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Issue Number One
Candidates Address Energy & the Economy; Wi-Fi in the Sky; Identity Theft Case Leaves Millions Affected
Aired August 06, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, CO-HOST: Just 91 days until Election Day, and Senators McCain and Obama are putting almost all of their energy into, well, the energy issue, while Congress tries to find an energy compromise on both sides of the aisle.
We'll take you to black gold boomtown. And guess what? It's right in this country.
And why your home equity loan or your chance of getting one could be in jeopardy.
Issue #1 one is your economy. ISSUE #1 starts right now.
And from the ISSUE #1 headquarters to the CNNMoney.com newsroom, we are all over the stories that matter to you.
Hello, everyone. I'm Ali Velshi. Gerri Willis is off today, but we are all over the energy issue.
John McCain is talking about it, Barack Obama is talking about it, and Congress might actually be talking about some compromise legislation.
We're also learning about the financial health of mortgage giant Freddie Mac as the government is looking toward big business to help fix Fannie and Freddie. Plus, why the CEO of Freddie Mac says we are nowhere near the end of this housing mess.
And we'll tell you about one of the largest identity theft cases of all time. Forty million people affected. How you know whether you could be a victim or not.
But we begin with all of the energy talk on the campaign trail, and with my very dear friend Christine Romans.
It's been forever, but great to have you back.
CHRISTINE ROMANS, CO-HOST: Thanks, Ali.
Ali, you know, Senator John McCain pounding away on the energy issue this week. And today, no different. Senator McCain is touring a factory right now in Jackson, Ohio, after spending much of the last 24 hours talking nuclear energy.
Joining us now from Washington to talk candidates and energy and their plans, our White House Correspondent Ed Henry -- Ed. ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, good afternoon, Christine.
You're absolutely right, John McCain in Ohio today to talk about the economy. He's going to say that he thinks the nation should cut taxes to try to stimulate the economy, but he's also talking about energy. It's become a heated debate between he and Barack Obama.
(BEGIN VIDEOTAPE)
HENRY (voice-over): Touring a nuclear power plant in Michigan, John McCain expanded his assault on Barack Obama's energy plan.
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Senator Obama has said that expanding our nuclear power plants "doesn't make sense for America." He also says no to nuclear storage and no to reprocessing. I could not disagree more.
HENRY: This is one of the sharpest policy differences between the two candidates. McCain wants to go full speed ahead on nuclear, building 45 new power plants by 2030.
MCCAIN: Now, we all know that nuclear power isn't enough and drilling isn't enough, and we need to do all of this and more.
HENRY: Obama has a much more cautious approach to nuclear power. He does not want to build any new plants without first getting a better handle on safety and security.
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: It means finding safer ways to use nuclear power and store nuclear waste.
HENRY: In Ohio, Obama stepped up his own attacks on McCain, again charging the Republican is in the pocket of the oil industry and mocking his decision to embrace offshore oil and gas drilling.
OBAMA: This is what he talked about yesterday -- "I want to drill here, I want to drill now." I don't know where he was standing. I mean, I think he was in a building somewhere.
(LAUGHTER)
HENRY: The McCain camp points out, however, Obama voted for the president's energy bill in 2005 which had billions in tax breaks for oil and gas interests. McCain voted against that bill and has a new ad pointing out he has repeatedly taken on special interests.
NARRATOR: Only McCain has taken on big tobacco, drug companies, fought corruption in both parties. He'll reform Wall Street, battle big oil, make America prosper again.
(END VIDEOTAPE)
HENRY: Now, John McCain has yet another new ad out today that uses that celebrity charge against Barack Obama. But unlike the last one that had pictures of Paris Hilton and Britney Spears, this one just focuses on Obama. It doesn't have those other folks in the ad.
But McCain tries to pivot in a positive way after the negative attack by saying, can a celebrity really lead the country? And McCain tries to say he'll do a better job on the economy and healthcare.
And by the way, Christine, you know, both candidates have been fighting in the last few days about whether inflating tires really save energy. But you know, there might be another way, particular for a man to save energy, and that's grow facial hair in the winter. It looks like Ali Velshi is ahead of the curve on that one.
VELSHI: It definitely keeps me very warm, Ed.
HENRY: Yes, that's what I thought.
ROMANS: All right. Ed Henry.
Thanks so much, Ed.
HENRY: Thank you.
ROMANS: Over to the other side of the campaign trail now, where not surprisingly, perhaps, Senator Barack Obama is focusing on energy in Indiana. But the focus may have been less on his energy plan and more on the senator standing next to him on the podium.
CNN Deputy Political Director Paul Steinhauser is live in Washington with more -- Paul.
PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: Yes, the guy who introduced Barack Obama was none other than the senator from Indiana, Evan Bayh, former governor out there, very popular in Indiana. Evan Bayh was the guy who introduced Obama today at that town hall.
Indiana, a red state. There's a thinking that maybe Evan Bayh, if he was on the ticket, could help Barack Obama steal that red state away and turn it blue. Evan Bayh was also a big backer of Hillary Clinton in the primaries, so there's a thought, too, that maybe he could help heal the wounds from that bitter primary process.
But remember, the real people who know what's going on are not talking to us. So this is merely speculation. Evan Bayh is one of a number of names being bandied about as Obama's running mate.
But, Obama there. The real mission today was to talk about energy.
