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Treasury Secretary Henry Paulson Trying To Calm Fears on Wall Street; Arlington National Cemetery Controversy; Jason Burnett Quit EPA and Now Accusing Vice President Dick Cheney of Censorship; Proposed Oil Refinery in South Dakota Wrapped in Secrecy; What's the Distance Between Obama and McCain Now; Cynthia McKinney Running for President in the Green Party; High Water Stopping Traffic in Tempe, Arizona

Aired July 13, 2008 - 22:00   ET

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


RICK SANCHEZ, CNN ANCHOR: Tonight, an exclusive interview with the government's point man handling what may be the biggest bank failure in U.S. history. In this, his first interview, he talks about what we should expect and who will pay.
(BEGIN VIDEO CLIP)

SANCHEZ: If you're going to hit them for more, wouldn't they hit us, as customers, for more in fees?

(END VIDEO CLIP)

SANCHEZ: Answers you may or may not want to hear. A look ahead. And how we got here.

(BEGIN VIDEO CLIP)

SUZE ORMAN, HOST, CNBC'S "SUZE ORMAN SHOW": You know, they were kind of watching like -- oh, I see it, I don't see it. Why didn't they want to see it? They didn't want to see it, in my opinion, because they were making so much money.

(END VIDEO CLIP)

SANCHEZ: What's the distance between Obama and McCain now? We've got the latest numbers.

What's with all the secrecy surrounding this proposed oil refinery in South Dakota?

And tonight, this question, "Why are the funerals of American soldiers kept under wraps?"

(BEGIN VIDEO CLIP)

GINA GRAY, FMR. DR. ARLINGTON CEMETERY PUBLIC AFFAIRS: I put my foot down. I refused to accept the answer of, that's the way it is. No, it's not.

(END VIDEO CLIP) SANCHEZ: At Arlington National Cemetery, she lost her job over this one. Tonight, she tells her story to you. We tell you the news. It starts now.

Hi, everybody. I'm Rick Sanchez here at the world headquarters of CNN. We've really got a lot to get to tonight. But first, tonight your government is trying to avert a crisis of confidence and you should know about it. This is a crisis of confidence over an economy that's showing some serious cracks on the heels of what may be the biggest bank failure in U.S. history.

Here's what's happened. Just within the last couple of hours, as we've been digging into things. First, Treasury Secretary Henry Paulson is trying to calm fears on Wall Street, especially when it comes to the battered lending institutions, Fannie Mae and Freddie Mac.

To avert a major problem tomorrow on Wall Street, he says that the government wants to give more credit now to those two companies and the Treasury may even buy stock in them if needed.

(BEGIN VIDEO CLIP)

HENRY PAULSON, TREASURY SECRETARY: Your support for the housing market is particularly important as we work through the current housing correction. GSE debt is held by financial institutions around the world. Its continued strength is important to maintaining confidence and stability in our financial system and our financial markets. Therefore, we must take steps to address the current situation as we move to a stronger regulatory structure.

(END VIDEO CLIP)

SANCHEZ: Right. Also, we've got this statement now. This statement coming in from the White House. They're saying that they want Congress to approve these measures pronto. This came earlier from Press Secretary Dana Perino. I'm going to quote her here.

"It's crucial that Congress quickly works to enact this legislation as a complete package along with the strong oversight reform legislation recently passed in the Senate."

So tonight, there is a definite sense of real urgency in our government about our economy. Here's another very important question we need to pose tonight. Was this failure of the California lender IndyMac, that we've been telling you about, inevitable? Or, was it triggered by Senator Charles Schumer?

You see, last month, he did raise questions publicly about IndyMac. And the White House today compared it to yelling fire in a crowded theater. For his part, Schumer is now saying -- no, it's more like, I saw fire, and I called 911.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D), NEW YORK: The regulator was asleep at the switch and allowed things to happen without restraint. And now, they are doing what the Bush administration always does, blame the fire on the person who calls 911.

(END VIDEO CLIP)

SANCHEZ: All right. So there we are with the politics of this as well. So, these lending practices, that Schumer was complaining about, where banks give loans to people with no income, no assets, and hope that the home will somehow go up in value and be able to cover it, didn't work.

Were they the real cause of this mess, those lending practices? And why didn't anybody do something about it earlier? It's a question that's not being asked only by us, but by many people. I brought it up yesterday in a conversation with Suze Orman. And as you can see, I obviously touched a nerve. Listen to what she says.

(BEGIN VIDEO CLIP)

SUZE ORMAN, HOST, CNBC'S "SUZE ORMAN SHOW": Why didn't they want to see it. They didn't want to see it, in my opinion, because they were making so much money. The banks were making money. The banks were selling these loans that were no good. They didn't have to worry about it, to the securities companies. They were selling it to investors.

Everybody was making money and everybody was driving which made the economy looked like it was driving, which made the administration looked good. Everybody was so happy. Except those who should have been watching.

