clinton's lock really on those blue collar voters. He reminds those workers that when it comes to enjoying the fruits of the nation's economic gains, they are outsiders, too -- Ali.

VELSHI: Bill, nobody covers these numbers more than you do at CNN. Time is getting tight for Barack Obama in Pennsylvania. And he's not making those inroads toward those white male voters.

Is it a big deal if he is or isn't? And is this latest move with the teamsters going to help him?

SCHNEIDER: Well, he is making some gains, but they are slow. And she still is ahead among union voters and among white voters and among -- particularly white blue collar voters and particularly white men.

His gains have been slow, but this has been a long campaign now in Pennsylvania, six weeks. He's now about four points behind on the average in the latest polls. And he has about 12 days now to catch up. So it's a real race for him.

VELSHI: All right.

Our Senior Political Analyst Bill Schneider, part of the best political team on television, joining us from Washington.

Well, as Senator Barack Obama hopes for an upset in Pennsylvania, Senator Hillary Clinton campaigns there today, as well. But New York's junior senator might be more upset with what happened overnight in Indiana.

Firefighters in Terre Haute said they are investigating a fire that broke out at Senator Clinton's local campaign headquarters. Fire officials say two people were able to safely escape the flames, but they are trying to determine what might have sparked the fire.

It happened just after midnight, shortly after a Bill Clinton campaign appearance at nearby Vincennes University. Now, 72 delegates are up for grabs in the Hoosier State, which has its Democratic primary on May 6th.

GERRI WILLIS, CO-HOST: And today we have the mortgage meltdown. It's taken its toll across the country.

The state of Ohio, it ranks number seven in the number of foreclosures, but this state is doing something about it. Most recently, Ohio Governor Ted Strickland announced a compact to help Ohioans to preserve homeownership and the Save the Dream initiative.

Governor Ted Strickland joins us right now.

Good to see you, Governor.

GOV. TED STRICKLAND (D), OHIO: It's good to be with you.

WILLIS: All right. Tell me about this plan to save Ohioans from foreclosure. How does it work?

STRICKLAND: Well, we've asked the subprime lenders, the major subprime lenders in Ohio, to enter into a written contract or compact with us. It's nonbinding legally, but it certainly carries the force of the subprime lenders' prestige and reputation.

And we are asking them to work with us and our homeowners to save these homes and to allow people to remain in their homes. So we've asked them to do several very specific things. And I think it's a big step forward. The first time I believe in the country that subprime lenders have been willing to enter into such a compact with a state.

WILLIS: You know, you've got big names on that list. Companies that are helping you out here, including Citibank, HSBC, Aquon (ph) Financial, a name that's really well known to consumers out there, I think.

But I have to ask you this question. Is this very different from what the administration has been doing with its programs? It's also nonbinding. It also requires that lenders voluntarily help.

STRICKLAND: Well, I think it's I quite different in that it is quite specific. These compact signers have agreed to work on significant loan adjustments and modifications. They've agreed to work to reduce penalties or to forgive penalties.

They've told us that they will take the responsibility to notify homeowners months in advance before their mortgage rate is reset. They've agreed to report to the state of Ohio on a regular basis what they are doing and what the outcome is. And so I think our plan is much more specific, will give much greater relief to the homeowner, and will, in fact, enable thousands of Ohioans to remain in their homes who otherwise would have lost their homes.

WILLIS: Well, let's talk a little bit about that. You say more serious, certainly will help more people. We mentioned before that Ohio is seventh in the nation in terms of foreclosures. What's the trend right now? Is it getting any better?

STRICKLAND: Well, in '07 we had about 85,000 homes foreclosed upon. That was a 7 percent increase over the preceding year.

We think we probably haven't bottomed out yet in Ohio. This is still a continuing problem. But what we are doing with this compact and working with these subprime lenders, we believe, will slow the rate of foreclosures, will enable us to provide assistance, counsel. We are also doing other things in Ohio besides getting the compact signed with the subprime lenders. We are...

WILLIS: I understand there is also a jobs program out there. I wanted to get to you this, because I think this is critical for Ohio and a lot of industrial states like Ohio.

You've got a $1.57 billion jobs program out there. Let me ask you this. Tell me about your program first, but then answer this -- is the federal government doing enough to help states like Ohio?

STRICKLAND: Well, I wish the federal government was doing more. And I've been talking with my good friend Senator Sherrod Brown and members of our congressional delegation who are trying to -- trying to help us. But the federal government can do more, I believe, than they are willing to do at this time.

So we are trying to do what we can do for ourselves. And you're correct, we just got a bipartisan agreement for a $1.57 billion jobs package. We hope to use these resources, most of them, within three years to create jobs, to do public works projects, to improve our infrastructure, to invest in sectors of Ohio's economy that are ready to go, and to create jobs -- biomedical, bioproducts, our logistics and distribution system.

