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Feds Reopen Failed Bank; Lobbyist Caught on Tape; Obama Cartoon on Magazine Cover Causes Uproar

Aired July 14, 2008 - 17:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, a busted bank reopens with federal regulators now in charge. Worried savers are lining up to trying to get their money out. But there's a hitch. We're going to find out how safe your savings are right now.
A lobbyist caught on tape allegedly offering access to Vice President Cheney and other top Bush administration figures for a price.

And a comeback for the Taliban and a setback for U.S. troops -- Americans and Afghan paying a heavy price in blood right now.

I'm Wolf Blitzer.


Worried customers lining around the block to pull their money out of the failed IndyMac Bank, which reopened today with a new boss, the U.S. government. A federal agency guarantees most of the deposits, but some fear their life-savings can be at risk.

So how safe are your savings right now?

CNN's Deborah Feyerick is standing by with that.

But let's go out to Pasadena.

CNN's Kara Finnstrom is standing by with what's going on Long lines. People trying to get their money -- Kara, tell us what the latest is.

KARA FINNSTROM, CNN CORRESPONDENT: Well, some of these people are not getting all their money back, because it was not fully insured. And they're just now finding it out. So a very difficult day for them.

We want to give you a quick look here at the hundreds of people -- the crowds out here. Some of these people trying to get shelter under these, you know, makeshift structures that they've put up. Others under umbrellas. Many of these people have been here for eight hours now and all of them want answers.


FINNSTROM (voice-over): The lines started building before sunrise -- customers coming to 33 branches of what was, less than one week ago, their bank. Now customers like Nasim Ahmed facing what can only be described as a nightmare, asking FDIC officials what happened to my money.

Ahmed and his family drove from San Francisco overnight. Ahmed had his personal savings and numerous accounts for his business, a clinical research company, at IndyMac. When the doors opened, he was number four in line.

Ahmed asked question after question. Two-and-a-half hours later, he came out.

NASIM AHMED, INDYMAC DEPOSITOR: I'm surprised, shocked.

FINNSTROM: Ahmed was told only the first $100,000 in each of his accounts is fully insured. Beyond that amount...

N. AHMED: And you will get 50 cents on a dollar. So that's -- that's pretty miserable.

FINNSTROM: Ahmed said he was misled by IndyMac officials, who had assured him he had structured his savings in different accounts that would be safe. He may take a huge hit.

N. AHMED: It this is going to hurt me, but I will try to recover, stand again and try to do business as usual. But from now on, I will be better -- more cautious.

FINNSTROM: Ahmed says he plans to fight for more of his money. But for now, he and his family are heading straight back to San Francisco.

SHAMEEMA AHMED, INDYMAC DEPOSITOR: I've never dreamed of this one. I don't know. It's like a disaster to me.

FINNSTROM: He says they can't afford to miss another day of work.


FINNSTROM: And CNN has tried to contact bank officials with the former IndyMac, but those calls have not yet been returned -- Wolf.

BLITZER: What a story.

Kara, stay on top of it for us.

Thanks very much.

So here's the question -- how safe is your money?

Let's go to Deborah Feyerick.

She's watching this part of the story.

There are a lot of nervous Americans out there. They have money, their savings, life-savings for a lot of them, millions of them in various banks.

And I'll ask the question to you, what should they be doing?

What's going on?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, you know, Wolf, a lot of people find comfort having their money in one bank. But, really, after what happened to IndyMac, many are realizing they may have just dodged a bullet.


FEYERICK (voice-over): It wasn't just IndyMac customers thinking about their money. Other people, too, were wondering if their bank accounts elsewhere might also be at risk.

GREG MACBRIDE, BANKRATE.COM: A bank failure is a wakeup call to anyone that has more money on deposit in a bank than is covered by FDIC insurance. Having that money deposited and not being fully protected is like driving around town without your seat belt on.

FEYERICK: Money experts say as long as your money is insured, $100,000 in an individual bank account, $250,000 in an IRA, there's no need to withdraw it -- even if the bank is failing because pulling it out creates other problems.

MACBRIDE: Banks don't keep all this money stuck in a vault in the back. It causes a liquidity crisis.

FEYERICK: The FDIC took over IndyMac in part to make sure the troubled mortgage lender would not take steps that could trigger even greater economic instability.

JOSEPH LYNYAK, BANKING REGULATORY ATTORNEY: The bank will try to right itself. And sometimes what that means is that a bank can sell- off assets which are very valuable, which end up resulting in a greater loss to the FDIC than otherwise would be the case.

FEYERICK: The FDIC says only a small percentage of the 90 banks currently considered at risk will actually fail.

JOHN BOVENZI, FDIC: At the end of the day, there will be some bank failures, but very few.

FEYERICK: And with $50 billion in its insurance fund, FDIC's chief operating officer, John Bovenzi, says that's more than enough to cover whatever might come.


