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CNN SATURDAY MORNING NEWS
America's Financial Crisis and What Congress is Going to Do About It; Texas Recovering From Hurricane Ike; Do Presidential Candidates Have a Plan to Fix Financial Crisis?
Aired September 20, 2008 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BETTY NGUYEN, CNN ANCHOR: From the CNN Center, this is CNN SATURDAY MORNING. It is September 20th. Did you survive the rollercoaster on Wall Street? Hopefully, so.
Good morning, everybody. I'm Betty Nguyen.
RICHARD LUI, CNN ANCHOR: Yes, what a week it is. I'm Richard Lui, in for T.J. Holmes. Thanks for joining us on this Saturday.
As Betty was just saying, what a week it has been. Day seven since it happened, American's financial crisis, that's right. And Congress is working hard over the weekend on the most sweeping government financial intervention, it is being said, since the Great Depression. We're all over this story. Live team coverage throughout this morning.
NGUYEN: Also, recovering from Ike. The lights are finally coming back on. But look at all of that debris. There's a mess out there. And thousands still not allowed back home to check out what was left behind after the storm. We'll have an update on that as well.
LUI: And, some amazing pictures. Unprecedented move by NASA this morning as they pull out two shuttles. (INAUDIBLE) we've got some live pictures right now. Are these live? I believe...
LUI: (INAUDIBLE) cool, is it?
NGUYEN: Well, you know, this is a live picture but it's a really interesting story because they are bringing this out for the very fact that this -- this mission to space is very dangerous. In fact, it was proposed a few years ago, and, in fact, shut down because it was considered too dangerous. So, they need a second back-up shuttle should the astronauts get in trouble up there and helping recover that Hubble space shuttle.
And so, we'll have the latest on that. So, stay with us.
LUI: Yes, what a sight.
NGUYEN: All right. So, staving off a financial meltdown. The federal government moves to take charge of the credit crisis as Wall Street woes threaten Main Street. The Bush administration asks Congress for sweeping new powers to bail out faltering banks and other institutions and then prop up money market funds.
LUI: You know, the historic rescue plan here would likely cost taxpayers hundreds of billions of dollars in the end. Administration officials are hammering out details with congressional leaders just this weekend. President Bush wants it done by Monday.
Now, after a frightening week that saw the failures of Lehman Brothers and AIG and the sell of Merrill Lynch, the proposed bailout sent markets soaring around the globe. You see it right there from yesterday, up 368 points and change following a 410-point surge that happened just a day before.
NGUYEN: President Bush says taxpayers, they are going to face some risks.
LUI: Yes, but he warns everyone will be at greater risk if the government does not act right now.
White House correspondent Elaine Quijano reports for us.
ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT (voice over): The president bluntly spelled out how America's financial crisis could get even worse.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Further stress on our financial markets would cause massive job losses, devastate retirement accounts, and further erode housing values, as well as dry up loans for new homes and cars and college tuitions.
QUIJANO: With top economic officials at his side, the president grimly conceded confidence, a critical ingredient in a healthy economy, has been shaken.
BUSH: Investor should know that the United States government is taking action to restore confidence in America's financial markets so they can thrive again.
QUIJANO: Earlier, Treasury Secretary Henry Paulson described the mammoth cost of that action in what's expected to be an unprecedented bailout.
HENRY PAULSON, U.S. TREASURY SECRETARY: Now we're talking hundreds of billions. This needs to be big enough to make a real difference.
QUIJANO: The details have yet to be hammered out with Congress, but the aim is to soak up bad debt, allowing banks to freely lend money once again.
BUSH: We will weather this challenge, too. And we must do so together.
QUIJANO: Just weeks away from the election and amid criticism that his administration didn't do more to head off the crisis, President Bush urged Congress to set aside partisanship.
BUSH: There will be ample opportunity to debate the origins of this problem. Now is the time to solve it.
QUIJANO (on camera): Aides say the goal is to negotiate details of the plan with members of Congress over the weekend. All of it with an eye towards the markets opening on Monday.
Elaine Quijano, CNN, the White House.
NGUYEN: All right. So, this would be the biggest government intervention into the nation's financial markets since the Great Depression.
Business news correspondent Stephanie Elam, she is up early with us on this story. How could you not be, there's so much going on. You know, a lot of people as they're watching today, Stephanie, wonder -- how in the world did we get here, how did it get so bad before we're forced to see a situation like this?
STEPHANIE ELAM, CNN BUSINESS NEWS CORRESPONDENT: Betty, it is one of those crazy stories that started, really, for us last Sunday afternoon. And so, this is one of those cases where so much happened, it's worth taking a look at how it all came together.
So, heading into last weekend, word was that Lehman Brothers would be bought by Monday. Instead, the investment bank was unable to find a buyer. The deals, they were still being made. Bank of America stepped in Sunday to save Merrill Lynch, buying the firm for $50 billion.
On Monday, with no buyer and no government bailout, Lehman filed the largest bankruptcy in U.S. history. Stocks were slammed with the Dow losing 500 points. AIG, they were the next shoe to drop. Officials worked around the clock to save the insurance giant which was deemed too big to fail. The $85 billion rescue was announced on Wednesday, but still, the Dow tumbled as fears swept the financial sector.
By Thursday, we got word that Treasury Secretary Henry Paulson was working on a plan for the government to absorb billions in bad debt. So stocks soared. Paulson announced the broad strokes of that plan on Friday, admitting it may spend hundreds of billions of taxpayer dollars but insisting it would be cheaper than allowing more institutions to fail.
Wall Street applauded the plan -- and get this -- the Dow ended the week only about 30 points from where it began on Monday. Just below that. Congress and Treasury officials, they are working on that plan throughout the weekend. And time is short as Congress is set to adjourn at the end of the week.
So, there were so many things that are happening at the same time in there, Betty, the interest rates were even -- the decision by the Fed was to leave interest rates alone. So, it was just a chock-full week here on Wall Street.
NGUYEN: Yes. I heard they did in order to, you know, restore confidence in this market. But as we go through this week and to see how it all played out, it didn't start on Monday. This started months ago. This started, as we heard the president say, with the mortgage meltdown. I mean, this is something that we have seen coming for a while, isn't it?
ELAM: And this is exactly what they're hoping to respond to now, because previously, what they've been doing is -- here's the fire, get water, and put that fire out. Here's another fire, get some water and put that out. And it hasn't been working, obviously.
So, this is a huge issue that has to be addressed. And that's what they're working on this weekend, to hopefully find a way to allow them to ease the markets, soothe some nerves out there, and hopefully get everyone back into a lending-and-buying mood out there which would actually help the markets around the world.
NGUYEN: Yes, stimulate the economy. All right. Stephanie Elam, thanks for breaking it down for us. We do appreciate it.
NGUYEN: You know, we do have a lot more ahead on America's money crisis. Coming up in just a few minutes, what the candidates are saying about it. Plus, how the world markets are reacting to it. We're live from London.
And just a little bit later, how this crisis is especially hitting homeowners. We're going to talk with Michael Crittenden of "Dow Jones Newswires."
All right. So tonight, a special "YOUR MONEY" emergency edition. No joke, emergency edition. Investment banks, bought out, bankrupt, or bailed out by the government. How can you understand exactly what went down this week? That's at 6:00 Eastern. And at 7:00, we are taking your calls live. Get the answers on a special two-hour "YOUR MONEY" emergency edition.
LUI: So, it's been a week since Hurricane Ike roared ashore in Texas. About 1.4 million customers, though, are still without power statewide. Galveston Island remains closed an under curfew as well.
CNN's Ed Lavandera is in Galveston watching the story unfold. Ed, clean-up continuing this morning, I guess, is that right?