It is Obama spelling out his proposals of what he would do to help get the U.S. off energy dependence overseas. He had some short- term things he said he would do, like increase domestic production of oil and natural gas. And he would -- also talked about long term. He wants to get the U.S. off of dependence of oil from the Middle East and form Venezuela.
Here's how he would say he would do that. (BEGIN VIDEO CLIP)
OBAMA: I will put the full resource of the federal government and the full energy of the private sector behind a single overarching goal. In 10 years, we're going to eliminate the need for oil from the entire Middle East and Venezuela. All of it.
(APPLAUSE)
Now, to do this, we're going to invest $150 billion over the next decade and leverage billions of dollars more in private capital to harness American energy and create five million jobs in the process.
(END VIDEO CLIP)
STEINHAUSER: And Christine, he also brought up oil drilling, offshore oil drilling. You know, it's been pretty controversial in the campaign trail.
He urged the oil companies to drill on the 68 million acres of land they lease right now where they're currently not drilling. You know, him and John McCain definitely don't see eye to eye on offshore drilling.
It's a whole week of energy, it's issue #1 with Americans, it's issue #1 with the candidates -- Christine.
ROMANS: All right. Paul Steinhauser.
Thanks.
And we should let you know that we're waiting to get some comments, a short statement on the economy, from Senator John McCain in Jackson, Ohio. And he might even take a couple questions. So we're going to be waiting for that. We'll bring that to you live when it happens.
VELSHI: Thanks, Christine.
The questions are good, because we get a sense of what people want to know.
We also have another way of doing that. A new CNN/Opinion Research poll today reinforces why we created this show at CNN. CNN Senior Political Analyst Bill Schneider -- he's part of the best political team in television -- is live in Washington with more on this.
Hi, Bill.
WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Hi there, Ali.
Well, what's issue #1? The economy, of course. And that's been issue #1 for most of this campaign.
Take a look at this poll result. We asked people which of these issues is your greatest concern right now. And the economy tops the list, 48 percent. That's far ahead of Iraq and health care, the number two and three issues. And below that, terrorism and immigration.
What's interesting here is that Obama voters are more concerned with all three of those top issues: with the economy, with Iraq, and with health care. McCain voters more concerned with terrorism and immigration.
What that suggests is that the issues are really driving a lot of voters to support Barack Obama. McCain's vote doesn't seem to be necessarily associated with the issues, it's more a personal vote for him.
VELSHI: Bill, interesting idea, though. Let's say those top three issues play to the Democrats, that doesn't necessarily mean that the Democrat gets the support of people who are concerned about the economy, Iraq, and health care. They've still got to have the positions that appeal to those voters.
SCHNEIDER: Yes, they do. And the Iraq issue is interesting there, because Democrats are more angry and more concerned about the Iraq issue. But when voters are asked, who do you think would handle that issue better, they still give the edge to McCain because McCain has the edge on every foreign policy issue.
Here's the -- look at the economy issue, the number one issue. Obama's ahead, health care; Obama's ahead. But Iraq, McCain is a little bit ahead, along with immigration and terrorism. So we do see a division that the more the focus is on foreign policy and international affairs and national security, the better McCain is likely to do. The more the focus is on domestic issues, the better Barack Obama is doing.
VELSHI: All right. In 90 days to go, Bill, can this emphasis turn around? Can it shift away from this? You've seen the economy being issue #1 for so long. Can Barack Obama lose that edge?
SCHNEIDER: Lose the edge? Well, I suppose. Anything is possible.
You know, if there were some sort of a foreign policy crisis, a war, something happening in the Middle East, then you would see the attention of the voters shift very rapidly towards foreign policy and national security. But right now, when people say Barack Obama leads John McCain on the economy, they're thinking about the record of this administration, eight years in office, the economy has not boomed. The oil benefits that were supposed to come from the Iraq war have certainly not materialized, with gas prices skyrocketing. And right now, when people make that judgment, they're judging on what's been happening in this country for the past eight years.
VELSHI: Bill Schneider, good to see you. Thanks very much for joining us.
SCHNEIDER: Sure. VELSHI: Christine.
ROMANS: You know, there's been so much energy talk on the campaign trail this week, we want to know who has been doing a better job of convincing you. That's the focus of today's "Quick Vote."
Log on to CNNMoney.com right now and let us know who you think has the better energy plan. The results coming up a little later in the program.
But up next, why Congress could be talking compromise on that long-awaited energy bill.
And we'll tell you why home equity loans just took a hit and what it means for you.
And why one airline is charging for a new service. This is a service you just might be happy to pay for.
We're all over issue #1, right here on CNN.
(COMMERCIAL BREAK)
VELSHI: Congress bickered for weeks over an energy bill before starting a five-week vacation last Friday. A few dozen House Republicans have stayed behind and are making speeches on the House floor with the lights, the microphones and the cameras off, pushing Democrats to come back and work on the energy bill.
Well, today, they got a little star power from Newt Gingrich. He helped out with a press conference and a show of defiance against the Democrats.
(BEGIN VIDEO CLIP)
NEWT GINGRICH (R), FMR. HOUSE SPEAKER: When we are sending $700 billion a year overseas, much of it going to dictators, and we are propping up organizations and people with the high price of oil, it's a bad national security policy, it's a bad economic policy, and in the long run it's a bad environmental policy. And if we would pass a strong energy bill this year, we would be a much better country. I'm very proud of the House Republicans.
