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California Bank Fails, More Failures Expected; Japanese Fishermen Stage a Massive Strike on Oil Price; Inside Myanmar; Tropical Storm Bertha Could Become Hurricane Again; Barack Obama Appeals to NAACP; Gas on Tap
Aired July 15, 2008 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: And good morning, everyone. You are in the CNN NEWSROOM. I'm Tony Harris.
HEIDI COLLINS, CNN ANCHOR: Hi there, everybody. I'm Heidi Collins.
You'll see events come into the NEWSROOM live on this Tuesday morning, July 15th.
Here's what's on the rundown.
A titan of American business takes a new hit. This hour, General Motors announcing plans to cut jobs and truck production. We'll watch for Wall Street reaction.
HARRIS: Bank failure leads to consumer concern. What you need to know to keep your money safe.
COLLINS: And going for the gold then surgery. An Olympic swimmer with cancer puts his priorities in place, in the NEWSROOM.
And this word just in to CNN now. President Bush set to hold a news conference this morning at the White House. He's expected to talk about the U.S. economy. It is set to happen at 10:20 Eastern Time. Of course, we're going to carry that for you live and we will get a look at it from our Elaine Quijano who is standing by at the White House in just a moment.
But first, the American car industry wants the engine that drove the nation's economy today -- it's a big cog in the sputtering machine. We are waiting to hear from General Motors right now. It's the latest bid to survive.
The struggling automaker expected to further slash truck production and thousands of jobs.
Ali Velshi will have the details on that coming up in just a few minutes.
Also this morning, a view of the economy from the people who shape it, Treasury Secretary Henry Paulson and Fed chairman Ben Bernanke will brief a Senate panel on their latest efforts and that includes the new moves to revise and regulate mortgage lending.
So we'll be talking about that.
Plus, buckle up for a white-knuckled ride on Wall Street today. Investors are bracing for a grim opening at the bottom of the hour. Overnight, Asian markets tumbled as U.S. mortgage fears rippled overseas.
HARRIS: So how deep will General Motors cut and how long are the odds that the car maker can reverse its staggering losses?
Joining us by home is Neal Boudette, the Detroit bureau chief for the "Wall Street Journal."
Neal, good to talk to you this morning. If you would, what are you expecting by the way of white collar jobs to be cut in the announcement this morning by GM?
NEAL BOUDETTE, WALL STREET JOURNAL: Well, they talked about a broad swathe of job eliminations, primarily in some areas like engineering where the head people who are developing trucks, but now aren't going to bring those vehicles to market. So they have a lot of overlap.
And in the headquarters in Detroit, in the -- in downtown, there are plenty of layers within middle management that can go. So it will be a pretty significant cut here.
HARRIS: You know, Neal, Wall Street has some concerns about the viability of General Motors and fears of actual bankruptcy. You know, fear is not always based in reality.
What are your thoughts on the continuing viability of General Motors?
BOUDETTE: Well, the fears about the bankruptcy are -- if you look at how much cash the company is burning right now, roughly, analysts say, about $3 billion a quarter, and they have $24 billion in the bank, and then on top of that if you lose $5 or $6 billion, over a period of time, that runs out.
That's where the bankruptcy fears come from. If General Motors takes steps they'll stave off bankruptcy and it won't be a possibility. But, you know, it's still there. You can see it coming if nothing is done.
HARRIS: And, Neal, bottom line, the problem for GM for us, if you -- and I know it's two, maybe threefold here, but one of the bottom lines, it seems, is that GM is just not making the kinds of cars that Americans want to buy. Is that correct?
BOUDETTE: Well, in part, yes. They're making a lot of trucks. And as you know, with high gas prices, people are shifting to cars. And that is really hurting them.
Their product line was heavily weighted toward trucks. They relied on trucks, pickup trucks and SUVs for most of the revenue and profit in North America. And now those products aren't selling. So they're in a very, very tough position.
Their cars have improved a lot in terms of quality and the way they feel and the way they look, but they still haven't caught on with a lot of customers.
HARRIS: And, Neal, is Ford in anywhere near the same kind of trouble it feels that GM is in?
BOUDETTE: It faces the exact same market forces -- this shift of consumers to trucks -- from trucks to cars, but it has a lot more cash on hand and is ahead of GM in terms of getting its house in order.
HARRIS: And that's Neal Boudette, the Detroit bureau chief for the "Wall Street Journal."
Neal, thanks for your time this morning.
BOUDETTE: Pleasure to be here.
COLLINS: GM's news sure to affect the markets today. We are less than 30 minutes now to the opening bell.
Susan Lisovicz is at the New York Stock Exchange with an early look ahead.
Hi there, Susan. Boy, it feels like a Monday morning but it's really Tuesday.
SUSAN LISOVICZ CNN CORRESPONDENT: Well, I tell you, Monday was a long day...
COLLINS: Yes.
LISOVICZ: ... and it was a rocky day. And don't expect much better today.
Let me mention GM shares, since you were just talking about GM's moves cutting 20 percent of its workforce, suspending its dividend, GM shares are up 3 percent in pre-market trading. The moves will help GM to raise $15 billion.