ED LAVANDERA, CNN CORRESPONDENT: Well, it does continue. Look behind me. This -- we're on Seawall Boulevard, the Gulf of Mexico here in the dark, it's hard to see but the water is just out there. The piles of debris are piling up along Seawall Boulevard. In fact, just a few hours - we got here about an hour ago, and there were clean-up crews working through the middle of the night cleaning up some of this debris. They just wrapped up, hauling off some of this debris. But there's still a lot more to go. And as you can imagine, as this island begins the clean-up process that there's still also a great deal of frustration. Some 40,000 to 45,000 people evacuated this island. They desperately want to get back and they're angry that they're not being allowed back.
The city officials here are saying, "Look, Galveston (AUDIO BREAK) support, can't withstand an onslaught of people coming back in these conditions. Roadways, sewage system, water system, gas and electrical systems, still unable to withstand any kind of heavy population here. So, they're still urging people to stay away. In fact, residents aren't allowed back on to the island so far. In fact, they say it could take another seven to 10 days before any of those people are allowed to come back home and start looking at their property.
And city officials also say it will take, at least, another seven to 10 days as well to restore power here on this island. So as other parts of southeast Texas to the west and to the east of where we are, mandatory evacuation orders are being lifted. People are being allowed to go back and check out their homes and the conditions that those homes are in.
Here on Galveston Island, which is kind of the epicenter of this storm, people aren't allowed back. And that has been a growing frustration. We imagine that frustration will go throughout the weekend -- Richard.
LUI: All right. Ed Lavandera, there in Galveston, Texas, for us. Thanks so much for that.
You know, if you would like to get involved in relief efforts of the victims of Hurricane Ike, visit our "Impact Your World" page. There, you will find links to organizations working in Texas and along the gulf coast. That's at CNN.com/impact.
Now, in just about 15 minutes, we'll check in with meteorologist Karen Maginnis for a look at today's weather as well, as you get your weekend started and we can tell you what's happening where you're at.
NGUYEN: You know, we're also getting a check on the presidential campaign with CNN's deputy political director. The candidates and the fragile economy. Everybody is talking about it.
LUI: That's right. You know, we'll hear what John McCain and Barack Obama are saying about what Congress needs to do during this entire situation.
NGUYEN: We want to give you some live pictures now from the Kennedy Space Center. Something you probably will not see again. Here's the reason. Two shuttles perched on their launch pads -- Endeavor and Atlantis. Here's a larger view of that. Atlantis blasts off on October 10th for a mission to the Hubble space telescope. But if something goes wrong on that mission, NASA wants Endeavor ready for a rescue mission. And to give you some additional information, here's the issue -- if Atlantis suffers serious damage during the launch or in-flight astronauts will not be able to dock at the International Space Station because they're going to be at the Hubble space telescope, where NASA says, they only have enough air for 25 days. That's why they have a back-up there on the launch pad. Hopefully, they won't have to send in a rescue mission. But just in case, they are going to be prepared.
Stay with CNN.
NGUYEN: All right. So, let's talk about you for just a minute -- your home, your life savings, you future.
Analysts say the upcoming presidential election could boil down to who is best equipped to deal with America's financial crisis. And today, both candidates are giving radio addresses focused on, of course, the economy.
Last hour, we heard from Senator John McCain. Well, here's part of his address.
(BEGIN AUDIO CLIP)
SEN. JOHN MCCAIN, (R-AZ) PRESIDENTIAL CANDIDATE: The financial services industry -- and there are many honest and honorable people who work in it -- plays a vital role in our economy. Yet it's clear financial firms have lost the trust of the American people. Government has a clear responsibility to act and to defend the public interest. That is exactly what I intend to do.
(END AUDIO CLIP)
NGUYEN: Senator Barack Obama is scheduled to deliver the Democrat's radio address this morning just after 11:00 Eastern. And we're going to bring you part of that just as soon as it happens.
LUI: Well, you know, the next president will have a lot of cleaning up to do in the wake of America's financial crisis. So, how do the candidates plan to get this done, and do either of them support a federal bank bailout?
Our deputy political director, Paul Steinhauser joins us right now. He is in Cincinnati, Ohio, on board the election express, we can see right behind him.
Paul, you know, the candidates are taking two very different approaches to offering a plan here. Why the difference? And good morning to you, by the way.
PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: And good morning to you, Richard.
Yes, you know, yesterday, we heard John McCain put out six specific proposals of what he would do if elected president. Barack Obama yesterday refrained from specific proposals. He talked about some bigger themes but he decided not to give specific proposals because he wanted to let the federal government and Congress have to try to work out the current crisis.
A little bit of a different, you know, kind of a little different stance from each guy there. Maybe because John McCain, if you look at the polls, when it comes to the economy, more Americans think that Barack Obama could do a better job. Not a huge difference, but a little bit, and maybe that could be one of the reasons why.
John McCain yesterday proposing that kind of that trust that would oversee banks and mortgage institutions to kind of like an early prevention program to try to prevent anything like this financial crisis from happening again. Barack Obama saying, "Listen, you've got to bail out not just Wall Street but Main Street as well." Both of them, though, spent some time going after each other.
Take a listen.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA, (D-IL) PRESIDENTIAL CANDIDATE: Senator McCain gave a speech in which his big solution to this worldwide economic crisis was to blame me for it. This is a guy who spent nearly three decades in Washington, and after spending the entire campaign saying I haven't been in Washington long enough, he apparently now is willing to assign me responsibility for all of Washington's failures.
MCCAIN: You've heard a lot of words from Senator Obama over the course of this campaign, but maybe just this once, he could spare us the lectures and admit to his own poor judgment in contributing to these problems. The crisis on Wall Street started in the Washington culture of lobbying and influence peddling, and he was right square in the middle of it.
(END VIDEO CLIP)
STEINHAUSER: So, Richard, there you go. I mean, they're talking specific proposals but they still are politicians and they're going after each other and blaming each other for this mess.
LUI: Yes, still looking forward to November on that.
You know, we all been watching the "poll of polls," right? Since the post-convention bumps, now especially this last week, they are very important. What is the latest numbers? You have some new ones in the last 24 hours?
STEINHAUSER: Yes, you know, we've seen a shift in the last week in the "poll of polls," our national "poll of polls." Take a look -- right now, Barack Obama is up about three points, 47 percent to 44 percent. Still about one in 10 Americans undecided. About a week ago, it was just the opposite. John McCain was slightly ahead.
What could be the difference here? Maybe it's the economy, maybe more people now looking to Obama, and maybe that bounce the Republicans got in naming of Sarah Palin as well. Maybe that's fading a little bit. And we'll have to keep looking at this national poll of polls.
But remember -- Richard, it's the states that matter the most. It's the battle for the states.
STEINHAUSER: And right here in Ohio, right behind me Cincinnati, of course, take a look at our Ohio poll of polls. Twenty electoral votes at stake here, it all came down to Ohio four years ago. Right now, it's as close as you can get, one point advantage for Barack Obama. But that's basically a dead heat. The politicians, they are going to be back here in this state over and over between now and November 4th, Richard.
LUI: Yes. Paul Steinhauser there in Ohio -- one of the nine tossup states that we're watching. I know you're going to be back to tell us how this all is going to fare out when it comes to the electoral map, that later this morning. Thanks, Paul.
And you can hear more from the candidates on CNN's "BALLOT BOWL." Do not miss that. Extended excerpts from the campaign trail, the candidates unfiltered in their very own words. "BALLOT BOWL" starting at 2:00 p.m. Eastern today, only on CNN.
NGUYEN: You know, Richard, as we listen to these candidates, especially when they're talking about the financial crisis.
NGUYEN: One is blaming the other and it's really hard to decipher -- are you getting the whole story? Who's telling the truth here?
LUI: That's right. And who are we going to call on for that, Josh Levs -- Josh Levs.
NGUYEN: Mr. Reality.
LUI: That's right. He's a part of the CNN truth squad.
Josh, what do you have for us right now?