(END VIDEO CLIP)
VELSHI: Now, the sticking point here is still offshore oil drilling. Republicans want it, Democrats don't.
Now, Democrats are saying these Republicans are not really interested in compromise or productive debate. They say this is just an election year stunt.
ROMANS: Well, better news at the pump, at least, with the price of gas sliding for the 20th day in a row. According to AAA Auto Club, the price for regular unleaded fell .9 of a cent to a national average of $3.86 a gallon. That's down from the record high we had of $4.11 back on July 16th.
The price for diesel fuel is down as well by about a penny. It now averages $4.63 a gallon.
Those prices have been falling, falling, falling, falling.
VELSHI: Well, right. And that high that you mentioned was July 16th, right?
ROMANS: Right.
VELSHI: I haven't been around. I was on a vacation for a while, but before that I went to Alaska to go to ANWR. So I've been out of the building here since about July the 23rd or something.
ROMANS: And look at what happened.
VELSHI: Kind of incredible, isn't it?
ROMANS: We're calling it the gas price -- the Ali Velshi Gas Price Index. Prices coming down consistently for the past 20 days or so.
VELSHI: Oh, yes.
ROMANS: They're still up, though, over last year. Let's point this out.
VELSHI: Sure, but my time away from here has resulted, or has some relationship, maybe, to gas prices going down. So this is why I've got this little goatee on.
ROMANS: Conspiracy theorist, you said.
VELSHI: And I'm thinking that maybe when gas prices go up again, I'll shave it off.
ROMANS: All right.
VELSHI: And we're all hoping I'm not going to have this for very long, I guess.
ROMANS: We still have some 11 states, I do believe, that are having gas prices above $4.
There you go.
VELSHI: Oh my goodness. You should have heard...
ROMANS: Eliciting groans from the newsroom.
All right.
VELSHI: All right. Very good.
Well, we've talked so much on this show obviously about energy, and I took you to the oil sands of Fort McMurray about a month ago, where the streets might as well be coated with oil. I also headed to ANWR in Alaska, where there's fierce debate over drilling for oil.
And now we want to take you to a tiny town in North Dakota that's quietly buzzing with good fortune because it's sitting on top of what many geologists are calling an ocean of oil.
CNN's Thelma Gutierrez reports from Stanley, North Dakota.
(BEGIN VIDEOTAPE)
THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): Stanley, North Dakota, a farming town of about 1,000 near the Canadian border.
UNIDENTIFIED MALE: Drive by Stanley, and you'll blink, you'll miss it.
GUTIERREZ: It's hard to miss what's happening here now.
UNIDENTIFIED MALE: I mean, you're talking hundreds and hundreds of wells.
GUTIERREZ: Everywhere we went, the talk was about black gold, oil that's sitting nearly two miles beneath the surface.
KEVIN FREDERICK, GEOLOGIST: The continual amount of oil we find in North Dakota is as much as three times as much in Texas.
GUTIERREZ: It's called the Bakken Formation, a vast 200,000- square-mile area from North Dakota to Montana and into Canada, rich with more than three billion barrels of crude. It was discovered in the '50s, but it wasn't until recently that the oil companies had the technology to drill both vertically and horizontally to get it out of the ground.
GARY DAZELL, STANLEY RESIDENT: The oilfield has blessed us. We're making lots of money.
GUTIERREZ (on camera): Are you in the six-figure range or...
DAZELL: Yes.
GUTIERREZ: Hauling water?
DAZELL: Hauling water. It don't get no better.
GUTIERREZ (voice-over): That promise of money is bringing hundreds of workers in. The only housing crisis here is that you can't find any.
MAYOR MIKE HYNEK, STANLEY, NORTH DAKOTA: There's one hotel in town, and that's full.
GUTIERREZ (on camera): What about an RV park?
HYNEK: RV parks are full. GUTIERREZ (voice-over): Stanley's mayor is still reeling from the boom that started just eight months ago and the growing pains the town is experiencing. They need new roads, a new water and sewer system. But Stanley's share of oil tax revenues is under $300,000. The state gets the bulk of it.
HYNEK: We definitely need a library. With the amount of wealth being generated here, I would think if any place should deserve one, it would be here.
GUTIERREZ: Just about everyone who owns mineral rights here is hoping a well and royalty checks will soon follow.
HYNEK: I'm fairly certain that if they drilled a well here, they'd have oil.
GUTIERREZ (on camera): Right where we're standing?
HYNEK: Yes.
GUTIERREZ (voice-over): So how many potential millionaires did we run into? Twenty-four-year-old Aaron Scarsgard (ph) now has a well on his farm.
UNIDENTIFIED MALE: My family has three. And so -- and there's more and more getting staked out every day.
GUTIERREZ (on camera): How many mineral acres do you have?
UNIDENTIFIED MALE: Enough that it would make me wealthy. You know, my family wealthy, I should say.
GUTIERREZ: Forty-eight years ago you were working on these rigs. Now it looks like there's going to be one on your property. Could you have ever imagined that?
UNIDENTIFIED MALE: No, not in a lifetime.
GUTIERREZ (voice over): Robert Western (ph) is 74. He took us to his farm and pointed out a stake right in the middle of his canola field. A sweet sight for a man who grew up during the depression.
