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Bailout Goes Bust: What Will Lawmakers do Now?; Credit Tightening for Borrowers; The Bailout and Oil; The Credit Crisis; New Tropical Storm; Inside I-Report; Gruesome Discovery; Where's Your Food From

Aired September 30, 2008 - 12:00   ET

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

TONY HARRIS, CNN ANCHOR: I'm Tony Harris in the CNN NEWSROOM.
Here's what we know right now. Stocks are fighting back from Monday's near 800-point plunge. There you see the Dow in triple- digits gains right now.

The House faces several options on the bailout bill. Negotiators could revise a legislation to get the vote to pass it, they could start over, or they could do nothing and see whether predictions of catastrophe actually come through.

In the meantime, Treasury can keep the crisis in check, for the most part, on a case-by-case basis. It can pump money into the credit markets, take over failing institutions, or push them into shotgun mergers. We've seen some of that recently.

Experts say it is only a matter of time before the House vote hits home for you. We will look at the sting of tight credit, how homes and businesses may soon feel it.

President Bush is keeping the pressure on Congress. He called both presidential candidates this morning to discuss the financial crisis. He says he is talking to Congress about next steps.

(BEGIN VIDEO CLIP)

GEORGE. W. BUSH, PRESIDENT OF THE UNITED STATES: We're in an urgent situation, and the consequences will grow worse each day if we do not act. The dramatic drop in the stock market that we saw yesterday will have a direct impact on the retirement accounts, pension funds and personal savings of millions of our citizens. And if our nation continues on this course, the economic damage will be painful and lasting.

(END VIDEO CLIP)

HARRIS: The presidential candidates today reacting to the bailout breakdown and finding some common ground on what should happen now. Both John McCain and Barack Obama are urging lawmakers to go back and try again.

Here's John McCain just a short time ago in Des Moines, Iowa.

(BEGIN VIDEO CLIP) SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: I call on everyone in Washington to come together in a bipartisan way to address this crisis. And I know that many of the solutions to this problem may be unpopular, but the dire consequences of inaction will be far more damaging to the economy security of American families, and the fault will all be ours.

(END VIDEO CLIP)

HARRIS: Both McCain and Obama also calling for the government to protect more of your money. In a statement, Obama says, "That is why today, I am proposing that we also raise the FDIC limit to $250,000 as part of the economic rescue package, a step that would boost small businesses, make our banking system more secure, and help restore public confidence in our financial system."

One House leader says doing nothing is not an option. The House doesn't meet again until Thursday, but the pressure is on to try come up with a new deal.

Brianna Keilar live from Capitol Hill right now with the latest.

And Brianna, words of confidence a short time ago from the Senate minority leader that a deal will get done and get done this week.

BRIANNA KEILAR, CNN CORRESPONDENT: Yes. Well, that is obviously the objective of everyone here, and obviously what they're trying to push and promote and assure with one eye to the markets, assuring the American people that this will get through.

At this point, Tony, Republicans and Democrats here on Capitol Hill huddling, trying to figure out exactly what the next step is, trying to figure out maybe what things can be added on to this House proposal. Democratic and Republican sources in the Senate telling us it's unlikely -- this was a possibility floated yesterday -- that perhaps the Senate would take this up before the House. Well, we're hearing that it's now unlikely the Senate will go ahead and do that. So obviously, an eye to the House at this point.

Meantime, Democrats and Republicans in the Senate, leaders there, they actually are meeting, some of them as we speak. We heard from Senate Democrats a short time ago, that they had a discussion, they're talking about ideas to tack on to this thing, and now are going to shop those ideas around. But both of them keeping up pressure for a deal.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D), MAJORITY LEADER: I'm hopeful and I am confident that all sides, House and Senate, White House, will work together to achieve a goal that will be good for the American people.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP) SEN. MITCH MCCONNELL (R), MINORITY LEADER: I, too, want to reassure the American people that we intend top pass this legislation this week, that we will pass it on a broad bipartisan basis, both sides cooperating to prevent this financial crisis from persisting. I think the message from the markets yesterday was clear. The time for finger-pointing indeed has come to an end.

(END VIDEO CLIP)

KEILAR: So the question is, what can be added on to this thing to get more House Republicans on board? Well, one proposal being floated both by Barack Obama, John McCain, as well as some House Republican -- a House Republican leadership aide, is this idea of increasing the amount of bank deposits that the FDIC insures, just to give people -- make people a little more comfortable about the status of their banks.

But according to a Democratic House leadership aide, there's also something in consideration, and that's that if these changes can't win over House Republicans, what about bringing on more house Democrats? We heard before House Speaker Nancy Pelosi, Tony. As you recall, she did not want to entertain that idea.

HARRIS: That's right.