JOSH LEVS, CNN CORRESPONDENT: We're going to start off with this. Fannie Mae and Freddie Mac became these symbols of the nation's economic mess. Which candidate got more money from them? We've got the answers.
NGUYEN: All right. So, this week John McCain accused Barack Obama of profiting from two giant mortgage failures.
LUI: Yes. And the question is: Fact or fiction? And our own Josh Levs is here to sort all that out. Hey, Josh.
LEVS: Hey. Good morning to you, guys. Yes, we have the truth squad, I think we're just about to tackle this one. And it's a good one to look at because it's kind of an example of how we, of course, keep saying it's guilt by association, especially with all these Fannie and Freddie, hear about it a lot in the news. They are the symbols.
So, who has really gotten more money from them? Let's look at the latest attack from McCain.
(BEGIN VIDEO CLIP)
MCCAIN: Fannie and Freddie were working to keep Congress away from their house of cards, Senator Obama was taking their money.
MCCAIN: He got more, in fact, than any other member of Congress, except for the Democratic chairman of the committee that oversees them.
(END VIDEO CLIP)
LEVS: Is that true? Our verdict on this one is partially true but misleading. I want to bring you to a graphic here that's going to start off with what McCain is talking about and where all this is coming from. Let's look at from Open Secrets, this is just a Web site run by Center for Responsive Politics, nonpartisan.
When you look at campaign contributions from employees of these companies, Fannie and Freddie, it's true that Obama comes in second of everybody in Congress, except for Christopher Dodd, who is first and chair of the Senate Banking Committee. And Obama got about $126,000 between his Senate campaign and his presidential race from employees of Fannie and Freddie.
So, that's what McCain is talking about. But I want to zoom in on the screen behind me now to put that in context.
Think about that figure, $126,000, right? Let's look at how much Obama has actually made. You've got him making about 390 -- there you go -- this green light is how much money he's made: $390 million for his presidential race alone. So, in the scope of things, did he really profit from Fannie and Freddie?
Plus, there's something else McCain didn't mention. Let's go to the second graphic now here. I want to show you some very different figures that also link contributions to Fannie and Freddie.
Look at this. The "New York Times" put this together. When you look at directors, officers, and lobbyists for Fannie and Freddie, you get completely different numbers. You get McCain making $169,000 from them; Obama, only pulling in $16,000. So you get really the opposite picture, guys. So, you can see, again, it's all about this whole concept of guilt by association. It's a matter of who do you link more to Freddie and Fannie amid this financial turmoil.
And, in fact, we're going to be doing something similar later on this hour. We're going to take a look at Obama's latest attack on John McCain and this whole idea of lobbyists, who is really letting their campaign be run by lobbyists, who is more tied to lobbyists, what's the truth there. Richard and Betty, we'll tackle that one, too, in just a few minutes.
NGUYEN: Yes, in which lobbyists serve as an adviser on your political team, this and that.
NGUYEN: You know, it really, it's just a war of words and how you skew the information. It's kind of what I'm gathering from your report there, Richard -- I mean, Josh.
LEVS: You got it.
LUI: That's right, getting all the details for voters. That's good stuff.
LEVS: Thanks, guys.
NGUYEN: OK. So, there is a tropical disturbance that we want to talk about today.
LUI: That's right. Karen Maginnis is keeping an eye for us on the weather.
And what we're looking here, how's it look right now, Karen?
KAREN MAGINNIS, CNN METEOROLOGIST: Well, right now, it looks a little ragged but, nonetheless, has the ability to strengthen into a tropical system in the next several days. It's got a little bit of sheer taking place. This just inside the Caribbean where I've outlined it on our enhanced satellite imagery. If it is to be named, the name will be Kyle. It will be the 11th system of the season.
Well, as we go into the latter part of September, we still are seeing some of these tropical waves off the west coast of Africa, but also development in the central Caribbean. So, we're right on target with what we typically see. But during the month of October, it shifts a little bit with most of the activity developing across the central Caribbean.
Well, right now, we've got some showers and thunderstorms just off the coast of Galveston and Houston. They're looking at a forecast that calls for about a 50/50 chance for showers and some thunderstorms.
And take a look at Jacksonville, Florida, this onshore flow and some thunderstorms. We've got a live picture coming to you and outside in Jacksonville right now, overcast skies. It did see some light rainfall and some thunderstorms could be rumbling around. But Jacksonville, your temperature today could only make it to 80 degrees. And that's not bad considering we're still in September and those temperatures are running a few degrees below normal.
Now, we'll continue to update you on the weather throughout the morning hours. Now back to you, Richard and Betty.
NGUYEN: That's great (ph), Karen -- 80 degrees in September, that's worth celebrating.
LUI: Yes, definitely. But what good weather for college ball certainly on a Saturday. Yes.
NGUYEN: Yes, (INAUDIBLE) big games today. OK, thank you, Karen.
LUI: Thanks, Karen.
Now, financial fall is bringing big challenges and causing a stir from Wall Street to Main Street.
NGUYEN: We're going to get a look at what can be done with this money crisis. And we'll talk with a couple of business analysts that you don't want to miss. Stay with us.
LUI: And welcome back to CNN SATURDAY MORNING. I'm Richard Lui, in for T.J. Holmes, who's taking a little vacation. Good for him, right?
NGUYEN: Yes, good for him. Boy, what a beautiful weekend for you to be in.
LUI: Oh, yes.
NGUYEN: A lot of news today, folks.
Good morning, everybody. I'm Betty Nguyen. We do want to thank you for starting your day with us.
Let's get straight to it. A historic bailout of the nation's financial markets in this works -- actually are in the works this morning. Congressional leaders are getting details about the administration's plan to avert a financial catastrophe.
The Bush administration is asking Congress for sweeping new powers to bail out faltering banks and other institutions, and it includes buying up bad mortgages and backing money market funds. Now, the plan would likely cost taxpayers hundreds of billions of dollars.
This week's failures of Lehman Brothers and AIG, and the sell of Merrill Lynch sent global markets into a tailspin. The proposed bailout turned them around though. As you see right there, the Dow climbed 368 points Friday following a 410-point surge on Thursday. Well, the financial crisis is a global issue, nonetheless. And I'm joined once again by CNN business news correspondent, Stephanie Elam and CNN International business anchor, Charles Hodson, to help sort all this out. Good luck, guys.
ELAM: Well, luckily, Betty, we do this a lot. Charles and I spend a lot of time talking during the week on CNN International where I normally live, and one of the things that I think we don't really get to know here is exactly how the global marks are reacting to it. And that's what we want to talk to Charles about.
So, Charles, tell us. You know, how did the European and Asian markets reacted, first of all, that global cash infusion from the central banks around the world, hoping to put some liquidity back into the marketplace?
CHARLES HODSON, CNN INTERNATIONAL BUSINESS ANCHOR: I think the assurance is very, very positively indeed. This is the "Financial Times" weekend edition. "Global Markets Roar in Approval," is what we're saying. And the numbers back that.
The FTSE Euro Index which is the top blue chips if you like, right away across Europe, that was up by 8 percent. The FTSE 100 -- the 100 British stocks, leading British stocks -- that was up by 9 percent.
So, in other words, yes, a very strong reaction. We also saw Hang Seng up nearly 10 percent in Hong Kong. So, Asia and Europe roaring in approval as the "Financial Times" puts it -- Stephanie.
ELAM: And, maybe, it's too early for us to say at this point, Charles. But, do you think that this is enough to actually soothe the markets over there?
HODSON: That, I think, is still very much an open question. Definitely, if nothing had been done, then I think that we would have been in a very, very sick state. We certainly would have seen further losses on Friday's trading. I mean, perhaps we're being a little bit optimistic.
Here's "The Times" of London, it says, "To Hell and Back." Well, you know, some people maybe excessively pessimistic might say, we might still go to hell, actually, but maybe not.