UNIDENTIFIED MALE: We certainly won't have money problems in the future.
GUTIERREZ (on camera): Do you wish it would have happened sooner?
UNIDENTIFIED MALE: It would have been nice.
GUTIERREZ (voice-over): Better late than never for a farmer who could become an oil baron in a brand new boomtown.
(END VIDEOTAPE)
GUTIERREZ: The mayor of Stanley says the town desperately needs doctors, nurses, plumbers, and electricians, that just about anyone who works hard and who can pass a drug test will have no problems finding work in Stanley -- Ali.
VELSHI: All right. So people who are watching this who think there's work there, they can go there? I mean, how tough is it going to be? Do they get a job at the oil company or anywhere else?
GUTIERREZ: Well, I've got to tell you, there was a restaurant in town that actually closed because there are not enough workers to work there. And then on the way home from Stanley, we were on a plane. We were talking to a person who was a personal trainer, and he told us that he went, had an interview, he got a job, never before had worked in oil, and his starting salary will be $70,000. So a lot of people are having no trouble at all.
VELSHI: Wow. Great story. Thelma, thanks very much.
GUTIERREZ: Thanks.
ROMANS: A major financial institution is putting a hold on home equity lines of credit. We'll explain.
Plus, why one big-time mortgage executive says housing prices could go down about 20 percent.
And the biggest identity theft case of all time cracked.
You're watching ISSUE #1.
(COMMERCIAL BREAK)
ROMANS: Call it the boomerang effect from the mortgage meltdown as more and more homeowners are finding it more difficult to tap into their home equity nest egg. Morgan Stanley is freezing the HELOC accounts to some of its customers. A Morgan Stanley spokesperson confirms some clients have been negatively effected by declining home values but wouldn't put a figure on just how many.
That moves comes on the heels of an American Bankers Association report which found consumers falling behind on home equity credit lines at the fastest pace in two decades.
VELSHI: Now, it's hard to tell whether mortgage giant Freddie Mac is a victim of the housing crisis or an instigator of it, but either way, it's suffering, and that is not good for the recovery in the housing sector.
CNN Senior Correspondent Allan Chernoff is here with a look at the big losses that Freddie Mac racked up in the last quarter -- Allan.
ALLAN CHERNOFF, CNN SR. CORRESPONDENT: Ali, this is an earnings report, or a loss report, we should say, that affects potentially all American taxpayers. The reason is, is that this raises the possibility that American taxpayers may actually have to help out Freddie Mac. Take a look at that loss, $821 million just for the second quarter. And you'll remember, it was only one week ago that President Bush signed a new law saying that the Treasury cannot only lend money to Freddie Mac, but can also even buy securities from Freddie Mac, buy stock in the company.
The government is trying to make sure that Freddie Mac and its sister company, Fannie Mae, keep on doing what they do, which is buy mortgages from banks and then give that money to the bank so they can make new loans. It's an essential part of the mortgage business in our country.
So let's have a look at what the CEO of the company, Richard Syron, said just a few minutes ago on the company's conference call, the earnings call -- "... the housing market is far from stabilizing." "...national home prices will fall 18 to 20 percent."
And by Freddie Mac's calculation, home prices across the nation are down 9.5 percent right now.
VELSHI: So he's saying it's going -- has much to go?
CHERNOFF: That's right. He's saying we're only halfway through it, and it could get much worse. And that means the problems for Freddie Mac are going to get worse.
VELSHI: Right.
And Freddie Mac, we've described it in many ways, but the one I like is that it's kind of like your operating system in your computer. You don't really need to know much about how it works, but if it doesn't work, your computer's in trouble. Freddie Mac is like that to the mortgage industry in America.
Is it -- it really depends on Freddie Mac being able to borrow the money it needs or to get access to the capital in order to keep on lending it. Can Freddie Mac continue to do that?
CHERNOFF: They say they can. They say that they've got enough capital. Their capital, their money is well above what the regulators in Washington are requiring. But they're also saying they want to raise $5.5 billion.
Ali, how do you do that when your stock is plummeting? The stock is down more than 90 percent from the year-ago level. Today, earlier, it was down about 14 percent. The investment bankers are telling Freddie Mac let's not do this just yet.
Now, you see these are some of the other problems the company's confronting in the earnings report. The provisions for future losses now up to $2.5 billion, the drop in the value of mortgages on the book, $1 billion. Those numbers, Ali, could easily get much bigger even in the next quarter.
VELSHI: Now, they've got a big bird's eye view of the mortgage industry's problems. Where are they saying the worst of the defaults and the problems are?
CHERNOFF: You know, more than half of the problems are happening in just a handful of states: California, Nevada, Florida, Virginia. That is really where we're seeing foreclosures soaring. Also defaults very high.
So, Ali, it's very concentrated in some major problem states.
VELSHI: All right. Allan, thanks very much.
ROMANS: All right. What Senators Barack Obama and John McCain are saying on the future of your energy. We'll check it out.
And we're going to tell you about a big-time I.D. theft bust to the tune of 40 million credit cards. How to know if you're a victim.
You're watching ISSUE #1, the economy, on CNN.
(COMMERCIAL BREAK)
ROMANS: Senators McCain and Obama fighting a war of words over energy this week. Let's listen to John McCain as he takes Obama to task for his actions on oil.