We're putting significant resources into advanced energy to try to make Ohio a center for advanced energy. And energy research, innovation, production, distribution.

So, we're trying to do what we can do for ourselves. But quite frankly, with oil hitting $112 a barrel, that's twice -- basically twice what it was approximately one year go.

WILLIS: All right.

STRICKLAND: And it's affecting Ohio's economy and it's hurting the national economy as well.

WILLIS: Governor, an ambitious agenda. We wish you luck with your program. We showed your 800 number.

Thank you for being with us today. We appreciate it.

STRICKLAND: Thank you for having me.

VELSHI: Well, this show is all about you. And every day we ask you to get involved and weigh in on our "Quick Vote." Today's no exception, except that when I ask you to vote, weigh in on the "Quick Vote," fewer of you do it than when Poppy Harlow does.

So let's go to Poppy Harlow at the set.

Take it away, Poppy.


Well, I have a challenge for people out there. We had more than 40,000 people vote on Wednesday. I want to see double that today.

Well, times are tough. The economy is weakening. Many experts say we are in a recession. You may have to borrow cash right now.

What we want to know today is, who do you feel most comfortable borrowing money from, the bank, your 401(k), or friends or family?

Log on to to vote.

You know, Ali, all of those are pretty tough. You incur -- you've got to pay interest to the bank. You incur a penalty if you borrow from your 401(k). Borrowing from friends and family, that can strain relationships.

So we want to know what you are doing out there if you need to borrow a little extra cash.

WILLIS: Thank you for that, Poppy.

HARLOW: Sure. WILLIS: We'll watch where we borrow our money.

Next up, some people are turning to the Internet to get a loan. We'll tell you how it works and whether that's a good idea.

Then we are turning the show over to you. Your questions, our answers.

The address:


VELSHI: All right. Welcome back to this Friday edition of ISSUE #1.

Two more possible indicators of an economy on edge. General Electric, one of the world's largest conglomerates, shaking Wall Street this morning with a less than impressive first quarter report. That's a report card of how much money they made from January to March of this year.

Compared to last year, GE announced a net income drop of 6 percent. That sent shares of GE spiraling more than 12 percent so far in today's trading. And that hurts the whole stock market.

Now, coinciding with that, the University of Michigan puts out a report about how consumers are feeling, consumer sentiment. It was expected to go down just a little bit. It plunged to the lowest point since 1982.

You consumers are hurting from the high prices, the jobs market, and the economy, including all of that talk about housing -- Gerri.

WILLIS: Today marks the 40th anniversary of the Fair Housing Act. It was supposed to stop home sellers and landlords from discriminating against minorities. But as you'll see, I learned for many folks it's simply not working.


WILLIS (voice over): In the spring of 1968, the United States was a nation divided by race.

(on camera): What was going on in this country? What was the tone?

REV. JESSE JACKSON, CIVIL RIGHTS ACTIVIST: Segregated schools by race, segregated jobs, segregated housing.

WILLIS (voice over): African-Americans were regularly denied mortgages and prevented from renting in white neighborhoods which had better housing and schools. That caused blacks to march for fair housing laws aimed at ending discrimination.

JIM CARR, CO-EDITOR, "SEGREGATION: THE RISING COSTS FOR AMERICA": The marches to improve integration were met often with an enormous amount of violence simply because people really didn't understand what integrated communities might lead to.

WILLIS: Resistance was also felt in Congress, where a bill aimed at ending discrimination against minorities wishing to buy or rent houses was stalled. That quickly changed after the assassination of Dr. King, which sparked five days of widespread rioting.

CARR: Emotions at the time, I think, suggested that this was not the time now to back down and do nothing.

WILLIS: King's death in April 1968 prompted Congress to pass the Fair Housing Act, but 40 years later, the National Fair Housing Alliance estimates almost four million housing violations against all minorities every year, including uncooperative real estate agents who put up road blocks to keep minorities out of white neighborhoods.

The John Marshall Law School in Chicago runs a fair housing legal clinic. They say discrimination today is more subtle and difficult to detect.

DAMIAN ORTIZ, JOHN MARSHALL LAW SCHOOL: Instead of talking to people when they call, they allow the answering machine to answer and let the people leave a message and try to determine, is this person white, black, Hispanic?

WILLIS: The clinic routinely files lawsuits against management companies and landlords who discriminate, often winning settlements for their clients. While progress has been made since 1968, Damian Ortiz says there is still work to be done.

ORTIZ: And it's unfortunate that 40 years later we are still dealing with the same issues.


WILLIS: Jim Carr told me one of the biggest changes since the 1960s is discrimination in mortgage financing. Instead of denying loans to blacks and Hispanics, many in the industry were seeking them out for subprime loans. A lot of people who took those loans are now facing foreclosure -- Ali.

VELSHI: Gerri, coming up next, just days away from Tax Day. The message from the IRS, you'll hear it from the IRS commissioner himself right here on ISSUE #1.