FEYERICK: The bottom line -- given the severe housing correction, a small percentage of banks will likely fail. But as a consumer, as long as your money is on deposit, that is fully protected by the FDIC insurance, if the bank fails, then it's really the bank's problem, not yours. But if you do pull it out, make sure your new bank is financially sound. And can go to the Web site, and to a section called bank bond and make sure that the bank is insured. No point pulling it out of one just to put it into another that might be at risk -- Wolf.

BLITZER: Excellent advice, Deb.

Deb Feyerick reporting for us.

We're going to have more on this story coming up.

But let's move on.

A newspaper's sting leads to some stunning videotape -- a lobbyist allegedly offering access to Vice President Cheney, Secretary of State Condoleezza Rice and other top Bush administration officials for a price -- a steep price.

Let's go live to our White House correspondent, Ed Henry.

He's working this story for us -- Ed, what's going on this story?


ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, the White House is basically denying that they knew any of this was going on. They essentially say that the lobbyist involved, Stephen Payne was acting alone. And Payne himself was in full spin mode, essentially telling CNN it was all a big misunderstanding.


HENRY (voice-over): Promises of access to the president's top aides in exchange for contributions to the George W. Bush Library and some cold hard cash on the side for the man brokering the deal. The whole discussion caught on tape.

UNIDENTIFIED MALE: ...politician a couple of hundred?

That would probably get the attention of the people raising the money.

HENRY: That's Texas lobbyist and Bush fundraiser Steven Payne, unwitting star of this shocking video, secretly recorded by the "Times of London." Here, he tried to get a donation from a man whom he thought was representing the exiled former president of Kyrgyzstan.

STEPHEN PAYNE: 200, 250. Something like that's going to be a show of when interested, we're your friends. We're still your friends.

HENRY: Payne, who raised $200,000 for the president's re- election, is seen promising meetings with top officials, including Vice President Cheney. In exchange, big money for the future Bush Library.

PAYNE: Cheney's possible. Definitely the national security adviser.

HENRY: The White House distanced itself from Payne's actions and suggested he's not an insider.

DANA PERINO, WHITE HOUSE PRESS SECRETARY: There's categorically no link between any official business in the Bush Library. Steve Payne was never an employee of the White House. But we do use hundreds of volunteers a year, as you know, for helping us do advance work.

HENRY: The White House admits Payne helped with logistics on some foreign trips and Homeland Security Secretary Michael Chertoff did appoint Payne to an advisory committee.

In a long written statement to CNN, Payne, president of Worldwide Strategic Partners in Houston, called the "Times of London" story "got you journalism."

Payne acknowledged mentioning that they might be able to make donations to think tanks, foundations and/or President Bush's library. But Payne stressed that in subsequent e-mails, which he gave to CNN, he made clear there could be no quid pro quo.

In one of those e-mails, Payne wrote he would accept the 250 and pass it directly to the library, but noted he could not promise specific government action because that would be bribery.


HENRY: Now the key question, did Stephen Payne get any meetings for his clients here at the White House. Dana Perino said she was not sure. So I asked her whether the White House would release visitor logs to find out whether Stephen Payne has been here at the White House a lot. She said she'd check with White House lawyers, but noted there's been litigation in other matters dealing with visitor logs. So the bottom line, it's highly unlikely the White House will ever release those records -- Wolf.

BLITZER: Ed Henry with an amazing, amazing story.

Thanks very much.

Let's go back to Jack Cafferty.

He's got "The Cafferty File" -- "got you journalism," that's what he called it.

JACK CAFFERTY, CNN ANCHOR: Well, and a quid pro-quo. They don't even -- that's the meaning of 90 percent of the transactions that take place inside the beltway. There isn't nothing for nothing down there. And, of course we'll never know, because the White House doesn't release anything, because they can get away with it because nobody in Congress cares and they won't force them to release this stuff by throwing people who refuse to answer subpoenas in jail. But that's another topic for another day.

Former President Bill Clinton has a warning for all of us. He says the country is becoming more and more divided. He spoke to the National Governors Association. And he said even though the Democratic primary produced historic results, with the final two candidates being a woman, his wife, and an African-American man, he sees a larger problem.

President Clinton thinks Americans are becoming more polarized as a nation. He says we're growing farther apart from each other and are "hunkering down in communities of like-mindedness and it affects our ability to manage difference."

Clinton says Americans are separating themselves by choosing to live with people they agree with. He used ideas from a book called "The Big Sort" by Bill Bishop for this speech to the Governors Association. Bishop found that in 1976, 20 percent of U.S. counties voted for Jimmy Carter or President Ford by more than a 20 percent margin. Just 20 percent. By 2004, nearly 50 percent of the nation's counties voted for John Kerry or President Bush by that same margin.

President Clinton reminded governors that the issues they're dealing with today are similar to those confronted by Teddy Roosevelt a century ago -- inequality among the rich and poor, immigration, energy. But Clinton says he's determined that we will deal with these issues and eventually enter a period of light, not darkness.