And, certainly, if you look at "The Independent" newspaper here in London, it's saying "The Panic is Over." Possibly. I think it's interesting to see what will happen when trading gets under way in Asia and in Europe on Monday because there will be those who want to sell the markets and there will be those who will say, "No, we've got the worst of it over with the, by taking all of these toxic assets off the balance sheet, we're in strong shape. The banks can recover and we can go ahead from here."
But I think it's very much an open question. I should be fascinated, as you said, to see what happens on Monday, Stephanie.
ELAM: I think it may be a case of to hell and maybe back or on our way back. I think that here's still going to be more volatility.
One last question I want to ask you about, Charles, because you would know. How do you think investors, traders over there, view this whole financial crisis which did start in the United States?
HODSON: I think in two words: deeply connected. You might think that this is purely a U.S. phenomenon and at the root of it, if you trace it all the way back, are the difficulties in the U.S. housing market. But we have such an interconnected world and so much of the U.S. mortgage debt was spread around, all of the banks, all way through the global financial system that there is nobody that does not feel connected.
At an emotional level, when people look out of their windows here in the city of London and over at Canary Wharf where Lehman Brothers offices are and they see their colleagues packing up their belongings into big cardboard boxes and trudging home and wondering if they're going to get paid, then it certainly hits home to traders here. This is something that none of us can escape.
And everyone actually here outside the United States owes a huge debt of gratitude to the U.S. government for what it is doing if that works. But don't forget that our central banks have also done the same sort of thing. For example, the British central bank, the Bank of England and the government have had a special liquidity scheme running since April and they've already guaranteed about nearly $200 billion worth.
Now, that makes me think that maybe the U.S. Treasury is going to have to be looking at more, like $1 trillion than a few hundred billion dollars when all of this is said and done. Certainly, the international signs are just about it (ph) -- Stephanie.
ELAM: So, there's definitely a lot more that's still going to come out of that, Charles. That's for sure. But we appreciate you helping us see how the world is seeing the picture for right now. Charles, thanks so much.
HODSON: My pleasure.
ELAM: Betty, as you can hear -- as you can hear from what Charles is saying, the world has become a much smaller place. And so, it's a global problem now.
NGUYEN: Yes, no doubt, especially when people all over, especially across the pond as well, losing money on this. So, we'll really keep our eye on it. Thank you both. We do appreciate it.
And on CNN tonight, a special "YOUR MONEY" emergency edition. Investment banks bought out, bankrupt or just bailed out by the government. How can you understand exactly what went down this week? That's at 6:00 Eastern. And then at 7:00, we are taking your calls live. Get the answers on a special two-hour "YOUR MONEY" emergency edition.
LUI: The financial crisis is hitting close to home for many homeowners in the United States and other people for that matter, as Betty was just nothing.
What did the administration's plan, though, mean to you? Well, Michael Crittenden with "Dow Jones Newswires" joins me now from Washington.
Good morning to you, my friend. And, you know, before we get into homeowners specifically, I want to ask you one question here, Michael. It was stated by one analyst that what was at stake was the entire western financial system: we're talking about ATMs, checkbooks, annuities, everything end to end. Was it that bad this week?
MICHAEL CRITTENDEN, DOW JONES NEWSWIRES: Well, that's a point to be argued from what Treasury Secretary Paulson and Fed Chairman Bernanke told lawmakers this week, that's how they sold it.
Now, if that's actually the case -- I mean, the fact here is the financial markets were collapsing. I mean, but this isn't a new thing. I mean, banks made billions of dollars, trillions of dollars of bad loans, investors worldwide bet on those, insurance companies like AIG insured those bets. So, you really did have a collapse and it took this dramatic intervention that sort of changed the face of the U.S. financial system.
LUI: All right, Michael, let's go down on this then. Homeowners, they are in foreclosure, some of them -- many of them, actually. They're part of a bank that's having trouble at this moment. What does this mean for their monthly payment now when we take a look at the government's plan or the elements of the government's plan that has been discussed so far?
CRITTENDEN: Well, the key is, this builds on July's housing bill that Congress passed and the president signed into law, which includes the Foreclosure Prevention Program. The goal of a lot of Democrats control Congress right now is to include even more homeowner protections in this bill, taxpayer protection, in order to serve, encourage and increase lenders to work with borrowers.
The key here is that the U.S. government, in buying hundreds of billions of dollars of mortgage debt and paper and mortgages, will own those loans and it will make it a lot easier for borrowers to refinance if the government owns their loan.
LUI: Right. OK, Michael, one last one very quickly. Who's paying for this, taxpayers, right? And how and when we see this bill being paid?
CRITTENDEN: Well, that's still being determined. I mean, I'm going to head up to Capitol Hill right after this. Early morning here for staff and for the media. But, I mean, this could cause taxpayers billions up front. Over time though, with the U.S. sells these assets back into the market, I think what you're hearing from lawmakers is that, you know, the government could possibly make money depending on how this goes.
This is really a psychological move, just to restore confidence among the financial institutions who have stopped borrowing and selling debt to each other.
LUI: Yes. Michael Crittenden, they could make money, the government that is, if they do as well as they did back in the 80s with the S&L crisis there, certainly, as you're pointing out there.
Michael Crittenden from "Dow Jones Newswire," thank you so much for stopping by this morning and giving us insight to what's happening right there
CRITTENDEN: Thank you.
LUI: Hey, do you have questions about your 401(k) and retirement pension? E-mail us and we'll ask a writer from "Forbes" magazine, at 10:15. The address is Weekends@CNN.com. Let us know.
NGUYEN: So, John McCain says he's going to take on "the old boys' network." Barack Obama wonders how he'll be able to do it. (INAUDIBLE)
LUI: That's right. Josh Levs is going to be back with part of the CNN truth squad to tell us what's happening.
LUI: Barack Obama attempts to tie John McCain's campaign to Washington lobbyists, but just how much of that assertion is true, is being asked.
NGUYEN: That's a good question. Now, our own Josh Levs is here with the CNN truth squad reality check. All right. We want the facts and only the facts, Josh.
LEVS: Yes, of course, you do. Yes, that's what we're here for, right? And this is kind of the flip side of what we were looking at just minutes ago. We were looking at the other side. Now, we're going to look at what Obama is saying about McCain.
(BEGIN VIDEO CLIP)
OBAMA: This is somebody who has been in Congress for 26 years, who put seven of the most powerful Washington lobbyists in charge of his campaign. And now he tells us that he is the one who's going to take on the old boys' network.
(END VIDEO CLIP)
LEVS: OK. Does he have seven powerful lobbyists in charge of his campaign? I'm going to look at that, and then, I'm going to jump to the larger picture here that keeps getting lost.
Let's zoom in on the board behind me. This is our fact check from the truth squad. It was done and, sure, our own Ed Henry has looked at this before. Let's close in on this. It is true, seven top McCain officials were lobbyists, that the campaign stresses none is currently registered to lobby Congress.
We have a photo here of one that you're going to see often on our air and that's Rick Davis. Let's take a look at him. He's campaign manager and he has done a great deal of lobbying, very high profile. He's lobbied in the telecommunications industry and some other areas as well. So, he is one example.
But I'm also going to point out here, that as we report, that Obama has some as well. He also has some people in his team who I can't get to that screen. But there you go. He does some people in his team who have, at times, done lobbying.
But, guys, there's a larger picture here that we always lose when we take about this. And so, what I want to do right now is go to this quote from Public Citizen because what they do is they try to tackle all the lawmakers who have any kinds of relationship with lobbyists out there.
Let's go to this graphic which is a quote from them. This is the president of that organization is saying: "Regardless of how many lobbyists are working on the campaign or raising money for him, John McCain fought for 14 long, hard years for reforms that seriously limit lobbyists' power. He has fought for campaign finance reform, limits on gifts and travel from lobbyists, and extensive public disclosure of lobbyists' activities."
