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AMERICAN MORNING

President's Housing Plan Details to be Released Today; Clinton's Mideast Mission; Debate Heats up over Clean Coal; Train Crash Texts Revealed; Is Dow Obsession Stalling Recovery

Aired March 4, 2009 - 06:00   ET

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


JOHN ROBERTS, CNN ANCHOR: Good morning. Thanks very much for being with us on this Wednesday. It's the 5th of March, and a good day to all of you.

KIRAN CHETRY, CNN ANCHOR: That's right. You sound a little throaty today.

ROBERTS: You know, it's this allergy thing that just got me and it like grabbed a hold of me. And I wish I could reach down in my throat, into my lungs and pull the cat out that I inhaled. I'm sure I inhaled a cat on Saturday night.

CHETRY: I know. And it seems like everybody...

ROBERTS: I can hear it going meow down deep inside there.

CHETRY: Allergies or the cold, something's going on. It's March, though. And welcome. Glad you're with us this morning.

We have a lot to cover. Topping our agenda right now, President Obama is about to roll out his $75 billion plan to help homeowners who are at risk of losing their homes. And as we speak, we have new information coming into our White House team about this plan.

Our Suzanne Malveaux has dialed into her sources and standing by live outside of the White House. We also have Christine Romans and the money team here to break down the impact for you on how this plan could affect you.

Also happening right now, Secretary of State Hillary Clinton is in the Middle East. She is meeting this morning with Palestinian Authority leaders. This is new video just in to CNN from Ramallah in the West Bank, and we are actually expecting a news conference in just minutes.

We're tapping into the global resources of CNN. We will bring it to you live. We're also checking in with Jill Dougherty. She is traveling with Secretary Clinton right now.

ROBERTS: Sorry it's the 4th of March, not the 5th of March.

We begin with breaking news this morning. We're standing by for new details of President Obama's lifeline for homeowners drowning in debt or foreclosure. The $75 billion plan essentially helps two groups of homeowners, those on the brink of foreclosure by providing incentives for them and to lenders to modify mortgages, and those who are current on their mortgages but can't refinance because of falling home prices.

CNN's Suzanne Malveaux is the only reporter live at the White House this early in the morning. The plan's been talked about in Washington for weeks now, finally coming to Main Street. It looks like there are some modifications from what we originally thought the plan was going to be, Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: You're right. I mean, this is something that candidate Obama promised on the campaign trail, and he also outlined at least the introductory about two weeks ago when we were in Phoenix, Arizona. But today is when those new details are released to the banking and the lending institutions. Today is the day that you figure out whether or not you qualify to actually benefit from his housing plan.

One of the things that they are really concerned about, how much people are spending when it comes to their mortgage payments. The percentage of their gross income, monthly income, they don't believe it should be any more than 31 percent. So today you're going to be getting details. Do you qualify? Are you one of those people that can actually lower your mortgage rate?

Now, how do you get this information? There's definitely a sense of urgency here. They want to get this out even before the markets open, John. So, there are two places you can go.

One is the HUD Web site. That's Housing and Urban Development. It's hud.gov. The other one, the treasury Web site. That's ustreas.gov. You can go to those Web sites.

We also expect that just in the hours or so, people are going to be able to get that information from their banks, from the lending institutions whether or not they qualify to see their mortgage rates go down, John.

ROBERTS: All right. Big day for homeowners in trouble today.

Suzanne Malveaux live for us at the White House. Thanks, Suzanne. We'll let you keep working your sources. We'll get back to you a little bit later on.

CHETRY: And we do want to dig a little bit deeper on this, breakdown the president's plan. Christine Romans is here "Minding Your Business."

It seems there's sort of two groups of people this may help in terms of that. And so, tell us who may qualify.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: This is the first sort of broad look, the broad attempt to try to fix the foreclosure crisis. This is what a lot of people have been waiting for. We've seen little ad hoc programs here and there, private and public partnerships but they haven't really worked on a broad scale. This is the big hope that this one is going to work. Let's talk about the two groups. Program one, according to zillow.com, their analysis, there could be maybe 14 million mortgage holders who can consider themselves in that program one. These are people who are current and able to pay their mortgage but they need to refinance into lower monthly payments. The idea here is to get people help before they fall behind, people who need to get into a more affordable loan so that they will not be a foreclosure statistic. So this is helping people who can be helped and try to stop this crisis.

Program two, this is three to four million homeowners helping them avoid foreclosure. These are people who are already behind and unable to pay their mortgage. The lender may lower their interest rates and/or the principal. And this is essentially modifying the loans to 31 percent of monthly income as Suzanne was talking about. Hud.gov, ustreas.gov.

We're going to have more details for you throughout the day. There are hundreds of thousands of people who potentially could qualify here, potentially could help lower their mortgage payments here and try to figure out how to avoid foreclosure. So a lot of information we'll be bringing throughout the day to try to figure out who qualifies and will it work frankly.