So here's the question: Do you agree with President Clinton that America is becoming more divided?

Go to You can post a comment on my blog.

Karl Rove refused to answer a subpoena the other day. Did anybody do anything about it?

BLITZER: Well, not yet.


BLITZER: The answer is not yet.

CAFFERTY: Yes, well, let's all hold our breath.


All right, Jack. See you in a few moments.

The cartoon that has lots of people talking, but not everyone is laughing. Does "The New Yorker" cover depicting the Obamas as terrorists cross the line?

And Obama's plan for Iraq -- we'll talk about all of that with our political contributors James Carville and Bill Bennett. They're standing by live.

Also, banks going under, a mortgage meltdown -- the New York mayor, Michael Bloomberg, tells us what he would do to try to solve the nation's financial crisis. He's deeply worried, also, about poverty in America.

Plus, another near disaster at a major U.S. airport.

What's being done about it? Stay with us.



BLITZER: Tasteless and offensive or satire and caricature?

There's a huge buzz underway right now about the new cover of "The New Yorker" magazine, featuring a very controversial rendering of Barack and Michelle Obama.

Let's discuss this and more with our CNN political contributor, the Democratic strategist, James Carville, and our CNN political contributor, Bill Bennett, host of the conservative national radio talk show, "Morning In America". He's also a fellow at the Claremont Institute.

James, what do you think of this cover?

JAMES CARVILLE, CNN CONTRIBUTOR, CLINTON SUPPORTER: Well, I think that "The New Yorker" has a long and illustrious history of visual satire. My daughter got my wife, for Mother's Day, a book of "New Yorker" cartoons on mothers. I haven't seen anybody saying they're attacking mothers.

It also has a long and distinguished history of outstanding journalism. Its editor, David Remnick, is an outstanding guy. He's written a bio of Muhammad Ali. He knows more about the collapse of the Soviet Union than probably anybody around.

And I, for the life of me, this is satire in its ultimate form. And I don't know what the big deal is. Just like it seems to be in this election cycle that when you can't question John McCain to say his fighter pilot is a qualification to be president without being accused of being anti-patriotic, that you can't use satire. That doesn't mean you're intolerant. I think it's fine.

BLITZER: What do you think, Bill?

WILLIAM BENNETT, CNN CONTRIBUTOR: We're flipping roles here. I'm on the Obama campaign's side. By the way, the notion that we all live in -- you know, with people that are just like us, to go on record, I live in Chevy Chase, Maryland, one of the most liberal communities in the most liberal county in the State of Maryland, Montgomery County. So I live with people of other points of view, even in my house sometimes.

But "The New Yorker" blew this. Yes, distinguished history, great writing. I read "The New Yorker" occasionally. But it was tasteless and it was stupid.

And the intellectuals missed it, you know?

I remember one time in college the honors philosophy majors put on a one act play. They thought it was hilarious. When everybody else saw it, no one laughed.

The intellectuals were playing a big joke, but then not enough people got it. This was just too clever by half and it backfired on them. And if I were the Obama campaign, I would be furious at these people.

CARVILLE: I wouldn't. I think -- I mean I respectfully disagree. I think this is an outstanding magazine. It uses satire. It's used it very effectively in the past. Anybody that read the magazine knows what it is. And if you had -- anybody could see what the point that they were trying to make here. And if you're not provocative -- and every time that somebody gets provocative in this campaign is people go overboard, I just think we're making a big -- a big error here. I really do.

BENNETT: Well, it's provocative with the wrong point. You know, it was to caricature or satirize conservatives. But there are no respectable conservatives who have said or written or caricatured like this. They're making -- they're really making fun of a straw man.

But in doing it, in creating these pictures, they created something that winced -- that maybe people wince. Obama supporters winced. That's not good caricature. That's not good satire.


CARVILLE: I think there was enough there for there -- to make this good satire. The conservatives have been pretty relentless in attacking Senator Obama's wife and they certainly have discussed his patriotism or whether he wears a flag pin...

BENNETT: But not about AK-47s. Nobody is suggesting...

CARVILLE: Oh, you know...

BENNETT: Nobody is suggesting that he's burning flags, James.

CARVILLE: You know, it's satire. It's satire. The nature of satire is some exaggeration. And...

BENNETT: Well...

CARVILLE: And I think that...

BLITZER: All right...

CARVILLE: I think that it's an outstanding magazine.

BENNETT: That's too far.

BLITZER: Let's move on...

BENNETT: A step way too far.

BLITZER: Let's move on to another issue. Some call it issue number two. That would be the war in Iraq right now. Barack Obama had an op-ed in "The New York Times." Among other things, he wrote today: "We can safely redeploy our combat brigades at a pace that would remove them in 16 months. That would be the summer of 2010, two years from now, and more than seven years after the war began."

