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Issue Number One
Dealing with Your Debt; Energy Debate Persists on Capitol Hill; Gas Prices Decrease for Fourth Straight Day; More Banks Under Investigation
Aired July 21, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
T.J. HOLMES, CNN ANCHOR: The energy debate on Capitol Hill, to drill or not to drill for oil? And why gas prices have gone down for the fourth day in a row.
More investigations into banks revealed as well. How to keep tabs and know what's at stake.
Also, deal with your debt right now and get yourself out of it.
Issue #1 is your economy. ISSUE #1 starts right now.
From the ISSUE #1 headquarters to the CNNMoney.com newsroom, we are all over the stories that matter to you.
Hello, and welcome to ISSUE #1.
Do not adjust your sets. I have hair.
I'm T.J. Holmes, and the chrome-domed one, Ali Velshi, is on the "Energy Hunt." Also, Gerri Willis will be along to join us in just a bit.
And, of course, speaking of energy, the debate is now on. Lawmakers on Capitol Hill about to get down to it on offshore oil drilling. Oil reserves near record gas prices. All that good stuff. We'll head over to D.C. live.
Also, selling a home these days you know certainly is not easy. You will not believe though what some people are giving away, if only someone would buy their home. We're talking free cars here. Not exactly Maseratis, but still -- in addition to some other free stuff they're handing out these days.
Also Las Vegas, it's a gambling town, but with plane tickets up and gas prices at near records, the casino town is in for some tough prices. Even in Vegas. Say it ain't so.
But we are going to begin with the hot topic on everybody's mind -- of course, energy.
Lawmakers on Capitol Hill today looking for solutions to sky-high oil and record gas prices. And our Kathleen Koch is there right now in Washington with the very latest.
So, if they have been looking for solutions for a long time, do the constituents, do the American people, have any hopes this time that maybe, just maybe, they're going to have some solutions this time around?
KATHLEEN KOCH, CNN CORRESPONDENT: Well, T.J., no guarantees on that. Obviously you know that there has been heavy pressure brought to bear by their constituents on Congress to do something about the soaring prices at the pump, but Democrats and Republicans have simply so far been able -- not been able to agree on what. Now, what's happening is tomorrow morning, there will be a procedural vote on a Senate bill that would crack down on oil speculation on the futures market that many believe is at least partially responsible for pushing up gas prices, but some Republicans dispute that.
(BEGIN VIDEO CLIP)
SEN. BYRON DORGAN (R), NORTH CAROLINA: If you're running a race with hurdles, jump the first hurdle first. The reason that we have oil at $130, $140, $145 a barrel, like a Roman candle just going up, up and up, is because we have excessive, relentless speculation of these markets.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
SEN. GEORGE VOINOVICH (R), OHIO: The proposal that the solution to the problem today is to end the speculation is a smokescreen. It may be part of it, but it certainly isn't the answer.
(END VIDEO CLIP)
KOCH: Now, why deal with speculation? First, Senate Majority Leader Harry Reid argues that once the Congress deals with that, it can consider other measures next. Republicans want to be able to introduce amendments to increase domestic oil exploration. Some Democrats want to push a "use it or lose it" plan that would force oil companies to drill on land that they already have leases on.
Now, at the same time, the House plans to take up an energy bill on Thursday, but it's unclear which one, whether it would focus on tapping the Strategic Petroleum Reserve, or would the House follow the Senate and crack down on speculation? But either way, the clock is ticking, T.J., with less than two weeks left before Congress leaves on its August recess.
HOLMES: All right. Kathleen, tell me -- I'm still chatting with you here -- about the speculation you speak of. All this speculation is about speculation. Nobody really knows for sure how much it's really affecting the gas prices.
So is there an independent voice out there? How much do we really know, if you will, about how much this speculation, how much affect it has on gas prices?
KOCH: T.J., it's tough to say for certain. Some experts say it is responsible for as much as 25 percent of the cost of a gallon of gas. In other words, more than $1 a gallon. But others point out speculation can be very positive, at least if you're on the winning end of it.
For instance, Southwest Airlines speculated, hedged, bought its gas -- you know, its jet fuel, set a price for it, was able to get a price for it in advance. The average is about $60 a barrel. That's for some 70 percent of its jet fuel, so that's really helping that airline stay afloat and make money where others are losing money. So it goes both ways.
HOLMES: All right. Kathleen Koch for us on Capitol Hill, where they'll have solutions for us soon, hopefully.
KOCH: Maybe.
HOLMES: Kathleen -- yes, maybe -- we appreciate you.
KOCH: You bet.
HOLMES: And of course, although they are rising today a bit, oil prices are sharply lower than they were just a week ago. Well, who can you thank for that? We certainly want to thank somebody for those oil prices heading south, maybe our neighbor to the south, Mexico.
Poppy Harlow, is that the case?
CNNMoney.com's Poppy Harlow.
POPPY HARLOW, CNNMONEY.COM: Not the first country to pop into my mind, but interesting. Yes, our friends south of the border here may be to thank for oil prices slightly down a bit today.
Tropical Storm Dolly also bearing through the Gulf of Mexico. That is weighing in here as well.
But the price of oil is still down $16 from a week ago. We're up just a little bit right now, but not much to speak of.
And talking about Mexico, when you think of all the countries that can affect the price of oil, Mexico probably not the first one that pops into your head, but a story by our very own Steve Hargreaves says Mexico may have played a big role in the recent decline in the price of oil.
Why, you ask? Well, a well-placed source does tell him that Mexico, which is the world's fifth largest producer of oil, hedged the sale price of oil. So what the heck does that mean?