So that's important to keep in mind as we're doing these fact checks that you can get lost in that immediacy, who's linked to Fannie Mae, earlier, who's linked to lobbyists. But in the end, the larger question is: What kinds of relationship do they have and how do they govern?
And you have this group that tackles lawmakers all the time saying, "You know what? He has fought that kind of thing for 14 years."
That's a slice of the pie that Obama doesn't tell you when he's doing that attacks.
So, there you go, guys. That's your truth squad reality check for this hour.
NGUYEN: All right. Mr. Reality, we do appreciate it. Thank you.
LEVS: Thanks, guys.
LUI: Yes, thanks, Josh.
And tonight, Don Lemon is keeping the candidates honest in fact. See more of our CNN truth squad. That's at 10:00 p.m. Eastern.
You know, for the best political team on television check out as well, CNNPolitics.com. It's your source for all things political. Everything is right there.
NGUYEN: OK. So, he is not even six years old, but he's already received voter registration information in the mail. Can you believe it? Florida mom says someone sent her kindergarten a voter registration application. So, she's worried it could be a scam. Meegan Suggs says, at first, she thought the documents mailed to her son were real.
(BEGIN VIDEO CLIP)
MEEGAN SUGGS, MOTHER: I was just shocked to see this in the mail after, you know, what happened in 2000 with all the accusations of voter fraud and everything. And then they're sending this out to my son who's only five.
(END VIDEO CLIP)
NGUYEN: OK. So, the return address on the envelope is the Division of Elections, but the supervisor of election's office for that county says, it did not mail the form.
NGUYEN: We'll continue to follow that story.
In the meantime, the nation's financial crisis, I know you're following it, and it's impact on sports.
LUI: On sports now and so many business problems as well. What about all those stadiums and sports centers sponsored by big business?
NGUYEN: It's true.
LUI: That's right. Sports business analyst, Rick Horrow, waiting in the dugout for us to talk about all of that.
NGUYEN: Good morning, everybody.
Baseball, football, NASCAR -- think about all the financial power houses that pay to have their name on a sports arena, a team's jersey or even the scoreboard, where AIG is all over that list. And Corporate America is reacting.
Analyst Rick Horrow joins us now from Cleveland. And, Rick, I want to show something because this really says a whole lot about what we're dealing with. You know, they say a picture speaks a thousand words. Take a look at that. What do you have to say about this, especially considering the financial crisis that we're in?
RICK HORROW, CNN SPORTS BUSINESS ANALYST: Well, since I can't see the monitor, I'm going to tell you about the financial crisis.
NGUYEN: Well, I can tell you what it is. It's an AIG logo on a jersey. HORROW: Yes, and I know. And I get it.
I'm in Cleveland, by the way, with the Squires, Sanders & Dempsey Law Firm and their 15 country partners are talking about global restructuring the economy. It affects corporations for everybody. AIG, obviously, is not immune. The bailout, $120 million for the sponsorship of the ManU jersey, AIG. We might as well put USA on those jerseys based on what's happening today.
They sponsor a deal at San Anita, just cut the deal with the Breeders Cup. They are sponsoring a big race. They call it also, a little been yet, "the ride of the day." They've taken us on a ride for the week. Not just the day, Betty.
NGUYEN: You know, let's talk about this, though, because you say, you might as well put USA on that jersey because taxpayers, put taxpayers on there, put my name on there because we're all bailing this situation out. And when we talk about the money that these big corporations, corporations mind you that are in trouble right now, are spending on these different sports team, arenas, logos, what-not, what kind of money are we talking about? I mean, are we talking about millions, hundreds of millions, how much?
HORROW: A lot of money. And you have too many letters to put your name on that jersey, Betty. But that's all right. And also, you don't have enough coins to spend for that.
$750 billion business to sports and the bottom line is -- $5 billion for naming these big buildings, 24 banks, financial institutions, it's not just AIG. Let's remember also that PNC Bank in Pittsburgh has a name on their deal and Citibank and Barclays, New York...
NGUYEN: All right. Let me stop you there. OK, because you're talking billions with a "B." Do these companies earn enough money in that advertisement to make it back, make back that investment, or are they just squandering this?
HORROW: Well, you know, marketing people wouldn't say they're squandering because they think it's going to be an above the fray return on investment.
Merrill Lynch does an event called the sharp shootout, a big golf tournament. Of course, Bank of America who bought them is the second biggest sports spender and their $1.7 trillion in assets goes a little bit of a part to NASCAR events, to ATMs with NASCAR advertising. They're also, by the way, the official bank of Major League Baseball and all of what that means.
So they think they get a return or they wouldn't be doing it.
NGUYEN: So, do the fans get a return in the sense that if you got a big corporation coming in, footing the bill for a lot of this stuff, the stadiums and what-not. that maybe ticket prices will change a little bit? HORROW: Well, if they didn't put their names on these buildings, the taxpayers would pay more for it. So, in that context, it's a pretty good deal but it's above the fray. Notice when you go to Philadelphia's football stadium, you know you go to Lincoln Financial Field, and Citizens Bank Park in Philly, and Chase Field in Phoenix, and Raymond James Stadium in Tampa, and PNC Park in Pittsburgh, and Progressive Field in Cleveland, and on and on and on. That's the gamble.
NGUYEN: Oh, please. My head is spinning. Yes, no doubt.
All right, Rick. I don't want you to go away because we got another story that's coming up. And you know it's coming down, unfortunately, we're talking about Yankee Stadium, the lettering of the stadium that was removed yesterday, can you believe it? I mean, the time has come for this thing to go the way of the dinosaurs. What are your thoughts about Yankee Stadium, the last game being play tomorrow?
HORROW: I want that "Y" and I want one of those "Es." They got two E's in Yankee, so they can give me one of those. Listen, my thought is...
NGUYEN: Are you going to pay for it?
HORROW: ... a bigger and better Yankee Stadium and a bigger and better Mets stadium are being built, 25 new deals in the last 10 years, 250 in the last 25 -- sports, arts, recreation facilities.
NGUYEN: Yes, but look, this is the house, you know, that Roth built. There's so much history here.
HORROW: Yes, every time a stadium's torn down, people talk about history, but you got to remember that you've got to improve these deals. I know I'm a cynic about it, but I've walked through the new one. The new one is twice as large, maybe not twice as good.
Hey, the last time I checked, Betty, the Yankees are still losing so I'm not sure it's helping them on the field.
NGUYEN: You just had to throw that in, didn't you?
HORROW: Yes, yes, yes.
NGUYEN: All right. Well, with that, we are cutting your mike. You are done for this weekend. But we'll see you again very soon. As always, we do appreciate it, Rick.
HORROW: Next week, I'll see you.
You know, there are lots of stories coming out of Yankee Stadium. And in the 9:00 Eastern hour, we're going to talk with a Yankee legend from the 1950s, former first baseman Moose Skowron. Stay with us for that. LUI: A crocodile tear from Rick Horrow. He didn't even blink.
All right. Well, a lot of families are trying to make ends meet in these difficult economic times. We've been talking about that. And for some moms, returning to work may be a shock now.
LUI: Straight to these live pictures from the Kennedy Space Center. Something you probably won't see again. Now, this is just one of the space shuttles, but there are actually two there perched on the launch pads. We got Endeavor and Atlantis. There you go. Atlantis blasts off October 10th, for mission to the Hubble space telescope.
This mission, it is a difficult and, potentially, dangerous one. Why? Well, if Atlantis is damaged in its process, NASA wants Endeavor prime and ready to go for a rescue and that's because as they're at the Hubble space telescope, they won't be able to have more oxygen, we are hearing them, for 25 hours, unlike if they are at the space stations if there are any issues getting to that space station.
NGUYEN: Twenty-five days.
LUI: Twenty-five days, sorry. Thanks.