Remember GM hasn't posted a profit since 2005.
Overall, though, stocks are under siege. We're expecting a sharply lower open. This after Asian markets fell sharply amid concerns about the U.S. financial system. European markets falling as well.
The euro rose to a record high against the dollar, topping $1.60.
We've got a couple of economic reports a half hour ago. New read on wholesale prices shows soaring energy and food pushed annual inflation up last month at the fastest pace in 27 years.
So people, understandably, are cutting back on spending prompting retail sales to come in weaker than expected last month. Fed chief Ben Bernanke is scheduled to brief Congress in about an hour on the economy today and address that extraordinary plan announced over the weekend to rescue mortgage giants Fannie Mae and Freddie Mac.
Nervousness about the banking sector continues to linger, though, and Oppenheimer analysts warned that the situation is increasingly bleak for Wachovia. The analyst expects the bank's mortgage portfolio to continue to lose value which he says will seriously jeopardize Wachovia's ability to generate earnings.
Wachovia shares are down 17 percent in pre-market trading.
And analysts note out today, says the reality is that investors have lost all faith and much of what drives the market is faith. We need to have faith in our financial institutions.
Two quick earnings reports to tell you about in that sector. U.S. Bancorp today reporting second quarter earnings that fell 18 percent, hurt by credit and securities losses. State Street, on the other hand, reported a 50 percent increase in quarterly profits driven by acquisitions.
So we left on a positive note, Heidi.
COLLINS: That was a long go around to get there, though, Susan, I have to say. My goodness. All right.
LISOVICZ: Yes, I've got my flak jacket underneath this sweater.
COLLINS: I understand, but we're glad you're there because there's an awful lot to talk about today regarding everybody's finances. So we will stay on track with that.
Susan Lisovicz at the New York Stock Exchange.
Thanks, Susan.
LISOVICZ: You're welcome.
HARRIS: President Bush and the economy next hour. He is due to hold a hastily called news conference, his first since last -- well, I guess late April.
CNN's Elaine Quijano is at her post at the White House.
And, Elaine, now what message is the president trying to send? Is it that, look, he sees the fear building and he wants the American people to know the government is on the job?
ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: I think that's exactly it. You heard Susan Lisovicz just say a moment ago this is about restoring faith in these institutions.
President Bush is trying to push back against some of these negative economic headlines. A steady stream really of bad economic news that Americans have been seeing to try to restore people's confidence in the market.
So the president today, in his opening statement, about five minutes long when this news conference starts as 10:20 Eastern, will give his assessment, really, on the current state of the economy.
He'll also talk about something we saw happen over the weekend. The treasury secretary making a rare Sunday night announcement that the Bush administration plans to take steps to bolster Fannie Mae and Freddie Mac, of course, those mortgage finance company giants really.
The president will also talk about oil, offshore drilling. The president yesterday lifted the executive branch's ban on offshore drilling saying now it's Congress's turn, really, to lift its own ban. The president saying this, of course, against the backdrop of high gas prices.
And he'll also call on Congress to move ahead on appropriations bills. But, again, the president is choosing to hold this news conference at a time when Americans have continued to see headline after headline of discouraging news on the economy.
So, as you said, President Bush really trying to send the message loud and clear that the government is on top of the situation, that it is taking steps to address these economic woes, and trying to restore confidence in the markets -- Tony?
HARRIS: Elaine Quijano at the White House for us.
And Elaine, see you next hour. Thank you.
COLLINS: Next hour, Barack Obama lays out his plan for Iraq. He tries to show why he should be commander in chief. His campaign calling it a major speech.
CNN will carry it live at 10:45 Eastern.
Obama visits Iraq later this month. He wants a 16-month timetable for troop withdrawal.
John McCain, campaigning in New Mexico today. He opposes a timetable for leaving Iraq. He believes when to leave should be decided by events that happen.
A new "Washington Post"/ABC News poll shows Americans are evenly divided over whether there should be a withdrawal timetable.
HARRIS: Violence down in Iraq, up in Afghanistan. The Pentagon and the next president have decisions to make.
CNN's Barbara Starr is live at the Pentagon.
And, Barbara, one of the Pentagon's top priorities, it seems, has to be getting more manpower and materials into Afghanistan.
BARBARA STARR, CNN PENTAGON CORRESPONDENT: To say the least, Tony. In fact, Barack Obama and John McCain may be about to find out the road home from Iraq goes right through Afghanistan.
(BEGIN VIDEOTAPE)
STARR (voice over): With Taliban fighters staging deadlier and more sophisticated attacks, Afghanistan is now the hotter war facing John McCain and Barack Obama. Even as they argue about Iraq and the surge ends later this month, American troops won't be home for long.
Commanders saying more troops and armor must be sent to Afghanistan to fight the rising violence.
But first, the Pentagon says U.S. troops have to get out of Iraq.