You've heard about airlines hedging fuel prices, buying tomorrow's jet fuel at today's prices. They do it to protect against the price going up, as we have seen this year. But Mexico is doing the same thing in reverse.
They're locking in today's sale price of oil just in case the price of oil goes down at a later date. In other words, Mexico probably is thinking here $140 a barrel, that was a pretty good price, a price where it can make a lot of money. The country deciding to lock in sale at that price just in case, T.J., oil prices fall down the road.
HOLMES: All right. A lot of stuff going on in there.
HARLOW: Yes. It's confusing.
HOLMES: Like you said, it's a bit confusing.
HARLOW: Yes.
HOLMES: But why would all this -- we're talking about Mexico here. Why would all that make the price of oil go down anyway? Explain it to a layman here.
HARLOW: Right. What it does is it shows us a change in mentality. Right? Everyone speculating the price of oil goes up, but if a big country, a country that produces a lot of oil, thinks it's going to go down, maybe some other countries are going to follow suit here.
Mexico basically betting prices have peaked. That has some eyebrows raised.
The question here, we've heard about speculators driving the price of oil up, what about driving the price of oil down? They can do that as well. And that can have a bandwagon effect.
If Mexico thinks the price has hit a peak, perhaps other oil- producing countries will as well. So far, we have not seen any other large producers signaling that, like Saudi Arabia, but if we do see them make the same move, you will really see the price of oil fall. That will be a huge energy fix for us, T.J. We can't really celebrate oil at $130 a barrel, but it's something to keep in mind, that Mexico's move may be followed by some other big OPEC countries.
HOLMES: And the fifth largest producer out there.
HARLOW: Yes.
HOLMES: So that's a big deal. That's not insignificant at all.
HARLOW: Yes.
HOLMES: Poppy Harlow, CNNMoney.com, thank you for the fix.
HARLOW: You're welcome.
HOLMES: Well, of course the "Energy Hunt" is all about CNN's worldwide search for the future of your energy. The Arctic National Wildlife Refuge is often debated as a place where we should or should not be drilling for oil. And as I mentioned earlier, I have hair, of course, so you noticed, where is the bald one?
Ali Velshi, he's not here today. Right now, actually, he is working. He's on a seven-seater plane headed to ANWR to check out the debate for you. But before he headed out, Ali checked in.
(BEGIN VIDEOTAPE)
ALI VELSHI, CNN ANCHOR: Well, the conflict is, do we go into a place because there's oil available, or do we say some things are just off limits? And that's what it comes down to.
In the wildlife refuge, a lot of it would be left alone. In fact, an area about the size of South Carolina would be left alone, an area of the state of Delaware would be drilled on. But the concern is there are caribou, there are native people who live here who live off the land, subsistence, you know, hunting, and, you know, should we be tampering with things that are that pristine? That's the debate at the moment. There are some people who say we need every last bit of oil that we can get, so we should, and those who say, you know, maybe we should be thinking about conserving.
(END VIDEOTAPE)
HOLMES: And be sure to stay with ISSUE #1 for the latest reports from Ali Velshi in ANWR.
Well, more investigation into banks revealed. We'll tell you the latest and what's at stake for you and your money.
And also, tough times for Sin City? Fewer blackjack bets even though more people are actually visiting the casinos. Why the House says it will still win in the end. The House always wins.
You're watching ISSUE #1.
(COMMERCIAL BREAK)
HOLMES: Well, we've been telling you about the subprime mortgage mess for nearly two years now, and that the federal government heaps most of the blame on certain lenders for making too many high-cost home loans to people who just can't afford them. Well, as you probably guessed here, that's only part of this story.
"The Wall Street Journal" reports that the federal government might have actually been involved. This somewhat convoluted turn of events goes way back to 2001. That is when the FDIC took over Superior Bank. That's a national subprime lender based in Illinois.
Well, the FDIC continued to run the bank's subprime mortgage business as it searched for a buyer. The Journals says that with FDIC supervision, Superior funded more than 6,700 new subprime loans worth more than $550 million.
You following along here?
Well, hundreds of these borrowers have lost their homes now to foreclosure. At the same time, The Journal says, FDIC regulators sold a huge chunk of the loans to Texas-based Beal Bank.
Beal is now suing the FDIC, claiming many of the loans were made improperly. An internal FDIC assessment implies that the agency's liability could be as much as $70 million.
Well, more and more banks under investigation these days, and the big question is, how can you, as a consumer, keep track of these investigations and understand what's really at stake here?
Well, CNN Senior Correspondent Allan Chernoff joins us now to try to help us understand this.
It's not a bad move just to go to the bank and take all my money out and put it under my bed? I shouldn't do that?
ALLAN CHERNOFF, CNN SR. CORRESPONDENT: Well, let's not panic just yet...
HOLMES: Let's not go that far.
CHERNOFF: ... because when you have got a financial crisis, you know not far behind are the investigators. They are trying to help consumers and investors, but they are working on several very important fronts right now.
First of all, investigations into possible mortgage fraud. The FBI says it is looking into 21 companies involved in the mortgage business. IndyMac, the big bank that has just failed, is one of those lenders.
Investigators are focusing on subprime mortgages. Those, of course, are loans made to consumers with relatively poor credit. The question is whether bankers were engaged in illegal predatory lending. For example, my misstating a customer's income just to make the loan, or using appraisals that bankers knew were not accurate.
Countrywide, which has been taken over by Bank of America, is being sued for mortgage fraud by several state attorneys general. While the banks could face penalties, we are a long way from any compensation going to the people who did lose their homes -- T.J.
HOLMES: That's always the case, isn't it?
You talk about mortgage fraud, any more frauds coming down the pike? Tax fraud, are we looking at this one, or what?