Do you see any changes, James, in Barack Obama's stance on a withdrawal from Iraq?

CARVILLE: Well, I mean, first of all, he's facing a deteriorating situation in Afghanistan. The situation in Iraq has improved somewhat. We're going to be six years and $3 trillion in this war. For my taste, mid-2010 might be a might slow for me. But I guess -- you know, he's going to Iraq now and let's see what he says when he comes back.

But you know, things in the world change. And I don't know how to explain this, but we're running a little short on money here. We'd better think of something different.

BENNETT: Well...

BLITZER: He's going to Iraq, Bill, as you know, to meet General Petraeus and General Odierno, the new incoming commander of U.S. forces in Iraq.

Do you see any change in his position?

BENNETT: Well, sure. As James says, things in the world change. Nothing changes quite as much as Barack Obama's mind. The summer of '10. Previously, he said the summer -- March of '08. That was this year. Then at one point he said right away. Then he said he was refining his views.

He clearly does not know his mind, because he doesn't know what he's talking about when it comes to this. He's kind of helpless on this.

Claire McCaskill, his national chairman, said yesterday on the Stephanopoulos show that it's irresponsible for a commander-in-chief to declare any date certain. So he should just back off this, get over to Iraq, find out something first and then make some (INAUDIBLE)...


BLITZER: She was actually on "Meet The Press," just to correct the record.

BENNETT: "Meet The Press". Excuse me. I never -- I only watch CNN.

BLITZER: All right, go ahead, James.

CARVILLE: He could flip-flop from now to the end of the century and he couldn't catch McCain. And Claire -- whatever Claire McCaskill said, it wasn't -- you know, it wasn't quite as profound as Phil Gramm, his national chairman, said.

BENNETT: Yes, well this...

BLITZER: But what's wrong...

BENNETT: ...this is about Iraq.

BLITZER: James...

BENNETT: This is about...

BLITZER: Let me just...

BENNETT: This is about Iraq.

BLITZER: Let me just be serious for a second.

BENNETT: And this is very serious.

BLITZER: James, what's wrong if he goes to Iraq, speaks with the commanders, gets the full briefing and he comes back and says, you know what, I am going to revise or refine my position a little bit?

What would be wrong with that?

CARVILLE: I don't know. Nothing. Jackie Fisher, the great British admiral, basically said consistency is the stuff for fools. So I believe -- anybody can refine a position. He goes over there -- you know, he ought to go over with the sort of view that my mother told me, God gave you two ears and one mouth for a reason. And not -- you know, I'm not precisely go back and you say this and you didn't do that or something like that. But I think the sooner that we can start redeploying people and the sooner that we can, you know, start saving...


CARVILLE: know, saving a little bit, the better off we are.

BLITZER: Very quickly, Bill, go ahead.

BENNETT: Yes. Well, maybe it's this change of mind that will be the right one. But he is able to talk about the removal of troops early because of the success of the surge, which John McCain was strongly in favor of and Barack Obama strongly opposed.

BLITZER: And he's been aided in recent days by the Iraqi government itself, of Nouri al-Maliki, saying they actually do want a timetable for U.S. troops to start pulling out.

All right, guys, stand by.

BENNETT: Thank you.

BLITZER: We're going to continue this in the days and weeks to come.


Thank you.


BLITZER: Some say it's proof of the Taliban's brutality -- a videotape just released that shows what's happening in Afghanistan. It underlines why the American military right now is so deeply concerned.

And a major plan by the mayor of New York that could impact millions of people. Michael Bloomberg at the NAACP convention. He's standing by to join us live.

And there are new developments in the search for a missing billionaire.

Stay with us.



BLITZER: Carol Costello is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Carol, what's going on?

CAROL COSTELLO, CNN CORRESPONDENT: Well, Wolf, a new search is underway for missing billionaire/adventurer Steve Fossett. A team of highly trained athletes and expert mountaineers are combing a remote area along the California/Nevada border. That's where Fossett's small plane is believed to have crashed last September. He was declared legally dead in February after multiple searches failed to turn up his remains.

Russia's navy is going on Arctic patrol again for the first time since the end of the Soviet Union. It's deploying a submarine destroyer and a missile cruiser starting on Thursday. A naval spokesman says it's not an aggressive move, just national security. But Russia is pursuing natural resources in the Arctic. It's staking a claim on oil and gas reserves.

A who's who of Mideast leaders in Paris for Bastille Day celebrations. In what some call a diplomat coup, French President Nicolas Sarkozy got Syrian President Bashar Assad and Israeli Prime Minister Ehud Olmert to attend, along with Palestinian and Lebanese presidents. But Assad reportedly refused to shake Olmert's hand.

That's a look at the headlines right now -- Wolf.

BLITZER: One of these days, they hopefully will. That would be an encouraging sign.


BLITZER: I'm not holding my breath, though.


BLITZER: OK. Carol, thank you.