And a new way a lot of folks are avoiding foreclosure.

It's all coming up.

Stay with us. You're watching ISSUE #1.


VELSHI: Just four days left to file your income taxes. And this year an added incentive to get it done on time. A rebate check.

Doug Shulman is the commissioner of the IRS in Washington, D.C. He joins us now.

Commissioner Shulman, there is no help for me. I don't think I have ever filed a tax return on time. But if you want that check, if you want that rebate check, you have got to get a tax return in. In fact, it's not just filing an extension, you've got to file a return.

Is that correct?

DOUG SHULMAN, IRS COMMISSIONER: That's correct, Ali. This year, like every year, Americans have to file their taxes by April 15th. But there is a special incentive.

Starting in May, we are going to be sending out over $100 billion in stimulus payments to the American people. And the most important thing for your viewers to know is, in order to get a stimulus payment, you've got to file a tax return.

VELSHI: Well, there are a number of people who are filing to get that stimulus check which starts at $600 for an individual filing and adds up if you are a married couple filing jointly or if you have a child younger than 17.

What do you need to do if you are filing this return by April 15th specifically to get the stimulus check?

SHULMAN: All you've got to do is file your return. If you e- file -- that's electronic filing -- and don't send it in by paper, and you look for a direct deposit for your regular refund, you'll get your stimulus payment quicker. But all you need to do is file a return.

Let me just mention that there are a group of people who normally don't file a tax return who have to file a tax return this year in order to get a stimulus payment. Those are people on Social Security, low-income individuals, people who get veterans benefits.

They just need to file a very simple form, the form 1040-A. They can get it off our Web site, File it, and they'll be eligible for a stimulus payment, as well.

VELSHI: All right, Commissioner, so if you are one of that group, or if you are a retiree, a disabled veteran, you can actually access some help at IRS offices across the country. About 300 locations I believe that will be open on Saturday.

Tell me about that.

SHULMAN: Yes. I mean, one important thing for everybody in America to know, for your viewers to know, is we're here to help. You can go on our Web site, You can call our 800 number, 1-800- TAX-1040. And tomorrow, on Saturday, we have got extra offices open all across the country.

Go on our Web site. You can see where one is located. Or just go into your phone book.

April 15th, everyone is scrambling to get their taxes in. We are here to help do anything we can to make it easy for you.

VELSHI: ISSUE #1 takes up a lot of time. So I haven't had a full chance to do mine, but I will get an extension in. If you are not filing a tax return, you think you owe taxes, you do have to get an extension. And that is not a difficult process, correct?

SHULMAN: That's correct. April 15th you should either file your return or file an extension. An important thing for people to remember is you can get an extension to fill out the paperwork and file, but if you owe taxes, you still have to pay your taxes now, April 15th.

So you get a simple extension form off of our Web site, You've got six months to file. You can estimate what you owe and just send us a check. It's a very simple form. But make sure to file either an extension or your tax return.

VELSHI: All right. Last tip -- anything that people should know that would make both their lives easier in getting their refunds back or your lives easier in processing them? Big mistakes that you would just love people to get over?

SHULMAN: Well, the biggest mistake that happens is the simple mistakes, math errors. The best way to avoid a math error is to electronically file.

Use some software. It's available free on our Web site for most Americans. Any filer who you work with can do it.

You plug it into a computer program. You e-file with us. You avoid the math mistakes. You get your refund quicker. So that's the best thing you can do for yourself and clearly for us.

VELSHI: All right. Commissioner, thank you for being with us.

I'll just remind our viewers, you can call 1-800-TAX-1040 or go to for some of that information, as well as locations of those offices that will be open during local time on Saturday across the country.

Thank you very much, Commissioner -- Gerri.

WILLIS: There is a new way people are getting out of foreclosure. We'll tell you exactly what they are doing and if it's working.

And we have answers to your questions. E-mail us at


WILLIS: You've probably heard the term reverse mortgages. It's exactly what it sounds like. The bank pays you instead of you paying the bank.

Reverse mortgages used to be a way folks over the age of 62 could supplement their retirement years. But more and more, it's a way for seniors to put off foreclosure.

CNN's Deb Feyerick has the story.


DEBORAH FEYERICK, CNN CORRESPONDENT (voice over): Arlevia Taylor was on the verge of losing her home. She's a senior citizen on a fixed income. She thought she refinanced her mortgage at a permanent low fixed rate, only to learn two years later her rate had jumped from 6.9 to 9.9 percent.

ARLEVIA TAYLOR, SR. CITIZEN HOMEOWNER: When I found out that I had an adjustable rate, I cried for days.

FEYERICK: Like many senior citizens who did not understand the fine print, Taylor says she was a victim of predatory lending.

BILL BRENNAN, ATLANTA LEGAL AID: Our sense is that there are hundreds of those, if not millions, of seniors who have been targeted for these bad loans...