Now, they're kind of crying about it. And Rick, it's really a shame. You know, everybody got mad at the Enron people, the WorldCom people. We took them to jail. We did all this. I don't know. I don't understand why the people that should have been watching and weren't watching and allowed this to happen aren't going to jail as well, if you ask me.

(END VIDEO CLIP)

SANCHEZ: All right. We'll leave that argument and pick up this part of the equation now. The government is concerned tonight about your concerns. So, what you're about to see here is a CNN exclusive. As you know, the FDIC has now taken over IndyMac, and tomorrow morning it will operate as a new bank.

What officials don't want, what they're telling me they don't want, is a line of people rushing to try and get their money out of this bank. They want to assure all Americans that the money in this bank is, quote, and these are the words he used when he was explaining this to me, "guaranteed and safe" -- that this is, just like he says, a new bank taking over an old bank.

Tonight, the government's point man in this massive takeover has sat down with me for his first network interview. It's important information for all Americans. Here now, the FDIC's John Bovenzi, who is in charge of IndyMac.

(BEGIN VIDEO CLIP)

JOHN BOVENZI, INDYMAC CEO/FDIC COO: We were watching IndyMac, along with other institutions, before the failure.

SANCHEZ: But was it on your must-be-watched list? Because I heard you a little earlier when you were having a news conference and you seemed to suggest that it wasn't one of the top banks on your list.

BOVENZI: Yes. I mean, I was referring at that time to our problem bank list. And IndyMac was not on that list at that time. But we were still looking at it because of some concern about its condition.

SANCHEZ: But what does that say, though? I mean, you have 90 other banks apparently that are on your problem list. Is that correct?

BOVENZI: Yes. I think the important point to make is that historically, only a very small percentage of the banks on our problem bank list ever fail. So, while there are 90 banks on that list, there'd be no expectation that 90 of those banks would fail. Most --

SANCHEZ: Let me ask you, John, what I think a lot of our viewers would want answered, because they all have transactions with banks. And they want to know if you are going to -- if they're going to be seeing other banks in the next coming weeks whose assets are also seized by the FDIC.

BOVENZI: If there are other bank failures in the coming weeks, I think the same message, if your accounts are under $100,000, you have absolutely nothing to worry about. And there are ways to structure your account so you can get much more than $100,000 coverage fully insured in any individual institution.

And I would recommend that people look at our Web site to see how to structure their accounts to take full advantage of deposit insurance.

SANCHEZ: The key being, don't have more than $100,000 per account holder in there, right?

BOVENZI: Well, that's a -- you know, a shortcut, safe rule that you know you're protected, if that's the case. You can still find ways to protect more if you like.

SANCHEZ: Let me ask you this question. If you have to come in and bail out these banks, that means that you have to use these funds that you have in reserve to do this. Do you have enough funds in reserve to bail out a bevy of banks should this problem grow? And if not, where will you get those funds?

BOVENZI: Well, the FDIC has $53 billion in its insurance fund, and it has the ability to raise more money from the banking industry going forward. So, there is more than enough --

SANCHEZ: But the banking -- I didn't mean to interrupt. But wouldn't the banks then, if you're going to hit them for more, wouldn't they hit us as customers for more in fees? Wouldn't that be expected?

BOVENZI: You could probably expect some portion of what they would charge to be passed on in fees. That would be correct.

SANCHEZ: Let me ask you something that -- you know, and we want to be as transparent as we can, and that's why we really appreciate you taking time to talk to us about this.

Some Americans would look at what IndyMac did, look at their lending practices, and say, why was that allowed to happen for so long? They were doing things that almost on its face seemed irresponsible. And it's not to single them out. Apparently, they're not the only ones.

You know, as an administrator, somebody who now has to come in and try to clean up this mess, are you frustrated that this thing wasn't checked before?

BOVENZI: Well, obviously it's a difficult time. And there were certainly institutions that made loans that shouldn't have been made. And there are standards being put out to hopefully have institutions with better underwriting going forward so that this kind of problem doesn't repeat itself.

SANCHEZ: We thank you, sir, for taking time. That's very nice of you to take time to tell the American people exactly what's going on with this situation, and certainly alleviate a lot of concerns.

BOVENZI: You're welcome.

(END VIDEO CLIP)

SANCHEZ: All right. By the way, we've got some fast facts for you tonight on IndyMac. There's a lot of folks watching this situation, because who doesn't bank, right? Here's the fast facts.

It was the 9th largest mortgage lender in the country. It had 33 retail branches, all in Southern California. Right now, it's the second largest financial institution to close in U.S. history. And they specialized in those "Alt-A" loans, which required little or no evidence of income or assets from borrowers. Many would say, that was the problem.

Also, from our better late than never department, as we continue to follow the story's developments tonight, the Federal Reserve is expected to announce tomorrow that it's changing the rules for how mortgages are going to be issued in the future. Surprise. Here are some of the expected changes.