KEILAR: Well, it appears now they are. And also, it's a bit of a veiled threat say if we're going to try to bring on more House Democrats, this bill may actually be more unpalatable to House Republicans. But you know, Tony, it's a fine line to walk, because if you get a House Democrat on board, are you giving up a House Republican, and exactly how do you do that math?

HARRIS: Boy, trying to figure out the vote here and where the votes are. What a process.

Brianna Keilar on Capitol Hill for us.

Brianna, appreciate it. Thank you.

KEILAR: You're welcome.

(BUSINESS REPORT)

HARRIS: You know, you can also follow the crisis on Wall Street, the buyouts, the bailouts, falling oil prices, rising gas prices, although gas prices are coming down recently. All of it at CNNMoney.com. Fourteen straight days of declines in the average price of gas.

Get all of the day's market news, the numbers, plus expert analysis. Just log on anytime. Log on now.

Small business owners are really feeling the pinch as the credit crisis grows. We'll get the latest from Main Street.

(COMMERCIAL BREAK) (BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The system I believe is a total mess. We've been nothing but lied to. OK?

The government, OK, has been saying this bailout is coming, and then what do they do? They go and they don't bail us out, and now we're done 700 points. My clients have zero in their accounts now.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: There's no reason in the world that working class citizens of America should be paying for this thievery and the robbery.

(END VIDEO CLIP)

HARRIS: Man. It's just hot.

America really finding its voice on this one. You know, you can't see it happen, but credit markets are tighter today. That makes loans more expensive, if you can get one. Short-term borrowing is oxygen for small business owners.

CNN's Susan Roesgen is in Oak Park, Illinois, with the congressman who voted for the bailout bill to stop, or at least to try to stop the predicted financial crisis.

Susan, good morning.

SUSAN ROESGEN, CNN CORRESPONDENT: Good morning, Tony.

Yes, I'm here in Oak Park, Illinois, with a congressman, a Democrat from Illinois, Congressman Danny Davis.

Congressman Davis, you did vote for the bailout.

And Tony, he also tells me that -- you're going to go back to Washington you think this week and that this time it will pass?

REP. DANNY DAVIS (D), ILLINOIS: Well, I think we are going back. And I voted for the bailout because I think the economy is actually in worse shape than we've been let known.

ROESGEN: I actually have a business owner I'd like you to meet, Congressman, in here.

This is the store that we've been at all morning, Tony, the popcorn shop here, a locally-owned family business.

Congressman, this is Erik Clasesson. He is the owner of this business.

DAVIS: How are you doing?

ROESGEN: Mr. Clasesson, I'd like to find out, what is your biggest concern? Here's your moment to tell a leader in Congress, you know, what your biggest concern is with the financial crisis that we've got going.

ERIK CLASESSON, MADLY POP'N: As a small business owner, I think my biggest concern is not just that we're kind of cash-strapped here, but that our customers who walk in don't have money, and they're not -- they're so uncertain about the economy that they're afraid to spend money. And they're really gun shy about it.

DAVIS: I agree with Erik, and that's exactly one of the reasons that I voted for the bailout, hoping that we could do something immediately, that we don't have time, really, to wait. We can't dilly dally. We need to put some infusion into the environment so the small business people like Erik can have customers.

ROESGEN: Well, Congressman, we have been speaking with Erik, all morning, and he has been telling us about his line of credit, a $30,000 line of credit that he went through already in the summer -- when the months are especially slow for your business. And now he's hoping to get a good holiday rush. But it he doesn't, or if all the other local shopkeepers here in Oak Park have needs can't be fulfilled because they can't get a loan, what can you do to help?

DAVIS: Then it becomes catastrophic, and what we need to be able to do is have some extension of that kind of credit, which means we need to have some capital available for people like Erik so that they can hang on and see whether or not they're going to be able to sustain until the economy really gets moving.

ROESGEN: What do you think, Erik? Does that sound like something that's actually going to come to pass?

CLASESSON: I think it would be fantastic. And the holidays are so important to not just us, but so many merchants out here. It's our lifeblood.

And if the holidays are bad this year, it's going to be a bad situation I think everywhere. Just like me, I think I'm just like a million other small business owners.

ROESGEN: Well, Congressman, we really put you on the spot today.

Got to tell you, Tony, that these two gentlemen had seen each other right before we went on line, but we had not told them what questions we would ask. So it's a good opportunity for a small business owner to talk to the congressman about what he thinks they can do.

And again, Congressman Danny Davis here, Democrat from Illinois, says that he believes Congress will meet on this issue again this week.

And pass it? DAVIS: We will pass an issue. I think that there are some changes that need to be made, such as putting in some direct approaches that homeowners can feel and see and know that they're being helped.

ROESGEN: Those that are struggling with their mortgages right now, yes.

DAVIS: That's right.

ROESGEN: OK -- Tony.