FEYERICK (on camera): All across the country.

BRENNAN: All across the country.

FEYERICK (voice over): Bill Brennan, an attorney for Atlanta's Legal Aid Society, took on Taylor's case. He contacted the lenders and point by point accused them of giving Taylor a loan they knew she could not repay.

BRENNAN: She was a senior homeowner living on a low fixed income from Social Security and alimony. How is she going to pay higher payments unless her income goes up? Which it was not going to do.

FEYERICK: Brennan persuaded the lender not to foreclose, but to take a payout generated by what's called a reverse mortgage, even though it was less than the $130,000 Taylor owed.

(on camera): You offered them $70,000.


FEYERICK: And what did they tell you?

BRENNAN: They accepted.

FEYERICK (voice over): Asked why, the company now handling the loan told CNN, "We believe every party to a foreclosure loses, so our focus is on helping homeowners stay in their homes."

With a reverse mortgage, the bank pays the homeowner and repayment is not made until the homeowner dies or moves out.

BILL BRENNAN, ATLANTA LEGAL AID: This is an easy solution that gives a substantial amount of cash to the mortgage company and gives a sense of security and well-being to the homeowner who can stay in her home for the rest of her life.

FEYERICK: While it may sound win-win, mortgage experts say it's not for everyone.

JESSICA ATTIE, FORECLOSURE PREVENTION PROJECT: The house has to be sold in order to pay off the mortgage. So somebody who's looking to leave their home to their heirs should -- is not really a good candidate for reverse mortgage. And reverse mortgages can be very expensive.

FEYERICK: Still, Legal Aid's Bill Brennan thinks the plan should be offered to all eligible seniors, like Arlevia Taylor, facing foreclosure.

ARLEVIA TAYLOR: I'm so happy. Let me tell you, today was my day.

FEYERICK: The loan must be repaid in full with interest. And that responsibility falls to the heirs who either have to sell the house or refinance in order to keep the property. And as usual with a reverse mortgage, the terms are decided on a case by case basis.

Deborah Feyerick, CNN, New York.


ALI VELSHI, CNN ANCHOR: OK, listen up. There are some areas of the country where -- and I can say this with a straight face -- things aren't so bad. In fact, from the housing perspective, they're actually pretty good. Caroline Waxler's with and she's brought some of those to talk to us about.

I just recently came back from Texas because the primaries in Texas. We spent a lot of time around there. Lubbock, Texas, is one of the places with a remarkably low foreclosure rate and a low unemployment rate. What's going on in Lubbock?

CAROLINE WAXLER, MANAGING EDITOR, MAINSTREET.COM: It's amazing. Lubbock is great. Did you make it to Lubbock when you were there?

VELSHI: We did. Yes.

WAXLER: Great. Lubbock is very stable. So a lot of people weren't jumping in to buy these -- to refinance. And low unemployment. And it's a great place.

VELSHI: Texas Tech University is there. It's the birth place of Buddy Holly. So it kind of is an interesting place to think about.

Another very low unemployment rate of a place that's on your list is Charlottesville, Virginia. Virginians enjoyed some benefits from, you know, technology jobs. What makes Charlottesville interesting?

WAXLER: Well, it's a university town. And again, these places are just all really stable. There's low unemployment. And, you know, Thomas Jefferson had a hand in Charlotte. That could have something to do with it.

VELSHI: Tuscaloosa, Alabama. Again, unemployment rate of 3.5 percent. Remember the national unemployment rate is above 5 percent. So these are fairly dramatic, these differences. And that low foreclosure rate, a median home price of under $160,000. What draws you to that? What's the idea (INAUDIBLE)?

WAXLER: Isn't that amazing? And again, I'm going to echo it. It's a very stable place. And Tuscaloosa also has a big college there. So I don't know if the theme is, there are a lot of college towns that are happening, but these are just not very glamorous places to live. But people like it. There's low turnover there.

VELSHI: And another place that's interesting in the Northeast, Burlington, Vermont. A hub that's covered by a lot of access from transportation. Great winter sports. What's interesting about Burlington to you?

WAXLER: Burlington -- the funny thing is, there are a lot of telecommuters in Burlington. And a lot of skiers. A lot of people that own second homes. And, again, it's just a stable place to live. It's not as cheap as say Tuscaloosa.

VELSHI: I can see that. Look at that, it's almost $378,000 for a median home price. It's like California.

WAXLER: A little more glamorous, but again stable.

VELSHI: One of the places that we talked about earlier with our senior political analyst, Bill Schneider, is York-Hanover, Pennsylvania. A beautiful part of Pennsylvania. They're losing some jobs. They've got a Hershey factory that makes the peppermint patties is shipping out to Mexico. But it's still the snack capital of the world, you're saying? Or snack capital of America?