CHETRY: It's interesting. "The Financial Times" today has a scathing rebuke of this, I guess you could say, calling it a policy disaster because they say it doesn't address the root causes of the housing market dysfunction, and saying that there's no real reform to Fannie and Freddie in the way that we lend money and the fact that so many people are overleveraged.

ROMANS: There's a lot of arguments about what we're doing, why we're doing it. It's just the mechanics of this.

You know, if you're somebody who's behind in your mortgage, you don't care about that argument going on in Washington right now. You care about figuring out if you qualify for this thing and if it's going to help you lower your monthly payments. So we'll try to figure out (ph) and find out exactly who is going to benefit and what they can do about it right away.

ROBERTS: It seems as though they've narrowed the criteria, too.

ROMANS: Right.

ROBERTS: Because there was that great human cry after they first announced this program in mid-February.

ROMANS: Yes.

ROBERTS: That hey, wait a minute. This is helping out people who are making their mortgage payments. It's rewarding people for doing what they're supposed to be doing.

ROMANS: And it's typical because you want to help people before they get in too much trouble but you don't want to spend taxpayer money to help people who could help themselves in the first place. So, it's a fine line and it will be very interesting to see how they can make sure that they don't -- they don't, you know, start that human cry one more time on that.

CHETRY: Christine, thanks.

ROMANS: Sure.

CHETRY: We'll be talking about this throughout the morning as well.

Also this morning, changes to a key part of the president's plan which allows bankruptcy judges to modify mortgages for homeowners nearing foreclosure. Here's more now on an "AM Extra."

Under the agreement between Democrats and lawmakers, judges have to decide whether a homeowner was offered a reasonable deal by their bank before the court gets involved. Secondly, homeowners must prove that they're exhausting all other options before they can use bankruptcy to reduce their mortgage payments and the House could actually vote on this bill as soon as tomorrow.

ROBERTS: Another story developing right now, Secretary of State Hillary Clinton's trip in the Middle East. She has just finished up meeting with Palestinian Authority leaders in Ramallah, and we are minutes away now from her news conference with Palestinian President Mahmoud Abbas. Clinton is in the West Bank this morning after meeting with Israeli leaders in Jerusalem on Tuesday.

CNN's Jill Dougherty is in Ramallah traveling with the secretary on her diplomatic mission, her first one to the Middle East. And Jill joins us now on the phone.

Jill, is there any greater hope today that a Middle East peace settlement could be reached? There are so many people who are very pessimistic that this could happen at all.

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: They really are, John, and the complications are very serious because after all, you have the new Israeli government not even formed yet. And if Benjamin Netanyahu is the prime minister, as is expected, he could take a harder line with his coalition. He also doesn't believe or doesn't really promote one of the bedrocks of U.S. policy and that's the two-state solution. So you have a lot of complications, and then here in the Palestinian territories, you have the Palestinian Authority which really is, has no power in Gaza.

They're trying to pull together a unity government, and from every side you look, there's a lot of complication. That said, the message really that Secretary Clinton is taking is that there has to be a way that there really is no option.

And just a few minutes ago, we went to a school, and this is the school that gets funding from the United States and the secretary was explaining that they're going to be increasing this funding to that school and a program throughout the Palestinian territories to take kids, disadvantaged. Now many of them are refugees, come to the United States, study at the university, and as she put it, preparing the next generation. And the argument could be made that unless they really have those people in place of this next generation, the two- state solution simply won't happen.

ROBERTS: All right. So there's so much pessimism about a Middle East peace settlement between the Israelis and the Palestinians but now a lot of people are thinking that the better chance is to turn the U.S. attention towards Syria, that perhaps that could be the key to unlocking the entire Middle East.

DOUGHERTY: Exactly. And yesterday the secretary announced that two diplomats, one from actually two envoys, one from the State Department, one from the White House, will be going to Syria, and this is a pretty rapid warming in relations between the two countries.

Syria could be crucial on a number of different fronts in the Middle East for bringing that possible piece, so that's one. Those diplomats will be traveling, we understand, this weekend, and they've already met with the ambassador. He came to the State Department last week. There have been congressional delegations, et cetera, so they're moving on that track very quickly, trying to get something done.

ROBERTS: Jill Dougherty for us this morning from the West Bank. Jill, thanks so much. We'll check back with you a little bit later on.

CHETRY: And we are standing by for Secretary of State Hillary Clinton's live news conference from Ramallah. We're going to dig deeper into her Mideast mission with former State Department official Jamie Rubin.

Stay tuned. It's eight and a half minutes after the hour.

(COMMERCIAL BREAK)

CHETRY: Welcome back to the Most News in the Morning. Here are some of the stories that we're watching right now.

The Coast Guard calling off the search now for two NFL players and a third man missing at sea since Saturday when their fishing boat capsized off of the Florida coast. Crews have narrowed the search for Marquis Cooper, Corey Smith and former South Florida football player William Bleakley, after a fourth boater, Nick Schuyler was rescued on Monday. Coast Guard officials say that if the men were still on the water's surface, that they would have been found by now.