HARRIS: All right. That is terrific.

Susan, appreciate it. Thank you.

You know, let's get a little more perspective on the bailout breakdown and what it really means.

Christine Romans, live from New York right now with some of her money team colleagues.

Christine, take it away.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: All right. Thanks, Tony.

We're with Paul La Monica, Jeanne Sahadi and Poppy Harlow.

Poppy, I want to ask you first, because you just got off the phone with the CEO of AutoNation. Tell me from the perspective of a CEO who is looking at employees and also people who are trying to borrow money to buy cars, what does the bailout, the fact that it blew up, mean?

POPPY HARLOW, CNNMONEY.COM: Right. You know, it's not often that a CEO takes your call within five minutes and returns your call within five minutes. He did.

AutoNation, a lot of you out there know, runs a lot of the local dealerships in your town, in your city, and he said what is going on is that banks are looking for a reason not to give loans. A lot of people said auto loans are the next thing to fall. He said even people that should be getting loans, the demand is there, the money is not there.

He said that has caused his business to go down by -- volume to go down by 15 to 20 percent. He has had to lay off people as a result of factories closing. And he said when we get that jobs number on Friday, it is going to be even worse than the unemployment rate of more than 6 percent right now. And he said this is a huge, huge problem.

And the auto sector is really feeling it. We already know they were hurting. And it's interesting, he's just saying we need something. He's really emphasizing that. ROMANS: What people want to know is, what does their life look like, Paul, if there is a bailout, and what does their life look like if there isn't a bailout? Either way, there are going to be more jobs lost, more bank failures, and probably a recession. Right?

PAUL LA MONICA, EDITOR-AT-LARGE, CNNMONEY.COM: Yes. I think, you know, using the "R" word, I mean, I think that's a bit of a technicality. Clearly, this is an economy where a lot of people are already struggling. So if it's a recession or if it's not, that really doesn't matter.

But the biggest problem I think that people are trying to wrap their heads around with the bailout is that it may not immediately affect you. Tomorrow morning you may not wake up and say, hey, my job is gone, or I can't get a loan anymore. But over the next few weeks and months, if we don't have any sort of plan, it probably will lead to more bank failures and banks pulling back on lending, which hurts everyone.

ROMANS: And it's a big unknown for what's going to happen and when. It's one reason why it's a tough sell to get all those votes, because you can't say this is what your constituents are going to feel right way.

People keep asking me, who are the winners and who are the losers in all of this? And what I keep saying, it's who loses the least. That seems to be the best way to put it.

JEANNE SAHADI, SR. WRITER, CNNMONEY.COM: Yes. We're spoiled (ph) in terms of problems, and I think Main Street is telling lawmakers -- I was talking to a leading economist just a little while ago, and he said, you know, they're telling lawmakers, we already are losing jobs, we're already losing our homes. So don't threaten us with that.

You know, the credit piece of it is more intangible for people. They can't see it, they don't necessarily feel it. Most people are still employed. Six percent, not a high unemployment rate.

HARRIS: Yes.

SAHADI: But he did say that he expects unemployment could go to 8 or 10 percent. And that's recessionary, not...

HARRIS: May I jump in here for a second here, Christine, with that wonderful panel of yours?

ROMANS: You never jump in for half a second, Tony. When have you ever jumped in for half a second?

HARRIS: So, Christine and the panel, terrific panel, America has voted through its representatives. America has said, we don't like this plan as it is currently constituted. We don't want to do this.

And you can't keep -- what do you say to the argument that you can't just keep papering over this problem? You can't just issue one bailout after the next. We understand on Main Street, that it is going to hurt, but better that we get more of the hurt out of the way now, that we deal with it now instead of passing it on to our kids.

ROMANS: Well, Main Street is already hurting. I mean, that's the thing here. They're already feeling it.

LA MONICA: Main Street is already hurting. And you know, I spoke to someone, a strategist this morning, who said that a lot of these people might actually reevaluate their position against the plan after looking at their 401(k)s this morning.

HARLOW: Right. After yesterday's drop.

LA MONICA: I mean, that's something that clearly, I think, has an affect. And when you look at the polls, it's kind of split about the bailout plan. It's just that the loudest people are the ones that are against it.

SAHADI: And the real element here that's not being talked about, internationally, Europe, Japan, they're slowing down, too. We have been living off of our exports to them. That has really propped up our economy up. That's not going to be there.

ROMANS: Jeanne, Paul, Poppy, thanks so much -- Tony.

HARRIS: Yes. And you can't say that, you know, you're investing for the long term, and then take a look at your 401(k) after -- and then make a decision on the...

ROMANS: Yes, it's down 25 percent this year, though. I mean, it -- I mean, people who could hold out when it was down 15 percent are now looking and saying, oh, wait a minute. I'm 15 years to retirement, I want to protect what I got. I can see why people are really, really concerned about that.