WAXLER: Some would say that, especially the Amish are there. It's a big Amish area. Perhaps that has something to do with the stability of the area. Again, not glamorous, but York is doing just fine. Maybe people want to move there.

VELSHI: What's your sense when you look at these places? Has the trend been good? In other words, are these places that are standouts from the national scene we see? Are they likely to stay that way or is the trend of high foreclosures and lower prices gripping so much of the nation?

WAXLER: I think these are standouts. Now I know we're not at the end of this. We can't say they survive, they're surviving. But when you compare them to other places in Florida, like that have rates as one in 80 homes are foreclosed. I mean one in 57,000? I'll take it.

VELSHI: Yes, good deal.

All right, good to talk to you, Caroline Waxler. Thank you for being with us. WAXLER: Thank you.

VELSHI: Caroline Waxler is a managing editor of


GERRI WILLIS, CNN ANCHOR: I vote for Charlottesville, guys, that's a great town.

Up next, CNN's T.J. Holmes is standing by at A&T in Greensboro, North Carolina, talking to the next generation of workers. Find out what the workers of tomorrow think about the economy of today.

And why your bank isn't the only place to get a loan. Find out all about peer to peer lending when ISSUE NUMBER ONE comes right back.


DON LEMON, CNN CORRESPONDENT: Hello, everyone. I'm Don Lemon, live in the CNN world headquarters in Atlanta. More ISSUE NUMBER ONE in just a moment. But first, we want to check some headlines.

Emergency in western Pennsylvania. Authorities are on the scene of a massive explosion on Pittsburgh's north side. Take a look at this video from affiliate WTAE. Now according to the Associated Press, this happened about two hours ago. At least two row houses have been leveled. No reported injuries as of yet. And we will keep you posted on that one.

Trouble in the skies. Flier anger growing worse today as American Airlines takes another 570 flights off the board. Add up the chaos from this week, thousands of flight canceled, 250,000 passengers stranded and the airline estimates losses in the tens of millions of dollars. Most of it due to an FAA mandated inspection of a possible wire hazard in MD-80 wheel wells.

Adding to airline wows, another U.S. carrier, another one, is filing for bankruptcy. Frontier Airline says it has a cash flow problem but promises business as usual while it shores up its finances.

The presidential candidates putting their focus on crime and the economy today. Hillary Clinton is outlining a $4 billion a year anti- crime plan. She wants to reduce the number of ex-cons who return to jail and help communities hire more police. Barack Obama is calling for shareholders to have a say in how much company executives get paid. He is campaigning in Indiana today. John McCain is detailing his plans to help homeowners caught in a mortgage crisis. The McCain campaign's in Texas today.

More news at the top of the hour right here in the CNN "Newsroom." I'm Don Lemon. Now back to Ali Velshi and Gerri Willis in New York.

WILLIS: Thanks, Don.

You know, we talk about the economy and what it means to your house, your job, your savings and your debt.

VELSHI: But if you're lucky enough not to have any of that, you're just starting out. CNN's T.J. Holmes packed up his mini van. He drove up to North Carolina, A&T in Greensboro. He's talking to students out there about issue number one.

I'm just seeing if you're listening, T.J., because we all know you don't have a mini van.

T.J. HOLMES, CNN CORRESPONDENT: Thank you very much, Ali, for pointing that out for me.

Yes, A&T here in Greensboro. And first I just want you all to watch the reaction when I say the date May 10th. OK. That's actually graduation day. Usually a reason to celebrate, but sometimes with the economy these days, always not a happy time for some of these students. I want to start with my man Alan over here, who is a senior. You're going to be taking a year off. You're going to go to law school. You're taking a year off, though, to find a job. But you didn't go back home to find that job. Why?

ALAN HOLMES, SENIOR, POLITICAL SCIENCE MAJOR: No, I didn't because I'm actually from Akron, Ohio. There's a lot of problems with the economy and people finding jobs there. So I just have to look elsewhere. If I don't stay here in North Carolina and find a job, I will go to D.C. and try to find a job on Capitol Hill.

T. J. HOLMES: So even if they're not getting their careers started sometimes, guy, they still have a struggle finding those jobs in between to hold them over until they really get their career started.

Going to go over to Desiree now. And a lot of things we were seeing on the campus, the students we talk to, students want to continue their education. Right now the economy's not so good. The job market's not so good. So, you know what, I'm going to stay in school.

DESIREE MCNAIR, SENIOR, BIOLOGY MAJOR: Right. And actually I'm planning on going to graduate school for a masters in public health. And that is because with a bachelors degree in biology, it's not really entering the health field. You have to have more training. And so you have to go to graduate school or you have to go to another professional type school to really get the job that you're looking for. So that's why I'm planning on going to grad school.

T.J. HOLMES: And, of course, we're here at A&T. And we were at North Carolina Central yesterday. Don't boo. But doing the historical black college tour. And for black students, there are so many issues. With black America. We were having this conversation, Chanelle, with black America. Do you think there are issues with the job market that are unique to black campuses, unique to black students facing any other challenges? Different challenges?