Lenders would be barred from making loans without proof of a borrower's income. The Fed is also looking to curtail any misleading ads for many types of the mortgages that people have bought into in the past, not knowing how it really worked. And they also are going to limit penalties for risky borrowers who pay their loans off early.

Consumer advocates say the new rules won't go far enough, but industry types already are complaining that they're going actually too far.

All right. This entire interview that I just did with John Bovenzi, we weren't able to get everything in there. Obviously, we asked a lot of micro questions about what's going on with the bank itself, the details that some folks in California may want to know as well.

If you want to see the full interview, again, this is the first interview that they do with a network, go to cnnmoney.com, cnnmoney.com, and you can see the whole thing in its entirety. Maybe worth a listen for you.

All right. We've got some new news coming in. There it is. All right. Sorry, Rog.

OK. These are the pictures I'm just being told now that we're getting. This is in Phoenix. Look at this. This is I-10 and US 60.

Remember, Phoenix is a place that doesn't get a lot of water. Well, guess what, it does tonight. So much water that we understand folks in this city are not being able to get through many parts of town. This is like the downtown area there. This is in -- OK, this is in Tempe, Arizona, according to what we have there.

Clear that up for me, Angie, if you would. Are we talking Phoenix or Tempe here? Tempe, Arizona. Thank you so much. All right. The information just getting to us now, this is Tempe, Arizona. KNXV, we thank you for the video just now coming in. I appreciate the clarification on that as well.

Also, coming up tonight, he quit his job with the Bush administration. Now he's accusing Vice President Dick Cheney of censuring reports on greenhouse gases.

And here's a question for you. Why are military funerals kept under wraps in this country, even if the family itself invites the media to go and see it? Controversy tonight at Arlington National Cemetery. We will be right back.

(COMMERCIAL BREAK)

SANCHEZ: These people are in Sudan, and what they're shouting is nothing nice about America or the West. What has them so angry? You will want to hear about this. It's just ahead.

First, though, news from the war in Afghanistan for you now. Nine U.S. troops died today in an insurgent attack on their remote eastern outpost. Hearing again about violence in Afghanistan seems to be a trend. Happened about 100 miles from Kabul on Afghanistan's border with Pakistan. NATO officials say that Afghan and U.S. troops battled insurgents most of the day. The fighting described to us as heavy.

Today's military fatalities make the worst one-day death toll in Afghanistan in three years. A NATO spokesperson says that many insurgent gunmen were also killed in this fighting.

And this, something of an ethical question for you now. When U.S. troops die in war, do you think that we all should share in honoring their service, if their family, of course, wants us to share in the honoring of their service?

But right now, we can't. It's against the rules. Even if the family personally invites specific members of the media to be there, they can't.

Tonight, the story of a woman who was willing to lose her job at Arlington National Cemetery over this rule. Here's CNN senior Pentagon correspondent, Jamie McIntyre.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT (voice-over): When America's war dead are laid to rest in the gentle hills of Arlington National Cemetery, news coverage is allowed only if families requested. And even then, it's strictly limited. News photographers are told to stay as far as 50 yards away.

Gina Gray, a former Army staff sergeant who served in Iraq, tried to change that when she took over as Public Affairs Director at the cemetery in April. And as a result, she alleges, she was fired.

GINA GRAY, FMR. DIR. ARLINGTON CEMETERY PUBLIC AFFAIRS: I put my foot down and I refused to accept, you know, these made-up regulations. I refused to accept the answer of, that's the way it is. No, it's not. The way we treat the military when we give them a burial is something that is, I think it's awe-inspiring.

MCINTYRE: The solemn rituals are seen from a distance through a telephoto lens. Even if, Gray says, the families would welcome close- up coverage.

MCINTYRE (on camera): And if the family wanted the reporter sitting right next to them, you can't do that?

GRAY: No, no. The family is not given the opportunity to make that decision. The family is not given the opportunity to say, yes, I want the media to be able to see and hear.

MCINTYRE: And you think that's wrong?

GRAY: I do think that's wrong. It's up to the family.

MCINTYRE: And you think that led to your dismissal?

GRAY: Partly, yes.

MCINTYRE (voice-over): The Army and Gray's former boss at Arlington Cemetery dispute that. He says her release was unrelated and the rules are aimed not at preventing coverage but at preserving dignity and privacy.

THURMAN HIGGINBOTHAM, DEPUTY SUPT., ARLINGTON CEMETERY: We work hard at working with the military to make sure that if the media is allowed by the family, we give them the access that we can.

MCINTYRE (on-camera): But already, Gina Gray's complaints have the ear of Army Secretary Pete Geren. The Army's top civilian leader is asking for an internal review to look for a better balance between providing access to the media and protecting the privacy of the families. Jamie McIntyre, CNN, Washington.