(BEGIN VIDEO CLIP)
MCCAIN: I saw that Senator Obama's latest attack has got to do with oil and campaign contributions. I think he might be a little bit confused, because when the energy bill came to the floor of the Senate full of goodies and breaks for the oil companies, I voted against it. Senator Obama voted for it. People care not only what you say, but how you vote.
Now, solving our national energy crisis requires, as I've mentioned, an all-of-the-above approach. And that'll require aggressive development of alternative energies like wind, solar, tide and biofuels. It also requires expanding traditional sources of energy such as offshore drilling.
And I noticed that there's confusing now information from Senator Obama as to whether he actually supports offshore drilling or not. The fact is, we have to drill here, and we have to drill now, and we have to drill immediately. And it has to be done as quickly as possible. And I believe that it's vital that we move forward with that, regardless of what we do on other energy issues.
Senator Obama has said that expanding our nuclear power plants "doesn't make sense for America." He also says no to nuclear storage and no to reprocessing. I could not disagree more. My experience with nuclear power goes back many years to being stationed on board the USS Enterprise, the first nuclear powered aircraft. I knew it was -- aircraft carrier. I knew it was safe then and I know it's safe now. And I proposed a plan to build 45 new nuclear plants before the year 2030 and that would provide 700,000 jobs for American workers. And that means new jobs. And if we really want to enable technologies of tomorrow, like plug-in electric cars, we need electricity to plug into.
(END VIDEO CLIP)
VELSHI: And coming up next, Senator Obama pushes back on John McCain's energy talk.
Plus, if the candidates are both flip-flopping in their energy plan, we're going to find out.
But first, the other news of the day. Don Lemon is in the "CNN NEWSROOM."
Don, take it away.
DON LEMON, CNN ANCHOR: Let me see. What is -- can I -- oh, man. No. I ripped off the back of my tie so I could -- what is that on your face?
VELSHI: It's just, you know, just a different. It's all I have. It's all I have to work with.
LEMON: You come back. I don't know who you are. No vest. You got hair on your face.
VELSHI: I'm still the Ali you know.
LEMON: All you need is a white cat. $1 million.
All right, Ali, thank you very much. I'll play with you on the other side of this news update. We have some serious news to tell you about.
Sentencing is expected this afternoon in the trial of Osama bin Laden's former driver Salim Hamdan. A military jury at Guantanamo Bay has found Hamdan guilty of five counts of providing material support to a terror organization in the September 11th attacks. However, jurors found him not guilty of conspiracy to aid a terror organization. Hamdan could face a maximum sentence of life in prison.
We also have new developments in a seven-year-old anthrax attack investigation. A judge today ordering records unsealed. Included in those records are search warrants issued for suspect Bruce Ivins. Ivins, a government scientist, committed suicide last week. The FBI is going over evidence with the families of the victims. Five people were killed in the 2001 anthrax attacks.
The Madeleine McCann search. Portuguese police have closed the case but newly unsealed documents they show possible leads the McCann's say were kept secret. Among them, a little girl seen on surveillance in Portugal days after Madeleine vanished. There's also a report about a Dutch woman claiming to have see a little girl named Maddie who was looking for her mom. It is unclear right now if the tips were fully investigated.
Presidential politics and accusations of flip-flopping. We've been hearing all about it. We check the claims on issues from offshore oil drilling to tax cuts. We'll have a reality check next hour right here in the "CNN NEWSROOM."
And also we're going to be talking to Reverend Run. Remember him, Ali, of Run DMC. He's got a new show. He's got a reality show on. He's got a book, as well. Very interesting family. We talk to him and a couple of his kids. He's got six children. One of them adopted. And maybe he can adopt you and buy you a razor.
VELSHI: Very nice. When is that going to be on, because I want to look at that?
LEMON: That's going to be in the 2:00 hour of the "CNN NEWSROOM." It will be very interesting. You'll want to watch.
VELSHI: Good to see you, my friend.
LEMON: Hey, welcome back, Ali.
VELSHI: Thank you.
LEMON: Oh, you do have a vest on. I didn't notice. Sorry about that.
VELSHI: Yes, I've still got the vest on.
LEMON: Welcome back. It's good to see you.
VELSHI: Don, we will talk to you at the top of the hour again.
Earlier we heard John McCain criticizing Barack Obama for his energy proposals. Now it's Obama's turn. Let's hear what he's been saying.
(BEGIN VIDEO CLIP)
OBAMA: The other day I was in a town hall meeting and I laid out my plans for investing $15 billion a year, energy efficient cars, and a new electricity grid and all this. Somebody said, well, what can I do? What can individuals do? So I told them something simple. I said, you know what, you can inflate your tires to the proper levels. And that if everybody in America inflated their tires to the proper level, we would actually probably save more oil than all the oil that we get from John McCain drilling right below his feet there, wherever it is that he was going to -- wherever he was going to drill.
So now the Republicans are going around -- this is the kind of thing they do. I don't understand it -- they're going around, they're sending like little tire gauges making fun of this idea and that this is Barack Obama's energy plan.
Now, two points. One, they know they're lying about what my energy plan is. But the other thing is, they're making fun of a step that every expert says would absolutely reduce our oil consumption by 3 percent to 4 percent. It's like these guys take pride in being ignorant, you know? I mean, they're just -- they think it's funny that they're making fun of something that is actually true. They need to do their homework because this is serious business. Instead of running ads about Paris Hilton and Britney Spears, they should go talk to some energy experts and actually make a difference.