A deadly attack on U.S. forces raising new questions about the war in Afghanistan. And military families and funeral coverage -- they speak out about the firing of the cemetery official.

And another near disaster at a major airport -- what's being done about it.

Stay with us.



BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, President Bush is lifting the executive ban on new offshore oil drilling put in place by his dad. But the move is purely symbolic unless Congress lifts its ban -- unlikely under the current Democratic control.

Also, the ACLU says the government's terror watch list will soon have one million names on it -- many of them in error. It's calling for the list to be reformed. An FBI spokesman says the agency is working on it.

And one Hawaiian city is considering a new export -- its trash. Landfall space is quickly filling up, so Honolulu is weighing a plan to ship some of its nearly two million tons of annual garbage to the West Coast.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

A mass attack by insurgents and a bloody setback for U.S. forces in Afghanistan. American troops hold their ground, but this battle is raising new questions about the state of the mission in Afghanistan. Let's turn to our Pentagon correspondent, Barbara Starr. She's working this story for us.

Barbara, we knew it was bad, but how bad is it getting?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Wolf, consider this, there are of 65,000 U.S. and NATO troops in Afghanistan, and still it is not enough.


STARR (voice-over): It's the latest sign of Taliban brutality. The Associated Press distributed video of what it says are two women abducted by Taliban gunmen and executed for allegedly being prostitutes. Gunshots and screams caught on tape. The incident could not be independently verified by CNN.

This, as U.S. forces suffered the deadliest attack in Afghanistan in three years. U.S. officials say 200 insurgents firing small arms, machine guns, rockets and mortars, launched a well-planned assault on a U.S. and Afghan combat outpost in the Kunar province alongside the Pakistan border, killing nine American troops.

MARK LAITY, NATO SPOKESMAN: It is quite common for them to attack our combat outposts. But this was a larger scale attack than normal.

STARR: U.S. officials say insurgents overran an observation platform outside the base, most of the U.S. troops were killed there. The fighting described as absolutely brutal. Senior U.S. military officials say the deteriorating situation is due to the lack of security on the Pakistan border. Militants are crossing into Afghanistan sometimes at will from Pakistan's tribal area.

ADM. MICHAEL MULLEN, JOINT CHIEFS CHAIRMAN: What it really speaks to is that that's a safe haven that has got to be eliminated, for all insurgents, not just al Qaeda.

STARR: U.S. commanders are now asking the Pentagon to send as many as 1,000 more MRAP armored vehicles to Afghanistan. That would double the number there now. They have proven highly effective in Iraq. And commanders in Afghanistan want more troops, perhaps as many as 10,000 more.


And, Wolf, a senior U.S. military official tells CNN that the Taliban, the insurgent fighters, they are now seen in the last several weeks, many of them are better trained, better equipped, and carrying out more sophisticated attacks than the U.S. anticipated -- Wolf.

BLITZER: This is a really, really serious problem under way. You'll stay on top of it for us. Barbara Starr is at the Pentagon.

Now to a follow-up to something we first reported last week. Pentagon officials have been defending their tight restrictions on media coverage of military funerals at the Arlington National Cemetery, citing the need to protect grieving families. Let's bring in our senior Pentagon correspondent, Jamie McIntyre. He's working this story for us.

You're getting a different analysis, a different sense from many of these grieving families.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, that's right, Wolf. Pentagon officials last Friday dismissed the complaints of a whistleblower, saying they had no complaints about the policy. But it only took one phone call for CNN to find out that's not quite the case.


MCINTYRE (voice-over): The three-volley salute, and the plaintive wail of "Taps" was all the television microphones from NBC could hear last summer as Army Specialist Christopher Neiberger was laid to rest in Arlington National Cemetery.

It was a disappointment to Neiberger's older sister.

AMI NEIBERGER-MILLER, TRAGEDY ASSISTANCE PROGRAM FOR SURVIVORS: I was surprised when I looked at the footage from NBC, and there was no sound. We do not want cameras in our faces. We do not want to be exploited. At the same time, we have a story to tell about our loved one. And we want their story told.

MCINTYRE: The Army is considering easing rules that keep news crews at Arlington as far as 50 yards away from funerals, but only after the cemetery's former public relations director, who was fired, went public with her complaints.

GINA GRAY, FMR. ARLINGTON PUBLIC AFFAIRS DIR.: And I was told, it's the law, it's the law. So I went back and looked. There's no law that says the media has got to stand so far back away from a funeral. It's a personal for me. I know these people. I know people that are buried there.

MCINTYRE: Ami Neiberger-Miller is also a public affairs professional and works for TAPS, Tragedy Assistance Program for Survivors.

(on camera): Gina Gray says, bottom line is, the families ought to be able to decide. Do you think she's right?

NEIBERGER-MILLER: Absolutely I think she's right.

MCINTYRE (voice-over): Not every family wants media coverage, but for Ami, who wears her brother's dog tags, it's one more way to ensure he's not forgotten.