ADMIRAL MICHAEL MULLEN, JOINT CHIEFS CHAIRMAN: I've made no secret of my desire to flow more forces, U.S. forces to Afghanistan just as soon as I can. Nor have I been shy about saying that those forces will not be available unless or until the situation in Iraq permits us to do so.
STARR: Obama still focusing on getting out of Iraq.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: I'm going to call in the Joint Chiefs of Staff and give them a new mission. And that is to bring the war in Iraq to a close. We are going to get out.
STARR: McCain still focusing on criticizing Obama.
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: His proposals would jeopardize the fragility of the success we've achieved.
STARR: But little discussion about what U.S. commanders are urgently recommending, sending up to 10,000 additional troops and a lot more equipment.
(END VIDEOTAPE)
STARR: Now, Tony, that attack we talked about in Afghanistan yesterday that killed nine U.S. troops, well, U.S. military officials are now saying they have a much greater understanding of how sophisticated, how well planned that nighttime attack was. And it's that kind of Taliban combat power that concerns them a great deal now -- Tony.
HARRIS: OK, Barbara Starr at the Pentagon for us.
Barbara, thank you.
And a reminder for you, we are waiting for Barack Obama's speech on Iraq. That's at 10:45 a.m. Eastern Time. And we will be carrying that for you live right here in the NEWSROOM.
COLLINS: Back-to-back explosions in Iraq. Iraqi officials say two suicide bombers blew themselves up in a crowd of army recruits today killing at least 28 people, wounding 55 others. Most of them army recruits. It happened in Baqubah north of Baghdad. That's in the troubled Diyala province. Last month officials announced a military push aimed at rooting out al Qaeda militants from that area.
HARRIS: And for the first time, a glimpse into the secretive world of questioning at Gitmo. A tape that is believed to show the interrogation of a terror suspect at Guantanamo Bay.
(COMMERCIAL BREAK)
BETTY NGUYEN, CNN CORRESPONDENT: I'm Betty Nguyen. Coming up, I'll take you inside Myanmar to find out if aid is finally getting to the cyclone victims.
(COMMERCIAL BREAK)
ANNOUNCER: Live in the CNN NEWSROOM Tony Harris and Heidi Collins.
COLLINS: We want to get some information out to you coming to the CNN NEWSROOM from Baltimore, Maryland.
Apparently there has been a policeman that has been shot. This is Anne Arundel County. Again, Baltimore Police telling us it happened in Anne Arundel Country. An officer has been shot, apparently was wearing a bulletproof jacket at the time but was still wounded.
Not sure of the extent of those injuries or the circumstances surrounding what happened here but you're looking at the new video coming in from our affiliate there, WJLA. Obviously they are on the hunt for this person and try to care for the officer.
Again, we will stay on top of this for you out of Baltimore, Anne Arundel County.
HARRIS: General Motors and its latest bid to survive deep cuts felt from the assembly line to the showroom.
Here with the details, CNN senior business correspondent Ali Velshi.
And Ali, we're talking about cuts designed to save how much -- is this, like $15 billion...
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: $15 billion, yes.
HARRIS: ... for 2009?
VELSHI: Yes. I mean GM is in a bad cash position and what that's done is that it's caused investors to continue to sell that stock. That stock now sitting at around 50-year lows, under $10 a share.
And that's, you know -- there were rumors starting to circulate about what GM have to go into bankruptcy protection. So they've designed this conversation to try to assure investors about what they're doing.
So $15 billion in cuts. Here's how it comes. GM already this year announced 170,000 units of truck reduction capacity. They're now accelerating that to 300,000 units by the end of the year. They're going to cut 20 percent of salaried job costs.
They're going to suspend the dividend. It's a 25 cent per share dividend. That was already cut from 50 cents a share. They're now going to suspend the dividend entirely, which is a big deal to people who invest in that stock for income.
They're going to sell $4 to $7 billion worth of assets possibly including Hummer, which they've discussed selling, they're going to eliminate discretionary executive cash bonuses, that is extra bonuses that are not part of the contract.
They're also going to reduce their sales and marketing spending. They're holding their engineering spending steady. They're going to eliminate health care coverage for U.S. salaried workers and there'll be no base increase in salary for U.S. and Canadian salaried workers at General Motors.
Some these are some attempts to try and save that money and get back on track. We're yet to see how the stock is going to do. It will open for trading at 9:30 along with the other stocks on the...
HARRIS: Yes.
VELSHI: ... on the New York Stock Exchange. And we'll see whether investors think there's anything in there that they like.
HARRIS: Boy, but there you see the approach, which is to lower your hard costs and...
VELSHI: Right.
HARRIS: And while trying to increase your cash position. So yes...
VELSHI: But, you know, in business there's another way to do this, and that's the way the automakers have always been struggling with -- increase your revenue, sell more cars.
HARRIS: Yes.
VELSHI: And thereby increase your profit. They're struggling with that and that's why they're moving from the trucks to the cars because at the gas prices people aren't buying trucks.
HARRIS: Yes, and that takes time.
There he is, Ali Velshi in New York for us.
Ali, good to see you. Thanks.
