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Obama Visits Germany; Dolly's Damage; Foreclosure Pressures Result in Tragedy

Aired July 24, 2008 - 15:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: Obama overseas. German crowds flock to hear him speak.
And the damage Dolly has done. South Texas sizes up the situation.

And the many fronts of foreclosure, a person who fighting it and a person who lost a sad battle.

Hello, everyone. I'm Kyra Phillips, live in New York. And you are in the CNN NEWSROOM.

Debris everywhere, flooded streets and downed power lines, that's what folks in South Texas are dealing with right now, a day after Hurricane Dolly crashed ashore. Governor Rick Perry is getting ready to fly over the area, which President Bush has already declared a major disaster.

The storm, now mainly a rainmaker, spawned a possible tornado in San Antonio, crossed the Rio Grande. In Matamoros, Mexico, city leaders hope to have all the lights back on by the end of the day.

(WEATHER UPDATE)

PHILLIPS: Time now to take another check of issue number one, your money and the economy. A home foreclosure hits a family in crisis. A Massachusetts woman commits suicide just hours before her home was set to be auctioned. We will have a live update.

Ford says it's lost a staggering $8.7 billion in the second quarter. And that's the company's worst quarterly loss ever.

And California's governor battles lawmakers over the state budget. He's threatening to cut state salaries all the way to minimum wage.

Well, California's budget shortfall is huge. And the escalating political battle has Governor Arnold Schwarzenegger making some serious threats about ways to close the gap.

Our Dan Simon is standing by for us in San Francisco -- Dan.

DAN SIMON, CNN CORRESPONDENT: Hi, Kyra.

I just spoke to the governor's office a short time ago. And here's the issue and why they're looking at this as a possible solution, albeit a very unpopular solution. You have people in Sacramento, state workers lining up as I speak to voice their displeasure.

But, basically, the state is looking at a $15 billion budget deficit. They're also several weeks late in passing a budget. So, what the governor is proposing to do is to trim the salaries of some 200,000 state workers to the federal minimum wage, which is only $6.55 an hour. So, if you're living paycheck to paycheck, this could absolutely be disastrous.

And this would affect everyone from janitors to administrators. There would be some exemptions here. Police officers and firefighters would not fall under this category.

But, nonetheless, this would affect 200,000 state workers. Obviously, many of them are not happy. Some feel like they're being caught up in the middle of a political ploy. Take a look.

(BEGIN VIDEO CLIP)

YVONNE WALKER, SERVICE EMPLOYEES INTERNATIONAL UNION: We're angry. We are angry. How can the governor play with people's lives like this? He's turning a budget crisis into a budget catastrophe.

(END VIDEO CLIP)

SIMON: Now, there could be a legal showdown here, because the state comptroller says he's going to continue to pay these workers regardless of what the governor does. The state comptroller pays the state employees all their salaries. And he says there's actually enough money in the budget to last through September.

So, this could actually be headed to court. But in terms of the P.R. fallout for the governor, this doesn't look good, because, after all, you're talking about state workers, people who don't make a lot of money to begin with. And the fact that he may roll back their salaries to minimum wage won't do -- won't earn the governor any points. But, keep in mind, he's not up for reelection. He's out in two years because of term limits -- Kyra.

PHILLIPS: So, the state workers will eventually get their total salaries, then, once the budget has been signed?

SIMON: Yes, that's the thing here. This is a temporary thing. They will actually get all of their money back retroactively.

This would just be in effect while this situation is ongoing with the budget. So, long term, they will be OK. Just, short term, you are looking at a serious issue.

PHILLIPS: Why is California in such a bad economic position, so bad to take it to this level at this point?

SIMON: I actually talked to a spokesperson with Department of Finance. And he put it this way. It all comes down to the mortgage meltdown. With the meltdown, you are talking about a lot less home construction. And when you have fewer people building homes, you're not having people going out and buying building materials. People aren't buying washers and driers, furnaces, that kind of thing.

And it all trickles down. So, you have a lot less money going to the state in the form of taxes. And that's why they're looking at this $15 billion shortfall.

PHILLIPS: Wow. We will follow it.

Dan Simon, thanks so much.