(END VIDEOTAPE)

SANCHEZ: We want to take you to Sudan now. We showed you a couple of moments ago those large and very vocal protests in the streets of Khartoum. Well, take a look at this.

That is about 2,000 people, we understand, shouting "Down, Down USA." They're reacting to news that the International Criminal Court is considering filing genocide charges and an arrest warrant for Sudan's President Omar Hassan al-Bashir. The charges stem from a five-year campaign in Darfur, which we're all familiar with by now, where about 300,000 people -- 300,000 people have died.

To try and keep prices down, we need more oil. We need more refineries in this country, right? We have the scoop tonight on a new one. But why is it being kept a secret. We go there. This is a CNN investigation.

Also, what are the newest numbers in the race for the White House between Barack Obama and John McCain? Who's up, who's down? And by how much? This may -- may surprise you.

(COMMERCIAL BREAK)

SANCHEZ: I want to pick up a theme now that we started just a couple of weeks ago right here, on a Sunday night. I told you how the White House had refused to even open an e-mail from its own environmental agency because it just didn't want to deal with greenhouse gases as an issue.

We checked into it, and we found out that there seems to be a history here to this type of thing. All right. You see this guy? His grandfather started Hewlett-Packard.

At age 31, Jason Burnett is rich enough to give more than $100,000 to be fair mostly to Democrats. He was also smart enough to work for the EPA. A job he recently quit and he's now accusing Vice President Dick Cheney of censorship. And he's not the only one.

(BEGIN VIDEOTAPE)

SEN. BARBARA BOXER (D), ENVIRONMENT AND PUBLIC WORKS CHRMN: This cover-up is being directed from the White House and the Office of the Vice President.

SANCHEZ (voice-over): Senator Barbara Boxer accusing Dick Cheney's office of censoring congressional testimony -- testimony, she says, that could have led to tougher air quality laws in the U.S.

BOXER: We're all Americans and we all breathe the same air regardless of our party.

SANCHEZ: By Boxer's side, life-long Democrat and former EPA executive Jason Burnett. He says the testimony he helped prepare for CDC Director Julie Gerberding was altered by the Vice President's office to make greenhouse gases sound less dangerous to your health.

JASON BURNETT, FMR. EPA EXECUTIVE: I wanted to make sure that the testimony was fundamentally accurate, and when I concluded that it was, I declined to make any edits or suggest that CDC do so.

SANCHEZ: The White House acknowledges that changes were made. But the CDC director says she was not censored by anybody.

DR. JULIE GERBERDING, CDC DIRECTOR: No one, from the Department, the White House or any place else in government has ever put one word in my mouth or taken one word out.

SANCHEZ: Cheney's office, not commenting. EPA whistleblower Burnett will not say whom he dealt with in Cheney's office.

BURNETT: I'm not interested in pointing fingers.

SANCHEZ: But he's not the first to accuse the administration of putting partisan politics over science.

Remember a year ago when these three former U.S. Surgeons General testified before Congress. Richard Carmona served the Bush administration from 2002 to 2006. He says his public speeches were censored, though not by the Vice President.

RICHARD CARMONA, FMR. SURGEON GENERAL: The vetting was done by political appointees who were specifically there to be able to spin, if you will, my words in such a way that would be preferable to a political or ideologically preconceived notion that had nothing to do with science.

(END VIDEOTAPE)

SANCHEZ: This has been an ongoing argument during this administration. It's as much about health, many would argue, as it is about accusations of censorship.

Let's bring in some guests. Tim Greeff is a Democrat with the League of Conservation Voters. Marc Morano is a GOP spokesperson for the Senate Committee on Environment and Public Works.

So, Marc, let's do it to you first. Critics say the Bush White House has been watering down facts about health risks regarding climate change for quite some time, because those in the administration feel any of these new laws would cost money and these laws would also hurt big business. To that accusation, you say what?

MARC MORANO, REPUBLICAN SENATE STAFF MEMBER: Well, you heard the CDC Director herself say she was not censored. This is a non-issue. This is the Associated Press which recently broke the Jason Burnett story. They should be actually embarrassed because of selective reporting.

All administration's at a testimony. This is akin to getting shocked that there's gambling going on in Vegas. This is routine. It's what administration officials are supposed to do with administration employees when they give testimony. SANCHEZ: But let's be fair. This is not the first time we've heard a statement like this. We've heard...

MORANO: No.

SANCHEZ: ...similar things from NASA officials.

MORANO: We have.

SANCHEZ: We've heard some from the Surgeon General. We've heard it from a former EPA executive. It seems to be a trend here, does it not?

MORANO: There is absolutely a trend. We heard of Will Happer from the Clinton administration Department of Energy challenged the Al Gore's view of climate alarmism and was forced out of the Clinton administration.

Roy Spencer, a NASA scientist, talked about the heavy hand of censorship he had to deal with when he was at NASA because he was a skeptical scientist.