HARRIS: I love pushing back against you smart people.

Good to see you, Christine, and your money team.

We all have enough to worry about on the financial front, right? Do we really have to add pain at the pump to the mix? And what if there's nothing to pump?

(COMMERCIAL BREAK)

HARRIS: Drivers are still feeling squeezed in some southern cities, and many people thought a post-hurricane gas shortage would last a few days. Georgia's governor certainly felt that way. Now AAA says the situation may not return to normal for two more weeks.

You know, the Atlanta area seems to be the hardest hit. There have been long lines at stations running out of gas, plus panicking drivers topping off their tanks. Officials say that's a no-no. Shorter lines being reported at stations this morning, though deliveries are being used up by the higher demand. The defeat of the $700 billion bailout is doing more than just hitting the stock market. It is also prompting oil prices to tumble. Certainly on Monday that was the case, by the largest amount in 17 years.

CNNMoney.com's Poppy Harlow is back with an "Energy Fox" from New York.

Hi, Poppy.

HARLOW: Never get a break around here.

HARRIS: Yes.

HARLOW: Hi, Tony.

This is a story that didn't get a lot of attention yesterday, but people are focusing on it today. What we saw happen yesterday in the oil market was the second biggest decline ever.

Oil fell more than $10.5. It settled below $100 a barrel. Trading was so volatile yesterday, they halted electronic trading for a few minutes.

And we know, we've seen a lot of those swings lately, a number of reasons. Everything from hurricanes to supply concerns. But there is one thing that always factors in to the price of oil. That's the state of not only our economy, but the global economy.

The oil market is generally seen as a really good indicator of which direction investors think the economy is headed. One trader explained it well, saying that huge drop we saw Monday shows energy investors are not optimistic at all, especially now that that bailout bill didn't pass.

(BEGIN VIDEO CLIP)

JEFF CARTER, INDEPENDENCE ENERGY TRADER, CME GROUP: Oil sold off because there's expectations that you're going to have a global slowdown. I think the mood on the floor, at least from what we could gather from everybody, was that the bill was going to pass but it was going to be a narrow pass. And it was actually a narrow defeat. And so when you have a little bit of a change in psychology, you have a big reaction to it.

(END VIDEO CLIP)

HARLOW: A big reaction indeed. Emotion runs this market right now, whether you're talking oil or you're talking stocks. It all comes down to demand.

Also, when the economy falters, Tony, you know what happens. Americans and people around it's world pull back. And that's what's going on.

HARRIS: Absolutely. So if the bailout passes, Poppy, does that mean oil prices will spike?

HARLOW: Yes, you would think so. But another trader I talked to this morning said we may see a little spike, but it won't last. That it's going to take a long time to get the economy to bounce back, and therefore demand for oil to bounce back.

This is interesting. Some analysts say oil could fall as low as $60 an barrel. And that's an energy fix that a lot of us out there would like to see. But Tony, the reasons behind it, the fundamentals behind it, I think are even scarier to a lot of people than $100 oil -- Tony.

HARRIS: We were talking about $150 a barrel...

HARLOW: Back in July, yes.

HARRIS: Yes. And now it's possible that we could see -- oh, that is -- that would be an energy fix.

All right. CNNMoney.com's Poppy Harlow for us.

Poppy, thank you.

HARLOW: You're welcome.

HARRIS: Just two days until the VP candidates debate. A lot of the focus likely to be on the new face, Sarah Palin. What does she have to do to succeed?

(COMMERCIAL BREAK)

HARRIS: Just want to give you a look at the big board. The New York Stock Exchange right now. And, boy, the Dow's been in positive territory throughout the day. Really out of the gate, from the opening bell on, we've been in positive territory, triple digit territory. As you can see, the Dow up 242 points. The Nasdaq up 59 at last check. The S&P up 32. So all of the major indices in positive territory.

President Bush says Congress must approve a financial bailout or millions of Americans will face hard times. CNN's Kathleen Koch at the White House now.

And, Kathleen, boy, the president is certainly doing everything he can, working the phones, meeting with leaders on both sides of the aisle here and talking to the presidential candidates as well.

KATHLEEN KOCH, CNN CORRESPONDENT: That he is. You know, it's a full-tort court press. Of course, the president's been doing that for more than a week and it hasn't worked yet. But right now White House says this is really about regrouping. The president hunkering down with his staff, with really anyone who can offer up some good ideas and trying to come up with a plan b.

Now the president did speak out to the nation this morning on the rescue plan. He said he was disappointed in yesterday's vote. He realized it was a difficult vote. The president said, though, this is not the end of the legislative process. He said what matters is that we get a law. And he said the country is at a "critical moment" for our economy.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: As much as we might wish the situations were different, our country is not facing a choice between government action and the smooth functioning of the free market. We're facing a choice between action and the real prospect of economic hardship for millions of Americans. For the financial security of every American, Congress must act.