CHERNOFF: Tax fraud is big, and, of course, that affects all of us, all taxpayers. In fact, according to a Senate investigation, the U.S. is losing $100 million a year to offshore tax evasion.
This allegedly has been going on for a very long time. Last month, the banker from UBS, the large Swiss bank, pled guilty to helping clients evade taxes. UBS has been in negotiations with the IRS and the Justice Department, and it says an internal investigation has uncovered employees were, indeed, creating sham offshore companies to defraud tax authorities.
UBS put out a statement on this saying that the company is working with the U.S. government to identify the names of U.S. clients who may have engaged in tax fraud. "It is apparent now that our controls and supervision were inadequate. UBS is committed to taking both corrective and disciplinary measures."
That a statement from UBS.
HOLMES: My goodness. It's going to get ugly, but we might as well not stop there with the investigations. Let's go to another -- auction rate securities. Explain this one to people.
CHERNOFF: Yes, this is a real scandal, and thousands of investors have been screaming about this for months. What's been going on here is that these people have been unable to get their money back on investments that they believe were as safe as money market funds and provided slightly higher returns.
Among the banks allegedly involved here, Wachovia Securities. But it's not just Wachovia. We're talking about most of Wall Street. The market for so-called auction rate securities froze when the financial crisis erupted earlier this year.
Now a whole bunch of Wall Street firms, including Wachovia, UBS, but many others as well, are under investigation for allegedly marketing these securities as if they were risk-free or very low-risk. Now, I should point out we were showing footage of Wachovia there. Wachovia has not been charged with any wrongdoing just yet in this.
HOLMES: Well, good to clear that up for us.
Allan Chernoff, who has just picked up the title of fraud and investigations correspondent.
Sir, we appreciate you. Thank you so much.
Well, of course this show is all about you, and now it is time for you to get involved in this show. We want you to weigh in on our "Quick Vote." And CNNMoney.com's Poppy Harlow here today here with today's question.
What have you got?
HARLOW: Hi there, T.J.
Well, you know, when times are tough, people often turn to plastic, but when basic necessities like food and gas are getting more and more expensive, how on earth are you coping?
Here's our question for you today: How do you handle your credit card charges? Do you pay in full, do you pay the minimum? Do you ignore them? I hope not. Or maybe you don't have a credit card.
Weigh in, let us know on CNNMoney.com. We'll bring you the results a little later in the show --- T.J.
HOLMES: All right. We will see you shortly, Poppy.
Well, the odds are against the Las Vegas economy, but casinos aren't worried a bit. We'll take you to Sin City, where I lobbied to do the show live today. We'll tell you what's happening next. Also, dealing with debt collectors. You have rights. We'll tell you what they are and how to use them should you get that dreaded phone call.
You are watching ISSUE #1.
(COMMERCIAL BREAK)
HOLMES: Money crunch. Consumers are spending less on their vacations across the board. It seemed for a while though that folks were still betting on Las Vegas, of course. But as our Chris Lawrence reports, some there are actually starting to get a bit worried.
(BEGIN VIDEOTAPE)
CHRIS LAWRENCE, CNN CORRESPONDENT (voice-over): Compared to this time last year, slightly more people are visiting Las Vegas, but they're leaving a lot less money on the table. In May, strip casinos won $100 million less than last year, and no, the gamblers didn't get any luckier.
PAT STRUBEL, TOURIST: I'm not spending near as much on the gambling as I used to.
LAWRENCE: Pat Strubel was the kind of customer casinos love. She comes every year, likes to chart her luck. But now she's doing more sightseeing, walking around, spending less.
STRUBEL: I have sat eight hours playing blackjack. You're not seeing me do that now.
LAWRENCE: What happens in the rest in the world doesn't stay there. The downturn has hit Vegas.
ROB STILLWELL, V.P., BOYD GAMING: There's no question, this is unlike anyone we've seen in recent times, probably the last couple decades.
LAWRENCE: But Rod Stillwell says Vegas is building for the long haul. Boyd Gaming still plans to open the Echelon in 2010, a multibillion-dollar project on the site where the Stardust once stood.
STILLWELL: These recessions don't last forever. The downturns don't last forever. And we're going to be ready to go when everything starts back up on the upswing.
LAWRENCE: But it's getting harder for tourists to get here. Last year, US Airways was flying in and out of Vegas 141 times a day. By September, it will be down to 81, with more cuts coming by the end of the year.
At the same time, casinos plan to open 30,000 more hotel rooms over the next few years.
PEGGY HOLLOWAY, MOODY'S INVESTORS SERVICE: You have to maintain hotel occupancy in order to drive the gaming revenue and all the other sources of revenue.
LAWRENCE: Casino analysts say the key is getting heads in the beds, but they may have to drop rates to make that happen.
HOLLOWAY: And certainly that will squeeze profits for the operators.
LAWRENCE (on camera): Now, people have been betting on Vegas' decline for years, but with more hotel rooms and fewer airline seats, this time the odds are against the casinos.
Chris Lawrence, CNN, Las Vegas.
(END VIDEOTAPE)
GERRI WILLIS, CO-HOST: According to the Better Business Bureau, complaints against debt collectors are up 26 percent over last year. That's over 18,000 complaints and counting. And when you're struggling to pay your credit card, your mortgage, and other expenses, getting nagged by a collector is the last thing you need. So know your rights if a collector comes calling.
Gerri Detweiler is with credit.com and is the author of "Stop Debt Collectors."
Gerri, welcome to the show. Great to see you.
GERRI DETWEILER, AUTHOR, "STOP DEBT COLLECTORS": Thank you.