SANCHEZ: All right, Tim. Hold on. Hold on. I'm going to help you here. Tim, I want to bring you in and I want to bring in something that he probably would have said as well.

During the Clinton administration, you remember the -- you remember the scandal over arsenic, saying that that administration was also in the pocket of big business, and that's why they had approved that policy.

TIM GREEFF, LEAGUE OF CONSERVATION VOTERS: Well, I think that what Marc's trying to do is what they often try to do. Instead of actually answering a question of what the Bush administration has done is actually wrong, or misleading the public, which several commissions have found. And they then point to, well, every administration does it.

That doesn't answer the question of whether or not the actions taken by the Bush administration had actually misled the public.

If you go back to December of this past year -- if you go back December this past year, the House Committee on Oversight and Government Reform passed out an official report that found, and I quote, that the Bush administration has engaged in a systematic effort to manipulate climate change science and to mislead policymakers and the public on the dangers of global warming.

SANCHEZ: Worse than other administrations, Tim?

GREEFF: It's irrelevant at this point. All administrations do it.

(CROSSTALK)

GREEFF: The point is, is the practice right or wrong? I'm not here to say whether or not the Bush administration or the Clinton administration is doing anything any differently.

(CROSSTALK)

SANCHEZ: But that's an important part of the argument.

MORANO: Yes, what the Bush administration did is what they're supposed to do. If you could go through Al Gore himself called Ted Koppel in 1994 and told him to go after scientists skeptical. This was a sitting vice president with an agenda on global warming telling Ted Koppel to go after scientists.

Now, how come there was no outrage from the EPA, from the League of Conservation Voters, from the media there? The real story here the media is missing is skeptical scientists are being suppressed across the board. The U.N. recently came out and said it's criminally irresponsible for someone to deny global warming fears.

SANCHEZ: I don't want to run out of time.

MORANO: That's the story. Not routine administration --

SANCHEZ: I understand that. But let me bring Tim in, because there is a cogent argument out there that says the great majority of scientists are on the other side of that argument, saying that there is a global warming problem, and that it most likely is being caused by man.

Tim, back to you.

GREEFF: Well, the vast majority of science organizations including the United States National Academy of Sciences, which is the most credited scientific organization that the federal government actually goes to to look at these, has said without a doubt not only is global warming happening, but human beings are the driving cause behind it.

But again, the basic point is, is what the Bush administration doing, manipulating the science and reports and panels have said, yes, what they're doing is manipulating the science.

MORANO: The Bush administration is --

GREEFF: We need to get back to -- excuse me, Marc, let me finish. We need to get back to whether or not what this administration doing is misleading the public and misleading policymakers, and that's exactly --

SANCHEZ: Marc, 10 seconds, last word.

MORANO: Sure. The notion the American people aren't getting, the global warming fears ingrained into them is laughable. You pick up any school book, you go watch any movie, TV show, man-made global warming fears are everywhere. And it's not true that the scientists -- the governing board of the National Academy of Science.

Yes, two dozen or so scientists will issue statement. The rank-and- file members of the American Meteorological Society, across the board, skepticism is growing by the day.

SANCHEZ: Marc, Marc, you'll hear all that unless, of course, you're listening to a right-wing talk show host and then you'll hear just the opposite. So, there's a big argument on both sides. Tim, Marc, my thanks to both of you. Good argument. Glad we had you both on. I appreciate it.

MORANO: Thank you, Rick.

SANCHEZ: Tim Greeff and Marc Morano.

A $10 billion project that hasn't been attempted in 30 years. This is about refining oil to hopefully to make our gas cheaper. That would be good, right? But why is it so secretive? Our Special Investigations Unit takes us to South Dakota for that answer.

Georgia politician Cynthia McKinney back in the news. A lefty who says what she thinks, right? And now she's running for president in the green party. We'll be right back.

Also, Barack Obama running for president as well. He's been much more cautious of late. Is it costing him in the polls? You're about to find out.

(COMMERCIAL BREAK)

SANCHEZ: Welcome back. I'm Rick Sanchez here at the world headquarters of CNN. Tonight, the so-called polls of polls is out. It's where we here at CNN take the culmination of several polls to see who's winning between Barack Obama and John McCain.

The distance between them right now, four points. Just four points separates these two senators. "Preston on Politics" now. Our weekly segment on this election cycle and there's the man.

Mark, McCain's got to feel like a 30-point underdog who's still in this game, in the third quarter, considering everything that's been going on in this race and all the bad news about this administration.

MARK PRESTON, CNN POLITICAL ANALYST: Yes, look, John McCain has, you know, not to his own fault now, but he's got to deal with an economy that is sagging. He's got to deal with the Iraq war. And still he is within striking distance.

SANCHEZ: Yes.

PRESTON: I mean, I think this goes to show you right now that, you know, a lot of people know Barack Obama's name, Rick, but they don't know Barack Obama. They don't know his policies. They don't know what he stands for. Someone like John McCain is a known quantity. He ran for president again. He's within four points right now.