VELSHI: OK. COLLINS: It's something you've never seen before, a videotape that purportedly shows the interrogation of a terror suspect at Guantanamo Bay's detention center.
That suspect was 15 years old when he was questioned by a Canadian interrogator.
More now from CNN's justice correspondent Kelli Arena.
Kelli, good morning to you.
KELLI ARENA, CNN JUSTICE CORRESPONDENT: Good morning, Heidi.
You know the reason this case has gotten so much attention is because Omar Khadr is so young. He is 21 now, but as you said, he was taken into custody when he was just 15 years old.
He's one of eight people who were juveniles when they were actually brought to Guantanamo Bay. Most of them have been released, but Khadr and one other man are still there. That's because both of them are expected to go before a military tribunal.
Khadr is accused of murdering a U.S. soldier in Afghanistan.
On the tapes, we see a Canadian intelligence official interrogating Khadr, who is a Canadian citizen, and whose lawyers previously alleged that he had been mistreated, sleep deprived.
But the tapes do not show any mistreatment. There is one point, though, on the tape where Khadr lifts his shirt to reveal bullet wounds and other injuries that he apparently sustained in Afghanistan. He's also uncontrollably sobbing on this tape.
Let's take a look.
(BEGIN VIDEOTAPE)
(BEGIN VIDEO CLIP)
OMAR KHADR, GUANTANAMO BAY DETAINEE: I got them on my arms. All over. Will you help me?
UNIDENTIFIED AGENT: No.
KHADR: I can't move my arms. I requested medical for a long time they didn't do anything about it.
UNIDENTIFIED AGENT: No, I mean, they look like they're healing well to me. You know, I'm not a doctor but I think you're getting good medical care.
KHADR: No, I'm not. You're not here. I lost my eyes. I lost my feet, everything.
UNIDENTIFIED AGENT: No, you still have your eyes and your feet are still at the end of your legs, you know. (END VIDEO CLIP)
ARENA: I mean this is pretty amazing because this is the first inside look that we have ever gotten of an interrogation at Guantanamo Bay. We know that there have been other interrogations that were taped, but the U.S. government says that those tapes were destroyed.
Now his lawyers, Heidi, chose to release the tapes to the media after a judge ordered that those tapes be turned over to his legal team. It's expected to add some pressure, you know, that's already on the Bush administration to close Guantanamo.
You know, this is just the kind of stuff that critics say will only help their cause.
COLLINS: Well, I'm confused. I'm still trying to watch and figure out what are they trying to say that the tape alleges? Because you know...
ARENA: Well, they're trying to show his state of mind. I mean, here he is, he's very young. He's clearly very distraught. He's making complaints that he wasn't receiving proper medical care. I think just the visual of seeing a very young person.
COLLINS: What are the laws on that, if any, as far as bringing in...
ARENA: Well, you know...
COLLINS: I guess it would be considered a minor, yes?
ARENA: Well, he is a -- well, he was when he was there.
COLLINS: Right.
ARENA: And you know, the U.S. government has contended that he was properly classified as an enemy combatant. He's charged with lobbing a grenade that killed a U.S. soldier. So, you know, they have contended all along that his detention was justified.
But, you know, again, we've seen, even within the private legal system, you know, a move -- usually minors are treated differently than people, you know, who are 21 and older. They're held in separate facilities. They go through a separate court system. And that is not the case -- don't forget, these detainees are in military custody.
COLLINS: Yes.
ARENA: So big difference.
COLLINS: All right. Understood. Appreciate it so much.
ARENA: You're welcome.
COLLINS: CNN's justice correspondent Kelli Arena.
Thank you, Kelli.
ARENA: You're welcome.
HARRIS: So how about this, a young man fighting for his dreams swimming for the United States in weeks in Beijing while fighting and waging an even more courageous battle against cancer.
(COMMERCIAL BREAK)
COLLINS: Eric Shanteau -- he won a spot on the U.S. Olympic swim team, something he's been working for all of his life. He's headed to Beijing next months and he's just heard he has cancer.
Our chief medical correspondent Dr. Sanjay Gupta is here now to talk a little bit more about this.
Boy, what a blow.
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Unimaginable decisions.
COLLINS: Yes
GUPTA: Go from one of the greatest highs in your life to one of the lowest lows. He has an incredible role model. Somebody who's gone through this exact same thing. As we found out from talking to him, he's determined to win and his spirit is so strong.
Take a look.
(BEGIN VIDEOTAPE)
(BEGIN VIDEOTAPE)
GUPTA (voice over): He's been preparing for Beijing his entire life.
ERIC SHANTEAU, OLYMPIC SWIMMER: Dreaming about the Olympics. It's -- you know, that's for as long as I can remember.
GUPTA: But just two months away from realizing his dream, doctors gave U.S. swimmer Eric Shanteau devastating news -- testicular cancer.
SHANTEAU: You get hit with, you know, basically, the biggest low you can ever have in your life.
GUPTA: Then two weeks later, the biggest high.
24-year-old Shanteau won a spot on the U.S. Olympic swim team.
SHANTEAU: As far as my swimming career is concerned, that's obviously the biggest high.