WILLIS: All right. Well, a big problem in this country with overzealous debt collectors. We see so much of it. You say one of the problem is they try to collect debt you don't even owe.
DETWEILER: Yes, absolutely. One thing they're doing is going after these zombie debts. These are old debts that are way outside what's called the statute of limitations, which means they don't really have any leverage to collect it. But they just scare people into paying these debts that they may not even owe.
WILLIS: Right, that's scary stuff. That's something you need to be aware of.
All right. So if you get one of these debt collectors on the phone, how do you handle them? What do you say? What's the right thing to do?
DETWEILER: Well, the very first thing to do is to try to stay calm and stay quiet. Say as little as possible. You don't have to tell them the whole story, your financial life.
Just ask them to put their request in writing. Tell them you need to check it out. That buys you some time to look into your options and determine what you really do owe and what you're going to do to pay.
DETWEILER: And that notification, that is by law, they have to do that. So if they say they don't want to do it, well, you remind them it's federal law.
Look, if you don't owe that money, if you're in a situation where you're getting some of that old debt that you no longer owe, what do you do? What are the steps to take?
DETWEILER: If you don't believe you owe the debt, the best thing you can do is put a letter in the mail to the debt collector, send it by certified mail, and ask them to stop contacting you. Now, if you're not sure whether you owe it or not, then it's OK to write them and say, I don't believe this debt is correct, but I don't know if I'd say stop contacting me, because when you do that, they cannot contact you again except to tell you they're taking legal action against you, which means they're basically going to try to take you to court.
DETWEILER: Now, Gerri, if you do owe that money and you know you owe that money, can you negotiate with one of these debt collection houses? I mean, how does that work?
DETWEILER: You absolutely can negotiate with a debt collector, and depending on the size of the debt, how old it is, and what you have in terms of the ability to pay, you may be able to settle it for as little as 10 to 25 cents on the dollar.
But the important thing is, first of all, to know what you can afford, to know whether you owe the debt and whether it's correct, and then, again, when you negotiate, you try to say as little as possible. Because remember, these collectors are on the phone all day long. You talk too much, they're going to win.
DETWEILER: You say that more than once, and I think it's really wise because it's a big issue, you don't want to have a long conversation with these people. And we should remind people there's a statute of limitations on debt.
It's different by state. You have to check out what it is in your own state. Even if you owe the money, they may not legally be able to collect against you.
Let's get into a conversation here about what is legal and what is illegal. What can these debt collectors not do?
DETWEILER: Well, they can't call you at work if you have told them to stop calling you at work. They can't tell other people about your debt. Your spouse, cosigners, and your attorney, if you have one, are the only ones they should be talking about this debt to.
They can't harass you. They can't threaten to take action that they don't intend to take or legally can't take.
My co-author, John Ventura, was an attorney when one of his clients actually tried to commit suicide because a debt collector showed up at her door and said she would lose her house in an hour if she didn't pay her debt. And that simply wasn't true.
DETWEILER: Oh my. What a tragic story. That's crazy. Yes, there are very serious rules about what these people can and can't do. You can't believe what they're telling you on the phone. You really have to be brave enough to check it out, and you can do that online at credit.com. That's Gerri Detweiler's site.
Gerri, thank you so much for giving us all this great information.
DETWEILER: Thank you, Gerri.
HOLMES: All right. What if I told you that if you bought a house, you could get a free car? A Mercedes S Class? OK, I'm lying about the Mercedes, but still, a car. Well, it's a sign of the times in the housing market. Wait until you hear what else is being offered these days.
And we will break down all the issues that matter with you with these good folks. The CNN money team is on the case next.
You are watching ISSUE #1: THE ECONOMY, on CNN.
(COMMERCIAL BREAK)
HOLMES: Well, from near record gas prices, to bank investigations, to mortgage meltdown, there's so much to break down for you. And that's why we have got this crew that we have put together here. Paul La Monica, Steve Hargreaves, and Poppy Harlow cover this stuff every single day, day in, day out, for CNNMoney.com.
Help us, please.
I'll start with you here, Paul. We were talking about the oil prices, gas prices. Well, oil prices went down for a bit last week. People were feeling pretty good on that. On the uptick now. What should we be looking for in the next couple days, or the rest of this week?
PAUL LA MONICA, EDITOR-AT-LARGE, CNNMONEY.COM: Yes, I think with oil prices what's interesting is, I think the main reason it went down last week was actually somewhat of a bit of bad news. I think there were some people speculating that finally we're seeing the global economy, including the U.S., of course, weakening, and that was driving prices down, because obviously if demand falls, we're going to see a lower price.
What we're seeing today and possibly for the rest of the week, concerns about Iran and some of the hurricanes that have been forming. That might hit supply and that's been driving prices up, at least for today.
HOLMES: At least for today.
All right. Poppy, we will turn to what made some big news yesterday. I'll turn away from oil prices a bit and get to some of the other issues with the economy. Henry Paulson goes on. And, you know, when he speaks, everybody's listening. But says it's going to take us several months at least. I mean, expect it. All the mess we've seen, shouldn't we expect that it takes several months for the economy to kind of turn around is what he was saying. But that set off a few alarms.
HARLOW: Yes, several months, if not years. I mean all the networks this morning talking about, oh, are we just months away from a recovery or is it the year or two down the road? And he said really three main things we have to be concerned about -- the housing crisis, no sign of turning around, oil prices, he said that will prolong the slowdown in the economy, and he talked about the crisis in the capital markets.
So, obviously, the Treasury trying to do a number of things. Mainly, what we saw in the past few weeks, the government backing of Freddie Mac and Fannie Mae. We'll see if Congress votes on approving that, you know, this Wednesday when they address the housing bill.