(END VIDEO CLIP)
VELSHI: And remember, you can always watch the candidates in their own words live and uninterrupted on the campaign trail at cnn.com/live.
ROMANS: A lot of talk of energy over the past few days and weeks, but are the candidates staying true to their initial plans or is there a bit of flip-flopping going on? And which side? Ken Vogel is with politico.com.
Ken, welcome to the program.
It's, you know, so many charges of flip-flopping, it's almost starting to lose meaning, isn't it?
KEN VOGEL, SENIOR REPORTER, POLITICO.COM: Yes, it really is. We, on the one hand, we want these candidates to take very specific stands on controversial issues, and then we criticize them when they shift those stands. So it's kind of difficult for them. We, of course, want to make sure that they are being consistent. And what we have found is that they have evolved somewhat, flip-flopped even, on these issues of energy.
ROMANS: Let's talk about some of those flip-flops or the refinement of their position perhaps some would call it, or softening of some of their positions. Both of these candidates have sort of changed their tune on different parts of their energy plans.
VOGEL: That's right. On offshore drilling in particular, John McCain was really criticized, including by the Obama campaign, for flip-flopping. Now if you go back and look at what he said over the years going back to 2000 presidential campaign, he never actually said he was against offshore drilling. What he said was, he would leave it to the states to decide for themselves. Now, of course, he's become kind of a cheerleader for offshore drilling. So certainly that's a shift in his emphasis, but maybe not an out right flip-flop.
Barack Obama, on the other hand, said that he was against offshore drilling as recently as a month ago and just this week said that he would be open to a package of energy reforms that tended to bring down the price of gas that included possible drilling off the shore of Florida.
ROMANS: And tapping into the Strategic Petroleum Reserve. That's something that his critics immediately jumped on as some sort of a flip-flop.
VOGEL: That, as well, you're right. And he said that he would be willing to release -- consider releasing 70 million barrels of sort of light oil, they call it, to be replaced later with crude oil. He says that, you know, the energy companies, the oil companies should first consider tapping into 68 million acres of untapped land that they can drill on. But there is no question, that is a flip-flop. It's a change of stance on the Strategic Petroleum Reserves. ROMANS: So when is a flip-flop a dirty word and when is a flip- flop just a reflection of changing realities?
VOGEL: Well, certainly energy has become a much greater issue in the 2008 campaign and we're really at kind of a tipping point, is how Barack Obama put it, on this issue where we have to consider new approaches. So, on the one hand, you would think it should be fair to allow the candidates to also consider new approaches, maybe even ones that differ from those that they've taken, stances that they've taken in the past. On the other hand, we do want to see a candidate come out and be consistent on these issues. So it's really a balancing act.
ROMANS: And public financing was right where Obama really got hit for his position.
VOGEL: That's right, public financing. Obama specifically said that he would take public financing in the general election if his Republican opponent agreed to do the same. Of course, John McCain has agreed, Obama has said that he will not. That's kind of a wonky issue. Maybe one that voters don't care as much about. However, on FISA, the Foreign Intelligence Surveillance Act, Obama also changed his position and that has really angered some in the sort of online, the net roots, the liberal activists who have had such impact on the Internet.
ROMANS: All right, Ken Vogel, senior reporter, Politico.com.
Thanks, Ken.
VOGEL: Thank you.
VELSHI: Well, a major automaker says it has a plan to get you into electric cars. We're going to tell you about that.
And surfing in the sky. One airline's plan to give you Wi-Fi in- flight and, of course, charge you for it.
ISSUE #1 rolls on next.
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VELSHI: On our ISSUE #1 radar today, less stress on your wallet as well as the environment. Japanese automaker Nissan has unveiled, not one, but two environmentally friendly vehicles. One is electric, the other is hybrid. And it'll utilize a lithium ion battery technology.
Another new technical wrinkle for Nissan is the eco-pedal. The company saying starting next year it will have a car that can sense when drivers are accelerating too quickly and it will ramp back the speed accordingly and that gives you a fuel saving, they say, of 5 percent to 10 percent.
Well, there's yet another service to pay for on planes. But this one you might actually like. Delta is about to begin offering wireless Internet access on some of its flights. So what's next? Well, could cell phone and Blackberry use in the sky be far behind? Here's CNN's Rusty Dornin.
(BEGIN VIDEOTAPE)
RUSTY DORNIN, CNN CORRESPONDENT, (voice-over): You can get wireless Internet here, but except on a few test flights, you can't up here. So passengers scramble frantically texting and e-mailing before the doors closed. But next month, Delta says it will offer a Wi-Fi service called GoGo on some of its domestic flights.
TIM MAPES, DELTA AIRLINES: People are going to be able to get on Delta Airlines and on 330 planes by the time we're done, on over 1,000 flights a day, open up their laptop and be able to access the Internet every time we're above 10,000 feet.
DORNIN: The airline says the service won't interfere with electronics and communication. But could the thing most passengers dread be next? Cell phones during flights.
MAPES: People will not have the ability to connect to their cell phone. And that is very much at the request of our passengers.