GUPTA: Testicular cancer is an extremely treatable disease. More than 95 percent cases are cured, especially when they're caught early.
Luckily, Shanteau's was. He made the extremely difficult decision to wait until after Beijing to have his operation, placing trust in his doctors, who are closely monitoring his condition.
SHANTEAU: I'm probably not going to be swimming in four years regardless. I'm looking at the end of my career here, whether I'm having treatment done today or in another month, it wouldn't -- it would make no difference.
GUPTA: Lance Armstrong, the world's best known testicular cancer survivor, is applauding Shanteau's fight.
After Armstrong was diagnosed with a more advanced form of the disease in 1996, he went on to win seven Tour de France.
GUPTA (on camera): Did you think you were going to die?
LANCE ARMSTRONG, TESTICULAR CANCER SURVIVOR: You have moments, for sure, where -- moments of weakness where you think I'm going to die or perhaps I'm going to die. I was totally committed, totally focused. And I had complete faith in my doctors and the medicine and the procedures.
GUPTA (voice over): But here's the question -- in Eric Shanteau's case, is holding off on his treatment smart?
DR. OTIS BRAWLEY, AMERICAN CANCER SOCIETY: It is not unusual for someone to delay getting treatment for several weeks or several months. And I'm not advocating that everybody wait a period of three or four weeks. If they do it under medical supervision, it can be very safe.
GUPTA: With the odds in his favor, it's a small risk Shanteau is eager to take.
SHANTEAU: I'm not going to let it beat me. I'm not going to let it affect what I've been working for so long.
(END VIDEOTAPE)
GUPTA: You know something else that Lance Armstrong said that I thought was so interesting, Heidi. He said, you know, he's going to go out there and he's going to swim like a man possessed because he's been reminded...
COLLINS: Oh I bet.
GUPTA: ... of just how fragile his life is and all of our lives are.
COLLINS: Yes, boy, you know, you look at his face and he just looks so young. And...
GUPTA: Yes.
COLLINS: And Lance was diagnosed pretty young, too.
GUPTA: In their 20's, yes. Yes, you know, it is one of the most common cancers among young men. In fact, I think it's the most common between men -- between the ages of 15 and 24.
But overall, this cancer tends to affect men at a very early stage in their lives and hopefully it's caught early but oftentimes it's not because people don't talk about it. They don't go to the doctor on time, whatever the case may be.
COLLINS: Yes, which is very disturbing. But, you know, in this case, he is going to hold off on that treatment. And you said in your piece that it seemed like that's OK. It's a small risk?
GUPTA: Yes, you know, I think -- you know, it's really important to say that there are some cancers out there where you have to get treatment immediately. So let that be a message to people who watch Eric Shanteau's story and say, well, I can hold off.
It's not the case for all cancers. He is going to get a blood test every week. He's going to get a CAT scan every two weeks from now through the Olympics and he get -- he's going to get his treatment after that.
If there is a change on either of those things he says he's going to put the Olympics on the back burner...
COLLINS: Yes.
GUPTA: ... and go start his treatment. So he's walking the line a little bit here but the doctors that we talk to say it's -- they're reasonably comfortable with that.
COLLINS: OK. And, boy, we have our fingers crossed for him.
GUPTA: Yes, be rooting for him.
COLLINS: Yes, absolutely.
GUPTA: Watching him closely. All right.
COLLINS: All right, Sanjay. Thank.
GUPTA: Thanks.
HARRIS: Is your bank safe? A national expert has some tips on how to protect your money and perhaps more importantly here your peace of mind.
(COMMERCIAL BREAK)
HARRIS: So why don't we do this? Let's take you to the New York Stock Exchange first. Got a lot of business to take care of in this section of the show. There you go, the opening bell just a short time ago. Yes. Yes.
COLLINS: I know you watch that.
HARRIS: No, no. Let's get the business day started. The Dow starting the day at 11,055. Oh, boy. You know our friends at CNNmoney.com indicated kind of a tough start to the day for U.S. stocks amid growing concerns about the banking sector as the dollar hits record lows against the Euro and fast approaching triple digit losses here in the first couple of moments of the trading day.
We're going to follow the markets throughout the morning with Susan Lisovicz's help, right here in the CNN NEWSROOM.
And a reminder, President Bush is set to hold a news conference this morning at the White House where he is expected to talk about the U.S. economy and attempt at least to ease the fear that is clearly growing out there. That is set to happen at 10:20 a.m. Eastern Time. And of course we will bring it to you live right here in the NEWSROOM.
A California bank fails and a new wave of nervousness washes over the country. Is your bank safe?
Terry Savage is a nationally known expert on personal finance. She's a syndicated columnist for the "Chicago Sun-Times."
Boy, we're glad that you are here. Because I really think that that's what people are saying to themselves. OK, where is all my money and how is my bank doing? What should they be thinking as they see people lining up, literally. It's pretty dramatic to get their money out of IndyMac?