SANCHEZ: So when does Obama breakaway? When does he breakaway, if he breaks away?

PRESTON: If he breaks away, it's going to come down to when he starts pouring tens of millions of dollars into television advertising. We know that John McCain is going to have about $85 million to spend on the election, Rick. September, October, first week of November.

We expect now that Barack Obama will have three to four times that amount of money. So Barack Obama is going to saturate the airwaves. And that's potentially a time where he could break away. But look, who knows. Everything's up in the air.

SANCHEZ: Oh yes, I know. I mean, I'm just looking at, you know, you look at the facts and you say well, it's a difficult time for this administration. He's a Republican. Barack Obama has got a lot of media play. He was in these primaries. You would think he had a lead.

Here's what ardent liberals have been saying, by the way. And I want to ask you if they have a point. They make the argument that when they look at this poll, they say to themselves, well, Obama moves to the right in the last couple of weeks. He capitulates on FISA they argue. And just like Kerry and just like Gore, he's going to lose because of that. That's their argument.

Do they have a point now that we see this poll that he's only up by four points?

PRESTON: No, I don't think, because, look, the poll numbers that we're looking at right now is for the whole general public. It's not just these liberal Democrats who are probably upset at some of the positions that Barack Obama has taken over the past couple of weeks.

And look, we're in a general election right now. Barack Obama has got to reach out as does John McCain to the center. He's got to reach out to voters, you know, who aren't necessarily in the base, in their corner. So that's what we're seeing with Barack Obama.

SANCHEZ: Yes. But don't tell that to left-ward bloggers or left-wing talk show hosts, man. They are furious with some of the decisions he's made in the last couple of weeks. And it's quite interesting to watch.

Speaking of the left, there's a new hat in the ring, man. Her name is Cynthia McKinney. You're very familiar with her. People in Georgia are very familiar with her. She's the new representative of the green party. Can she make a dent?

PRESTON: You know, I think she can perhaps in Georgia, Rick. Look, it was a good day for John McCain yesterday when Cynthia McKinney won the green party nomination. And the reason I say that is that she could possibly neutralize Bob Barr in that state.

You know, Bob Barr the Libertarian Party presidential nominee. He was on your show just recently. You know, he was expected to take between 4 percent and 6 percent of the conservative Republican vote in Georgia. That might have been enough for Barack Obama to take the state.

Right now, Cynthia McKinney, a former congresswoman herself, from that state could come back and maybe pick up a few percentage points. And that could probably hurt Barack Obama in that state.

SANCHEZ: That's interesting. Yes, you got Barr, you got Nader, now you got McKinney. You know this thing, who knows? All it takes is a little bit to swing it one way or another. Mark Preston, thanks so much for being with us as usual. Good man.

PRESTON: Thanks, Rick.

SANCHEZ: All right. Do you want to get more "Preston on Politics," just go to cnnpolitics.com and our "Political Ticker." And of course, here with us as you see that handsome face every Sunday.

Tomorrow night on "LARRY KING LIVE," Jesse Ventura speaking of politics. He's going to tell Larry whether he's going to be making a run for the Senate against Norm Coleman and Democrat Al Franken. Talk about an interesting race, huh. That's "LARRY KING LIVE" at 8:00 p.m. Minnesota Time, that is.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It was a huge secret with a weird name. They dubbed it the Gorilla Project, largely because of these very weird concrete sculptures of gorillas that were near the property. But now even after it was announced that the Gorilla Project is actually an oil refinery, many people still don't know much about it.

(END VIDEO CLIP)

SANCHEZ: That is Special Investigations Unit correspondent Drew Griffin. He's as good as they come. He's from South Carolina. He'll be right here in two minutes to explain that story in South Carolina. And what's really going on with this refinery.

(COMMERCIAL BREAK)

SANCHEZ: Welcome back to the CNN NEWSROOM. I'm Rick Sanchez. It would be the first new oil refinery -- yes, right -- to be built in the United States in 30 years. And unlike many other big oil projects, most of the neighbors say they want it. So what's stopping it?

SIU's Drew Griffin is going to be joining me here in just a little bit. Here he is. He's got his microphone on his tie and get ready to go. We're going to be talking to him about all of this in just a little bit.

First thing I want to do is I want you to watch the piece of journalism that Drew has put together for us. He traveled to South Dakota to investigate the mystery behind what locals call the Gorilla Project.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN SIU CORRESPONDENT (voice-over): It was a mystery just across their dirt road. Somebody was interested in a large area of cropland. Dale and Carol Harkness never imagined that this farmland would become the center of their own energy crisis.

DALE HARKNESS, FARMER: Last summer, the finally let the community know what they had intentions of doing with this land.

