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Economic Shock: President Bush Proposes $140 Billion Fix; Housing Market Still Attracting People Willing to Take Risks; Wrongly Convicted? New Doubts About Murder Case

Aired January 18, 2008 - 14:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: Hello, everyone. I'm Kyra Phillips at the CNN world headquarters in Atlanta.
DON LEMON, CNN ANCHOR: And I'm Don Lemon.

You're in the CNN NEWSROOM.

PHILLIPS: You heard it right here on CNN, President Bush calling for quick, temporary tax relief to head off an economic downturn. He wants incentives for businesses, as well as consumers.

CNN's Brianna Keilar is at the White House with more -- Brianna.

BRIANNA KEILAR, CNN CORRESPONDENT: Kyra, broad-based tax relief, that's what the president talked about today. And it's anticipated that will come in the form of tax rebates, basically checks that are cut to taxpayers in an attempt to pump money into the economy.

And following the president's comments, a follow-up briefing by Treasury Secretary Henry Paulson. He estimated that the total price of this economic stimulus package would be somewhere between $140 billion and $150 billion.

(BEGIN VIDEO CLIP)

HENRY PAULSON, TREASURY SECRETARY: I'm trying to focus on the positive, and the positive is we've got broad consensus in Congress we need to do something, and so now we need to turn that into -- into the reality of legislation. And then I can tell you, when we get the legislation, we're going to run like a bunny here to -- to get the relief out.

(END VIDEO CLIP)

KEILAR: Democratic Senator Chuck Schumer, chairman of the Joint Economic Committee, just responded on camera to the president's comments. The only issue he seemed to raise was with the fact that President Bush didn't talk about spending stimulus being a priority.

And this is a big priority for Democrats in terms of extending unemployment insurance benefits and also food stamps. And Schumer said that that spending stimuli is a must in an economic stimulus package -- Kyra.

PHILLIPS: And following the press conference, Democrats publicly seemed very encouraged, correct?

KEILAR: Democrats, and, of course, Republicans as well, really just a slew of very positive and optimistic statements coming from leadership in the Senate and the House. There had been some concern, still some concern, by Democrats that the president, by speaking today, kind of could, you know, lay out his process, isn't really presenting a unified front with them. There was some concern for that, but Senator Schumer said despite that, he is confident that they can come to an agreement and come to an agreement quickly -- Kyra.

PHILLIPS: All right. Brianna Keilar live at the White House.

Brianna, thanks.

(STOCK MARKET REPORT)

LEMON: I'm just getting some information now that Democratic senator from New York, Chuck Schumer, just spoke out about the president's proposed economic stimulus plan. And, of course, he is head of the Banking, Housing and Urban Affairs Committee, at least serves on that. So we're going to listen to his comments and then we'll be back right after that.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D), NEW YORK: We are glad the president has stepped up to the plate and announced he will work with Congress to quickly pass a stimulus package. The nation is headed -- the nation's economy is headed towards recession, and a stimulus package is very much needed, and it's needed quickly.

We need a balanced package of both tax cuts to the middle class and spending stimuli that will immediately jump-start the economy. So I'm pleased that the administration has recognized that the centerpiece for any stimulus plan should be tax rebates targeted at the middle class.

By putting money in the hands of middle class and working families that need it most, we can jump-start consumer spending that is needed to get the economy back on track, and either avoid or mitigate a recession. However, we hope the administration works with the Congress to design these rebates so they are truly targeted to middle class families who will immediately inject spending into the economy.

Democrats are committed to working together with the administration to work out any differences that may arise on these targeted tax cuts to the middle class.

I'm also pleased that the president has agreed to take renewing the Bush tax cuts, which don't expire until the end of 2010, off the table. These tax cuts, largely aimed at the very wealthy, would create a blockage.

We have no time to deal with ideological and paralyzing debates. We must refrain from doing anything that will bog down efforts to quickly pass the stimulus package. And a long debate over whether the president's tax cuts, mainly aimed at the wealthy, which expire in 2010, should be renewed now could spell death for the package.

(END VIDEO CLIP)

LEMON: Democratic Senator Chuck Schumer from New York responding to the president's proposed economic stimulus plan.

Also coming up in the CNN NEWSROOM, Democratic Congressman Barney Frank. He's the chairman of the House Financial Services Committee. He's going to join us to talk about the plan as well -- Kyra.

PHILLIPS: Well, as President Bush pointed out in his statement today, a good chunk of the blame for the economic climate goes to the record rate of home foreclosures. But as risky as it is, today's housing market still is attracting folks who are willing to roll the dice.

For more on that, let's turn to CNN's Josh Levs.