(END VIDEO CLIP)

KOCH: Deputy Press Secretary Tony Fratto said that, yes, the president did receive calls this morning from the two presidential candidates, John McCain and Barack Obama. That the president appreciated the calls. Both men offered their ideas. And Fratto said the calls were very constructive.

But Fratto also went on to say that right now the White House believes that the best solution is indeed the one that the House voted on yesterday. That at its core, it is the best way to proceed. Fratto said, well, there may be some ways to improve upon it and the administration is looking at all ideas. And, yes, he is still optimistic. Hopeful, he said, that they could get a vote on a new plan, Tony, by the end of the week.

HARRIS: Boy, the Senate minority lead, Mitch McConnell, saying the same thing.

Kathleen Koch at the White House for us.

Kathleen, appreciate it. Thank you.

KOCH: You bet.

HARRIS: The bailout breakdown and the Wall Street meltdown rippled across global financial markets. Russian stock markets had to suspend trading after heavy losses during the early going. The Irish government announced today that it will guarantee all deposits in its banks. The one-year guarantee covers six Irish banks and is in direct response to the turmoil in the financial markets. There were some glimmer of optimism today in Asia.

(BEGIN VIDEOTAPE)

HUGH RIMINTON, CNN CORRESPONDENT: I'm Hugh Riminton in Hong Kong.

Now an intriguing thing has taken place on Asian markets after what took places in Washington and on Wall Street. The markets tracked downward right at the open and it was mainly financial stocks bearing the brunt of it. But as the day went on, they started to find some resilience. Why might that have been? Two major reasons. One is, analysts and dealers here say the markets are factoring in the possibility that despite all the gloom out of Congress, probably, at some stage, a bailout plan will go through.

The other factor, though, is even more intriguing. And that is that Asian markets are starting to convince themselves that they are not more strict. That Asia is not the United States. And the contagion that has taken place in the U.S. need not affect Asia.

Hugh Riminton, CNN, Hong Kong.

(END VIDEOTAPE)

HARRIS: And happening right now in the crucial swing state of Ohio. Voters are lined up, ready to cast their absentee ballots under a new law upheld by state and federal courts yesterday. For the first time in the state's history, voters are being allowed to register and vote on the same day, instead of waiting 30 days. The state Republican Party argues the extra time is needed to make sure the registration applications are valid.

The candidates today, Republican Presidential Candidate John McCain is in Des Moines, Iowa. Right now he is talking with the media. But just last hour, he hosted an economic round table with a group of small business leaders.

Meanwhile, Democratic Presidential Candidate Barack Obama is no Reno, Nevada. Next hour he hosts a rally for his supporters. When that happens, we will bring you part of that event live.

While Obama and McCain are rallying their constituents, the VP candidates are busy cramming for Thursday night's debate. Democrat Joe Biden is in Wilmington, Delaware, his home city, whole Republican Sarah Palin is hunkered down at McCain's ranch in Sedona, Arizona. You can see the first and only vice president debate of this election right here on CNN Thursday. That is 9:00 p.m. Eastern Time.

Walking a fine line into Thursday's debate, experts say Sarah Palin has to show she understands the issues without looking like she's scripted. Here's CNN's Brian Todd.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT, (voice over): At the very least, Sarah Palin's getting valuable training on where political curve balls might come from. Like from a grad student in a south Philly cheesesteak joint.

UNIDENTIFIED MALE: So what do we do, cross border like from Afghanistan to Pakistan, you think?

GOV. SARAH PALIN, (R) VICE PRESIDENTIAL CANDIDATE: If that's what we have to do to stop the terrorists from coming any further in, absolutely, we should. TODD: On its surface, a position that seems more like Barack Obama's, it prompts her running mate to say on ABC's "This Week," we're on the same page.

SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: She shares my view that we will do whatever is necessary. The problem is, you don't announce it. You don't say to the Pakistanis, we're coming in unilaterally and carry out operations.

TODD: But as she prepares for what's clearly her most important public appearance of this campaign, GOP strategists say the stakes for Sarah Palin and the McCain campaign have been hyped up considerably over the past week. McCain's gambit on the financial bailout raised them, as did Palin's own perform in a CBS News interview parodied on "Saturday Night Live."

UNIDENTIFIED FEMALE, "SATURDAY NIGHT LIVE": Ultimately what the bailout does is help those that are concerned about the health care reform that is need to help shore up our economy, helping the -- oh. It's got to be all about job creation.

TODD: McCain campaign officials tell us they're not worried about Palin's debate performance. They say some of her other answers in network interviews show she understood the issues. Campaign aides say Palin is going to Senator McCain's ranch in Arizona to prepare and that some top staffers from the senator's campaign will help her. Analysts say she's got a tall order to show command of the facts and not look rehearsed.