TERRY SAVAGE, COLUMNIST, "CHICAGO-SUN TIMES": Heidi, you've asked the right question. My own mother called me this morning, who has heard me over the years say -- now, relax, if you're under the insured limit. Don't worry. But even she said, you know, you look at pictures on the news of people lining up to get their money out and it scares everyone. And that's the problem.
We had a couple of banks, more than a couple of them, that made very unwise mortgages. That's not a surprise. The FDIC took them over. And all of those people who are under the $100,000 insured limit are perfectly safe.
It's just amazing in America, though, that many people leave money over -- if they're smart enough to have that much money, you would think they'd be aware of the insurance limits. But they leave more money than that in the banks and those people will not be repaid fully. Some of them not at all for those amounts above $100,000.
COLLINS: Yes. Well, you make an excellent point. Some of this is definitely personal decision. But what do you do if your bank does go under? I mean, do you have any recourse, whatsoever?
SAVAGE: Let's start with what you do before your bank goes under.
COLLINS: Let's -- I like that a lot better. SAVAGE: There maybe more bank failures. OK, I don't expect that giant bank panic. But number one, a lot of people have walked into banks and purchased things that aren't even really insured deposits. Banks have securities divisions now. And although it says over-the- door bank, you may or may not have an insured deposit.
So the first thing you want to do is make sure that where your money is inside that bank is really an FDIC insured deposit. Then you want to check, at my web site terrysavage.com, I have a link to the FDIC rules. That's where I posted there on the home page, so you can see that joint accounts, retirement accounts are actually insured up to $250,000 if they're in FDIC CDs.
So you want to make sure you understand the rules. And if you have more money than the insured limit, you could switch it to another bank. You're not walking in with a sackful of money or out with a sackful of money.
You want to have it wire transferred to an account at another bank. Or look for alternatives. You know, you can go to treasurydirect.gov and buy IOU's treasury bills right from the federal government at their every Monday auction, $100 minimum.
But you can put hundreds of thousands of dollars and the world perceives those as the safest investments of all and it's easy to do.
COLLINS: All right. Very good. Excellent points there. I want to get to a couple of e-mail questions for you because we're trying to get people involved and really hear their concerns.
Here's one from Jenny and Denville Georgia. She wants to know how much total FDIC insurance money is available for bank failures or do the taxpayers pay for the bail outs once the FDIC insurance fund is depleted.
SAVAGE: Well, that's what's going on in the markets today. The FDIC fund has a lot of money. But there are trillions of dollars of deposits and over $2 trillion as of year end last year, they're actually uninsured. It's not all little depositors. Some big companies leave a lot of money in the banks overnight.
The FDIC fund is made up of assessments from the member banks. There's this obvious implied guarantee that if that fund were ever to run out of money, which is totally unlikely. There's nearly $60 billion in it -- that the federal government would step in.
And parenthetically now as you watch CNN all morning and you see the dollar is going lower and the market is down, what you're seeing is the rest of the world looking to America and saying -- gee, you're promising to print to bail out everything from Bear Stearns, to Fannie Mae and Freddie Mac, to maybe FDIC in the future. And that's why the world doesn't think they like to hold dollars right now.
COLLINS: Yes. I definitely understand that. Here's one last one for you. Doesn't the American public have the right to know the FDIC's 90 problem banks? And isn't that public domain information. If you want it, should you be able to get it?
SAVAGE: Well, you know, that's an interesting question. Let's make it clear. Our banking system is based on the confidence in the entire system. And the very fact that you name banks that might have problems has the potential to create enough unrest that people will take their money out.
So it's a fine line between the public's right to know and the fact that we need to maintain confidence in the entire system. You know, truth be told, there are probably aren't enough trees to give everybody a dollar bill for all the deposits in the banking system. We couldn't print enough.
But we have confidence in our system. And that's what keeps it going. So to the extent that we have the FDIC there and they are very much more aware now of these problems -- a little bit belatedly, I would add -- they're on top of all the banks that need to be rescued.
Just remember, back in the late '80s, early '90s, they bailed out a number of savings and loans that made headlines and no insured depositor ever lost a penny.
COLLINS: Yes. Wow, some really great points. Terry, will you come back?
HARRIS: Yes.
COLLINS: We want you to come and talk with us more about this because keeping it in perspective is really, really important here. Terry Savage, so appreciate it.
SAVAGE: Delighted, Heidi.
COLLINS: Thank you.
HARRIS: Yes, good stuff.
Signs this morning that the high price of fuel is being felt worldwide. Japanese fishermen stage a massive strike trading fishing boats for picket signs.
CNN's Kyung Lah has more.
(BEGIN VIDEOTAPE)
KYUNG LAH, CNN CORRESPONDENT (voice-over): Across Japan, the fishing industry grinding to a halt. Fish markets fell silent. 200,000 boats sat still on the water while the fishermen hit the streets of Tokyo. Wearing yellow banners that read "Stop the Oil Hike: I Can't Go Out to Fish."
Thousands traded their polls for picket signs, staging the industries first ever nationwide one day strike.