Well today's court appearance for disgraced financier Bernard Madoff regarding his attorney has been postponed until next week. This morning, though, we're learning new details that some could benefit, the victims of Madoff could benefit. Court documents showing Madoff will hand over his investment firm and company perks, like artwork, entertainment tickets, which once liquidated could be used to pay back some investors. Madoff's lawyers are still fighting to keep his apartment. Well, the Kennedys have been described as America's royal family. Now, Massachusetts Senator Ted Kennedy has a title to go along with that. Kennedy has been awarded an honorary knighthood by Britain's Queen Elizabeth. That award is in recognition of Kennedy's service to the relationship between the U.S. and the U.K. and Northern Ireland. 77-year-old senator, of course, as we know is battling brain cancer -- John.

ROBERTS: You know, looking back to the first story that you're telling us about there, how difficult it would be for those families of the three guys missing out there in the Gulf of Mexico just to never know what really happened.

CHETRY: I know. And, I mean, even yesterday when we were doing the story here the fact is that the one survivor, Nick, was able to say all four of them at one point were holding on to the boat and had life vests on them. Well, when they found him, he was the only one still holding on to it.

ROBERTS: And we still don't know exactly what happened to them during that time either, so there will be more details on this to come out.

It's 13 minutes now after the hour. We're watching the situation in the Middle East. Secretary of State Hillary Clinton after meeting with Palestinian President Mahmoud Abbas will be out to give a live press conference in just the next few minutes about what took place there and whether any progress toward a peace deal might be made. Also talking about this idea of negotiations with Syria over a possible peace deal and how that could sort of unlock that Gordian (ph) Knot in the Middle East dealing with Iran, Hamas, the Palestinians and the Israelis.

We've also got Jamie Rubin. He's going to come in and give us some perspective and analysis on all of this, so stay with us. We'll be right back.

(COMMERCIAL BREAK)

ROBERTS: Happening right now, Secretary of State Hillary Clinton is in the West Bank for talks with Palestinian Authority leaders. She's about to hold a news conference with Palestinian President Mahmoud Abbas in Ramallah. We're expecting that in the next three or four minutes and we'll go live to it when it happens.

Secretary Clinton met with Israeli leaders on Tuesday. And joining us now to talk more about this first diplomatic mission of the secretary to the Middle East, Jamie Rubin, who served as the assistant secretary of state during the Clinton administration. Good morning, Jamie. Good to see you.

JAMES RUBIN, FMR. ASSISTANT SECRETARY OF STATE: Nice to see you, John.

ROBERTS: So what if, I mean, people don't hold out much hope that there is going to be a Middle East peace deal any time in the near future just because of the dynamic there with Hamas, the Palestinian Authority, potentially Benjamin Netanyahu becoming the next prime minister. What do you think?

RUBIN: Well, I think it's going to be very difficult with the presence of Hamas in the region that doesn't recognize Israel, doesn't recognize past agreements. Nobody wants to do business with them and if you don't have any direct engagement, it's very hard to see a long- term peace deal.

It's possible to see some sort of cease-fire, but that's the best one can really imagine going forward. On the other hand, there is one place, one issue that I know you were about to get to, Syria, where people can imagine that a hard-line Israeli government could do business with a hard-line Syrian government, in a sense, based on classic security interests, territory for peace and security, as opposed to all the complex issues wrapped up in the Palestinian issue, Jerusalem, refugees, water, all these complex issues. The peace deal with Syria has always at least in theory been a straight trade land for peace.

ROBERTS: I was covering the Clinton administration back when you were the assistant secretary and I remember 1999, we're on a trip to India and Pakistan. There was an emergency stopover in Geneva because Hafez al-Assad (ph), Bashar al-Assad's father, said that he wanted to meet with the president. He just happened to be in Geneva.

Everybody dropped everything. We flew into Geneva. Meetings went on and Assad basically stiffed him back then that Clinton thought that maybe there's this idea of a breakthrough with Syria potentially. What's changed between then and now that would bring Syria to the table?

RUBIN: Well, first of all, I wouldn't promise that it's going to succeed but I think it's worth trying. And what's changed is that Syria has been isolated for a long time, that Hafez Assad's refusal to negotiate at that time based on a disagreement of a very small amount of tiny strip of land has not served Syria very well. They've been isolated ever since and now they're forced to be in the camp of Iran, and look to Iran for possible openings to the world and the result is that if Syria can see what's in its interest, how to open up to the west, how to get out of the hole they've dug for themselves, they can get back to go on hikes.

This is something that would be a dramatic gat, so to speak, for the son of that president, Hafez Assad. Whether Bashar Assad, the son has the guts and the gumption and the toughness to negotiate such an outcome, I don't think anybody knows. I mean, it's a long shot but it's still the best possible option out there.

ROBERTS: Just looking at live pictures here in Ramallah and still the secretary and the Palestinian president yet to come out. We'll keep monitoring that situation.

But let me take you back to what you said about the Golan Heights. Do we have any reason to believe that Israel would ever give back all of the Golan Heights and if they didn't, could there ever be a peace deal?