But the question that a lot of lawmakers have for Paulson is, OK, you're going to be gone in January when we have a new administration. What about the rest of us that have to answer to our constituents, the taxpayers who will be backing Fannie and Freddie if this gets approved? He made a lot of headlines, but Wolf Blitzer here on CNN definitely pushing him on when is recovery.
HOLMES: You mentioned taxpayers there. And, Steve, I'll turn to you now. Taxpayers. Everybody listening. This whole debate about drilling, about ANWR, what should or should not be done. If we start drilling this afternoon, still there's talk it would be decades before we could even possibly get to that oil. What does that mean for somebody watching right now who wants to get involved in this debate? Well, what should I think? What should we do here? Reasonably, how is that ever, no matter how much oil is there, ever going to affect the price of gas?
STEVE HARGREAVES, WRITER, CNNMONEY.COM: Right. Well, you know, it would take a long time, as you say. It would take a long time for the oil to come on, five, 10 years. The government estimates that there's about 800,000 barrels that you could get per day out of there. What it would do, it would increase domestic production. It would increase domestic production quite a bit.
But, you know, oil is a global market. And so when you look at global production, it wouldn't be that significant of an increase. The government says maybe 3 cents a gallon. It might reduce prices by 3 cents a gallon.
HOLMES: Is there even a guarantee, even if that oil is produced in the U.S., or we get that oil in the U.S., is there any guarantee that it's going to be used exclusively just for the U.S. market?
HARGREAVES: Well, Congress could say that, yes, that oil from Alaska would have to go to the U.S. market. But it doesn't really matter. I mean the oil is priced globally. So it would . . .
HARLOW: No, I think you want to -- you know, say as well. But the Department of Energy is speculating here, if we do drill in ANWR, that we would still import about 46 percent of our oil. That's less than we import now, but it's still a huge number. So is it going to even -- if demand goes up, the, you know, we're just going to need more and more and more from around the world. And they also say maybe there's only about between two million and four million barrels even in ANWR. So the question is, OK, we drill that temporary fix. Obama calls it a band-aid fix.
HOLMES: It still doesn't break our dependence on foreign oil.
HARLOW: No.
HOLMES: As Jon Stewart said, it's like having a cocaine problem but then, hey, I'm out of cocaine. That's my problem.
HARLOW: There you go.
HOLMES: There you go.
Bob, Poppy, Steve, thank you all so much for keeping us straight. Not a lot of good news in there, but still we appreciate you putting it all in layman's terms for folks like me.
All right. We were talking about this earlier. Buy one house, you get one car for free. That story coming your way in just a moment. But first, let's get you up to speed on other stories making headlines.
My man, Don Lemon, in the "CNN NEWSROOM" in Atlanta.
Hello there, sir.
DON LEMON, CNN CORRESPONDENT: I just bought a house about a year ago, T.J. I didn't get a car or anything. I just got a mortgage.
HOLMES: You did not. You got a bad deal, buddy. You got a bad deal.
LEMON: All right. Thank you, sir. Talk to you in a little bit.
Barack Obama in Iraq. He's getting the low down today from top commanders. And we just got these new pictures into the CNN "Newsroom." They show Obama with the military's top man in Iraq, General David Petraeus. They flew by helicopter from the airport to the Green Zone in Baghdad.
Earlier we got this new video of the senator's meeting with Iraqi President Jalal Talabani. It's been a very busy day. Obama also met with Prime Minister Nuri al Maliki. He praised al Maliki's leadership but said the government needs to do more.
Obama is traveling with a congressional delegation. He had breakfast in a mess hall in Afghanistan on Sunday. Obama will also visit Jordan, Israel, the West Bank, and make stops in Europe as well.
Tracking some storms for us today in the severe weather center, Mr. Chad Myers. What's going on?
CHAD MYERS, CNN METEOROLOGIST: Yes, the one we're worried about really is Dolly. I mean, to be real honest, Cristobal, that thing's out in the middle of the Atlantic at this point in time. Yes, it will make some waves for North Carolina and also through to Delmarva (ph) Coast.
But this is the storm that is developing into the Gulf of Mexico. It's not forecast to turn into the oil fields at all. But there are oil fields off the Yucatan Peninsula there, the Mexican oil fields.
This storm is now a 50-mile-per-hour storm. It is forecast to become a hurricane before it makes landfall. And that landfall could be anywhere from almost Galveston all the way down to about Tampico, Mexico. That's how wide the cone is right now. We'll keep watching it for you as this goes on -- Don.
LEMON: All right, Chad, we'll check back in with you at the top of the hour. Thank you very much.
MYERS: All right.
LEMON: Now let's go back to the "Newsroom" -- I should say to New York and Gerri Willis for ISSUE #1.
Hello, Gerri.
You're doing double, triple duty. I just watched you on "The View" and now you're there.
WILLIS: You did? I know, it's magic.
LEMON: How many are you? What are you trying to give -- what's his name -- Sanjay a run for his money?
WILLIS: I know. I'm just having a lot of fun. Yes, "The View," that was a real experience and I challenge you to go down over there yourself and be questioned by like five women at one time. It's crazy. All right.
LEMON: It happens all the time here. Thank you. Good to see you.
WILLIS: Thank you, Don.
Here's the sales pitch for you. You buy a house. You get a car. It sounds pretty extreme. And it's not the only offer out there. But do these big ticket freebies really work? Well, it depends on who you talk to.
CNN's Kate Bolduan has the story.