GRIFFIN: This is the intention. A $10 billion oil refinery. 400,000 barrels a day of Canadian oil would arrive by a yet-to-be built pipeline, then converted into gasoline, diesel and jet fuel. The company behind the mysterious project says it will be a first of its kind clean refinery. We'll get to the mysterious part in a minute.

But Dale Harkness laughs at the idea of a clean oil refinery. In the rush for new energy production, he fears his farmland, creek water and fresh, quiet skies are all about to be ruined.

(on-camera): Why not sell this farm stud? I know you love it, but golly, can't you get a million or two for it and cruise on down to Florida?

HARKNESS: How many people that have been handed a pocket full of money that are happy? Not near as many as people that have earned it and are proud of it. I feel I've earned this. I want my children or grandchildren to be able to enjoy it. And if not them, someone else.

GRIFFIN (voice-over): The Harkness' biggest problem, though, is not fighting an oil refinery, it's fighting their own neighbors. Many have already agreed to sell. And just last month, the oil refinery question was placed on the Union County ballot. Voters near the proposed refinery said no, but countywide, voters overwhelmingly said yes.

58 percent of voters in Union County, South Dakota, want an oil refinery right here. The mayor of the closest town said jobs, tax money and a desire for energy independence all played a role.

You think Elk Point, Union County, South Dakota, is the place to start?

MAYOR ISABEL TROBAUGH, ELK POINT, SOUTH DAKOTA: Well, it's as good as any. And it will be great for Elk Point because if we don't grow, a small city dies.

GRIFFIN: So is the first U.S. oil refinery in 30 years really about to be built? If you ask the folks around Elk Point, that's where this story gets a little mysterious.

(on-camera): It was a huge secret with a weird name. They dubbed it the Gorilla Project, largely because of these very weird concrete sculptures of gorillas that were near the property. But now even after it was announced that the Gorilla Project is actually an oil refinery, many people still don't know much about it.

(voice-over): That even includes the mayor who wasn't told the plan until one day before everyone else.

Why the secrecy? TROBAUGH: They say that's the way big business does their -- when they do their thing, they don't want anybody to know they're coming in. So they keep it secret.

GRIFFIN: Who are they? The company that would build the $10 billion refinery is called Hyperion Energy. They have a new office on Elk Point's main street where we went to find out more about them. And were politely told by the receptionist, we would have to find our answers somewhere else.

And so the actually Hyperion folks they just come every couple weeks?

UNIDENTIFIED FEMALE: Yes. They golf last week at the governor's tournament. But they're not here otherwise.

(END VIDEOTAPE)

SANCHEZ: What happens with this story? And a big part of it of course is, who are these people? Who are the people in charge of the company? Drew's going to stay here. You'll see the second part of this story. And I'll debrief him afterward when we come back.

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SANCHEZ: Here's where this gets good. Wrapped in secrecy from the start, a proposed oil refinery in South Dakota has now gone public. One big support from the local community and even has the governor's blessing. But there are questions. And the biggest one is, how can a relatively unknown company pull off a $10 billion project that no other major oil company has tackled in 30 years.

CNN Special Investigations Unit correspondent Drew Griffin is here tonight. We're going to talk to him in just a little bit. First, though, I want you to watch part two of his report. Here it is.

(BEGIN VIDEO CLIP)

GRIFFIN (voice-over): Hyperion Energy, the company behind what could be the first new oil refinery to be built in the U.S. in 30 years has a fancy 15th floor air conditioned office in, where else, Dallas, Texas. But that is not where Hyperion chose to answer our questions.

For answers, we were told to meet the oil refinery's project executive in a Dallas City park a few miles away. Where in 94-degree heat, we met Hyperion's Preston Phillips -- who explained to us Hyperion doesn't have a lot of experience building oil refineries, doesn't have the $10 billion in financing it will take to build the refinery yet. But says now is the time to start the project.

PRESTON PHILLIPS, HYPERION ENERGY: We need more refineries in the United States.

GRIFFIN: Is it really going to happen? They're not sure Hyperion is the company that can make this happen.

PHILLIPS: Well, we obviously wouldn't be spending the resources and time we have if we didn't think we could.

GRIFFIN: What we found out about Hyperion is it mostly has been involved in real estate dealings with oil and gas leases. Its CEO is this man, Albert Huddleston.

We learned he's involved in a federal lawsuit accusing him of wasting money from his wife's trust account. She is the granddaughter of famed oil man H.L. Hunt.

According to the suit filed by one of the former trustees, since his marriage to Mary, Albert has pursued a variety of businesses, always unsuccessfully.

Huddleston has countersued, denying the charges, and accusing the former trustee with extortion. As for Huddleston, we were told he was travelling, not available for comment.

Then we were sent this videotape, apparently taped just last week. It's Albert Huddleston talking about global politics, world wars, oil in Canada. Remember this is basically a home video statement where we couldn't ask any questions.

The only time he came close to answering our big question, which is -- does Hyperion have the expertise or the money to pull this off, he said this.