People making minimum wage get a little some extra in their paycheck starting today. The national minimum wage rises by 70 cents today to $6.55 per hour. That's the second of three increases approved by Congress. And of course critics say that increase will be swallowed up by higher food and gas prices. And business groups complain it's a bad time for their labor costs to climb higher. There's one more increase to go. The minimum wage climbs to $7.25 an hour of July 24 of next year.

And more rocky news on the housing front today. The National Association of Realtors reports another drop in sales of previously owned homes, down to 0.6 percent in June. With unsold homes flooding the market, median sale price dropped 6.1 percent from the previous June to just over $215,000. That's the fifth largest drop on record.

Susan Lisovicz will have more on the housing numbers and Wall Street's reaction in just a few minutes right here in the NEWSROOM.

Well, help for homeowners facing foreclosure may be on the way. By a big margin, the House has passed expansive legislation to try to shore up at-risk loans to the tune of up to $300 billion. The bill would also commit as much money as needed to prop up the troubled lenders Fannie Mae and Freddie Mac.

It would increase the current loan guarantee cap to $625,000 and create up to $7,500 for first-time buyers. Now, action by the Senate is pending. And that could happen in the next couple of days.

Well, it's a story about financial hardship and family tragedy. A Massachusetts woman who handled her family's finances killed herself this week just hours before the bank was scheduled to foreclose on the family home.

CNN's Deborah Feyerick has been tracking the story.

(BEGIN VIDEOTAPE)

DEBORAH FEYERICK, CNN CORRESPONDENT: Whatever else was going on in her life, it was clear Carlene Balderrama had reached the end of her rope.

According to Police Chief Raymond O'Berg, at 2:30 on Tuesday, just hours before her home was to be sold off at foreclosure action, she faxed her mortgage company telling them by the time the auction started at 5:00, she would be dead. It's unclear if the mortgage company immediately saw the fax. But, an hour later, at about 3:40, the chief says someone from that company called the Taunton Police Department in Massachusetts.

Officers were sent and found the woman dead of a single gunshot wound. She had used her husband's rifle and left a suicide note telling her husband and son to take the insurance money and pay for the House.

The police says Mr.s Balderrama had not packed any boxes to suggest the family was moving out and says, because she handled the family's finances, her husband had no idea they were in such trouble or that the house was about to be auctioned.

As police were on scene conducting the investigation, people were arriving for that auction. It was listed as canceled in public records following the death.

The mortgage company has not returned our calls. But Mr. Balderrama says he plans to stay in the house and that the mortgage company did reach out to him the day after his wife's tragic end to help him -- quote -- "straighten things out."

Deborah Feyerick, CNN, New York.

(END VIDEOTAPE)

PHILLIPS: And straight ahead, I'm going to talk with a man who's taking lenders to court to try to stop foreclosures. San Diego City Attorney Michael Aguirre will talk about his legal strategy ahead in the NEWSROOM.

In Oklahoma City, a deadly collapse at a work site this morning. A crane lifting a steeple into a church toppled over and crushed a car. An 80-year-old man was inside that car, by the way. He was killed. He and his wife had stopped to watch the construction. She was taken to the hospital in good condition.

A bridge-building mission in the heart of Europe.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: There is no challenge too great for a world that stands as one.

(END VIDEO CLIP)

PHILLIPS: Barack Obama delivers his much-anticipated speech in Berlin. We will have a live report from German capital.

And getting your party to think younger when it seems it's stuck in the past. We are going to look at the challenge facing young Republicans in campaign 2008.

(COMMERCIAL BREAK)

PHILLIPS: Compelling words on an international stage. As you may have seen live on CNN, Barack Obama spoke to a big crowd in the heart of German's capital just a short while ago. Among other things, the Democratic presidential candidate talked about the challenges the U.S. and Europe both face in a dangerous world.

(BEGIN VIDEO CLIP)

OBAMA: The fall of the Berlin Wall brought new hope. But that very closeness has given rise to new dangers, dangers that cannot be contained within the borders of a country or by the distance of an ocean.

Think about it. The terrorists of September 11th plotted in Hamburg and trained in Kandahar and Karachi before killing thousands from all over the globe on American soil.