(BEGIN VIDEOTAPE)
CATHERINE POE, HOMEOWNER: Come on upstairs. KATE BOLDUAN, CNN CORRESPONDENT, (voice-over): Maryland resident Catherine Poe bought this three-bedroom colonial with her daughter as an investment property in 2005. They share a love for restoring historic houses.
POE: Well, they always had two parlors in those days.
BOLDUAN: They fixed up and resold two historic properties before, no problem. But not this time.
POE: It was the beginning of what people just thought was going to be a blip. And actually it sort of went blip, blip, whop. It dropped drastically.
BOLDUAN: The house has been on and off the market twice in two years. Poe's hoping the third time's the charm with the help of a Prius thrown in.
POE: I'm hoping that it makes people say, oh, let me go take a look because that is something wonderful.
BOLDUAN: Extreme economic times, calling for extreme house- selling measures. A free car, a free vacation, raffling off a house for $100 a ticket, and even buy one house, get one free in the case of one San Diego developer. All examples of creative incentives and the lengths people are going in today's floundering housing market. Poe's realtor says it's a first for him but worth a try.
CHUCK MANGOLD, REALTOR: You have to make a specific house more attractive to a buyer so that it can compete with the sea of inventory that's out there.
BOLDUAN: But the National Association of Realtors warns that creative incentive may not be the best way to close a deal.
ELIZABETH BLAKESLEE, NATIONAL ASSOCIATION OF REALTORS: If you're going to offer incentives, offer closing costs help. Or if it's a condominium, offer to pay condo fees for six months. Your incentive ought to deal with what you're doing.
BOLDUAN: Despite the draw of the free Prius, just a handful of people showed for Catherine Poe's open house. She now expects to take a loss of at least $60,000. Further proof the housing slump has not yet passed?
POE: The love affair with historic houses is still there, but we're having to be realists also.
BOLDUAN: The National Association of Realtors says these kinds of incentives are often negotiated out during the sales process. Poe says, if the buyer doesn't want the car, they will gladly take the 20 grand off the price of the house.
Kate Bolduan, CNN, Washington.
(END VIDEOTAPE) WILLIS: Well, big changes are coming to one airline. We'll fill you in.
And why something as simple as a handshake can say so much about you and help you in the workplace.
ISSUE #1 rolls on next.
(COMMERCIAL BREAK)
WILLIS: Some good news from the IRS. More than five million of you will soon be hearing from tax collectors. They are sending a second set of info packets to qualifying retirees and vets to say it's not too late to file for the economic stimulus package. Targeted people are those who normally don't have a filing requirement but who most file this year in order to get the payments. The IRS says everything you need to file will be included in the packet.
And another airline is taking drastic action in response to soaring fuel costs. Midwest Airlines is slashing service up to 40 percent starting September 8th. The airline is phasing out a dozen fuel guzzling MD-80 jets and cutting 1,200 jobs or around 40 percent of its workforce. Midwest says it's trying to avoid filing for Chapter 11 bankruptcy protection -- T.J.
HOLMES: All right, Gerri, I know you do it, we all do it, punching on the Blackberry, walking through the hallway, running into people. You just can't stay off that thing. It's embarrassing and it's rude. Our next guest is here to talk about business etiquette. Jacqueline Whitmore is author of the book, "Business Class, Etiquette Essentials for Success at Work." We all could use some of this.
Let's start with the BlackBerrys. What's right? What's wrong? What's appropriate? What's inappropriate? People are just constantly -- whether you're at dinner, whether you're in the office talking to somebody. But we're all so informal here. We feel like we know each other, so we can just type away.
JACQUELINE WHITMORE, AUTHOR, "BUSINESS CLASS": Well, it's interesting because the business arena has become so casual, and because BlackBerrys have become such a part of our lives, we kind of put ourselves in a bubble and we don't really notice other people around us when we're on the Blackberry or when we're on a cell phone.
HOLMES: So is it OK to type on that Blackberry? I've been to meetings a lot of times with big -- whoever it is. Everybody's always on the Blackberry. So is it OK, though, since it is so casual now?
WHITMORE: I think BlackBerrys are great. Don't get me wrong. However, however, but when you're face-to-face with somebody else and you're trying to have a meeting, it's really important to focus all of your attention on that person.
HOLMES: OK. All right. What about the -- this was cell phone courtesy month, I believe. What are some of the other big things we all do, aside from the Blackberry or the cell phone, that we need to be mindful of?
WHITMORE: That's right. This is National Cell Phone Courtesy Month. An event I founded about six years ago.
HOLMES: Oh, that was you?
WHITMORE: That was me. In an effort to help raise awareness that we should all use common courtesy when we're on a cell phone. Like, for instance, don't do the cell yell. Don't talk to loudly when your on the cell phone. Don't discuss private matters in public places, your torrid love affair, your lab results.
LEMON: Why did you look at me like that when you said torrid love affair.
How can you tell somebody to shut up? If somebody's being rude, how do you tell them, hey, stop being rude? Whether -- it might be a perfect stranger, but still, is there a way you can say, hey, stop that?
WHITMORE: I think that you have to really judge the situation. I wouldn't go up to a stranger and say, shut up. I would probably alert a manager if I'm in a restaurant or movie theater. I don't take matters into my own hands. But if you're on a bus and you're sitting next to someone, they're getting on your last nerve and bouncing on it, you might want to just say, do you mind . . .
HOLMES: Stopping.
WHITMORE: Right.
HOLMES: But if he's bigger than me, I probably shouldn't do that.
WHITMORE: No. that's right.
HOLMES: All right. Let's talk about this handshake. The proper way to shake a hand. This is a big deal in business. Now what's the proper way. I shake a man and a woman's hand the same.
WHITMORE: That's right.