CHANELLE OLIVER, SENIOR: Actually, I really do think there are a lot of differences that we're facing. We're not just competing with our friends here. We're having to compete with schools of predominantly white students and a lot of the ivy league and things like that. And coming to an HVCU, I love the experience. I would never trade it for the world. But it is going to be a challenge having to deal with the other counterparts of it. I think our education here is as great as any other education. Especially here at A&T, aggie pride.

CROWD: Aggie pride.

T.J. HOLMES: All right. Now this ain't no pep rally now, come on.

David, I will turn to you, a political science major. You have at least until the fall. Your field, you want to do some lobbying for non-profit, though, folks. He wants to do some lobbying. But, still, that job market for you, did you decide about that particular field because you thought the market would be good? And what do you think about the job market there now?

DAVID STREET, SGA PRESIDENT, N.C. A&T UNIVERSITY: Well, I mean, obviously the stereotype with the lobbying field, when you hear about all the corruptive and negative things that have been going on the past several years. But, I mean, I had a co-op last fall in Washington, D.C., doing affordable housing for low income families. So, I mean, you know, you could definitely do some positive things in that lobby industry. So that's what I intend to do.

T.J. HOLMES: I will turn to Amina here now in the middle here.

Did you find you had to kind of temper your expectations about graduation, about the job market, about the field you're going to go to, because even if you're not paying attention day in, day out to the economy and the job market, everybody knows right now people don't feel that good about the economy. How did you kind of have to manage your expectations of what to expect once you graduate and continue your education?

AMINA CLIETTE, SENIOR, AFRICAN-AMERICAN STUDIES: Well, when you talk about like the recession and things, usually people go back to school because there aren't a lot of jobs out there. So I decided to go to law school because I want to be a part of like the political scene, so you have to know the law, things like that. So I decided to go to law school. But most people in the recession, they usually go back to either education and getting -- honing their skills so they can be better prepared.

T.J. HOLMES: And, guys, we hear a lot of that on this campus. Campuses I've been on before. I was at Georgia, of course. Went to (INAUDIBLE). Kind of the same thing. A lot of kids, you know what, the job market's not so great. I need to continue my education.

What's happening May 10th again, guys? What is that?

CROWD: Graduation.

T.J. HOLMES: Oh, yes. I've got two here, Amina and David, at least they're going to be graduating in the fall, in December. We'll be back. We'll be back, though.

But there -- Ali and Gerri, that just gives you kind of an idea of what you hear. It's not unique to -- no matter what campus you're on, an historically black college or a predominantly white college, it doesn't matter, the issues and the concerns are the same for so many graduating seniors.

VELSHI: T.J., Amina's right, if the opportunity cost is lower than going out in the working world, than it's useful to go back to school and get some edition. You we cannot afford to lose from the world of CNN. So you stay with us. Listen, something interesting about North Caroline Gerri and I were just talking about. It's got lower than -- it's got higher than average job growth. At the moment, its unemployment rate is under control and it's not been the worse housing situation in the last little while.

WILLIS: It's a great housing market. We need all those bright minds to stay right in North Carolina. That's my home state.

VELSHI: Congratulations to all of them.

T.J., good to see you.

T.J. HOLMES: All right, guys. You all take care.

VELSHI: Well it's time to get you some answers to your questions. The help desk is stand by with real solutions to your questions. And it's not too late for you to weigh in.

WILLIS: Our address is

And it's the eBay of consumer lending. We'll explain how it works and whether it's a good idea, up next.


WILLIS: Hey, you just don't stop e-mailing us. So many questions, so little time. Let's get right to the help desk. Jack Otter is with "Best Life" magazine. Hillary Kramer back. She's with AOL and the author of "Ahead of the Curve." And we have our very own Allan Chernoff.

Welcome to you all.

Let's jump right in. OK, the first e-mail is from Steve in Kentucky. He asks, "property taxes are based on my home value. Should I have my home reappraised to save on my tax bill?"

What do you think, Jack?

JACK OTTER, DEPUTY EDITOR, "BEST LIFE": I like the way Steve's thinking, but I can save him money. Don't bother to pay an appraiser. It's actually set by the assessor's office in your county or town or city. So go there. See what it's assessed at. And don't jump right in. Sometimes these towns don't assess for literally decades. So it's possible that his actual value that he's taxed on is based on a 1995 value of his house. So check that and only if it's overpriced in the assessor's eyes than he should challenge it.

WILLIS: You know the only problem is, sometimes you can have the value of your home cut. You may not want that to happen. You may not want to say, for the record, my home's value is less than what I thought it was. That can be a negative when you go to sell it.

OTTER: Of course, can you hire an appraiser at that point?

WILLIS: Well, I'm sure you can. I'm sure you can.