(END VIDEO CLIP)

PHILLIPS: Meanwhile, Republican presidential candidate John McCain returns to a battleground state. He is in Ohio again today, where he's focusing on the economy and meeting with small businesses. Tonight, he's attending a cancer summit in Columbus.

And during a stop just a short time ago, the Arizona senator once again took aim as his rival Barack Obama over the issue of Iraq and Obama's opposition to the so-called troop surge.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: It's very clear that Senator Obama does not understand what's at stake here, what was at stake in Iraq. And his refusal to acknowledge that the surge has succeeded is, again, a graphic demonstration of his lack of understanding of national security issues, but this one in particular.

(END VIDEO CLIP)

PHILLIPS: Looking now at a key voting bloc in election 2008, a new Pew Center poll shows strong support for Barack Obama. A whopping three-fourths of registered Hispanic voters surveyed say that they have a favorable opinion of Obama -- 44 percent have a favorable opinion of John McCain.

Two-thirds say they are either for or leaning toward Obama -- 23 percent are for or leaning toward McCain. Now, on issues that matter most to Hispanic voters, education is tops, followed by cost of living, jobs and health care. The interviews were conducted June 9 through July 13.

Now, let's get back to Berlin and that speech that Barack Obama made.

Our chief international correspondent, Christiane Amanpour, was there. She heard it.

Christiane, touching on everything from nuclear weapons, to the Iraq war, to the economy, he hit all the key button issues. Wasn't quite sure how much this speech was going to be about contact or more lyrical, but, indeed, he captured the crowd.

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Yes, I think it was both. It was both lyrical, historical. There was some key points that he knows a world and especially a European audience wants to hear about.

Apparently, police are now saying that some 200,000 people may have turned out. That's a very, very large crowd. And throughout his speech, they were largely receptive, as some of my colleagues have described it.

I wouldn't want to say that they were euphoric in their reception of the speech. There were good cheers at very certain points during the speech. But it wasn't as wild as I had expected, given the huge anticipation and how many people turned out.

But when Barack Obama talked about things like renewing the spirit of cooperation between the United States and Germany, and, of course, the rest of the world, it got good applause. When he talked about bringing down walls between religions, Muslims, Christians, Jews, he says, races and other such ethnic groups, it drew loud applause.

When he talked about how we must come up with a new battle of ideas -- for instance, he said, back during the Cold War, we won the war of ideas. We were able to confront and cause Soviet communism to collapse. Why can't we now have a new triumph of ideas and bring, for instance, in his words, the vast majority of Muslims, who are moderate and committed to peace, and separate them from the extremists? Why can't we try to win on that front? So, those kinds of things drew very loud applause.

PHILLIPS: And, also, you talk about the -- the part when he talked about bringing down the walls. It was reminiscent of Ronald Reagan when he looked at Mikhail Gorbachev and said, "Mr. Gorbachev, tear down that wall" -- Barack Obama using the same I guess essence of that speech, but talking about religious hatred, race relations, and that those are the walls that must be torn down now.

AMANPOUR: Well, yes, he did use that imagery a lot.

And, look, this is the quintessential symbol of freedom and division in Europe. And several previous American presidents, most notably President John Kennedy, President Ronald Reagan, came here and really made huge impacts because of the historical time they lived in and because of the words they used.

Barack Obama made reference to that and said that we live in a different historical time, but, nonetheless, one that we have to be mindful of and we have our issues to confront and we need to cooperate with each other to be able to do that.

One of the things that drew the sort of first applause was when he described himself. He said other American leaders have been here. I come here and I don't really look like any of them, referring to his color and his race. And that drew a great full and appreciative applause here.

And there were many people in the crowd who -- really it was kind of a United Nations over here. It wasn't just Germans. There were many Americans. I spoke to people from the Netherlands, from Australia, from Britain, lots and lots of different nationalities here. It's a very international city, cosmopolitan.

And people came to hear the kind of message that he was -- that they wanted to hear from him. And, before, I asked a political analyst here, what -- how did he account for the outpouring of support for Obama? And he said, well, people are desperate for a political redeemer. They want someone to turn back the tide of what they have gone through over the last seven to eight years of the Bush administration.

And he cautioned, though, that a lot of it is not based on fact or experience, but based on expectations. And so Obama does carry that huge weight of expectations around with him -- Kyra.