HOLMES: The same grip. The same . . .
WHITMORE: Right. And you always stand for handshaking. Don't allow a desk to be in between you and the other person. That handshake you just gave me was the fail safe.
HOLMES: The fail safe. Can't go wrong with that.
WHITMORE: And two or three smooth pumps is all you need. Pump, pump and down.
HOLMES: Oh, we're still talking about handshakes there, right?
OK. Last thing here. Casual dress as well. They have the casual Fridays. But during the week, people just seem to -- again, we're all so comfortable with each other that people just dress whatever kind of way sometimes.
WHITMORE: That's right. And I must say, T.J., you look very, very nice.
HOLMES: Thank you.
WHITMORE: But a lot of people don't look quite as nice as you do. So what happens is, I think when the weather gets hot, people shed their clothes and they show a little bit more skin and you have to use common sense.
HOLMES: OK. Jacqueline Whitmore, again, it's pump, pump what? OK, sorry.
WHITMORE: The pound sometimes.
HOLMES: We'll do the pound.
Gerri, let's hand this over to you before we get in trouble over here, all right.
WILLIS: I don't think -- I want to watch this for a little while longer. I'm really enjoying this interview. Pump, pump, and down. People wear less clothes in the summer. I don't know where this is going. OK.
HOLMES: Yes.
WILLIS: Well, why don't we talk about what's coming up in just a second here.
Times may be tough in the economy right now, but folks were happy to spend their $10 at the box office this weekend. We'll tell you about the biggest opening weekend of all time.
And we'll open up the Help Desk and talk about the topics that are on your mind. The address, issue1@cnn.com. We're all over issue #1 right here at CNN.
(COMMERCIAL BREAK)
HOLMES: Well, "Dark Knight" had a big weekend. A record-setting opening weekend for that movie, "The Dark Knight," took in $155 million. That shatters the previous record that was set by "Spider- Man 3," which was just in 2007. Now moviegoers, of course, right now are raving about that whole movie, but especially about the performance put on by Health Ledger, the late Heath Ledger, who, of course, died before the movie was released. He plays a deeply disturbed Joker.
WILLIS: Time now to focus on your money. It's the Help Desk. Answers to your questions. Let's get right down to it. Gary Schatsky is the president of objectiveadvice.com. Farnoosh Torabi is the author of "You're So Money" and Stephen Gandel is the senior writer for "Money" magazine.
So, welcome all. Great to see you guys. Let's get right down to those questions.
The first one is from Steve who asks: "Is there any way to tell if your bank is at risk of failure" -- Steve?
STEPHEN GANDEL, SENIOR WRITER, MONEY: Not really. I mean you could go through the public documents, but the market's already doing that, right? So you could watch the stocks. But you'll get a lot of false positives there because some stocks go down and those banks aren't going out of business. But the truth is, you don't really need to know, right, because your money at any bank is insured for $100,000 in a regular account, $250,000 . .
WILLIS: Almost any bank. Not every bank.
GANDEL: No -- most banks are that FDIC. And $250,000 for a retirement account. So you really don't need to -- you don't need to be watching whether your bank's going to fail. It's not going to impact you.
WILLIS: So people shouldn't worry, Gary?
GARY SCHATSKY, PRESIDENT, OBJECTIVEADVICE.COM: Well, if you're under the limit, you shouldn't worry about it. You have other things to worry about. And I think everyone is worrying about them. So that is the primary focus.
WILLIS: So those limits, $100,000 for the single account, $250,000 for retirement.
And, you know, I have heard, there is a place you can go and find out how well your bank is doing. Bankrate.com actually has a safety and soundness rating. So you might want to check that out. But you're absolutely right. So hard to know really how they're doing.
Dottie in Pennsylvania asks: "We're boomers already in retirement and collecting on our funds. We're in 50/50 stocks and bonds. Are we OK? What should we do to protect our funds?"
Gary, this is right up your alley.
SCHATSKY: Well, it clearly -- the market should be a wake-up call to take a look at your overall asset allocation. Take a look at where the money is. Fifty-fifty doesn't sound terribly aggressive. But a lot of it depends. Are you receiving a pension? If you're receiving a pension, you can be more aggressive. Probably one of the things everyone should now be focusing on is, are they properly allocated between tax sheltered accounts and non sheltered? Because if you have a tax loss outside of the retirement account, like an IRS, you can at least sell it and take a tax loss which will mitigate some of the problems you have because the IRS will kick in from there.
WILLIS: That's a great idea. GANDEL: Now the person who asked this question says she's a boomer in their retirement. So, first of all, they're doing great because they've already retired. And they're early retirees. So they probably actually want a little more in stocks than 50/50. I would say -- because you're going to have a very long retirement, you're going to need the excess returns to make it that whole way. Of course, you're going to have some more volatility. But target day retirement funds for people their age are generally these days more than 50 percent in stocks.
WILLIS: Farnoosh, I want to ask you to jump in here because I think so many people are concerned about this and one of the big questions they have, hey, we're in a bear market. Why would I invest in stocks?
FARNOOSH TORABI, AUTHOR, "YOU'RE SO MONEY": I think you've got to look at your time horizon. And remember that retirement is not just 10 years. Like Stephen said, it could be 25 years. We're hoping for another 40, 50 years. So think about your time horizon. I think cash is king right now and, again, look at your -- how aggressive do you want to be in this market. If your risk tolerance is not very high, consider, you know, transferring some of that money back into cash right now because it is a bear market. And you'll want to just do what you feel comfortable doing right now.
WILLIS: OK, different strokes.
SCHATSKY: But if you haven't been in the market with a lot of money, now is a fantastic time to step up and get involved.