NGUYEN: Yes. That's not a lot of time to get work...
LUI: Twenty-five hours, they're not able to get there.
NGUYEN: Like this, it's going to be a quick mission, folks.
NGUYEN: Actually, so, this is something that, like Richard said, you don't see very often, hopefully they will not need this emergency backup. But we're going to get the latest on this from our space correspondent, obviously, the guru when it comes to all things NASA, and Miles O'Brien will join us a little bit later this morning to break it all down for us.
In the meantime, though, America's financial crisis is forcing some to stay -- some stay-at-home moms into the workforce and they're learning some really hard lessons to boot.
LUI: Yes. CNN's Kate Bolduan has the story of one family trying to make ends meet.
KATE BOLDUAN, CNN CORRESPONDENT (voice-over): Working at a Maryland hospital is how Anne Calladonato spends most of her days.
ANNE CALLADONATO, WORKING MOM: Good morning, doctor.
UNIDENTIFIED MALE: Yes. A. CALLADONATO: Good (ph).
BOLDUAN: But here at home is where she used to work and where she'd like to be now.
A. CALLADONATO: Everything's gone up, from like milk to diapers to gas, our electric bill. So, I needed to go back to work, and I didn't necessarily want to, but it's almost like we didn't have a choice.
RICHARD CALLADONATO, FATHER: Laid out the bills and we said, our options aren't many here.
A. CALLADONATO: Then you shake your hands right.
BOLDUAN: This stay-at-home mom of two turned working mom after three years away. Calladonato says she had to because the household income dropped by more than $60,000, virtually overnight.
A. CALLADONATO: My husband's job was alleviated and it was two weeks before my second child was born, and it was great that he found a position quickly, but it was a significantly lower salary.
BOLDUAN (on camera): The Calladonatos aren't alone. The latest Labor Department numbers show that unemployment rates spiked to just over 6 percent in August, an increase for the eighth straight month.
SILVIA ANN HEWLITT, CENTER FOR WORK-LIFE POLICY: What you're looking at these days is all kinds of working mothers who are perhaps going, you know, from part-time work to full-time work, or perhaps taking on a kind of moonlighting job at night or at the weekend. And that is extremely hard on families.
BOLDUAN (voice-over): Experts say stay-at-home moms trying to re-enter the workforce face an extra challenge. The longer they've been out, the less they make when they jump back in.
HEWLITT: The reality is that it's often hard to get back in. And for instance, if you're a college grad, you actually lose about 37 percent of your earning power if you take three years out.
BOLDUAN: That's the case for the Calladonatos. Anne is making less now than she used to, but she's keeping it in perspective.
A. CALLADONATO: I mean, life changes. You know, you just have to accept it, and you have to try to make the best of it.
BOLDUAN: Kate Bolduan, CNN, Washington.
LUI: All right. Here at CNN Center, it's Saturday for you, we're at CNN SATURDAY MORNING. It's September the 20th, we're almost through the month.
Good morning. I'm Richard Lui. I'm in for T.J. Holmes. NGUYEN: And good morning, everybody. I'm Betty Nguyen. We do want to thank you for starting your day with us.
And, of course, today, everyone is talking about this. I know you're looking at your financial statements, maybe you might not want to be doing that because America is in a financial crisis.
Congressional leaders, they are hard at work right now, this weekend, trying to hammer out some new provisions to make sure that this mess is all cleaned up, hopefully, by this week. They can get a bill out and we can start seeing the situation get a little bit more back to normal.
But we're going to stay on top of that for you.
LUI: And how about this? We've been talking about gas, certainly, within the recent months. Well, there's a gas problem in one major U.S. city. We're just looking this up. Out of 13 stations randomly called in one state, only two had gas. There's a shortage that's prompting a run on stations.
NGUYEN: Yes, and it's all because of a rumor. So we're going to get to the bottom and find out where that started.
In the meantime though, they are buzzing in one Florida condo community, and we're talking literally. Look at that. A whole hive of bees. We're not talking a small one. This is a huge one. Had to be removed. We will show it to you and show you the sweet return from it all. Stay with us.
LUI: All right. Stepping off a financial catastrophe, the federal government moves to take charge of the credit crisis as Wall Street's woes threaten Main Street right now.
NGUYEN: Yes, the Bush administration is asking Congress for a sweeping new power to bail out faltering banks and other institutions and also prop up money market funds.
LUI: This historic rescue plan would likely cost taxpayers hundreds of billions of dollars. Administration officials are working out the details with congressional leaders over this weekend. President Bush wants it done by Monday.
NGUYEN: This week's failures of Lehman Brothers and AIG and the sale of Merrill Lynch sent global markets into a tail spin. The proposed bailout, though, turned it around. You see there, the Dow closed 360 points higher on Friday, following a 410-point surge on Thursday. Of course, we have team coverage this morning on this story. Business news correspondent Stephanie Elam in New York and Kathleen Koch at the White House.
LUI: That's right. In that team coverage, the bailout would be the biggest federal intervention, by the way, into the nation's financial market since the Great Depression. President Bush acknowledged the risk to taxpayers. He said the risk of not acting would be higher. Our Kathleen Koch joins us now with the latest from the White House. Good morning to you, Kathleen.
KATHLEEN KOCH, CNN CORRESPONDENT: Good morning, Richard. After the wild ride that we've had on the markets this week, it really goes without saying that there are no guarantees in this unprecedented rescue package.
Treasury Secretary Henry Paulson and President Bush yesterday laid out the goals of the plan, and they are, of course, the main one being to restore stability to and confidence in the nation's financial system.
So the federal government essentially will buy up hundreds of billions of troubled mortgages from banks, from other financial institutions in the hope then is that they will feel more confident that they will then be more willing to make new loans. President Bush yesterday explained that the administration basically concluded it had to do more than just address the symptoms of the nation's financial ills.
(BEGIN VIDEO CLIP)
BUSH: We must address the root cause behind much of the instability in our markets, mortgage assets that have lost value during the housing decline and are now restricting the flow of credit. America's economy is facing unprecedented challenges. We are responding with unprecedented action.
(END VIDEO CLIP)
KOCH: Now President Bush there looking as somber as I have ever seen him as are leaders on Capitol Hill yesterday. Many questions remain about this plan, obviously, perhaps the primary one is just what is this going to cost?
Now, yesterday Secretary Paulson said it needed to be, quote, "big enough to make a real difference." Some lawmakers on the Hill are saying they're hearing that means as much as half a trillion dollars. When will it kick in? We are hearing that the plan could go from the administration to Capitol Hill as soon as some time today, perhaps, though, not until tomorrow.
Lawmakers then promise they will immediately begin going over it very carefully, obviously they will also be having hearings early next week so the potential is there for them to actually take a vote perhaps as soon as mid-week. The president then signing it. The White House made the point over and over again yesterday that time is of the essence here. They asked congressional leaders to put aside partisanship and pass this plan quickly. Richard?
LUI: Yes and Kathleen, it was said that both Ben Bernanke as well as Treasury Secretary Paulson were very, very somber in their meetings with congressional leaders on Thursday night no doubt as well. KOCH: Indeed. I simply got chills in listening to the comments by top senators, like Senator Chris Dodd of Connecticut on the Hill yesterday and then watching the president reading his -- his gestures, his face. You could tell that they are dealing here with something that none of them have ever faced before, that this is the gravest of situations. They are doing not what they want to do, but what they all understand they have to do right now.
LUI: Really good insight there. Certainly based on the comparison to the Great Depression as well as the '80s you hit it on the head there.
KOCH: Very sobering.
LUI: Yes, absolutely. Kathleen Koch at the White House, thank you so much. Have a good Saturday.
Once an icon of stability, Lehman Brothers will sell its investment banking and trading business to the British bank Barclays. A bankruptcy judge approved this sale just after midnight. The 158- year-old investment firm filed the biggest bankruptcy as you might remember in U.S. history this week. Barclays will take control of the unit that employs about 9,000 people here in the United States.