JOSH LEVS, CNN CORRESPONDENT: Yes. You know, I went to this auction last night -- wild. I mean, the foreclosure auctions, they've been happening forever, right? We've all heard about them. I had no...

PHILLIPS: You get pretty good deals.

LEVS: You can get some crazy, ridiculously good deals. I've never heard of things like this, but what's happening now, because there are so incredibly many foreclosures, is that what's on the auction block is massive, and it's growing every single day.

And what I'm going to show you right now is that, today, there are more and more players who feel they can actually come out ahead.

(BEGIN VIDEOTAPE)

LEVS (voice over): It's fast-paced, big bucks, and a sign of America's new reality. As the mortgage crisis leads to record numbers of foreclosures, more and more people are spotting opportunity and packing into foreclosure auctions. Mostly investors like Reginald Jackson.

REGINALD JACKSON, INVESTOR: You can make an average of at least $10,000, $15,000, $20,000 per property. It depends.

LEVS: He's done his homework, scoping out some modest homes for long-term investing. The homes are listed online, so the bidders arrive knowing what they want. Jackson already bought six foreclosed homes this week.

JACKSON: Purchasing at least another six houses tonight.

LEVS (on camera): You know that sounds like Monopoly?

JACKSON: Yes, I do. I'm pretty good at that game, too. LEVS: All right, so another property sold. This is one of many auctions taking place in the Atlanta area across this week. They are selling off more than 500 homes valued between about $30,000 and $700,000.

(voice over): Many sell well below market value, but some folks here want the prices high -- realtors who list the properties. Michelle Gilbert now focuses on foreclosures.

MICHELLE GILBERT, REAL ESTATE AGENT: That's the way to go now. And unfortunately, the market is going in that direction.

LEVS: And for the company that runs the auctions, it's a booming business.

DAVID WEBB, HUDSON & MARSHALL: Just last year alone, we did about 8,000 assets. And this year we'll do 12,000 to 15,000.

LEVS (on camera): And when you look ahead, it's going to be more, right?

WEBB: It's going to be more. There's plenty on the market. And really, the auctions -- the institutions that own these properties really like to be able to go into a market area and move a lot of property in a very short period of time.

LEVS (voice over): Which explains why at these auctions, speed is the name of the game.

(END VIDEOTAPE)

LEVS: All right. Now think about this -- there's actually a delay between foreclosure and auction of about 18 months, so most of these homes were foreclosed back in 2006. So imagine now how incredibly many auctions, Kyra, there will be this year and next year with all these foreclosures. They are telling me could see auctions in our neighborhoods every couple of weeks.

PHILLIPS: My heart goes out to all the people that lose their homes.

LEVS: Yes.

PHILLIPS: I mean, what happens to these folks?

LEVS: Right. Well, fortunately -- maybe fortunately, one myth is that there are people at home right now afraid that their homes will be bought at the auction. Actually, because of that delay, most people are gone from their homes by this point.

What you find is that, first, when people start to default on their mortgage, there's a delay before the bank does anything about it. Then there's a delay before the foreclosure itself.

And even if they're foreclosed on, some people squat in their homes for months after that, because it's not necessarily worth the money to evict them. By the time they get to auction, as a rule, these people have moved on.

Still, it's heartbreaking. I mean, a lot of them are victims of predatory lending, but also bought homes that, you know, if they had really crunched the numbers and seen that mortgage interest rates could go up, might not have bought it in the first place.

But the idea here is they've found places to live. Very often though, it's rentals and they're just barely getting by, unable to own a home.

PHILLIPS: How high do the prices go -- or the homes go for, and how low?

LEVS: Well, I saw homes go last night for as low as low as $10,000, $13,000, $15,000.

PHILLIPS: Wow.

LEVS: Now, we're not talking fancy homes, but we are talking about homes in which you could own the property, raise it, hope it's worth more in a few years, make a bunch of cash. And you're talking about a sliver of what people originally paid for it.

But it is good also to point out that some are valued very high. There's one I got here -- $700,000 is the value on the house. Five bedrooms, six bathrooms, it's got an indoor swimming pool.

The reason I like it -- and there you go. Nice going, guys. That's the image right there of that home.

It's in an area called Stone Mountain. It's a fancy home.

The reason I like to point this out is the stereotype we have in our minds is that if you're being foreclosed on, you can't afford a home. Not necessarily. You can't afford your home, which is different.

So some people buy homes they ultimately cannot afford. You can still be subprime, just because you bought a home that's bigger than the home you actually could afford. So there you go, a $700,000 home hitting the auction block Saturday.