GANDEL: Stocks are down. I mean, prices have fallen.
WILLIS: They're on sale. It's the shoe sale for stocks.
TORABI: The risk is a factor of age, am I right, fellows?
GANDEL: Yes.
TORABI: All right.
WILLIS: I love that. We're debating on the Help Desk. I love that. That's best.
Nancy in California asks: "The interest rate for my student loans is at 7 percent. What options do I have for refinancing them at a lower rate?"
Farnoosh, this is you too.
TORABI: All right. I don't really know whether this is a private loan or if it is a Stafford loan, so let's take it two ways. If it's a private loan and it's at 7 percent, I think she's pretty much reached home run here. I mean, 7 percent is pretty competitive. The average rate for a private student loan in this country is about 8 percent. So I'd say, work with what you've got here. If it is a Stafford loan, another federally backed Stafford loan, and she got this maybe two years ago before July 1, 2006, she's in luck. She can refinance to a lower rate. If she's within her grace period, she has an opportunity to go back to 3.6 percent. If it's after her grace period, 4.2 percent. But other than that, out of luck.
WILLIS: Devil's in the details. OK. Linda asks, "what is the best thing for retired persons on fixed incomes to do with their money at this time?"
Steve, you want to take a crack?
GANDEL: OK, so we're back to the same question, stocks or bonds, right? So it depends where you are. Just like you said, it's the age. If you're a very early retiree, you've got 20, 30 years ahead of you, then you should be more heavily weighted into stocks than bonds. If you're older, you want more stability. You don't have the years to get through that volatility. You want more bonds than stocks.
WILLIS: I want to go on and on and on.
SCHATSKY: Well, let's just add, what about paying down debt? I mean, these are the types of things people should be looking at with the market. Look at your overall financial picture.
WILLIS: All right. Great advice. And I love people mixing it up on the Help Desk. It's terrific. Thanks so much for your help today.
TORABI: Thank you.
GANDEL: Thank you.
HOLMES: Well, of course, it's tough these days to figure out where or how to invest your money. But would you turn to a psychic? We'll check that out.
Also, you have one more chance, one last chance to vote. How do you handle your credit card bills every month? That is our question. Log on to CNNMoney.com right now. You have one last chance again to get in for today's Quick Vote. Poppy Harlow is back with the results. That's coming up next.
But for the moment, you are watching ISSUE #1.
(COMMERCIAL BREAK)
HOLMES: Well, how do you handle your credit card charges? That is today's Quick Vote question. We have Poppy Harlow back with us with the results.
Was one of the options just pay the minimum due, because that's what I do?
HARLOW: You bet. You bet. Tisk, tisk, bad. Check out those interest rates. About 15 percent just say the minimum. Seventy-five percent, very impressive, you pay the full amount. I just did that.
HOLMES: Oh, come on.
HARLOW: Ouch, I did. It hurt but it was better than . . .
HOLMES: Seventy-five percent, though, pay in full?
HARLOW: Yes. Our viewers are truthful.
HOLMES: Come on. They're rich, apparently.
HARLOW: Three percent of you ignore the bill. Do not do that. Seven percent of you don't have a credit card. Congrats to you. No plastic there.
HOLMES: All right. Poppy, thank you.
And, Gerri, how are you paying your bills these days?
WILLIS: As often and as frequently as I have to. All right.
Well, a wild ride with the economy can push some folks to do all sorts of things to cope and handle their money. Grottos, psychics and even auctions (ph).
CNN's Richard Roth explains.
(BEGIN VIDEOTAPE)
RICHARD ROTH, CNN CORRESPONDENT, (voice-over): On a hot summer day, people trek to this 70-year-old grotto in the Bronx, New York, for the water. Traditionally, people believe the water produced miracles. Now more people are praying instead for peace and calm in turbulent economic times.
UNIDENTIFIED FEMALE: It's like a real drastic change with the gas prices.
ROTH: If you can't be led to these spiritual waters, more Americans are flocking to spirits themselves. Tarot card reader Susan Levitt in San Francisco reports a surge in people looking for divine intervention.
SUSAN LEVITT, SPIRITUAL COUNSELOR: There are many more questions about property, real estate. Do I quit my job and freelance?
ROTH: So clients are not asking, will I ever get married?
LEVITT: Supposedly that when the times are tough, the three biggest businesses are psychics, cosmetics -- a woman will buy a lipstick to feel better -- and luxury items, because the top 3 percent will still be buying their Bentleys.
ROTH: Ah, Bentleys. Not everyone is suffering. If you can't afford to buy a car these days, just rent a Bentley for $3,000 a day from Beverly Hills Rent-a-Car, showing off their exotic fleet for their new New York agency. GARY LERANIAN, LUXURY CAR RENTAL MANAGER: I think from a stress relaxation point, these are the toys you use when work goes bad everywhere.
UNIDENTIFIED MALE: Sold, $4,000. Thank you, sir.
ROTH: For those down about the down economy, the auction of singer James Brown's memorabilia made bitter scream, I feel good.
JEFF ALLEN, BROWN'S FORMER AGENT: Well, all of these things have value and then continue to grow in value. So I didn't -- I just took my money out of the bank and reinvested it in James Brown.
ROTH: Collectibles may be the best market pick.
ITSI ATKINS, AUCTION BIDDER: And anything that's great and associated with greatness will find its market, you know. It will do better than Bear Stearns.
ROTH: Richard Roth, CNN, New York.
(END VIDEOTAPE)
WILLIS: Time now to get you up to speed on other stories making headlines.
HOLMES: The "CNN NEWSROOM" with Don Lemon and my dear Betty Nguyen starts right now.