PHILLIPS: Christian Amanpour live from Berlin, thank you so much.

Well, there is one part of the vote that Barack Obama has not had trouble with, and that has been the youth vote. However, the McCain camp has had a challenge with that.

CNN's Chris Lawrence reports.

(BEGIN VIDEOTAPE)

CHRIS LAWRENCE, CNN CORRESPONDENT (voice-over): He hears the screaming at his rival's rally. And this young Republican wonders what could be for his candidate.

ERIC PEARLMUTTER, USC YOUNG REPUBLICANS: We try to get people out to our college Republican meetings and we can't seem to draw the same type of vocal support.

LAWRENCE: Eric Pearlmutter cringed when his candidate admitted he doesn't use e-mail. John McCain's MySpace page looks like it hasn't been updated in five months. And some pictures seem too nostalgic to represent, say, small business.

LAWRENCE (on camera): Does that image connect to young people?

PEARLMUTTER: Well, when you see the Main Street barber shop image, you think of 1950's America. An entrepreneur as Silicon Valley guy will definitely make it more attractive.

LAWRENCE (voice-over): Barack Obama has spoken at hundreds of college campuses.

JASON MATTERA, YOUNG AMERICA'S FOUNDATION: Senator McCain should demand that the same colleges and universities host him or else their tax-exempt status could be in jeopardy.

LAWRENCE: Young conservative Jason Mattera says McCain has to connect young voters to conservative principles.

MATTERA: So, if they're suspicious of Uncle Sam telling them what Internet sites they can view, they should be equally suspicious of Uncle Sam, the federal government, telling them what health care plans they're going to be a part of.

LAWRENCE: At an Ohio town hall meeting this month, a student told McCain that Republicans were a dying breed on his campus.

MCCAIN: But I understand the challenge I have and I understand that this election is really all about people of your generation.

LAWRENCE: The campaign plans to increase McCain's presence on Facebook, and MySpace. He's also appearing on shows that appeal to younger viewers like "THE DAILY SHOW."

McCain is trying to close a numbers gap. According to recent CNN Opinion Research Corporation polls, 40 percent of young voters consider themselves Democrats, only 25 percent Republicans.

(on camera): Up until now, both parties tended to ignore young voters because historically they're pretty unreliable when it comes to actually turning out to vote. But the bad news for Republicans is that once a young person does vote for a particular party, they tend to stick with it for years.

Chris Lawrence, CNN, Los Angeles.

(END VIDEOTAPE)

PHILLIPS: Well, Russell Simmons was shaking things up on Capitol Hill today, giving testimony at a House hearing on physical and health education. And, no, he didn't wear his bedazzled shirt and short shorts.

The exercise guru, as you know, is known for "Sweatin' to the Oldies," but his focus this morning, getting young people moving. Simmons wants schools to expand phys-ed programs to help fight childhood obesity. But, as you can see, he did shed that business suit after the hearing for a lively pro-P.E. rally outside. He is bring those 1982 dolphin shorts back. It was frightening. Oh, don't forget the famed socks as well.

Well, an Australian submarine takes aim at a U.S. Navy ship, blowing it apart. What's going on? We will tell you.

(COMMERCIAL BREAK)

(BUSINESS REPORT)

PHILLIPS: Well, they have trained a lifetime for a shot at the Olympics, but an entire nation's best athletes are forced to sit out of the Beijing games. We are going to tell you who and why.

(COMMERCIAL BREAK)

PHILLIPS: Hello, everyone. I'm Kyra Phillips, live in New York. And you're in the CNN NEWSROOM.

3:30 Eastern time right now. Here are some of the stories that we're working on. Barack Obama makes a splash in Berlin. A crowd of better than 200,000 heard him urge a commitment to winning the war in Afghanistan and defeating terrorism.

Severe storms in parts of New England today, including unconfirmed tornadoes. Dozens of home damaged in and around Epsom, New Hampshire, about 10 miles east of Concord.

Also this hour, possible twisters amid the remnants of Hurricane Dolly, now a tropical storm. Dolly hit Laredo today and also damaged parts of San Antonio. The storm is angling back toward Mexico.