RUBIN: Well, I think the short answer to that is yes. We do have reason to believe the Israelis will give back all of the Golan Heights. There may be a disagreement about some territories, some land erosion around a lake but the idea of giving back this mountainous area that was obtained during the '67 war is something that conservative and liberal prime ministers in Israel have accepted behind the scenes. They don't want to admit it publicly but behind the scenes, Barack in negotiations where I was an observer and participant during the talks with President Clinton and Madeleine Albright made clear that he was prepared to give back the Golan Heights. Benjamin Netanyahu in negotiations through intermediaries made clear that yes, under certain circumstances they're prepared to give back the Golan Heights. So it's possible. Extraordinarily difficult.

ROBERTS: All right. Jamie Rubin, stay with us if you would, because after the press conference we'd like to get some analysis and perspective from you.

So, don't go away. Don't go home for breakfast just yet. Thanks, Jamie - Kiran.

CHETRY: Twenty-one minutes past the hour. Time to fast forward to some of the stories we'll be hearing about on CNN later today.

President Obama's top moneymen will be back on Capitol Hill today to lobby lawmakers on the president's $3.6 trillion budget blueprint. Both Treasury Secretary Timothy Geithner and budget director Peter Orszag faced sharp criticism Tuesday from Republicans who have issues with the size of the spending plan and especially the tax increases.

Right now, pressure is mounting on Swiss bank UBS to release the names of Americans hiding money from the IRS in that country. This afternoon the bank's chief financial officer will go before a Senate subcommittee and lawmakers are expected to press the bank to turn over the names of some 52,000 people. We'll be monitor the meeting and we'll let you know what they say.

Also this morning, Senators John McCain and Russ Feingold, as well as Congressman Paul Ryan hold a news conference to announce a renewed attempt to curb wasteful spending. They plan to reintroduce a line-item veto bill that would target earmarks, improve congressional accountability and promote fiscal discipline.

All right. Right now, we are coming up on 22 minutes past the hour.

(WEATHER REPORT)

ROBERTS: President Obama right now working on a plan to go after the toxic loans that lie at the heart of the financial crisis. We're going to break down what the administration is considering and get reaction from some of the best economic minds in the country live in our studio this morning.

It's coming up on 24 minutes after the hour.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT (voice-over): Astronaut or aquanaut? The concept of flying underwater sounds crazy, right? But not to engineer Graham Hawkes who gave the submarine wings. Yes, wings.

GRAHAM HAWKES, HAWKES OCEAN TECHNOLOGIES: We just had to tear out everything we knew about submersibles and start again, on wing subs, underwater flying machines. The machines we built move underwater should look like aeroplanes not submarines. Airplanes don't look like balloons.

TUCHMAN: Hawkes says his so-called underwater submersibles are designed to be more agile than any creature living in the ocean, well, except for maybe dolphins. He's been building these crafts for over a decade.

HAWKES: We're the first to fly with big sharks and it's a hell of a reward. I can tell you that.

TUCHMAN: But Hawkes isn't keeping all the fun for himself. You, too, may someday fly underwater. He's now building submersibles for adventurers and private companies.

HAWKES: If you want to stalk a shark, if you want to go a great white and go woo-hoo, you want to do a barrel roll with a whale. Shall we go and find some new territory humans have never seen before? Now, on land that's incredibly difficult. Underwater, anywhere.

TUCHMAN: Gary Tuchman, CNN.

(END VIDEOTAPE)

ROBERTS: It's coming up now at 28 minutes past the hour. And checking our top stories this morning, Mexico amassing troops at the Texas border in an effort to end the drug war that has claimed some 2,000 lives in the past year. President Felipe Calderon has ordered thousands of army soldiers and federal officers into Ciudad Juarez, a major stop for drug smugglers into the United States. Mexican drug cartels have been fighting for control of the trade in cocaine, heroin and marijuana.

China beefing up its military muscle this morning announcing plans to boost defense spending by nearly 15 percent. Beijing says the money will be used to pay for better salaries and to modernize its military. It's the 19th double-digit increase in spending in the past 20 years.

And there is just one, just one lucky winner of the mega millions jackpot, the winning ticket worth a whopping -- get this -- $212 million. It was bought in Ocean County, New Jersey, which would give us some insight as to where the lucky winner might be, Kiran. CHETRY: There you go. Just one winner, unbelievable for that big, big jackpot. It's not us, although we'd be here anyway.

Turning to breaking news, new details emerging right now about the president's housing rescue plan. Here's what we've learned so far.

First, it's designed to lower monthly payments for homeowners at risk of losing their home and second, help those who still are paying their mortgages but may be in trouble down the road because they can't refinance due to falling home prices.

Jeffrey Sachs, the director of the Earth Institute at Columbia University, as well as Diane Brady, the senior editor of "Business Week," join me to talk more about this, as well as the bad banks funding plan, which we'll get to in a second. Welcome to both of you.

DIANE BRADY, SR. EDITOR, "BUSINESS WEEK": Nice to be here.