LISA BURNS, QUINNIPIAC UNIVERSITY: If she's not comfortable at this point, she needs to do whatever it is it takes for her to get more comfortable so she can say a few things that are possibly off script, yet, of course, are still going to represent McCain's stance on these issues.

TODD: So Sarah Palin's clearly got to demonstrate command of the issues, but not look heavily coached. GOP strategists we spoke to say, while Palin's own gasps have contributed to the pressure on her, it's also true that expectations for her are so low that all she's got to do is avoid a major misstep and avoid losing this debate.

Brian Todd, CNN, Washington.

(END VIDEOTAPE)

HARRIS: And for all the latest campaign news, check out our political ticker. Just log on to CNN.com/politics, your source for all things political.

America is speaking its mind and lawmakers are listening. What are our I-Reporters saying about the bailout today?

(COMMERCIAL BREAK)

HARRIS: Take a look at this picture. David O'Dea (ph). He's a trader at the New York Stock Exchange right there on the floor. Rubbing his eyes after what was clearly a very difficult day yesterday. The Dow Industrial average dropping more than 700 points yesterday -- 777. A difficult day yesterday. A better day so far today. The Dow in triple digit territory, in positive territory throughout the day.

You know, the stock market losses, I guess they total to more than a trillion dollars yesterday. $1.2 trillion. Banks are going out of business and analysts are warning about a long and deep recession. But who's really to blame here? Consumers with massive debt? You and me? People with houses that perhaps we can't afford? Personal finance editor Gerri Willis joining us now.

So, Gerri, are we to blame for this here?

GERRI WILLIS, CNN CORRESPONDENT: I've got say, Tony, this problem is a lot bigger than consumers carrying too much debt. I've got to tell you, there are lots of people out there to point fingers to.

Originally the original consumers in the cross-hairs, they were people with adjustable rate mortgages. They were subprime borrowers. People who did not have the best credit. This was often their first time in the marketplace. They were unfamiliar with the landscape. How it worked. They trusted their bank, their broker, their mortgage broker to get them the best deal possible.

And what did they get? You know, they got pre-payment fees. They got exploding arms. There's also Wall Street here, which packaged these investments and sold them all over the globe. As a matter of fact, Wall Street, two years ago, made something like $62 billion in just bonuses to people, right?

HARRIS: Right.

WILLIS: So now the FBI is investigating. And who do they have in their cross-hairs? Well, it's not consumers, obviously. It's Freddie Mac, it's Fannie Mae, it's a host of companies, as well as fraud artists who got into those things. So there's lots of people to point the finger at.

HARRIS: But no matter who's to blame here, it sounds like there's plenty to go around. Are there some real lessons for consumers? Because you talk about this every day with us.

WILLIS: Well, you know, Tony, it is time to get serious. You have to understand your own money. You can't rely on a broker or a banker or even a trader, anybody else to tell you how to spend your money and what you should invest in. You've got to become educated and understand what you're doing. Take stock of what you can afford when you're making a major purchase, like a house.

And for those people out there who are in a lot of trouble right now, and I know there are a lot of worries, particularly with people who are in mortgages they can't afford, get some help. The National Credit Counseling Foundation will take your phone line. They have a hotline. It's call the Hope hotline. Call 888-995-HOPE. The Department of Housing and Urban Development can also help you. Go to hud.gov. There are people out there to help you out here and I know it's a problem for it of people.

HARRIS: And we're also talking about our personal finances. And at some point here, we have got to take control. We have got to take control of this credit card debt. We have got to do it, Gerri. We've got to get our credit scores in some kind of shape so that when credit is available again, should that happen, we can have access to those markets for home loans and school loans and car loans and the works.

WILLIS: That's right.

HARRIS: Thanks, Gerri.

WILLIS: And it will come back.

HARRIS: Yes. Yes, yes, I think you're right about that. Absolutely.

WILLIS: It will come back and the country will continue working and the stock markets will continue working.

HARRIS: And, look, the sky is up. Folks are saying the sky was going to fall in and it's a new day and the sun's out.

All right, Gerri, appreciate it. Thank you.

WILLIS: My pleasure.

HARRIS: You know, more than two weeks after Hurricane Ike ripped through Texas, the bodies of three more victims have been found in that state. That brings the death toll to 67 people. The storm caused flooding and deaths as far away as Pennsylvania and Illinois. Volunteers and fishermen searching through storm debris found the latest victims in Galveston and Orange Counties.

Meanwhile, the power is still out for some 110,000 people living in Texas and there is fallout for the energy companies. One firm estimates its damage from both Ike and Gustav at more than a billion dollars. Boy, that's a story to tell there.

Let's bring in our Chad Myers.