NEIBERGER-MILLER: This is one that I had made with his picture on it.


MCINTYRE: The Army is looking at this, and frankly, the problem is not that hard to solve. Advocates say families should be fully informed of their options and then all it will take is some common sense and some common courtesy.

BLITZER: That's what's necessary, it's only the right thing to do. Jamie, thanks for that report.

Close calls at New York's Kennedy Airport. Federal authorities are quickly moving to try to make some major changes, but will they keep all of us safe?

And for the second year in a row, a Miss USA finds it tough to walk and smile at the same time. CNN's Jeanne Moos finds that "Moost Unusual." Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: We're learning about another near disaster in one of the country's busiest airports. And the government is moving quickly in reaction. Let's go to Mary Snow. She's in New York working the story for us.

Mary, what's the latest?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, the government put new procedures in place at New York's JFK Airport within hours Friday after two planes came very close to one another. Now, today the FAA announced other measures to improve runway safety across the nation, as it investigates what happened at JFK.


SNOW (voice-over): It's believed to be the first time the Federal Aviation Administration has stepped in to change the way planes take off from and land on JFK's perpendicular runway, spacing them out.

The action came Friday after the second incident caused alarm in one week. The FAA says a Delta flight missed its landing approach and had to go around a Comair flight taking off.

Steve Abraham of the Air Traffic Controller's Union describes what he saw.

STEPHEN ABRAHAM, NATIONAL AIR TRAFFIC CONTROLLER ASSN.: The 13- Right (ph) departure comes off in this direction climbing and what's supposed to happen is 22-Left (ph) arrival is supposed to land. The 22-Left arrival didn't land and he's back up in the air, pointed at the 13-Right departure. And what the controller did was turn them this way, away from each other.

SNOW: Six days earlier the FAA says a Cayman Airlines flight that was landing had to go around a departing LAN Chile flight.

AIR TRAFFIC CONTROLLER: If you could just maintain 1,000 please. I need a left turn, a quick left turn, a left turn adding zero niner zero now. Traffic on departure roll.

ABRAHAM: That's as close as I ever want to see airplanes get.

SNOW: The FAA insists they were not near collisions, but says they are under investigation.

ROBERT STURGELL, FAA ACTING ADMINISTRATOR: The system is built to take care of these kinds of events. In this particular case, you know, we just want to take a look at it a little more closely.

SNOW: Critics have also targeted the FAA for placing young air traffic controllers at busy airports, saying experience is key. The FAA's acting administrator defended the hirings.

STURGELL: We have 20-year-olds fighting a war, we have 20-year- old police officers, we have 20-year-old firemen. We can certainly have a 20-year-old air traffic controller.

SNOW: One former NTSB investigator wonders just how widespread the problem is.

GREG FEITH, FORMER NTSB INVESTIGATOR: Is there really a systemic problem with the policies and procedures, and the controllers in the way they operate at JFK? That's going to be a huge issue that the FAA and the NTSB need to determine.


SNOW: Now, the FAA said today it's expanding using a runway light system in 20 of the country's busiest airports, and that includes JFK. These lights let pilots know when runways are clear. I spoke with the president of the Airline Pilots Association who says his union has asked for those lights for a decade and he wants to see them in 80 of the nation's airports, not 20 -- Wolf.

BLITZER: What is the FAA, Mary, saying about The New York Post headline that suggests the FAA is actually hiring teens, teens as air traffic controllers?

SNOW: Yes, it was a front page story with the headline "Kids in Control." And the FAA is saying today, it defended hiring young people, saying that it was always the case that air traffic controllers only needed high school diplomas, saying that it does advertise online for applicants. And it's saying that it's very hard to retain veterans in cities like New York because of the cost of living. But the Air Traffic Controllers Union is saying that the FAA is desperate and that's why it's doing this.

BLITZER: All right, Mary. Mary is watching this important story. And as Mary just reported, 20 airports are slated for enhanced lighting systems. The list includes many of the country's and the world's busiest airports, including Los Angeles International, Dallas- Fort Worth, Denver, Atlanta, Washington Dulles, Chicago's O'Hare, and all three major New York area getaways. That's important information.

A run on a major bank, sparking new concern about the country's growing financial crisis. The New York City mayor, Michael Bloomberg, he will offer some advice. We'll also talk about poverty in America.

And soldiers with criminal backgrounds convicted of crimes in Iraq. No longer an isolated problem. We'll be right back.


BLITZER: One big bank fails. Others are floundering. Stock markets keep plunging. Let's discuss this, and more, including the state of poverty in our country. Joining us now is the mayor of New York, Michael Bloomberg.

Mr. Mayor, thanks for coming in.

MAYOR MICHAEL BLOOMBERG (I), NEW YORK: Wolf, thank you for having me. BLITZER: How worried should people who have their life savings in regular banks be right now?