All right. Alex who's out of Texas has a question. "I have several federal loans from undergraduate and graduate schools that I need to start making payments on. Are those federal loans going to affect my credit score when I apply for a mortgage or a vehicle loan?"


HILLARY KRAMER, AOL MONEY COACH: Yes, absolutely. But it's really a trick question because if you've been paying them on a timely basis, you will get that mortgage. It will help you because that's what the credit rating agencies are -- they're looking for to see that you're a timely payer. But, if you haven't paid them, yes, it will affect your credit score even 50 years down the road. So you want to make sure to establish a very, very strong credit rating now.

WILLIS: Well, good advice.

OK, we have Jerry (ph) in New Jersey. It's really not me. "I had $30,000 in an IRA and now it's down to $24,000. Do I move it now? What would it cost me to move it and where should I put it?"

Jack, I'm going to jump over here to you for a second.

OTTER: I think he's -- or she, perhaps -- is making a mistake, which is to mistake an IRA, which is simply a tax designation . . .

WILLIS: It's a vehicle.

OTTER: Exactly. A vehicle with an investment. So let's go to the investment. No, don't change it. You're -- he's making the mistake that everyone makes, which is, when you lose money, you sell. If you're under say 50 years old and this is retirement money, obviously, stick with the market. It's a good time to reassess, make sure you're diversified. I think right now is a good time to be in the equity market. You and I agree on that. Money markets are paying nothing.

WILLIS: Stocks are cheap.

ALLAN CHERNOFF, SENIOR CORRESPONDENT: She might want to stay in stocks, but she may say, hey, you know what, this fund I'm in or whatever it is has not been performing all that well. It's a good opportunity to look back at the long-term performance of the fund.

WILLIS: Reevaluate.

CHERNOFF: If it's not good, maybe shift it onto a different fund with a better long-term record.

KRAMER: Yes, but then you end up chasing performance and there in lies the problem.

CHERNOFF: No, no. Well, you know, if you're long term. I'd say maybe not six months, but look at the three year, the five-year record. You want a fund that's got a solid performance over the long term.

WILLIS: You know, sometimes we have disagreements on our panel. It's all good. Everybody's got great ideas.

CHERNOFF: She agrees with me (ph).

WILLIS: Let's take the e-mail from Bob in New Jersey. "We've heard that FDIC," that's a federal agency, "insures bank accounts up to $100,000. If we have a joint bank account of $200,000," that's husband and wife I presume, "are we covered for each $100,000?"


CHERNOFF: Absolutely. As a matter of fact, you can be covered -- a couple can be covered up to $1.1 million at an institution.

WILLIS: Really?

CHERNOFF: Yes. If you add up individual, joint, then also retirement accounts and if you have revokable trusts, which are accounts that, upon your death, it goes to a beneficiary. If you add all that up, and I'm just talking about a couple here, you can actually get up to $1.1 million coverage from the FDIC. And you can go online. They've got something called EDIE, which is the Electronic Deposit Insurance Estimator. Just plug all the numbers in. They'll tell you exactly how much you're protected for.

WILLIS: Perfect. Give that e-mail or url one more time.

CHERNOFF: It's -- go to the But I think we also can pop it up. We've got it over there. And you just,

WILLIS: Brilliant. OK. Great idea.

We've got one more e-mail. Let's get it in here. Dave in New Jersey asks, "what is the U.S. dollar backed by?"

Who wants to jump in? Hillary?

KRAMER: I'll do it. The good faith and credit of the U.S. government and the people.

WILLIS: No gold states (ph).

KRAMER: No, yes. The people's faith in the U.S. government. And that's why we have the dollar decreasing in value is because outside of the United States there's less faith in the U.S. and that's why we're seeing the dollar drop in value. And when that faith returns, we'll see the dollar come up. And, you know, we should be coming out of recession soon.

WILLIS: We hope that dollar comes up.

KRAMER: It will. It will again (ph).

WILLIS: Hillary, I hope it comes up.

Jack, Hillary, Allan, thanks so much for helping us out today. Great job. Terrific answers.

VELSHI: And a fantastic question, what is the U.S. dollar backed by. I'm glad somebody asked that.

Listen, still to come, your next loan could be just a mouse click away. Log on, share your story and get some cash. We'll explore something called peer-to-peer lending next.

And this ties in very nicely with today's Quick Vote question. Where do you feel most comfortable borrowing money from? There's still time to vote. Log on to Poppy wanted like 80,000 responses. So do your part for her. We'll be coming right back on ISSUE NUMBER ONE in a minute.


WILLIS: It's time now to get the results of today's Quick Vote. Let's check back with Poppy Harlow. She's at the set.

Poppy, hey, you've also got to tell us how many responses you got.

POPPY HARLOW, CNNMONEY.COM: Yes, you know, the viewers let me down just a little bit. Only 35,000 of you or so voted. But that's still a lot. I was looking for 80,000. Let's do better next week.