I can't survive anymore says fisherman Nobusuke Shirakami. We will die if the oil prices keep going up. (on camera): Thousands of fishermen march around and around the building in downtown Tokyo. That building is this one, the Department of Fishery, who they say needs to act.
(voice-over): Fishermen want fewer fees and more financial help. Inside the ministry, the government said subsidies are easier said than done.
I understand the miserable conditions the fishermen are in, said the fisheries minister. But we should be reforming the industry to lessen oil dependence.
A day before the strike at Funabashi Port just outside of Tokyo, we met Kasutoshi Ono (ph). He's been a bass fisherman for 60 years, a fourth generation fisherman.
Ono (ph) says he's done everything he can but oil prices have tripled in four years, eating away all of his profit. He says an end to Japanese fishing is not just years away. Without intervention, he says, it's around the corner.
Japan needs to remember we're the ones who provide your food, Ono says. The government is doing nothing. Are we going to rely on imports? But the sushi-loving nation has been relying more and more on imports.
That global competition has kept the market price of fish relatively low, while oil costs keep rising, squeezing the Japanese fisherman in the middle.
But this is a nation long defined by its fishing industry. An industry these food providers say may become extinct as the price of oil continues to climb.
Kyung Lah, CNN, Tokyo.
(END VIDEOTAPE)
COLLINS: Fires on the West Coast, storms brewing in the Atlantic. We get the latest on a busy weather morning from Rob Marciano in a moment.
(BEGIN VIDEO CLIP)
BETTY NGUYEN, CNN ANCHOR: I'm Betty Nguyen. Coming up, I'll take you inside Myanmar to find out if aid is finally getting to the cyclone victims.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
HARRIS: Inside Myanmar. It has been more than two months since a cyclone devastated that country, killing tens of thousands of people, wiping out entire towns. CNN's Betty Nguyen traveled to Myanmar. She's been giving us an unbelievable look, an exclusive look inside the country including efforts to rebuild schools.
Betty joins us now from Bangkok, Thailand.
And Betty, this is a question that you couldn't ask the government because you weren't supposed to be in the country. But did you get a sense of how the country is doing in rebuilding schools and getting kids back into class?
BETTY NGUYEN, CNN ANCHOR: Well, according to the Myanmar government, all schools have reopened along the Irrawaddy delta. And I can tell you, Tony, that we did see students going to class even in villages that received very little aid. But still thousands of desks will remain empty. And it's just a painful reminder of the lives lost in the storm.
(BEGIN VIDEOTAPE)
NGUYEN (voice-over): School has officially begun along the Irrawaddy delta, even though few classrooms are still standing. Cyclone Nargis did more than destroy lives, it robbed many of a bright future.
This woman survived the tidal surge by grabbing onto a tree trunk. Today, her hands are wrapped tightly around a picture of her daughter killed in the cyclone.
She says she never imagined losing her. And even though, they're poor, they did their best to give her an education. After all, she was their only child.
Two weeks after the storm, they learned she passed her final exam and would have graduated high school.
UNIDENTIFIED FEMALE (through translator): I couldn't help but cry out loud.
NGUYEN: Sadly, she isn't the only mother crying. Dozens died in this small village.
(on-camera): Her daughter attended this high school. As you can see, there's not much left. Some two months since the cyclone hit, they haven't even begun rebuilding because they're still waiting on materials and skilled workers.
(voice-over): And until it arrives, these piles of wood will stay right where the cyclone left them. In fact, very little aid has even reached this farming community. Yet, there is the sound of hope.
Thanks to UNICEF. Work has begun on the elementary school. Eventually, books will be recovered from the rubble and placed back on these desks. And just maybe there will come a time when children can once again look out these windows and see better days.
(END VIDEOTAPE)
NGUYEN: UNICEF says some 4,000 schools were damaged in the cyclone. Tent schools have been set up in some villages. Others have started class in monasteries. Pretty much, Tony, they are doing what they can to bring some kind of normalcy back to their communities.
HARRIS: We just love that you're getting an opportunity there to talk to the people who have been so victimized by the cyclone and in many respects by their own government.
I have to ask you, Betty, give us a look ahead to what you have for us tomorrow.
NGUYEN: Well, tomorrow, we have a story about those who have really suffered the most in all of this, that being the farmers. Not only have they lost lives in the storm, but they've also lost their crops, their only way of making a living.
Also, the buffalo, what they use to tend those fields. So we're going to show you what they're doing to try to recover and if any aid is coming in to their rescue. We'll let you know tomorrow.
HARRIS: Thanks, Betty. Betty Nguyen from Bangkok, Thailand.
COLLINS: Tropical storm Bertha could become a hurricane again, gaining strength as it passes by Bermuda. Bertha's high wind slammed the island nation yesterday. Thousands of people lost power. The storm has also caused rip tides up the East Coast from the Carolinas into New England.
HARRIS: The worst wildfires ever. That's the take on the current fire situation in California. The governor's office now saying it's worse than the fires in 2003. About 1300 square miles have burned. That's compared to more than 1100 in 2003. But in those 2003 fires, more than 3600 homes were destroyed. 100 homes burned in this year's fires.