Chad, we're trying to, you know, find some time to shoehorn you in here with all of this financial news today because there is something to report in the tropics there behind you.

CHAD MYERS, CNN METEOROLOGIST: Well, we've got another name out of the way. Tropical Storm Laura. Yesterday it was a sub tropical storm, which just means it wasn't really warm enough, didn't look that good. It was out there but it wasn't doing very much.

Now a 60 mile-per-hour storm. Here's Nova Scotia and all the way over. So we are way out here in the middle of the Atlantic Ocean. Not going to hit anything, except maybe make some waves up for Iceland and then gets stuck up into the jet stream. And it will maybe make some kind of a windy run at the British Isles. We'll have to see about that. So in October, where do our storms come from? Not typically out in the middle of the Atlantic, where this one is, but closer to the shore. Because this is where the gulf stream still is. The water's still fairly warm here along the East Coast and also down into the Caribbean. But these areas are going to get smaller and smaller and by November there's not much left whatsoever because the cold air is on the way. Cold air makes cold water. Cold water will not make hurricanes.

Look, right now it's 61 in Buffalo. Fifty-seven up in Toronto. All part of a big cold front that's going to make its way all the way to the south. The only problem with this is that we're not going to see any rainfall from it or not much from it. We really would like to see a cold front bringing a lot of rain to the Southeast. The drought-ridden Southeast. And now we don't have water and we don't have gas. So now what do we do? What's next, you know?

HARRIS: Maybe we won't be able to find bread and milk and maybe that's next.

MYERS: You know, my car says 40 miles to empty. Which means I can make it home tonight. I can make it back here tomorrow and then I have to stay at a hotel.

HARRIS: That's right. A half a tank is the new empty. That's my motto.

MYERS: I have to stay in a hotel. What am I going to do?

HARRIS: Then what are you going to do. All right, Chad. Appreciate it. Thank you.

MYERS: Yes.

HARRIS: You know, we've got a lot of emotional viewers submitting I-Reports about the bailout. Let's take a trip to cnn.com's I-Report desk and check in.

And one of the guys helping run things down there, there he is.

: Hey, Tony.

HARRIS: At the I-Report operation. There he is, producer Tyson Wheatley.

Tyson, I understand you talked to one guy who's glad the bailout didn't pass?

TYSON WHEATLEY, I-REPORT PRODUCER : Yes. Pete Crabara (ph). He's a doctorate student in St. Louis. And he says, you know what -- you know he's been watching CNN a lot and he's been hearing from folks that say that our readers and our viewers don't support the bailout because they don't understand it. He takes real issue with that and he sent in this pretty interesting video. He says, you know what, I'm glad it failed because the taxpayer shouldn't have to foot the bill. Check it out. (BEGIN VIDEO CLIP)

PETE CRABARA, I-REPORTER: The real story playing out right now is that the fact that the American public has risen up as one in opposition to this bailout and inundated their congressional representatives with e-mails, letters, and phone calls demanding that this bailout not occur.

(END VIDEO CLIP)

WHEATLEY: So, Tony, that's a pretty typical response that we're getting right now. A lot of frustration.

HARRIS: Well, I've got to tell you something, look, America, I've said it a couple of times today, that America, through its representatives, had its say. And, boy, you saw what happened with the bill.

Hey, what else are you getting in? What other video are you looking at, Tyson?

WHEATLEY: OK. Something a little different. Well, let's just go right to the video. It's really excellent. This is a waterspout from Key West. This comes to us from David Ross. He's actually a meteorologist with the National Weather Service in Key West. He saw this forming yesterday, so he went up to the top of the roof with his co-workers and shot this pretty cool video.

HARRIS: What is he, part storm chaser as well? Take a look at that. Boy, that's pretty amazing when we see those.

Hey, I know you're also asking for submissions today. What do you want to get from your i-Reporters?

WHEATLEY: We're going to try something really fun today, actually. You know, tomorrow the . . .

HARRIS: Pretty big anniversary, yes.

WHEATLEY: Tomorrow's the 100 anniversary of the Model T, Ford's, you know, classic assembly line. And so we're asking something fun. We want to know, what's the first car that you ever drove? What's the first set of wheels you got behind, you know, and tell us the story behind it. So we're getting a humongous response right now. And it's actually kind of fun. A lot of great stories.

HARRIS: It was a '77 -- no, it was a '70-something or other Chevy Nova.

WHEATLEY: OK.

HARRIS: When was the last time you even heard the word Nova?

WHEATLEY: Yes, it's been a while.

HARRIS: That's crazy. WHEATLEY: Mine was a '92 Ford Hatchback.

HARRIS: It was?

WHEATLEY: I'd love to see a photo of your Nova, though.

HARRIS: Let's get some of those submissions and let's talk about it tomorrow, all right, Tyson.