CHETRY: Diane, we talked about this housing plan before and when this announcement was first made. Now we're getting new details this morning. What are your initial thoughts on who this is going to help and how it's going to work?

BRADY: Well, I think anything right now that helps homeowners retain their homes is genuinely a good move. There's been too much attention on the banks, so I think this is going to allow more Americans to stay in their homes for longer and that's what the economy needs right now.

CHETRY: A little bit of an outcry, Jeffrey, when we first started hearing details about the plan, people who were critics said hold on, this rewards people that perhaps made bad investments knowing they couldn't pay and it just seems too wide-reaching. It seems they've distilled it down to two distinct categories. Is this going to make it clearer and are people going to understand better whether or not they qualify?

JEFFREY SACHS, DIRECTOR, EARTH INSTITUTE AT COLUMBIA UNIVERSITY: Well, it does make it clearer. I think there is no perfect solution because obviously people are in trouble, also overborrowed and so others are saying why should they be bailed out. But the fact of the matter is we're in crisis. Everybody has to both pitch in and also those who need it need a helping hand right now. So I think this is pragmatic.

CHETRY: Pragmatic. That's interesting. There's also a scathing review of this in the "Financial Times" today by Christopher Joy. He says "It's merely treating the symptoms of the calamity in an extremely costly manner and remarkably does nothing to prevent the next generation of borrowers experiencing the same problems."

And Diane, when we talk about that, you both make a valid point which is that you got to do something in the short term to make sure this doesn't happen. What about the long-term strategy to make sure -- I mean, do we truly understand why we're in this predicament and how to prevent it in the future?

BRADY: Well, yes. I think -- I think the reality is essentially is that we borrowed too much money for things that we didn't need. And Americans have been overleveraged. And too many people in homes, they essentially and ultimately cannot afford. But the reality is right now you want to keep those people in their homes.

The macro issue, yes, we have to deal with that. We have to deal with the fact that there's too much debt in most households, and many people have assets they can't afford.

CHETRY: So Jeffrey, looking, you know, on the horizon for getting past this current financial crisis are we just talking about living a different lifestyle than we've grown accustomed to living. And the fact that the U.S. economy runs on people spending money, and it's run for years on people spending money that they didn't have.

SACHS: Definitely consumption is going to be lower for years to come, because the loss of wealth, the paper wealth, the housing values and the stock market, is now about $15 trillion in this country. Worldwide, it's about $40 trillion. That's a lot of money to drop in a year and that's what's happened. So all over the world, consumption is down. The idea is, rather than having that turn into unemployment, we need to increase investment, partly through government, so that the demand for goods and services, the jobs are maintained and we turn those resources into something valuable for the future. That's the essence of President Obama's plan, and he's got that right.

BRADY: One of the big realities going forward is we will not get the access to credit that we had before. I mean, that's the big issue, not only do we want to be more frugal, the fact is we're not going to be allowed. Foreigners aren't going to basically fund our debt to the extent they have, and we're not going to be getting as much credit as we used to.

CHETRY: Which brings us to the banking crisis in this bad bank funding plan. Apparently, the administration is trying to solve what's been called one of the toughest riddles at the heart of what's been going on. And this is this, how do you value these toxic assets that are on the banks books that are really bringing them down. This so-called mark-to-market and on and on.

Jeffrey, explain it to us in a way we can easily understand. How is this private/public partnership going to work?

SACHS: The problem is the banks are loaded down with bad assets. If you take them off the books of the banks at too high a price you're bailing out the shareholders. If you take them down at too low a price, you could wreck the banks and wreck the value. Nobody knows exactly what they're worth. So there is a big puzzle. We need a lot of transparency in this process.

One of the amazing and distressing things that's happening right now is the decisions being taken by just a few people are moving trillions of dollars right now. This is very unusual. Not very satisfactory. So whatever is done, we need a lot of transparency to understand who is taking the risk, what are the taxpayers getting out of it. This can't just be an insider play. And so I'd say process plays a big role in this. There is no easy answer to this.

Some of us -- I've made my own suggestions, others have made their suggestions about ways to find that middle balance, but it is tricky. And to satisfy the American people properly, we need a lot of transparency, not just back room deals.

CHETRY: And Diane, that's the interesting, you know, fissure I guess you could say where, you know, we know that banks need to succeed, but we also don't want them to be rewarded. And so it's sort of these dueling feelings about where we're headed.

BRADY: Well, and I think banks don't really have a handle yet on their own liabilities. You look at a year ago, AIG for example was still telling the market that everything was OK. Now they've racked up a $60 billion loss, the largest in history. And we've poured almost $200 billion into this company so I think the reality is that we don't really know the total value of these toxic assets. But what we do know is that the banks have to survive, and we need to sustain the economy as long as we can until we get out of this.

SACHS: But we don't need to bail out the shareholders in the midst of that.

BRADY: Agreed. Agreed.

SACHS: It's absolutely unacceptable that Wall Street took $18 billion of bonuses this year. That's a disgrace. And that really needs to be turned around.