We're going to keep an eye on it. And based on what I saw last night, that thing could go somewhere in the $300,000s, the $400,000s. We'll have to see.

PHILLIPS: And an indoor swimming pool.

LEVS: Heated -- heated indoor swimming pool, yes. Not bad, huh?

PHILLIPS: All right. We'll track it.

Thanks, Josh.

LEVS: Thank you.

PHILLIPS: And you can stick with CNN for all the news that affects your financial security.

Just go to cnnmoney.com for more info on money, jobs, and the mortgage crisis.

LEMON: Well, it's a scramble on the day before. Last chance for the White House hopefuls to make impressions in South Carolina and Nevada.

Voters in those states get their chance tomorrow to weigh in, even shake up the race. Most of the Republicans are crisscrossing South Carolina, where tomorrow's primary could determine a front- runner in a race that's seen three different winners in the first four contests. South Carolina Democrats don't vote for another week, so Clinton, Obama and Edwards, well, they are in Nevada, where tomorrow's caucuses offer chance to build momentum heading toward Super Tuesday.

Presidential candidates and the reporters who cover them, together in our Friday Political Ticker.

Democrat John Edwards says he's not getting a fair shake from the media. Edwards and his aides say reporters are obsessed with Hillary Clinton and Barack Obama, crowding out coverage of Edwards. The campaign has even launched a Web site and a Web video to show what it says are examples of Edwards getting overlooked.

Well, Republican Mitt Romney is having issues with one reporter, in particular. At a South Carolina news conference, Romney got into a back-and-forth, so to speak, with Glen Johnson of The Associated Press over the role of a lobbyist in his campaign. The decision -- well, a discussion, I should say, kept going after the event ended.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: He's not running my campaign. He's not running my campaign. He's not running my campaign.

GLEN JOHNSON, THE ASSOCIATED PRESS: (INAUDIBLE)

ROMNEY: Listen to my words, all right? Listen to my words. I said...

JOHNSON: But that's semantics. Running your campaign and giving you advice. Come on.

UNIDENTIFIED MALE: Hey, Glen, save the arguments...

ROMNEY: He approached me, Eric (ph).

Let's talk. Let's you and I talk.

JOHNSON: I'd be glad to talk any time.

(END VIDEO CLIP)

LEMON: Romney insists he has no lobbyists "running my campaign." Johnson cites the frequent presence of Romney adviser Ron Kaufman, who heads a major communications firm.

Republican Mike Huckabee won't say whether he considers a confederate flag an offensive symbol, but he says outsiders have no business telling South Carolinians how to display the controversial banner.

(BEGIN VIDEO CLIP)

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: You don't like people from outside the state coming and telling you how you ought to raise your kids. You don't like people from outside the state coming down and telling you what to do with your flag. In fact, if somebody came to Arkansas and told us what to do with our flag, we'd tell them where to put the pole, that's what we'd do.

(END VIDEO CLIP)

LEMON: South Carolina once flew the confederate battle flag atop its statehouse. It was moved to the capitol grounds back in 2000.

The flag, of course, conjures images of racism for some, southern pride for others. Now, in the 2000 GOP primary, John McCain took the same position Huckabee takes. McCain now says he was wrong not to call for the flag to be removed.

Well, time is running down and the race is heating up. For the freshest polls, the latest flights, the Political Ticker blog and more, check out cnnpolitics.com.

PHILLIPS: Gut-wrenching regrets from the lead investigator in a murder case. She's battling to free a man that she help put behind bars for life.

We're going to find out why.

LEMON: And congressman Barney Frank joins us in the NEWSROOM with his reaction to President Bush's plan to stimulate the U.S. economy.

(COMMERCIAL BREAK)

(NEWSBREAK)

PHILLIPS: In a poll released by "Fortune" magazine, almost six in 10 Americans say we're headed for a recession. One in five say we're already there.

Joining us now from New York to sort it all out, Andy Serwer, managing editor of "Fortune" magazine.

So, Andy, was this your idea to poll? And did you come up with the outcome here?

ANDY SERWER, MANAGING EDITOR, "FORTUNE": Well, some editors at the magazine came up with the idea for a poll, but you have to agree it's timely. And obviously, economic conditions are changing rapidly and Americans are starting to respond to that and notice what's going on around them.

LEMON: Yes. And you know what? We were wondering about this. I remember we got like a rebate -- that's part of the proposed plan -- a rebate back in 2001.

Did that help the economy? Did it help consumers at all?

SERWER: I think it's fair to say, Don, it did help back in 2001.