People making minimum wage get a little something extra in their paychecks now. The national minimum wage rises by 70 cents today to $6.55 per hour. That's the second of three increases approved by Congress. Minimum wage goes up to $7.25 an hour in July of next year.

And a San Diego city attorney is trying a new strategy to halt foreclosures. He is suing major lenders, taking them to court to try to protect homeowners. The situation in San Diego of course is part of the wider mortgage mess that's affecting much of the country. Nationwide, 340,000 homes have been repossessed this year, that's a 136 percent increase from 2007. In the second quarter, more than 118,000 California home loans were in default, and almost 80 percent of California homeowners now in default will go through foreclosure.

That brings us to San Diego's city attorney, Michael Aguirre. He's suing major lenders, trying to create what he calls a mortgage sanctuary in his city. He joins me now live from San Diego.

And, Michael, I should say for full disclosure that you are in my home city. This is where I was raised. And I actually went home just recently, and just driving through my neighborhood, seeing all of the homes under foreclosure, what's going on?

MICHAEL AGUIRRE, SAN DIEGO CITY ATTORNEY: Well, you know, we think that the best way to get the market stabilized -- the housing market stabilized nationally is to try to stabilize the housing stock that is up...

(AUDIO GAP)

AGUIRRE: And the best way to do that is to stop the automatic pilot foreclosure system that we have in place now. And what we'd like to do is to create a forum here in San Diego by bringing a lawsuit that alleges that many of the subprime loans were unlawful or fraudulent or unfair under the law and then creating a forum -- a settlement forum, to push folks into the FHA available loans.

Now we have $300 billion that is going to be made available for FHA-qualified loans. And the idea is that the foreclosures really are not helping anyone. They're not helping the lenders, they're not helping the borrowers. And what we're seeing in cities like Cleveland and Buffalo is thousands of houses foreclosed, abandoned, demolished and lawsuits coming out of that where it's too late to actually take what is a nonperforming asset and convert it into a performing asset.

PHILLIPS: So, Michael, you're going up against two of the biggest banks, Bank of America and Countrywide. Tell me what kind of evidence you have that you are going to present to try and prove that these banks have been -- is it doing something illegal, unethical? What's your claim?

AGUIRRE: Well, you know, the shareholders of Countrywide, which has been taken over by Bank of America -- and that's why Bank of America is in this part of the litigation, those shareholders have already brought very powerful claims in the federal district court in Los Angeles that a district court judge has found sufficient to state a case for securities fraud under the strictest pleading requirements under federal securities laws pleading requirements.

And so here in California, we have -- as in many other states, we have a law that prohibits unlawful, fraudulent or unfair business practices. The kinds of predatory lending that were taking place with regard to subprime loans are what we're focusing on. Very similar to what they did in the state of Massachusetts, where the state attorney general in that state was able to get an injunction doing very much what we're trying to do here, which is to stop foreclosures of the kinds of loans that we're talking about.

We think if we can do that and then create a settlement forum so that the lenders and the borrowers can come together and we can do mass reworkings of the loans, that that will help stabilize the situation in San Diego. So we don't in San Diego turn into the kind of problem that Cleveland is.

And we're hoping other cities -- we've been contacted today by officials in Colorado and Illinois, and we're hoping...

PHILLIPS: Are they wanting to do the same thing?

AGUIRRE: And -- well, they're exploring it. Because the idea is not to be punitive to the borrowers, but to get people to pause. Many people are calling us and saying they're calling Countrywide, they're borrowers, they're second mortgage holders, and they can't even get a return phone call.

And what we're hearing is that this automatic pilot foreclosure, where we just -- you know, one after the certificating going over the financial cliff, it really is something that needs to be paused. And we need to have the kind of mass tort approach that we saw in cases like tobacco and other cases that have been successfully resolved. We need to do the same thing here.

PHILLIPS: Well, we're going to follow it. We found fascinating today. And we'll (INAUDIBLE) stay on top of it. Let us know how it goes. Michael Aguirre, San Diego City attorney. Thanks, Michael.