CHETRY: All right. Thanks to both of you for your insight this morning.

Jeffrey Sachs, as well as Diane Brady.

BRADY: Thank you.

CHETRY: Appreciate it.

John?

JOHN ROBERTS, CNN ANCHOR: And from here in the United States across the ocean to the Middle East, you're looking at pictures this morning of the auditorium where very soon Secretary of State Hillary Clinton and Palestinian President Mahmoud Abbas will hold a joint press conference following their meetings there in Ramallah. We're watching it closely for you. And we'll bring it to you live just as soon as we get some word.

You can see the front two rows of seats there assigned to the dignitaries are empty. Won't take too long to fill them up, though, so we'll keep a close eye on that.

Also, it's the most trusted name in coal or is it? Environmentalists say clean coal is an oxymoron. And they're getting Hollywood's help to wage a PR war against the coal industry.

Our Jim Acosta in Washington following that for us this morning. He'll be right up with his report.

Thirty-five and a half minutes now after the hour.

(COMMERCIAL BREAK)

ROBERTS: Live pictures this morning from Ramallah and the West Bank, anticipating a press conference with Secretary of State Hillary Clinton and Palestinian President Mahmoud Abbas in just a few minutes' time. Still waiting for the dignitaries to arrive there, but it won't take but a minute to fill those front seats. So we could be just a little ways away from it. We'll keep monitoring it for you very closely. We don't want to miss a second of this very important press conference.

The secretary's very first trip to the Middle East with the new commitment on the part of the Obama administration to try to reach a Palestinian/Israeli peace agreement. But some people saying more likely that they might get one with Syria first. We'll keep following that story.

Clean coal, it may sound like an oxymoron, and there's a growing effort to prove it is just that a big pipe dream. It's a fight that has some of Hollywood's heaviest hitters on board. Our Jim Acosta working this story for us. He's in Washington this morning.

And Jim, they're getting pretty creative here on both sides in terms of this fight.

JIM ACOSTA, CNN GENERAL ASSIGNMENT CORRESPONDENT: They are, John. Good morning. Environmentalists are determined to keep global warming from being pushed to the back burner.

From big protest in Washington to new TV ads that are getting a lot of attention these days. One of the latest spots targets the coal industry, and might as well be dubbed "No country for coal men."

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Clean coal harnesses the awesome power of the word clean.

ACOSTA (voice-over): The battle over clean coal is getting dirty. Take this ad grilling into coal industry claims that it's cleaning up its act.

UNIDENTIFIED MALE: Supported by the coal industry, the most trusted name in coal.

ACOSTA: To make this spot, environmentalists backed by Al Gore scored none other than Joel and Ethan Cohen, Hollywood heavyweights behind "No Country For Old Men."

AL GORE, FORMER VICE PRESIDENT OF THE UNITED STATES: Clean coal is like a healthy cigarettes. It does not exist.

BRUCE NILLES, SIERRA CLUB: It sort of like Big Foot and mermaids.

ACOSTA: Environmentalists say the coal industry is years, perhaps decades, from achieving what many scientists consider true clean coal technology. That technology consists of capturing carbon as it comes out of the smoke stack and storing it underground before it's released into the atmosphere. To this day there is not one power plant in the nation using that technology.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Clean coal technology is something that can make America energy-independent.

ACOSTA: But the coal industry has a powerful ally in President Obama, who promised to support clean coal research during the campaign. The technology gets a mention on the White House website.

If the term "clean coal" is misleading, does that mean that the president is misleading the public about clean coal?

NILLES: Great question. The term clean coal means different things to different people. What the coal industry uses the term clean coal to mean anything that is built post-1970, regardless of the fact that it's spewing out large amounts of carbon dioxide.

ACOSTA: The coal industry and it supporters argue efforts to modernize coal plants are having a positive impact.

JOE LUCAS, AMERICAN COALITION FOR CLEAN COAL ELECTRICITY: With technology, we can reduce greenhouse gas emissions, still preserve access to affordable reliable energy in this country, promote energy independence and create jobs.

ACOSTA: Still, the industry refuses to say its plants contribute to global warming.

Can you just answer that yes or no if you believe that burning coal causes global warming?

LUCAS: I don't know. I'm not a scientist.

ACOSTA: That debate spilled into the streets outside the power plant that heats the U.S. capitol, a plant that still runs in part on coal.

UNIDENTIFIED MALE: We are generation last, man. If we don't take action right now, it's going to be too late for America and the whole world.

(END VIDEOTAPE)

ACOSTA: Energy Secretary Steven Chu once called coal his worst nightmare. Now he takes the administration line of supporting clean coal as an energy option to combat global warming. But environmentalists are encouraged by one idea coming from the White House -- a policy called cap and trade, which could force coal companies to pay for their emissions - John.

ROBERTS: Wouldn't it be nice, Jim, if everybody could just agree on something for a change.

ACOSTA: It is not happening these days in Washington. A lot of horse trading going on. And this cap and trade policy, watch this one closely because it is going to generate a lot of discussion, John. The Obama administration is hoping that it's going to generate a lot of revenue for the government for all of these policy proposals that are out there, but the industry is not convinced, John.