You had real spurt of economic growth after those rebates came in the mail, and people did start to spend again. But, you know, it's always questionable whether it's going to work this time, because, first of all, conditions are different from what they were in 2001.

This is obviously a housing-driven economic slowdown. Will it be big enough? Will it get fast enough -- get to people fast enough? Those sorts of questions.

PHILLIPS: So, every -- you know, there are these fears that we're headed for a recession. At what point do you know that we truly are headed for a recession, we're in a recession, we're almost to a recession?

SERWER: Well, that's a great question, Kyra. I mean, there's two definitions, real quick.

One is, did the economy shrink for two consecutive quarters in a row? We're obviously not there yet.

The second comes from this handy-dandy little outfit called the National Bureau of Economic Research. They actually call recessions in the United States, and they have sort of -- a more amorphous description of a recession, which is a significant economic decline spread across the economy for several months.

We're almost not even there yet for that. Having said that, the economy is clearly slowing down, so if we're not in a recession yet, we seem to be getting awfully close.

LEMON: Yes. And we have -- we've got some viewer e-mail for you.

SERWER: Sure.

LEMON: And we want to ask -- Kyra, I think -- I'll go ahead and ask the first one.

His name is Sheldon, and he says -- he's from New Jersey, and he asks, "How is a tax cut of $600 going to change anything when overspending by people and the government got us in this mess? We have the highest deficit bleeding money. The dollar is going down and fuel is going up."

SERWER: Well, I'll tell you, Sheldon's a pretty astute observer of the economy, you guys. He knows what's going on, and he raises some good points. First of all, you know, the tax rebates also offer psychological well-being for Americans. It shows the president is paying attention, that the government is doing something. So there's that part of it as well.

As far as people overspending to get us into the recession -- or into this slowdown, I should correct myself -- that's also true. But, again, it really focuses on housing.

People were overspending on housing, and they were victims of predatory lending to an extent. So if people use this money and invest some of and it save some of it, and then also spend for some items, that's probably a good thing for the economy.

PHILLIPS: Katherine in Colorado wants to know, Andy, "I'm 42 and my 401(k) is invested in mutual funds. My value has tanked over the last six months. Should I just ignore it and keep reminding myself that I should invested for the long term?"

She also says that she doesn't want to sell for a loss and she wants to know if maybe she should just change her investment selections, and that she's highly diversified.

SERWER: Oh, that is always a tough one, watching the market go down day after day. You know, we're down 10 percent already this year. And I have to say that, you know, selling right now, you know, it's really tough.

I mean, if you were able to sell right now, put your money in cash, and then reinvest, you know, a few months from now when the market is even lower, more power to you. I think that if you're invested in the long term, you have good stocks, diversified, you just want to ride this baby out, you know, especially if you have got a lot of years to go before retirement.

But I admit, it's very hard to watch your portfolio go down day after day like this.

PHILLIPS: We'll keep riding it with you.

Andy Serwer, managing editor of "Fortune" magazine.

Great to see you again, Andy.

SERWER: Thank you, Kyra. Good to see you.

LEMON: And make sure you stick with CNN for all the news that affects your financial security. And go to CNNMoney.com for more information on money, jobs, and the mortgage crisis.

PHILLIPS: A Colorado man is doing the time, but did he do the crime? The lead investigator in a murder case is battling to free the defendant.

(COMMERCIAL BREAK) PHILLIPS: Grisly murder 20 years ago in Colorado. A suspect was convicted and sent to prison, where he remains today. But is he really guilty?

A lot of questions are being raised. Even the lead investigator says the man is innocent.

Our investigative correspondent, Drew Griffin, has been looking into the case and joins us now.

And you were just telling me some of the details you've just learned. It seems unbelievable in many ways.

DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT: Kyra, you know, you and I know that prisons are filled with people who say they are not guilty, right?

PHILLIPS: That's true.

GRIFFIN: And we get letters from them all the time.

But this kid, now a grown man, Tim Masters, out in Fort Collins, Colorado, has one person who says he is not guilty. It's one of the lead investigators who trailed him for 12 years.

(BEGIN VIDEO CLIP)

LINDA WHEELER-HOLLOWAY, LEAD INVESTIGATOR: I told my husband, never make me choose between you or my...

GRIFFIN (voice over): She may be gentle with horses on her Colorado ranch, but for the past 30 years as a cop and investigator, she's been putting hardened criminals behind bars, which is why what she is about to say is so unusual.

WHEELER-HOLLOWAY: The day he got convicted, I was just almost sick to my stomach.

GRIFFIN: Linda Holloway says one man she helped put in prison for murder back in 1999 is innocent, and she has known that every single day for the eight years Tim Masters has been locked up.