And we want to let you know that we did contact Bank of America to get their response -- or its response, rather, to the lawsuit. They told us that it had not received the complaint so no one there could comment on it. Now in the heart of New Orleans and for 100 miles downriver, an oily sheen covers the great Mississippi. A tanker and barge collided earlier yesterday, causing a 420,000-gallon spill. According to the Coast Guard, the pilot of the tug boat moving the barge didn't even have a proper license. Meantime, the river remains closed to help speed up the clean-up. Now traffic is starting to back up with dozens of ships bound for the Gulf stranded.

Stunning video of a U.S. Naval ship blown apart. It happened during international military exercises off the coast of Hawaii. An Australian submarine fired the new heavyweight torpedoes that actually sank that ship. Look how quickly it went down. But don't worry, the vessel was a decommissioned destroyer. The military actually runs these exercises about twice a year. They're going to do this until the end of the month. It's all to promote stability in the Pacific region.

Well, the Olympic games, just two weeks away and today we learn that one nation won't be represented in Beijing. Iraq's seven Olympic athletes have officially been banned. The reason? Political interference according to the International Olympic Committee, which charges the Iraqi government with undermining the sports movement there. Iraq's athletes and coaches are disappointed.

And it's a sentiment also felt in Washington.

(BEGIN VIDEO CLIP)

DANA PERINO, WHITE HOUSE PRESS SECRETARY: But I am sure that the Iraqi athletes who have trained so hard and were finally going to represent a country that is free and sovereign and working to establish its democracy, they have to be terribly disappointed. And I'm disappointed for the athletes as well.

(END VIDEO CLIP)

PHILLIPS: Well, 15 days until the Olympic flame is lit in Beijing. And Chinese police announced the takedown of an international terrorist group allegedly planning to target the games. According to China's state-run media, the terror group was eyeing venues in Shanghai where some Olympic soccer matches will be played. They're not yet releasing further details. Chinese authorities, meanwhile, say they cracked five terrorist groups earlier this month and rounded up more than 80 suspected terrorists.

Well, coming together to talk about what divides us. A conference on race and reconciliation opens today. The hosts join us live.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

JACQUI JERAS, CNN METEOROLOGIST (voice-over): The Sun's energy is free. But harnessing that energy isn't. And most people have yet to fully embrace solar power. CONRAD BURKE, INNOVALIGHT: Today's solar panels are a rather expensive proposition for a new home or an existing homeowner.

JERAS: Conrad Burke is the president and CEO of Innovalight, located appropriately in Sunnyvale, California. It's promising to make solar energy 10 times cheaper by producing lower-cost solar cells. The secret? It's in a bottle.

BURKE: We have developed silicone (ph) ink technology whereby you can actually deposit it in liquid form in silicone.

JERAS: The ink is made of nano-crystals of silicone, which is a key element in converting heat from the Sun into electricity. Most traditional solar cells are made in several steps and have a layer of silicone that is made using the costly high heat method. With fewer steps, Burke says Innovalight uses low heat inkjet technology to basically print solar cells.

BURKE: We can put that silicone in a completely new way and ultimately drive down the costs.

JERAS: As energy costs continue to rise, Burke hopes his innovation will help interest in solar power rise as well.

BURKE: With the emotional impact of gas prices the way they are, with the dependence we have on foreign energy, I think solar is in really a great point of acceptance.

JERAS: Jacqui Jeras, CNN.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

PHILLIPS: We've been following the severe weather across the country, mainly in New Hampshire and also Texas. There were fears of tornadoes there. We were telling you about the severe weather in New Hampshire where actually we got this video in from Epsom, New Hampshire, our affiliate, WMUR, showing us how the weather has just clipped those trees there.

It also caused a number of homes to collapse. And now we're getting word that authorities there have confirmed that one person has been killed when the storm leveled a house -- actually a number of houses were leveled. But within this one, the AP is reporting now that one person has been killed.

Also, state emergency management spokesperson Jim Van Dongan (ph), who we talked to about an hour-and-a-half ago, said there are other injuries but doesn't have a number yet or know how serious they were. Police and firefighters are actually going door-to-door in the towns from Epsom all the way to New Durham, looking for people to try and make sure there haven't been any other deaths. But unfortunately, one person found dead in a home that was leveled by that New Hampshire storm.

We're staying on top of all the severe weather. Chad Myers is with us for the rest of the afternoon.