NGUYEN: Well, yesterday the SEC temporarily banned short-selling of financial stocks. This follows a similar move by Britain and other countries, a likely jump on the bandwagon. Although it is legal, short-selling is partly to blame for the recent collapse of investment and commercial bank stocks.
So here's how it works. An investor betting on a particular stock to go down has his broker borrow shares which he quickly sells. He waits for the price to fall, then buys them back at the lower price, returns the shares to the original owner, then pockets the profit, minus commissions and expenses for borrowing shares.
Easy money unless, of course, the price goes up. In that case, the losses are unlimited. So let's find out a little bit more about short-selling and why it's to blame for part of this mess -- from business correspondent Stephanie Elam, she joins us now live. All right, Stephanie, help us sort this out. How is short selling partly to blame for this?
ELAM: Well, it's one of those things, like you said, it is a legal situation, but the thing about it is, is that in a good situation, it's actually adding liquidity to the market. That's under normal market conditions. The problem is that recently short selling has added to the upheaval we saw on the market in this past week.
You saw people clamoring in on financial stocks that are saying, hey, wait a second, maybe the speculation is not going to move to this company and this company. When that happened, short sellers were coming in and you would see erratic behavior in the stock price of certain stocks. That was adding to frenzy.
NGUYEN: OK. It's one thing if speculation that a company is going to be troubled and we're going to see the stock fall. It's a whole other thing to blame it on the short sellers if in fact they are spreading rumors and lies, which has not been deemed just yet. So let me ask you this. When it comes to short selling, aren't they partly the market indicator that shows you which companies indeed are troubled?
ELAM: That's exactly it. At this point, we do know that they're starting to investigate exactly what was going on here with the short selling, and I think by removing this aspect for now, this temporary ban will help ease the markets here.
But that's what the SEC wants to know, whether or not there was more rumors being spread. Something else that was out there that was helping to propel the stocks which were moving more to the downside than people would have expected them to do.
NGUYEN: There are people who say this is so controversial and they're really arguing against it, saying when it comes to short selling what you are doing by halting this is that you're keeping people from making profits, making up some of the losses that they've had, especially in this financial crisis.
ELAM: Right. Overall, though, you've seen the stock markets come back and rally up. The same thing we saw in Europe, when the U.K. did the same thing. At this point, people are saying that, but I think what the SEC wants to do is use every tool they have in their toolbox to figure out a way to help calm down the market and get things back on pace before they go back to allowing that. Remember, this is just a temporary ban. They don't plan on leaving it like this forever.
NGUYEN: How long do you think it will last, quickly?
ELAM: We don't know how long at this point it could be, but obviously we're not done with this wild ride on Wall Street so it could be a little bit longer.
NGUYEN: All right. Stephanie Elam, as always, we do appreciate it, thank you.
NGUYEN: All right. On CNN tonight, we have a special called "YOUR MONEY: Emergency Edition." Investment banks bought out, bankrupt or even bailed out by the government. How can you understand exactly what went down this week? We're going to explain it to you on this emergency edition of "YOUR MONEY." It's 6:00 Eastern. And then at 7:00, they're going to be taking your calls live. So if you've got questions about this, you will get answers on a special two-hour emergency edition of "YOUR MONEY."
LUI: One week ago today, Hurricane Ike hit Texas. Entire neighborhoods were wiped out along with most basic services on Galveston Island. About 45,000 evacuees have been told a gradual re- opening of Galveston begins next week.
(BEGIN VIDEO CLIP)
REAR. ADM. W. CRAIG WANDERWAGEN, HEALTH & HUMAN SVCS: We're very certain that the city will be back in operation here very shortly and we will continue to provide whatever help, support they would wish us that we be here to do.
(END VIDEO CLIP)
LUI: Residents have been warned there's no power, limited sewer services and spotty power services as well in that area at the moment. You know, the National Oceanic and Atmospheric Administration has taken some striking pictures of Galveston Island post-Hurricane Ike. Now in these before and after shots, you see them right here, they're all but a fraction left of three piers. You can also see a tremendous amount of debris in the bottom left hand corner if you look closely, no doubt left behind by Ike's storm surge in the end there.
NGUYEN: There is a tropical disturbance though. If you thought Ike was bad enough, it is not over. Meteorologist Karen Maginnis is keeping her eye on that. Karen, it just seems like one after the other after the other.
NGUYEN: We also have some great i-Reports of the hurricane damage on Galveston Island. These are from superstar i-Reporter Matteu Erchull. He's in Dallas now, but was able to take these shots of Galveston on Thursday. Erchull says no block was left untouched by Hurricane Ike, and the whole place stinks. He also says he lost a lot of personal belongings.
I can testify to the fact that there is a strong and distinct smell down there in Galveston. Where I was in particular -- OK, granted, I was at a bait shop so you're going to see lots of chum and what not, but there were dead fish that had washed ashore from Hurricane Ike.
LUI: Just floating around?
NGUYEN: No, they were just there on the ground. And they had been dead for days. So, obviously, you can imagine the stench that was in the air.
LUI: Yes, quite a story it was, and continues to be for a lot of people.
NGUYEN: No doubt.
LUI: We've got more on the nation's financial crisis for you, that's of course the other big story this week.
NGUYEN: Yes. The question some families are asking, can I still get a loan to go to college? So what about that, Josh?
LEVS: In a lot of cases these days the answer is suddenly no. We are going to show you what this means for college students now and next year.
LUI: Possible price gouging in Georgia. Gas prices shot up more than $1 a gallon in some locations a week ago, and word eight refineries in Ike's path had been closed. The state has asked for financial records of some gas stations as a result there.
Then in Nashville right now a shortage of gasoline. In a random check of 13 stations, only two were still pumping gas.
NGUYEN: Yes, they believe that that started on a rumor -- no one knows exactly who, of course, started the rumor. I don't think anyone's going to come forward with that. But obviously people started to panic and they headed to the gas stations to make sure they filled up. So many of the different stations are out of gas as of this morning.
LUI: Two out of 13, absolutely amazing.
NGUYEN: It's really incredible. When we talk about this financial crisis, it really reaches into so many different areas. It's also a lesson college students aren't eager to learn about.
LUI: Yes. Yet America's money mess has many of them scrambling for tuition right now. Our own Josh Levs joins us with more on that, with just how far-reaching this crisis has become.
LEVS: Hey, guys. I don't know if you saw this story at CNN.com, but it became one of our most popular stories. It was stunning. It's about how college students, an incredible number, are suddenly losing their loans, unable to pay for school. And it focused on this guy right here who's joining me right now.
Hello, Eric Hahn.
ERIC HAHN, COLLEGE STUDENT: Good morning.
LEVS: Thank for joining us.
HAHN: Thank you.
LEVS: I want you to stay off by telling everybody the basis of your story. Here you were ready to pay for school and at the last second your loan just fell through. What happened?
HAHN: Well, I was applying for a student loan unsubsidized. That means the government was not going to help me out at all. So I sent them my last documents and they called me up saying we've closed out our loan program for right now.
LEVS: So this private company calls you out of nowhere and says sorry, the economy is bad, we can't give you any money at all.
LEVS: So what did you do?
HAHN: Well, I asked them of course at first why? Why is this? Why are you guys closing down? And all he could say was the credit crisis, we're reaching our credit limits and so forth. Hopefully we'll come back but for right now we can't do it.
LEVS: I want to show everybody a graphic while we talk because I want you all to understand how huge this is, what's going on here. Let's go to this graphic here. First of all, private loans each year, are about $17 billion out of the market. So there's a ton of students like you.
LEVS: And if we look at this next graphic that I'm going to show you now, we've seen this figure that says 33 private loan programs in this country, 33 private lenders have completely dropped their private loans for students like you.