DORNIN: Some members of Congress are supporting a bill that would continue the cell phone ban. But this new service would be allowed.
REP. JERRY COSTELLO, (D) ILLINOIS: We are not limiting the use of Blackberries, e-mail. This would only restrict and prohibit voice communication in flight.
DORNIN: For some fliers, it's worth paying the fee, between $10 and $13, for longer flights.
LESTER RIDEL, BUSINESS TRAVELER: Most of us that work off of our laptops. And the ability to continue to do that on the airplane, especially considering some of the delays that some of the airlines have been having, that would fantastic.
DORNIN: Most crew members say they're happy to have passengers entertain themselves, but this will allow people to open Internet sites that have music and potentially sound and noise. Could that be a problem for you, maybe?
KAY BILREATH, FLIGHT ATTENDANT: Well, it could be. But any time anybody uses any kind of device like that on the aircraft, they are supposed to use headphones.
DORNIN: Most of the other major airlines are testing and planning to roll out similar systems, making getting connected in some cases easier than making a connection.
Rusty Dornin, CNN, Atlanta.
(END VIDEOTAPE)
ROMANS: We have a major credit card crackdown to tell you about. Forty million could be affected.
Plus, should you be worried about one bank's step of suspending certain home equity loans? We're all over issue #1 right here on CNN.
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ROMANS: Yet another reason to really scrutinize your credit card statements. The Department of Justice believes it may have cracked the largest and most sophisticated international identity theft ring ever, jeopardizing more than 40 million debit and credit card accounts. Eleven suspects, three of whom are American, are accused of hacking into retail computer networks and swiping credit card information. Authorities are still trying to figure out exactly how much money was stolen.
VELSHI: Well, Morgan Stanley had a busy 24 hours in the news. First, the Treasury Department taps the financial giant to give advice on Fannie or Freddie. Then reports that Morgan Stanley is freezing home equity lines of credit for some of their customers.
Well, to break this and the rest of your money news down, Greg McBride is with bankrate.com, Gary Schatsky, the president of objectiveadvice.com and Paul La Monica is with CNNMoney.com.
OK, I kind of introduced you guys the wrong way. So we've got Gary, we got Paul, we got Greg. Let's talk about this.
So Morgan Stanley has said that some of its customers are not going to have access to some, at least, of their home equity line of credit. They say, in some cases, the value of the property is down. Now one of the things, Greg, that we've heard is that this has been sort of going on with some banks for some time.
GREG MCBRIDE, SENIOR FINANCIAL ANALYST, BANKRATE.COM: It certainly has. And that's a byproduct of falling home prices. You know, a lot of these home equity lines that were approved for $50,000 a couple years ago when the homeowner had $50,000 in equity, they don't have $50,000 in equity anymore. As a result, lenders are pulling back. You can't expect that they're going to lend you $50,000 if you only have $10,000.
VELSHI: Right. So people may be very frustrated about this, but it may be actually helping to prevent further losses in this. What should anybody who's watching us do about this? I guess you consult and look at what your situation is with your line of credit.
MCBRIDE: You can certainly call the lender and appeal directly because a lot of these decisions are made from 35,000 feet geographically. They're going to say, oh, prices have dropped in that state, let's scale back. Well, I mean, if you have a particular circumstance, if the value of your home hasn't dropped, or if you're in the midst of a home remodeling and, hey, I needed more money, appeal that to the lender because it's the one-on-one appeals that they do have some latitude to give and take.
VELSHI: Yes. GARY SCHATSKY, PRESIDENT, OBJECTIVEADVICE.COM: What you're seeing is a lot of the lenders are really jumping in and they don't really know what they have in terms of underlying equity.
VELSHI: Right. It's very hard to value it at this point.
SCHATSKY: So they're seeing people lose money and they're making these rash judgments. And as pointed out, you can just step up and say, look, the value here is there and, therefore, I need the line. So hopefully you don't need it.
VELSHI: Somebody actually said to me today, if this is what we think is going to happen, if you're in danger of this happening and you've got $50,000 spare on your line of credit, take it out now.
SCHATSKY: Well, look, why do you want to borrow if you don't need the money? The last thing you want to do is start paying interest on something that you don't need. For many of my clients, I have lines of credit that I almost never expect to use. It's just a cushion and a pillow. But if you think you're going to actually need it in the next couple of weeks and it's going to be shut down, then, I guess, you tap into it.
MCBRIDE: Yes. And where that argument holds weight is, particularly people having trouble lining up money for college education. Tuition payments due in the fall. A lot of people were relying on home equity to do that.
VELSHI: And then all of a sudden you get a call from the bank that it's not there.
PAUL LA MONICA, EDITOR AT LARGE, CNNMONEY.COM: But it's Morgan Stanley, I think, what's interesting. This isn't your average retail bank. So I would imagine that this has a lot to do with declining home values for some of their higher net worth customers. These are really, for the most part probably, subprime loans that are getting hit, you know, as a result of this.
VELSHI: Now part of this, of course, is access to money. Part of it is banks having trouble valuing the property. Part of it is access to money. Freddie and Fannie are very, very central to that whole operation. There's more news about them today. What's your thought on what's going on?
LA MONICA: Well, Freddie Mac, I guess, the good news is, it wasn't $1 billion loss, right? It was obviously another tough, brutal quarter for Freddie Mac. Over $800 million loss. They've cut their dividend drastically, which is probably a smart move because they really need to be conserving capital right now.