ALBERT HUDDLESTON, CEO, HYPERION ENERGY: I am not going to go to these strategic partners and financial partners and other people until we have a permit. And if we don't get the permit, then perhaps people are right. I just don't believe that's the case.

GRIFFIN: Back in South Dakota, reporters for the "Sioux City Journal" have apparently had the same trouble we've had finding out about Hyperion. Mitch Pugh is the editor.

MITCH PUGH, EDITOR, SIOUX CITY JOURNAL: (INAUDIBLE), where is the money.

GRIFFIN: Huddleston did tell at least one person he has the money, Elk Point Mayor Isabel Trobaugh. But she wouldn't share the details.

TROBAUGH: What he told me was private. It was his own personal -- by his own personal funding and that's not public.

GRIFFIN: So the United States' first new oil refinery in 30 years is perhaps underway. Voters said yes. Land has been leased. And the company says if all goes as planned, a clean oil refinery will be producing gasoline right here in just six years.

Just remember, there's a little matter of $10 billion yet to be found and the neighbor with growing political backing from environmentalists who says clean or not, there won't be a refinery here.

HARKNESS: I'll keep fighting it. They'll never build here. 150 years from now, somebody will be enjoying that land and this land.

(END VIDEOTAPE)

SANCHEZ: Sounds like we're at a stalemate. But let's suppose that they go ahead and are able to pull this thing off. Giving them the benefit of the doubt. When you think of a refinery, you think of pollution. These words that we kept hearing "clean oil refinery." What in the heck is a clean oil refinery?

GRIFFIN: Here's the idea. The refinery comes with its own power plant. The power plant is powered by by-products and wastes of the refinery itself. So they have this integrated gasification combined cycle system which is supposed to reduce emissions, they say. 80 percent below what the cleanest refineries now have.

So if they can get their permits, they think that they could actually produce a clean oil refinery.

SANCHEZ: Viewers are sitting here watching us and they say, great, can it bring my gas prices down.

GRIFFIN: Right. That's the bad news because 400,000 barrels a day, this would produce. We're consuming 21 million barrels a day. It's a big drop in the bucket, but it's a drop in the bucket. But hey, you've got to start somewhere.

SANCHEZ: A drop is a drop, right?

GRIFFIN: That's right.

SANCHEZ: Thanks, Drew. Appreciate it. Good stuff.

By the way, we've got an update now on that U.S. Army lieutenant declared missing four days ago that we've been following for you.

Second Lieutenant Holly Wimunc's apartment was found burning Thursday near Fort Bragg, North Carolina. We've been all over this story. There's been no sign of her since. Tonight, her parents -- pardon me, I misspoke, the parents of her husband say that their son is not a suspect. And that he is cooperating with police in this investigation. They want to make that clear.

Wimunc's husband is a Marine stationed at Camp Lejeune. They are divorcing, we understand. The latest information from investigators. And we've checked -- no clues, no suspects. This one is a real mystery. And we are going to stay on top of this one for you.

Also, take a look at this video. High water stopping traffic. This one we told you about at the beginning of the newscast. It's not the only concern, by the way. This is in Arizona, Tempe. Look at that. Jacqui Jeras breaking it down for us. She's straight ahead.

(COMMERCIAL BREAK)

SANCHEZ: The hit and miss weather problems all over the country. Let's go right to Jacqui Jeras standing by at the CNN weather center to bring us up-to-date on what's going on.

Wow, those pictures out of Tempe are amazing.

(WEATHER REPORT)

SANCHEZ: Take a look at this one. One of "Rick's Picks." These people lined up, but they're not waiting to board the Amtrak train. They plan to moon it. As in moon it.

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SANCHEZ: Thousands of people get together to flash their caboose at a caboose. Well, this has become like a legendary event. And this year, they all gathered once again to moon the Amtrak train. But cops found out about it, they thought there might be some illegal drinking, they showed up and they busted the thing up.

We're not going to show you the real tight shots, of course. Legend says moon over Amtraks started as a dare to win a free drink at a nearby saloon.

And then, there's this story. Chickens did not cross the road. No. This is in Edmond, Oklahoma. A semi carried thousands of processed chickens flipped over. By the way, they're frozen chickens. Parts of the highway were closed for more than three hours.

We've had a lot of economic news tonight. And there is one more breaking story coming out of our nation's heartland. Another American institution has been bought by a foreign company. This one hurts.

One last thing on this Sunday night. An American icon headed overseas. "Wall Street Journal" said that Anheuser-Busch, the family- run beer maker is going to change its tune. We'll be right back.

(COMMERCIAL BREAK)

SANCHEZ: Here's the upshot. Anheuser-Busch has been sold to a European company who long have said they know more about beer than we do anyway. Maybe more about business, in this case.

Thanks so much for being with us. I'm Rick Sanchez. See you tomorrow.