LEVS: So you must know other students who are going through this. What's happening?
HAHN: Yes, definitely. Well what's happening is students that don't have co-signers, such as myself, have to apply for private, unsubsidized loans. When it falls through, as in my case, you pretty much apply for other loans. You start settling for more expensive debt. And in my case, you pull out your savings, you go and sell your stock and pay for your short-term expenses.
LEVS: Yes, I know we don't have that much time this morning. But you're one of seven kids, you're the oldest. You really want to make it. You want to get your college degree. You want to move on.
HAHN: I do. I'm a senior, so close.
LEVS: So you ended up doing what? You have to get some private loan at some crazy high interest rate.
LEVS: Which is what?
HAHN: Twelve percent, compared to eight percent a year ago for the same exact company. So it's going up drastically.
LEVS: From the same company?
LEVS: So the short version is, look, I'm not that old but not that young. When I was in school it wasn't like that. You could get a private loan, you didn't have to start paying interest until like six months or a year out of school.
HAHN: Right, exactly.
LEVS: Yours is going to start compounding at 12 percent now?
HAHN: Right. In other words, I already have the maximum $5,000 from the government which wouldn't accrue already. But what I've got now, instead of getting $5,000 to pay back when I graduate, it will be like $6,500.
LEVS: This is unbelievable. Eric Hahn, thank you for joining us today.
And you all can see these kinds of figures that we're talking to you about. So many people are being impacted in various ways. We know you might not be a college student, but you probably have your own way that you've had to give something up. Send us an i-Report, i- Report.com. What are you giving up in this economy? How is it affecting you? What are you sacrificing because of this money crisis? Let us know and we will be sharing some of those just two hours from now, guys.
LUI: All right, thank you, Josh.
NGUYEN: You know, there is concern over the next shuttle mission. Our space correspondent Miles O'Brien is going to be joining us to talk about that. It's really quite historic and we're going to explain it all to you next.
LUI: We have news just in to us here at CNN. We got an advisory from the National Transportation Safety Board right here. I'll read a story from it. A jet crashed in South Carolina, it's a Learjet 60. It crashed on takeoff at 11:53 p.m. Eastern on Friday. Six people on board this plane. Two crew, four passengers.
Now, the two crew have died. Two of the four passengers also dead. Two remain injured at the moment. Now, the NTSB is sending 11 people, an 11-team member -- rather an 11-member team to investigate what has happened here. Again it happened at 11:53 p.m. overnight, a private jet down.
NGUYEN: In the meantime, we are following this story as well. NASA wants to make sure that the next shuttle mission goes off without a hitch. It's got Endeavour on the pad at Kennedy Space Center ready for a rescue mission in case something goes wrong aboard Atlantis.
OK, so here to explain what is happening what is happening and why it's happening this way, CNN space correspondent Miles O'Brien joins us by phone from New York. Miles, have you seen this ever happen before?
VOICE OF MILES O'BRIEN, CNN SPACE CORRESPONDENT: Well, there's two separate things. The picture has happened before. There have been two shuttles poised for launch on the launch pad. As a matter of fact, in the history of the program, this is the 18th time we've had two shuttles on two launch pads side by side.
It is unprecedented, however, that one of them is there as a possible -- I repeat possible -- rescue mission for the other. This is the first time a space shuttle has flown to a destination other than the International Space Station since we lost Columbia in February 2003.
The theory was that if there was some problem with the heat shield, if it had a breach as we had with Columbia, losing the crew that the crew could just camp out on the space station until they could get a rescue mission together and bring them home.
In the case of the Hubble they're nowhere near the space station, can't get to it. And so if there's something wrong with the heat shield on Atlantis during this mission, what do they do? Well, they call up Endeavour. And Endeavour's crew would go up and pick them up, transfer the crew over in a series of space walks and bring them home.
That's why we have two shuttles on the launch pad in the unlikely event that we need a rescue mission during this Hubble repair mission coming up on October 10th, that's the rescue mission right there, Betty.
NGUYEN: Let me ask you this. How dangerous is this mission? When it was first proposed a few years back, it was canceled because it was, indeed, considered too dangerous. And I know that Hubble is in an area where it has a debris field orbit. So, how dangerous is this mission?
O'BRIEN: Yes, there's a slightly higher risk for meteoroid strikes and pieces of debris to hit it. There's no shielding there from the space station, as the shuttle normally gets. Yes, I think you could probably say the risk is a little bit higher here. Every one of the crew members I've talked to, I've asked them about it, they say they gladly would risk their lives in order to make the Hubble space telescope that much better, and be able to do good science for another decade or so.
It's -- any time -- the only safe shuttle is the shuttle in a hangar, there's no question about that. I think what NASA did was, after the decision was made first to cancel the last Hubble repair mission, they went through and thought, wait a minute, doing -- fixing it robotically will be very difficult. Let's find a way to do this with a measure of safety. That's where you get this rescue mission. It's definitely -- would be a space high wire act to pull it all off, but it does provide an ultimate back stop for the crew.
NGUYEN: Hopefully it is not needed. But Miles, we do appreciate you joining us by phone today to explain it to us. Very interesting and we will be watching closely. Thank you, Miles.
LUI: So many beautiful pictures came from the Hubble space telescope too as well, for science.
NGUYEN: Absolutely. It's really important. That's why they are going to take the risk that they are to go up there and try to fix it. LUI: Yes, as you noted.
OK, if you've ever been fishing or wanted to go, take a look.
NGUYEN: This is, indeed, a whopper. We will tell you just how big -- my goodness -- it is and where it was caught.
NGUYEN: Well, around the water cooler today, a fisherman -- boy, is this a story for you -- reels in a 65-pound catfish. Ben North snagged the catch of the day in Indianapolis yesterday. It was more than three feet long. Hopefully he didn't catch it by noodling. That thing would have taken off his arm.
LUI: Yes, look at what he has at his arm. This thing is outrageous. North is saying here he snapped the pictures to prove his fish tale. Look at this thing. Then released the catfish -- he released the catfish, so it would have a chance to breed.
NGUYEN: Other gargantuan catfish.
LUI: If that was blue fin tuna, he'd be a rich man, no doubt.
NGUYEN: No joke, that's a thoroughbred right there, folks, when it comes to catfish.
All right, so it's a sticky situation, shall we say, in south Florida. Bees have been busy building a massive hive in an apartment complex with an equally massive amount of honey.
(BEGIN VIDEO CLIP)
ADRIEN VALERO, BEEKEEPER: UNIDENTIFIED MALE: This one is one of the biggest ones I have done. This one -- the whole hive probably has like, four feet long. They took out, like, maybe 60 pounds of honey and it still has a lot of honey left over.
(END VIDEO CLIP)
NGUYEN: Four feet long -- what did he say, 65 pounds --
LUI: Something like that.
NGUYEN: -- of honey? That's bigger than the catfish.
LUI: Seems like a lot of (ph) big things going on when it comes to the animal kingdom. You know, and actually with the bee shortage, it's a good deal for him if he thinks about selling bees. So, that's kind of interesting.
NGUYEN: Yes, local honey can be expensive, too. So, good for them.
All right, so here's a way to get a politician in your pocket. A toy company in Connecticut is selling three versions of GOP vice presidential candidate Sarah Palin in action figure form.
LUI: Yes, she comes in a traditional model, then there's Sarah "armed and dangerous" and ...
LUI: ..."schoolgirl Sarah" as well, with mesh stockings and platform shoes.
NGUYEN: Oh, come on. That's wrong.
LUI: How about that one?
NGUYEN: What about -- what, no "Malibu Joe Biden"? Come on, equal opportunity here.
All right, we'll have much more coming up right here on CNN. The money team is watching this financial crisis.
LUI: That's right. "HOUSE CALL" with Sanjay -- Dr. Sanjay Gupta starts right now.