BLOOMBERG: Well, I think regular banks are fine. The federal government will guarantee the savings. We have a number of programs that came out of the bank failures in the Depression. And you should not have to worry about, if you have money on deposit in a regular bank, that you'll be able to get your money out. You will able to. That money is perfectly safe.

BLITZER: That's if it's under $100,000, which is a guaranteed by the FDIC.

BLOOMBERG: That's correct. But I think the bigger banks, the federal government is not going to let the banking system fall apart here, I think that is clear. In terms of investments you may have in the stock market, the stock market I think is just reflecting the fact that in this country, we have not been willing to face the real problems.

If you think about it, we are trying to commit mass suicide by keeping those who would come here and create jobs from coming into America. People around the world want to come here and work and create jobs and invest here and help our science. And in fact, we're driving these people out of this country, and sending the jobs of tomorrow overseas. So that's one of the big problems. And the stock market reflects that. The stock market reflects -- well, there's a few...

BLITZER: I was going to say, what else would you do, in addition to allowing the illegal immigrants, for example, to have a pathway to citizenship or whatever, what else would you do if you could to try to fix this economic mess?

BLOOMBERG: You have to do a few things. One, when it comes to immigration, we have 12 million people here, we're not going to deport them. Let's get serious about that. We were complicit in them getting here. They may have broken the law, but we can't get rid of them, and we don't want to get rid of them. And we have got to move on from talking about that again and again.

We've got to attract the best and brightest from around the world to come here. And that means giving visas to those who want to open businesses here and who want to study here and want to bring all of their skills here. But that's just one thing.

Congress has been spending money we don't have. That's hurting. We have an energy policy that's driving up the cost of food dramatically around the world, including here. And that's terrible for our economies, because while the economy is slowing down, we're also having inflation.

So the Fed really doesn't know what to do. They get whipsawed no matter what they do. And we've been unable to face the issue of energy dependence on foreign sources. And what we're doing here, along with the problems in health care that every time you turn around Congress walks away from facing, is this massive transfer of wealth from the Western world to the Third World to many countries that hate America, and massive transfer of wealth in the United States from young to old as we don't focus on who is going to pay for health care.

And you start to see these things reflected in the market.

BLITZER: You made a major presentation before the NAACP on how we define the poverty level in our country. And your bottom line, correct me if I'm wrong, is that there are a lot more people below the poverty line than the federal government right now clearly acknowledges.

BLOOMBERG: Well, what we're trying to do is -- number one, I didn't get out to Cincinnati to make the speech, I got held up by the weather.


BLOOMBERG: But my deputy mayor gave the speech. I think what we tried to do is to come up with a measure of poverty to tell us about who is here and what they're doing and what they need. You know, unless you understand the real problem, you have real numbers, you can't help fix it.

You can't help people and you can't fix problems. And the old measures of poverty centered around the cost of food when food was, let's say, a third of the budget. Today food is an eighth of most people's budget. It did not include cost of health care, it did not include cost of child care, it did not include differences in rent between one part of the country and another.

And at the other side, it didn't give all of us, you and me and the taxpayers, credit for the things that we have to help the poor. There is the earned income tax credit, there is food stamps, there is temporary assistance to needy families, there is Section 8 vouchers.

So it just wasn't a good measure. And we tried to make the measure make sense. And then the numbers are what they are, whether they're higher or lower, at least they better reflect what's really going on in the economy.

And whatever they are, they're way, way too high for this -- for a rich country like ours to have so many people living in poverty.

BLOOMBERG: Well, Wolf, I'll give you a number that's really scary. One-third of the people who -- of the families with at least one working full-time member of their family is below the poverty line. These are people who punch the -- set the alarm clock and punch the time clock and they just can't make enough money to make ends meet.

And the only ways we're going to fix that problem is through better education, and bringing the kind of jobs here that justify high wages. You can't stop business from going to where the low wages are. But if we want to have high wages for the people of America, we have got to have the jobs where we're -- the value-added kinds of jobs. And instead, we're driving those out of this country.

BLITZER: I can see how passionate you are on this issue and a lot of other issues right now. Who do you think would do a better job in dealing with this issue, would it be Barack Obama or John McCain?

BLOOMBERG: Well, I think that's for the public to decide. But keep in mind, it is...

BLITZER: But what do you think? What do you think?

BLOOMBERG: Well, regardless of what -- the one that I will vote for, the fact of the matter is, it is Congress that passes most of these laws. It is congress that is so divided based on party and partisanship that they're unwilling to face the tough issues. They're afraid of the voters and the voters are crying out for leadership.

And I hope that the two candidates, the Republican and Democrat, Obama and McCain, that they are willing to stand up over the next four or five months, until November, and say explicitly what they would do and how they would get Congress to go along and how they would pay for it.

Because this magic bullet that God will provide, God helps those who help themselves, and science is going to -- is not going to bail us out of the environmental problems we have. We have got to do that ourselves.