Well, today in Washington, a conference began. Men and women of different backgrounds, from different fields, talking about race and reconciliation. On the table, some things that for a long time were just swept under the rug. William Cohen and Janet Langhart Cohen made this thing happen because, well, they felt the time was right.

Good to see you both.

WILLIAM COHEN, CO-AUTHOR, "LOVE IN BLACK AND WHITE": Great to see you.

JANET LANGHART COHEN, CO-AUTHOR, "LOVE IN BLACK AND WHITE": Hi, Kyra.

PHILLIPS: And let's just -- you guys have such an incredible story, an incredible background. You've written a book about your relationship -- your biracial relationship. You've been married for how many years now, is it, Janet?

LANGHART COHEN: Who's counting? We got married on Valentine's Day, Kyra. I think it was about, what, 13 years?

PHILLIPS: There we go. Something like that, right? And it has been bliss ever since.

LANGHART COHEN: Seems like 14.

PHILLIPS: Yes, there you go. And. Mr. Secretary, it feels like it was just yesterday you married your beautiful wife, right?

W. COHEN: It does indeed. The two most important words in a marriage is, yes, dear.

PHILLIPS: You're a smart man. Now I see why you were defense secretary. There weren't a lot of yeses there though. You would argue those in the Pentagon. But let's talk about the conference that's taking place. This is basically your baby, both of you came up with this idea.

Janet, let's start with you. Why did you feel it was necessary?

LANGHART COHEN: Well, I've always wanted to have this conversation ever since my mother, when I was 7 years old, and she barely, out of her teens, told me we couldn't be served in that restaurant because we were colored. And she told me what it was going to be like for me to live in this country as a person of color. That there would be people who wouldn't like me because of it. And I'd have to try twice as much to get half as much.

So I wanted to continue this conversation. I had asked President Clinton 12 years ago in the Rose Garden if he would indeed have a summit on race and racism. And of course, he said yes. And then his presidency was overtaken by other issues. But now Bill and I are leading the way on discussing this. So we can reconcile some of the problems of our country. We started on the principle of equality and justice for all. And you know this country was conceived with the human stain of slavery. And the result is racism. So we're trying to reconcile some of that in looking back to our dark past and owning it and look forward to our bright future.

PHILLIPS: And let me tell you, Mr. Secretary, being married to Janet, you know, how has that changed or affected you or impacted you with regard to race relations? And what have been some of the challenges? I mean, you were secretary of defense, and very much a white world there at the Pentagon and within the White House. I mean, we're starting to see more and more diversity. We see Barack Obama now actually having a chance to make it into the White House. What was the toughest part for you within your marriage and dealing with race reconciliation issues?

W. COHEN: Dealing with Janet.

(LAUGHTER)

PHILLIPS: She's a tough cookie.

W. COHEN: Well, she's -- she wrote a book called "From Rage to Reason: My Life in Two Americas." And I like to kid her, it's a misnomer. The title should be "From Rage to Reason to Rage," because there is no shortage of examples whereby something will take place on the evening news or morning news and it will just send a jolt through her and through me where you see a sense of injustice, where you see a person who has been victimized through racism.

When you see someone who was shot 41 times and it turns out, of course, that he's not white but black, when you see the kinds of things taking place in our society, then it stirs these emotions of rage. And I certainly can share in that. And I am in that household. And I see it and I see the toll that it takes.

But what's great about this country and what we have learned is that we are still a country of great promise. And the fact that Janet and I could be married in this country, that we could have grandchildren that we have growing up, children of color, that they will have a better future than perhaps many have had in the past.

So I look at it that we made great progress, the fact that we are married. Seven years before we met, it would have been illegal in about 17 states for us to have been married. So it took a Supreme Court decision to say that we could not only be on the bus together, sit beside each other on a bus, but we could be married. It happened in 1967, certainly during much of our lifetime.

LANGHART COHEN: But you know, Kyra, you asked about the Pentagon. And when I met bill, he was a U.S. senator, and I told him I wouldn't marry him until he left because I was afraid his being married to me would hurt his chances of re-election.

PHILLIPS: Wow. LANGHART COHEN: Well, Bill Clinton, after we married, selected us to be secretary of defense.