WHEATLEY: Let's do it.

HARRIS: Appreciate it. Good to see you, sir. Thank you.

WHEATLEY: Take care.

HARRIS: Just a horrible story. A little girl found wandering the streets. We told you about this yesterday. Her story leads to a nightmare discovery.

(COMMERCIAL BREAK)

HARRIS: Just a shocking crime to tell you about. A Maryland mother is being held without bond after police found the bodies of her two adopted children in her freezer. Even more disturbing is how police discovered them. Bruce Leshan from our Washington affiliate WUSA has the story.

(BEGIN VIDEOTAPE)

BRUCE LESHAN, CNN CORRESPONDENT, (voice over): Sheriff's deputies are trying to comprehend what to neighbors seems incomprehensible.

UNIDENTIFIED FEMALE: Just the thoughts of them saying, mommy, why are you doing this to me, you know, it's sad. God, it's sad.

LESHAN: Nancy Sears (ph) lives just across the street.

NANCY SEARS, NEIGHBOR: Never. I had never seen a child there. Not the whole time.

PHILLIP GARRETT, NEIGHBOR: She was walking up this road and initially we just saw a little head and two ponytails.

LESHAN: It was neighbor Phillip Garrett who may have saved the eight-year-old girl's life.

GARRETT: And she said, my mom beats me to death. She hits me all the time. That's what I'm going through.

LESHAN: He found her bloody and beaten wandering the road after she had escaped out her bedroom window from what authorities suspect was years of abuse.

GARRETT: She told us that she had two sisters and that her mother beat them to death and that they just didn't come home one day.

LESHAN: She told you that her mother beat them to death.

GARRETT: That's what she said. And that's exactly what she said that she was doing to her as well.

LESHAN: What the little girl didn't know was that her sisters were still inside the modest home. Police found the chest freezer in the basement and suspect that Rene Bowman (ph) beat her two daughters to death in Rockville, perhaps a year and a half ago, stuffed them in the freezer and then somehow transported the whole freezer into the Lusby (ph) house when she moved in this past February.

And then you went back and asked the mother about it and she told you?

UNIDENTIFIED MALE: Yes. Yes.

LESHAN: She told you what?

UNIDENTIFIED MALE: Told us that both of her daughter were in that freezer.

LESHAN: You feel like maybe you saved her life?

GARRETT: I feel like I would be afraid to figure out what would have happen had I not called the police. Had I not let someone know of higher authority that something was going on, what could have happened to her.

LESHAN: You don't want to know?

GARRETT: I don't want to.

(END VIDEOTAPE)

HARRIS: The girls never attended school in Calvert County where they lived, so no one ever suspected anything was wrong.

We're back in a moment.

(COMMERCIAL BREAK)

HARRIS: You know, with the China food scares comes real concerns about what we're eating. A new federal law goes into effect today that could give you some answers. But as our chief medical correspondent, Dr. Sanjay Gupta reports, there are loopholes in the new law.

(BEGIN VIDEOTAPE)

SANJAY GUPTA, CNN CORRESPONDENT, (voice over): COL labels, country of origin labels, pretty good name for something that's been a long time coming a lot of people would argue. This idea of being able to know where your food comes from is something that's gained a lot of momentum, especially with a lot of these recent food scares. So I want to tell you specifically what foods we're talking about overall here. Meats, whole cuts and ground, as well as fish and shellfish. Some of those have been labeled for some time already. Fruits and vegetables, nuts and even some supplements, as you see there as well.

But if you take this a step further, and I think it's important to do this, you'll recognize that not all foods are labeled, and that leaves some pretty big loopholes in the entire system. For example, I went to the grocery store here. Take a look at this chicken. A raw chicken like this, this would require a label. But if it's cooked or processed in any way, it no longer require as label. So this chicken, for example, over here, would not.

Even something like raw peanuts. Peanuts over here, you would have to have a label, which country these peanuts came from. If they're roasted, though, they no longer require a label.

And the thing that I think perhaps is most concerning is when it comes to fruits and vegetables. For example, this cantaloupe has a product of the U.S.A. label on it already. But if it's cut up in any way and put into a fruit salad, it no longer require as label. Now this is important because a lot of the food scares, for example, have come specifically from processed food.

Now if you want to get your lamb specifically from New Zealand or you want to get your grapes specifically Chilean grapes, you're going to be able to do that more likely than before. And these labels are going to come in all forms. Little stickers, little twist ties, little signs.

But keep in mind that some of the most recent food scares in the United States have come from within the United States. For example, that E. Coli scare in spinach. That came from California.

So this is a good move but it doesn't quite go far enough yet. Stay tuned.

Back to you for now.

(END VIDEOTAPE)

HARRIS: All right. The CNN NEWSROOM continues right now with Betty and T.J.