ROBERTS: All right. Jim Acosta for us from Washington this morning. Jim, thanks so much.

ACOSTA: You bet.

ROBERTS: Kiran?

CHETRY: We've also some new developments in that head-on train collision that killed 25 people. Wait until you hear what investigators found out about the engineer who was texting just seconds before the crash.

It's 43 minutes after the hour.

(COMMERCIAL BREAK)

CHETRY: And welcome back to the Most News in the Morning.

We are watching extreme weather right now along the East Coast. Power crews scrambling this morning to restore power after Monday's snowstorm in the Carolinas. An estimated 40,000 are waking up in the dark right now as the mercury hovers near freezing. Crews say it may take until Thursday before everyone's power is back on.

And this morning, safety officials are revealing the contents of the final text messages sent by the engineer of a commuter train that killed 25 people outside of Los Angeles last September. We're now learning the engineer was actually planning on having a teenager take over the controls.

Here's CNN's Ted Rowlands.

(BEGIN VIDEOTAPE)

TED ROWLANDS, CNN GENERAL ASSIGNMENT CORRESPONDENT (voice-over): Engineer Robert Sanchez was at the controls of the Southern California commuter train when it collided head on with a Union Pacific freight train in September of last year, killing 25 people and injuring more than 100 others. Phone records show Sanchez was not only texting a friend just 22 seconds before the collision, but made plans to allow the same friend to actually operate the train.

This is a text conversation four days before the crash.

Sanchez to friend, "I'm really looking forward to getting you in the cab and showing you how to run a locomotive."

Friend to Sanchez, "Oh, my God, dude, me, too, running a locomotive. Having all of that in the palms of my hands."

Sanchez to friend, "I'm going to do all the radio talking, you're going to run the locomotive and I'm going to tell you how to do it."

At a Washington NTSB hearing, officials say Sanchez had been caught with a cell phone twice before - once, another employee turned him in; another time, a manager called his phone to see if it was with Sanchez in the train cab.

RICK DAHL, CONNEX RAILROAD LLC: The engineer's cell phone rang. It was in his briefcase on the other side of the train. I told the engineer that he was in violation of our policy.

ROWLANDS: The NTSB investigation indicates that Sanchez missed a stop signal, resulting in the collision. The engineer's alleged conduct has raised serious questions about what other people may be doing while operating trains.

KITTY HIGGINS, NTSB MEMBER: One train, one day, one crew. I mean, it raises questions for me about what the heck else is going on out there.

ROWLANDS (on camera): According to the NTSB, one of the operators of the other train ended up testing positive for marijuana. That individual survived Sanchez. The operator of the commuter train died with 24 others. The NTSB continues to investigate. They're expected to release a full report later this year.

Ted Rowlands, CNN, Chicago.

(END VIDEOTAPE)

ROBERTS: And we're still waiting for that press conference from Ramallah in the West Bank. Secretary of State Hillary Clinton on her first and very important Middle East trip, sort of setting the ground work there for the work that will occur over the next weeks, months, potentially even years, trying to craft a two-state solution for the Israelis and the Palestinians.

And a potential breakthrough in Syria sometime during this administration. Is it possible? We'll find out. We'll keep watching it for you.

It's 48 minutes after the hour.

(COMMERCIAL BREAK)

ROBERTS: Welcome back to the Most News in the Morning.

So you've probably seen the crazy pet video that's all over the Internet. Sleeping dogs, running, slamming into walls, barking, some of what goes on looks downright dangerous, and of course, it was all irresistible to our Jeanne Moos who looks a little closer at those doggies in dreamland.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN NATIONAL NEWS CORRESPONDENT (voice-over): Let sleeping dogs lie? No way. Not one that sleep walks and then breaks into a sleep run. Run, girl, run. You're about to become an Internet hit. That even woke up this kid. "PETCO doesn't make helmets," posted one wag.

Sure, there are countless sleeping dog videos featuring dreaming dogs twitching, some set to music, some seem to be having nightmares or giving us nightmares. But none have achieved Biz Kid's Internet stardom. She even barks in her sleep. "Your dog is possessed," posted someone. "Put some holy water in his dish." Her dish, actually. And the dog that's dreaming of a nice cool drink seems to be this one.

But Biz Kid's disturbed sleep has left some folks disturbed. "Your dog is having a seizure. Go to the vet." We did.

(on camera): Should we be alarmed by this?

DR. BOAZ LEVITIN, VETERINARY NEUROLOGIST: Not -- not really.

MOOS (voice-over): Here at NYC Veterinary Specialists, the vet neurologist admits Biz Kid's simulated sleepwalking is extreme.

(on camera): Is it the most you've seen or you've seen worse?

LEVITIN: That's the most I've seen.

MOOS (voice-over): But if it's only happening during sleep, the doctor suspects they're not seizures and it could be treated with a Valium-like drug if the owner were worried about the dog hurting herself.