W. COHEN: Us.

LANGHART COHEN: And I want to say about the Pentagon and our military, the whole time we were there, those four years, the only colors I was aware of was red, white and blue. We had the finest military in the world. And not only because we the fighting force, but because of the disciple and good order and progress.

And our civilian society could benefit from all the things we've learned about race in our military.

W. COHEN: And meritocracy. That they base promotions on merit. That's something that we need to have, yes.

PHILLIPS: Well, final thought, because you know, we've been running this whole series, "Black in America," and we're talking about the race reconciliation conference. And you know, we hear so much about minorities. The Unity conference is going on in Chicago right now. But are white people talking about race enough? Are we hearing from white people on this? And how important is that, Janet?

LANGHART COHEN: Kyra, that is the best question anybody has asked me. That is one of the reasons I wanted to form -- Bill and I decided to form this conference this way. I, as a person of color, feel that it is incumbent upon me to welcome white Americans into this dialogue to talk about it.

We African-Americans talk about it all the time. And white Americans may feel like they're being politically correct. What do we call them, Negro, black, African-American? Because we keep changing our names. And I wanted to have this conference more for them to come in and leave their shame, leave our blame, leave the guilt, the denial behind and talk about the truth.

We know we haven't always been land of the free. But we are home of the brave. We are brave enough to face our truth, as dark as it is, because we have a bright future. And that's what we're working for in this conference.

PHILLIPS: William and Janet Cohen, for president and vice president. I'm just trying to figure out who would be the president. Probably Janet.

W. COHEN: Commander-in-chief.

PHILLIPS: Yes, there you go. I know she's your commander-in- chief.

LANGHART COHEN: Thank you, Kyra.

PHILLIPS: Great to see you both. My honor and pleasure.

LANGHART COHEN: Thank you. PHILLIPS: Aw, we even got a kiss there. I love it. All right. It was unparalleled television event. CNN's "Black in America," don't miss the second part of this ground-breaking documentary tonight at 9:00 Eastern only on CNN.

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PHILLIPS: Time now to check in with CNN's Wolf Blitzer, he's standing by in "THE SITUATION ROOM" to tell us what's coming up at the top of the hour.

Hey, Wolf.

WOLF BLITZER, CNN ANCHOR: Kyra, thanks very much. Barack Obama's big day in Berlin, an historic speech before a huge crowd. Did he deliver? We'll have extensive coverage and analysis from the best political team on television.

Congress tries to make a move to release oil. We'll have the latest on that. Plus, an up-close look at the wildlife refuge in Alaska that's behind another major oil debate. We're going to show you what all the controversy is all about.

And another disaster for New Orleans, 400,000 gallons of fuel spilling into the Mississippi River and dozens of other vessels now stuck. We're live on the scene for that story. Brian Todd is in New Orleans.

All that, Kyra, and a lot more coming up right here in "THE SITUATION ROOM." And, Kyra, one thing, I forgot to mention this the other day to you.

PHILLIPS: Yes?

BLITZER: Congratulations on being the journalist of the year.

PHILLIPS: Thank you, Wolf. I'm just trying to keep up with you, my friend.

BLITZER: Well deserved for Kyra.

PHILLIPS: Thank you, Wolf. That means a lot coming from you.

Well, take a look at this, just don't sneeze. We're going to tell you who has been building an Olympic-sized house of cards.

(COMMERCIAL BREAK)

PHILLIPS: What's a baseball game without peanuts? For certain Seattle Mariner fans, it's a chance for a trip to the ballpark. The club will offer peanut-free zones at two upcoming contests. And to make things easier for fans with allergies, well, that idea came up from a fan whose 4-year-old son risks serious illness if exposed to peanut dust. He'll now be able to see his first Major League game.

All right. Nobody sneeze. An Olympic-sized house of cards is going up in Hong Kong modeled after actual Olympic sites in Beijing. American Brian Berg is using 140,000 playing cards to create the "Bird's Nest" National Stadium, the Water Cube Aquatic Center, even a 10-foot version of the state television building. Well, Berg has been at this for about eight hours a day for nearly a month. He's definitely no amateur. Berg holds a Guinness world record for stacking cards.

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PHILLIPS: All right. Let's take you to "THE SITUATION ROOM" and Wolf Blitzer -- Wolf.