Everyone's wondering, will the federal government, which now has the power to do, Secretary of the Treasury Henry Paulson, can he buy shares in either Freddie or Fannie, increase the amount of loans that they give to these companies. Will they actually have to step in and help bail them out? The Freddie news was not all that encouraging and we're going to find out more on Friday, when Fannie Mae reports, just how badly they're doing.
VELSHI: How's this playing with your clients, Gary? I mean we've heard in the last week or so a number of banks, smaller banks generally speaking, that have been taken over by the FDIC. Nothing sort of coming close to the IndyMac takeover. But the fact is, are people concerned about their banks and their ability to get mortgages going forward?
SCHATSKY: They certainly are. They're concerned with their banks in terms of their deposits. They're concerned with their ability to get mortgages. Well, if you have great credit, it has gotten harder, but you can get it. And you really have to take a look at where your deposits are. I mean the amazing thing about the Freddie situation is, where are the analysts on this? I mean when you miss your earnings estimate by three times, it's something -- you want to talk about opaque where you can read it.
VELSHI: And that's sort of what characterizes it. And, Greg, you're in the business of trying to take away some of that cloud and letting people know what's available. We do see mortgage rates going up. And as Gary said, they're a little harder to get.
MCBRIDE: They are harder to get. Here's the thing. Since June 15th, the benchmark 10-year Treasury yield has declined about a quarter of a percentage point. In the same period of time, 30-year fixed mortgage rates have gone up a quarter of a percentage point. That greater spread between the two, a byproduct of the fact that Fannie and Freddie are hiking fees and because investors are very nervous about loan quality.
VELSHI: All right. We'll keep on breaking it down for you. Thanks to all three of you.
ROMANS: All right. Why Americans aren't the only ones suffering through the credit crunch.
And make sure you take some time to vote. Who has a better handle on the future of your energy? McCain, Obama, both, neither? Log on right now to CNNMoney.com. It's your last chance. Results up are next.
You're watching ISSUE #1.
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ROMANS: Time now to get the results of today's Quick Vote. More than 18,000 of you weighed in.
VELSHI: We asked, which candidate you believe has the best ideas for the future of energy. Here's how you voted.
ROMANS: Thirty-three percent said John McCain, 37 percent said Obama, 2 percent both, 28 percent, Ali, neither.
VELSHI: Very interesting. It speaks to a lot of people who think that the problem might be bigger than what the president can handle.
Now it's not just this country that's going through a credit crunch. There is also a credit crunch in Europe. It's feeling the effects, even though you might not realize that.
ROMANS: That's right. And it wasn't until the collapse of a major British mortgage lender that Europeans actually noted just how much trouble they were in.
CNN's Jim Boulden explains.
(BEGIN VIDEOTAPE)
JIM BOULDEN, CNN CORRESPONDENT, (voice-over): European markets were set for a quite August back in 2007. All the main indices were bubbling over. London's FT100, for one, was near a seven-year high.
CHRIS GILES, FINANCIAL TIMES: Actually, what most people thought, was though there might be some troubles in small parts of the U.S. financial system, generally the financial system was sound and also the world economy was absolutely fine.
BOULDEN: Then Europe started to really take note of stories about the U.S. housing crisis. And on August 1, 2007, European stocks plunged. The panic began in the U.S. mortgage markets last month, when complex trades and mortgages, tied to people with poor credit, started to falter. This has caused the collapse of some hedge funds. European shares fell hard on rumors that non-U.S. banks could be infected by too many bets on the American housing market. Veteran economist, Kit Juckes, summed it up this way in early August last year.
KIT JUCKES, ROYAL BANK OF SCOTLAND: I think at the moment we're trading on fear. We're looking into the abyss. And, you know, the worst fear is that this spreads and instead of being a U.S. housing market problem, it becomes a credit cycle problem and the trigger for weaker global growth.
BOULDEN: That fear became reality on August 9th when French bank BNP Paribas suspended three funds tied to the U.S. subprime housing market.
Then, a month later, the public learned that this mid-sized British mortgage lender, Northern Rock, needed emergency lending support from the Bank of England. And that triggered this.
The first run on a British bank since the 19th century. Savers lined up outside the branches to get their money out. From then on, every bank looked vulnerable. A recent report, in fact, shows that European banks have actually lost more money since the credit crunch began than American banks. $200 billion lost compared to $166 billion. Wobbles in financial stocks, plus the explosion in oil prices, a big reason why the strong stock market rally, which took place in the autumn of last year, proved a false dawn. And then the bears settled in.
Jim Boulden, CNN, London.
(END VIDEOTAPE)
ROMANS: Concerning, I guess, because it means that you're not going to get any help from overseas.
VELSHI: That, I think, is the biggest issue here.
ROMANS: There is some contagion, right.
VELSHI: We've always heard the U.S. economy is slowing down. But, you know, the others will help us out. The rest of the world is doing better. Well, now we have to worry if they're not all doing better.
ROMANS: All right. So the economy is issue #1 and here at CNN, we are committed to covering it for you.
VELSHI: ISSUE #1 will be back here same time, same place tomorrow, 12:00 Eastern, right here.
ROMANS: All right. "CNN NEWSROOM" with Don Lemon and Randi Kaye starts right now.