Cats can also look pretty demented while sleeping. But in the case of Shadow here, the lethargy was caused by her owner. He put the cat in his homemade marijuana bong to calm her, he told police, when they came to his house to arrest him on a pot possession warrant.

UNIDENTIFIED MALE: It appeared that there was something moving in -- in the box.

MOOS: Shadow will be put up for adoption. Meanwhile, this guy has adopted Biz Kid's position.

(on camera): I bet I know what this guy's dreaming of -- Internet fame.

(voice-over): And he'll go to the wall to get it. OK, it may be a stretch. But one person theorized, Biz Kid was dreaming that he was chasing a naked mailman covered in bacon.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

ROBERTS: Emergency fix for the housing disaster.

(BEGIN VIDEO CLIP)

OBAMA: It will help millions of Americans who are struggling with declining home values.

ROBERTS (voice-over): His plan, your house, our economic team with what every home owner needs to know.

Plus, the diving doubt.

UNIDENTIFIED FEMALE: We've become Henny Penny. The Dow is falling! The Dow is falling!

(END VIDEO CLIP)

ROBERTS: New help for the Dow obsessed. You're watching the Most News in the Morning.

(COMMERCIAL BREAK)

CHETRY: It's that ringing sound. You can't get it out of your head lately. It really causes many of us to wonder how low did it go today.

With the economy and the Dow sinking fast, it is hard to feel secure. But many experts and even the president say that our fixation on the markets may be misguided.

(BEGIN VIDEO CLIP)

OBAMA: You know, the stock market is sort of like a tracking poll in politics. It bobs up and down day-to-day, and if you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong.

(END VIDEO CLIP)

CHETRY: Carol Costello now live from Washington with more on how our so-called Dow obsession could actually be undermining the recovery.

It's a tracking poll, but for some who are, you know, nearing retirement it's a tracking poll that's connected to a lot of money for them.

CAROL COSTELLO, CNN CORRESPONDENT: I know, but if you still have ten years to go before your retirement, think long-term here, because then it's not so scary to watch the Dow. Maybe it is scary to watch the Dow. But many Americans like you said, Kiran, are glued to it to the point of obsession.

(BEGIN VIDEOTAPE) COSTELLO (voice-over): The Dow has taken on a life of its own. It's up. It's down. It's tanked, and America can't take its eyes off its little weekly line.

UNIDENTIFIED FEMALE: But it bothers me because that showed me how the economy is doing.

UNIDENTIFIED MALE: It concerns me more because of how everybody reacts to it.

UNIDENTIFIED FEMALE: I'm concerned. Definitely I'm alarmed.

COSTELLO: And why wouldn't they feel that way? The joke is their 401(k)s have become 201(k)s, and the falling Dow is all they hear about.

UNIDENTIFIED FEMALE: I hate to say it, but the second target might be 4,000 and maybe 400.

UNIDENTIFIED MALE: Some popping and dropping, largely dropping.

UNIDENTIFIED MALE: I wish I could hold your hand.

COSTELLO: It's the kind of analysis that has talk radio buzzing.

DR. JOY BROWNIE, CLINICAL PSYCHOLOGIST, WOR RADIO HOST: The Dow Jones will make you feel like a victim.

COSTELLO: Psychologist Dr. Joy Browne says her listeners have become obsessed with the Dow.

BROWNE: We've become Henny Penny. The Dow is falling! The Dow is falling! And, you know, as far as I'm concerned, the Dow is straight in. It's just uncivilized. That's what the Dow is. It doesn't mean anything.

COSTELLO: Dr. Browne says you should ask yourself this. Did you become a multimillionaire when the Dow soared to 14,000 in 2007? Browne says if you have a job now and you pay your mortgage, it's not likely the falling Dow will drive you to the poorhouse.

But make no mistake, market analysts like Art Hogan of Jefferies & Company says the Dow is an important economic indicator. When it loses 23 percent of its value, we ought to pay attention. But not obsess.

ART HOGAN, CHIEF MARKET ANALYST, JEFFERIES & COMPANY: Watching the Dow every day is not going to predict the fact that you may become part of that 8 percent that's not working or that you may lose your house. Watching the Dow is more of a reflection of what investors think about the earnings power of those 30 companies that make up the Dow.

COSTELLO: Hogan and other analysts say the erratically diving Dow was more of an indication of how Wall Street feels about the president's plans to fix the economy. And, traditionally, it has been an indication of how the economy will play out in the short term. And history tells us the Dow has always recovered.

(END VIDEOTAPE)

COSTELLO: Let's hope history is right. Now the point here is not to allow -- not to allow your mood to be controlled by the ups and downs of the market. You can't control it. Dr. Browne says you'll feel better if you sit down, come up with a plan that would protect you if the worst happens, and it's important to keep in mind, Kiran, that 92 percent of Americans still have jobs.

That's very true. The silver lining today from Carol Costello. Thanks so much.

ROBERTS: Just think of how much fun it's going to be when you're 92 years old, getting up for work every morning.

Just crossing the top of the hour.

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