There is no magic thing that is going to bring the economy back quickly. We have gone through a dozen years of great markets, we're going to go through a period here of some very trying times, the housing crisis is nowhere near over.

Public confidence has been debased. We have inflation. We have people pulling their reins in and being afraid to make investments and it is going take time to work through that. And we need leadership in this country.

BLITZER: All right. A direct challenge to both of these candidates from the mayor of New York. Mayor Bloomberg, thanks for coming in.

BLOOMBERG: You're welcome, Wolf. Thank you for having me.

BLITZER: Appreciate it very much.

Convicted of serious crimes, we're going to get to that story in a moment. But the online effort to save an all-American beer from foreign ownership, we have new details. Stay with us.


BLITZER: Let's get back to Jack Cafferty for the "Cafferty File" -- Jack.

CAFFERTY: Wolf, the former president, Bill Clinton, gave a speech to some of the nation's governors the other day, which he suggested that our country is becoming more and more divided. We wanted to know how you felt about that.

David writes from Florida: "Let's see, 85 percent of the people think we're on the wrong track. McSame wants to stay on the wrong track. Obama wants to change direction. Yet the polls are still saying both candidates are in a dead heat, just as they have been for eight years. Either the pointer on the opinion poll meter has been stuck for eight years, or we are terminally divided."

Bob in Virginia: "I believe he is correct. By the way, did he mention how he and his wife contributed to and tried to use this divisiveness to their advantage with their comments during the Democratic primaries?"

Kay writes: "Absolutely, we are more divided. And as they say, everything comes from the top. The Bush administration has always emphasized the 'with us or against us' stance, an eight-year diet of divisiveness, division has left us here, Republican or Democrat, Christian or Muslim, have or have-not. And sadly, we are not all watchful and careful.

Sherri writes: "I don't feel we're any more divided, that's because Obama won in Iowa. As a black American, that surprised me and everybody I know. And it opened our eyes that America is open for a change in the form of either a woman or a black man.

G.C. writes: "Life is filled with stress. Home, family friends relieve that stress. I find nothing wrong with living in communities of people with similar values to yours. Rich and poor folk alike, and those in between have been doing this for decades. We're not more divided, it's just more in the forefront."

And Deborah in Indiana writes: "Yes, we are more divided. What's worse, we can't agree to disagree or listen to one another's point of view anymore. We've lost our ability to listen to someone's ideas, think about them, and then discuss that opinion rationally. Everybody has this notion that it is my way or the highway."

If you didn't see your e-mail here, you can go to my blog at Look for yours there among hundreds of others. Knock yourself out.

BLITZER: People will do that, Jack. See you in a few moments.

The Belgian brewer InBev announced it will buy the U.S. beer company Anheuser-Busch for $52 billion, creating the world's largest brewer. That has many people online upset causing some to actually take action.

Let's bring in Abbi once again. What are these people doing? How are they reacting online?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, they are saying this isn't just beer, this is an American icon. There has been a Web-based campaign in St. Louis with more than 70,000 signatures against this merger. And there has been new sites popping up, smaller sites in the last 24 hours, calling for a boycott. And there is a St. Louis-based song-writer, Phil McClary, who has put all of their feelings to music.


UNIDENTIFIED MALE (singing): Are you a hard-working American? Stand up show some class, and have a drink with mother freedom and tell InBev to kiss your glass.


TATTON: That's Phil McClary, he says there is not a lot the little people can do, but last night he put down his Bud Light and he says it's going to be a few months before he thinks he can drink another.

InBev CEO assured people today that nothing will change, saying Budweiser will be brewed in the same breweries by the same people according to the same recipe -- Wolf.

BLITZER: Abbi watching the story for us.

John McCain is telling Hispanics he has earned their trust. Let's bring in Lou Dobbs, he is watching this story for us.

He spoke at National Council of La Raza today. He actually made the case that he's better as far as comprehensive immigration reform than Barack Obama is.

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Well, he made the case, he also pointed out he had 75 percent of the Hispanic vote in his election in the state of Arizona. But these two pandering to LULAC now La Raza, I mean, for crying out loud, today we had Senator Obama trying to explain, the man who last week told us all that he wanted our children -- wanted to make sure that we were making sure our children were speaking Spanish, he informed us all today that La Raza, the organization he is speaking before, means "the people," instead of "the race."

And so we have to give Senator Obama a little linguistics lesson, a little something in Spanish. It is "la gente" is "the people." And "la raza" is "the race," so he needs to get that straight. He's starting to mess with us with both languages now, English and Spanish, and he only speaks one of them.

BLITZER: And Lou is going to have a lot more coming up on this story, you've got to believe, in one hour on "LOU DOBBS TONIGHT," we'll see you then, Lou.

DOBBS: You had better believe it, you got it. Thanks, Wolf.

BLITZER: Thank you.