Here's the question. Who do you feel most comfortable borrowing money from? Well, an overwhelming amount, 63 percent of people, said the bank. A traditional answer there. Seventeen percent of people want to borrow from their 401(k) and incur that penalty if they're under the age. And also about 20 percent of you said you want to borrow from friends and family.

So if you have more questions of where to borrow from, log on to Our site has a the lot of resources, Gerri, especially in our ask the expert section for people looking for the best business advice out there.


WILLIS: I think 34,000 is pretty good. Thanks, Poppy.

HARLOW: Yes, not too shabby, sure.

VELSHI: Well, listen, this is -- takes us nicely into what we want to talk about. Adjustable rate mortgages, as you know, have meant trouble for people. Ditto for high-interest credit card bills. We've heard about adjustable rates, in fact, shooting higher than 30 percent on some loans. But where do you go? Well here's CNN's Reggie Aqui.


REGGIE AQUI, CNN CORRESPONDENT, (voice over): When the credit cards max out, when the banks say no, what then?

JOHN ULZHEIMER, CREDIT.COM: You can go to a pay-day lender, a title lender, a pawn shop. You can hock your jewelry. These are horrible options.

AQUI: Amy Vogt wasn't at that point. The head of a small music production company in Atlanta, she need $10,000 to keep her business afloat.

AMY VOGT, PANDEMONIUM! PROMOTIONS: Well, first I was using credit cards.

AQUI: Until she heard about A so-called peer-to- peer lending site. Borrowers post the reasons why they need money. Everything from seeing grandma in Portugal, to paying for a root canal.

VOGT: I really love the people-to-people aspect. I like that you could tell your story and people could decide whether your story, you know, touched them in some way.

AQUI: The lenders, regular people, not banks, look at the site's credit grade for each borrower. AA is the best. HR for high risk is the worst. Then they decide if they'll fund the loans and at what rate. Four hundred plus people wanted to help Amy.

VOGT: I was just, oh, man, how could I have not heard about this before?

CHRIS LARSEN, CO-FOUNDER & CEO, PROSPER.COM: Basically it's an eBay for money and credit.

AQUI: Chris Larsen is Prosper's CEO and co-founder. With more than 600,000 current members, his peer-to-peer lending site is by far America's largest.

LARSEN: You know, we've actually seen a very dramatic change in our marketplace at Prosper over the last year as the credit crunch has hit. And what we're seeing mostly is now very credit-worthy people coming to Prosper, which is quite a shift. And we believe it's probably because things like home equity loans have really just gone away.

AQUI: But should you do it? John Ulzheimer of says borrowers can't really lose, but he cautions lenders.

ULZHEIMER: This is not a game. This is not -- this should not be done without much thought. This should be something that when you put the money into their system, you should be comfortable losing it. (END VIDEOTAPE)

VELSHI: All right, Reggie Aqui is here from Live.

WILLIS: All right. Reggie joins us now from Atlanta.

OK. So let me ask you this question. I'm still curious about this. And I'm a little suspicious, you know what I mean, Reggie?

AQUI: You're nervous about this, Gerri, I know. I know.


VELSHI: For the lender.

WILLIS: Hey, look, look, look, if I'm borrowing money, you know, there's no FDIC insurance on this. I mean, look, you know, there are no guarantees.

AQUI: There aren't any guarantees, you're absolutely right. But here's the deal, Gerri, I mean, reality, people are going to credit cards. They're going to banks and they're getting denied. So this is another option among a slew of options that people have. So at least there's something else that they can do.

But let me go through some quick things here that you have to watch out for. Remember, there's no bank here. You are the bank. So if you're going to go on this site and lend out, you've got to know that there is a delinquency rate. There are people who are not paying these loans. And so you have to look at that very carefully.

And most of these sites, they're pretty transparent about their delinquency rate. We're talking about 10.5 percent on, the number one peer-to-peer site. And that is a combination of both the delinquency and the default rate.

Also, you know, interest rates vary. You can get a good interest rate if you have really good credit, about 7.5 percent, but it's all the way up to 28 percent if your credit is poor.

And the last thing you should know is that, you've got choices here. Prosper is the biggest one. There's There's also But, Gerri and Ali, these rules are changing every day. These business models are changing. We're even seeing some of these companies disappear. So do your research, as always, like you guys say.

WILLIS: All right.

VELSHI: Reggie, good to see you. Thank you for that.

WILLIS: Ali and I will be back with more ISSUE NUMBER ONE all next week at noon Eastern. VELSHI: CNN "Newsroom" starts right now. Let's head over to Don Lemon and Fredricka Whitfield, who's got this afternoons news from you -- for you from the "Newsroom." I think it's probably time for me to stop talking. So let's take it over back to the "Newsroom."

DON LEMON, CNN ANCHOR: One Marine finally captured.