At least 40 of those were in Concord (ph), California. But now all evacuation orders have been lifted. And next door that is the same situation, good to say, happy to report, in paradise.
And let's check in now on the strength of tropical storm Bertha. There he is. Rob Marciano in the severe weather center.
Rob, good morning.
(WEATHER REPORT)
COLLINS: Hey, can I tell you something real quick?
ROB MARCIANO, CNN METEOROLOGIST: Yes, what's up.
COLLINS: I don't know. If you remember, I'm just back from Vegas. It rained for three days there. And people were standing outside like this, like it was real -- it was crazy.
HARRIS: Like you needed another reason to spend more time at the tables.
MARCIANO: Exactly.
HARRIS: Raining outside, so you couldn't do the pool and the -- you did a little bit of that maybe?
MARCIANO: Yes. You do roll dice maybe.
COLLINS: I did.
MARCIANO: Did you put $5 on red? How did I do?
HARRIS: That was the request, right?
COLLINS: I didn't. I don't play that game. Sorry.
MARCIANO: You owe me 10 because I felt lucky. All right, guys, we'll see you in a little bit.
COLLINS: Thanks, Rob.
HARRIS: Not just what their country can do for them, but what they can do for their country. Barack Obama appeals to the NAACP.
(COMMERCIAL BREAK)
COLLINS: President Bush speaking out on the economy and other issues today. He is scheduled a news conference for 10:20 Eastern. We, of course, will bring that to you live when it happens.
HARRIS: Not just government and business, but what individuals can do to lift up America. Barack Obama spoke to the NAACP convention last night.
CNN's Jessica Yellin was there.
(BEGIN VIDEOTAPE)
JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT (voice-over): The man who could become the nation's first black president told the nation's most revered civil rights group that struggling African- Americans need some tough love.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: You know what, we also have to demand more from ourselves. Now -- I know there are some who have been saying I've been too tough talking about responsibility. NAACP, I'm here to report, I'm not going to stop talking about it.
YELLIN: It seemed a direct response to the flap Reverend Jesse Jackson kicked up last week. Barack Obama made it clear he's not backing down.
OBAMA: We need politicians doing what they're supposed to do, and CEOs doing what they're supposed to do. And we need parents doing what they're supposed to do. YELLIN: But he also spent much of the speech addressing the issues Jackson called on him to discuss more often, racism and poverty.
OBAMA: We have to break the cycle of poverty and violence that's gripping too many neighborhoods in this country.
YELLIN: And the role government and corporate America can play as well, with a particular emphasis on his economic message.
OBAMA: If we can spend $10 billion in Iraq every single month, we can spend some of that money right here rebuilding the United States of America.
YELLIN: The NAACP is a non-partisan group, but you couldn't tell it when Barack Obama uttered this --
OBAMA: Not only will we help achieve social justice and economic justice for all, but I'll come back to you next year on that anniversary and I will stand before you as president of the United States of America.
YELLIN: The audience at the NAACP clearly had no objection to Obama's message of personal responsibility. In fact, when the senator called on African-American fathers and families to do more, he received some of the loudest applause of the night.
Jessica Yellin, CNN, Cincinnati.
(END VIDEOTAPE)
HARRIS: And a reminder, we are waiting for Barack Obama's speech on Iraq. That's at 10:45 Eastern this morning. And we will carry that live for you.
COLLINS: Could they be sitting on a gold mine? A New York family says there's natural gas flowing from their faucet.
(COMMERCIAL BREAK)
COLLINS: Gas on tap. A New York family says natural gas is -- look at that -- is flowing from their bathroom sink. And if you need proof, check out that flame. I don't think you need proof anymore. I don't know.
The family said the problem started after they built a second water well. They heard a noise and thought they had air in the pipes so they called a plumber.
(BEGIN VIDEO CLIP)
RAY OSTERHOUT, HOMEOWNER: He had a cigarette lighter in his hand and two of his workers were up there with him. He turned it on and about a three-foot flame shot up. Two of them ran out of the bathroom, one went way out of the bathroom, one went the other way, yelling. (END VIDEO CLIP)
COLLINS: Yes. I hope nobody got hurt. Obviously, they didn't. But anyway, it's not clear where the gas is coming from. But the family has leased the land to a gas drilling company to explore. Good idea.
Good morning, everybody. I'm Heidi Collins.
HARRIS: And I'm Tony Harris. Stay informed all day in the CNN NEWSROOM. Here's what's on the rundown.
Commander-in-chief takes the helm through turbulent economic waters. Live this hour, President Bush seeks to calm consumer fears.
COLLINS: Bank goes belly up. More failures expect. Hear the warning signs that your financial institution could be in trouble.
HARRIS: And the candidate reveals his plans later this hour. Barack Obama tells us what he would do in Iraq and Afghanistan. It is Tuesday, July 15th, and you're in the CNN NEWSROOM.
President Bush speaks this hour and responds to the latest wave of troubling economic news. The President's news conference just minutes from now. And of course, we will carry it live for you, right here in the NEWSROOM.