(on camera): Is the murderer still on the loose?

WHEELER-HOLLOWAY: Yes.

(END VIDEO CLIP)

PHILLIPS: Wow. Now -- all right. Give us the background here.

GRIFFIN: So the background is this teenage kid was fingered as the only possible suspect in the hours after the investigation in Fort Collins, Colorado, which has virtually no crime. They couldn't solve the case on any forensics. There was no physical evidence.

They followed this suspect for 12 years. Tim Masters, grew up, joined the Navy, went on with his life. And they came back in, and they used some psychological testimony of a doctor who looked at some drawings and they were able to convict him.

What we're showing now, Kyra, is actual -- this is day of the murder. Tim Masters, a 15-year-old, was interrogated for seven hours by police. He was even given a lie detector test and lied to.

They told him that he failed. Right? He never broke once.

We have a lot of that tape on our Web site right now. CNN.com has a new crime page. You can almost become a juror yourself and determine if this kid really did it or not.

PHILLIPS: How was the person murdered? Was anybody else around? Was there any connection to the individual that was murdered to this young kid?

GRIFFIN: No connection at all. And I mean no disrespect to this victim, whose name I won't say, but she was basically a 37-year-old single woman who liked the nightlife.

She lived in an apartment building that she walked across a field to go to a bar. OK? In Fort Collins, Colorado. That's what she usually did.

She was stabbed in the back and found in this field. On the morning that her body was found, this young kid, he had to cross the field to go to a school bus. The police found out that he crossed the field, saw the body, and just kept on going to school.

His explanation was he couldn't believe it was real. He thought it was a mannequin or somebody was playing a joke on him.

PHILLIPS: Or he was scared to death.

GRIFFIN: And he might have been scared to death. Who knows?

But the fact of the matter is, he's trying to get a new trial right now. And there's all kinds of evidence now appearing that police may not have provided during his original trial. Evidence that shows that the case might not have been as tight as it should have been.

PHILLIPS: So could he be completely cleared and finally be taken out of jail? He's been in there for nine years now.

GRIFFIN: Absolutely. And, in fact, his new defense attorneys say new DNA testing, they say, proves somebody else's DNA is on this woman's body, not Tim Masters'. They're not revealing that yet until they do get a new trial and find out if Tim Masters will be tried again for this murder, but it's a real dilemma, because this is a very safe, little tight-knit community. And if it's determined that Tim Masters did not kill this woman, well who did?

PHILLIPS: And, he's going to be owed a lot as well. We'll follow it with you. Thanks, Drew. Well, Drew does have a lot more on the story. It's coming up at 10:00 p.m. Eastern on "A.C. 360." It's something you'll only see on CNN. And if you'd like to see more of the interrogation that Drew was just talking about, that tape of Masters when he was just a kid or the extended interview with the cop who thinks he's innocent, just go to cnn.com/crime.

LEMON: President Bush proposes a quick and temporary boost for the ailing economy. Will the Democrats play ball? That's the question. We'll talk live with the chairman of the House Financial Services Committee, Barney Frank, Massachusetts.

(COMMERCIAL BREAK)

LEMON: Well, here is a mind-boggling statistic for you. Since the first day of the year, I'm talking 17 days ago, the stock market has lost about nine percent of its value. The Dow sank 307 points yesterday alone. Does that mean it's time to shift some of your investments? Not necessarily.

(BEGIN VIDEO CLIP)

JEAN CHATZKY, MONEY MAGAZINE: Panic. Right now is not the time to stop investing in your 401(k). It's not the time to stop putting money in your kids' 529 accounts. Because, as Dave said, I'm not sure that we are in K-Mart and the blue light is exactly on yet, but I can't tell you when it's going to go on. And so we want to ...

LARRY KING, CNN ANCHOR: Buy stocks?

CHATZKY: Absolutely. I buy them all the time. Every single month, dollar-cost averaging in.

(END VIDEO CLIP)

LEMON: Well, in the next hour, we'll hear much, much more from Larry King's panel of experts. Very interesting panel last night that he had on. Look for that around 3:30 Eastern, right here in the CNN NEWSROOM.

In the meantime, the president is calling for quick, temporary relief to head off an economic downturn. Take a listen to what he said a short time ago.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: To be effective, a growth package must include direct and rapid income tax relief for the American people. Americans can use this money as they see fit, to help meet their monthly bills, to cover higher costs at the gas pump or to pay for other basic necessities. Letting Americans keep more of their own money should increase consumer spending and lift our economy at a time when people otherwise might spend less.

(END VIDEO CLIP) LEMON: Democrats say they want a stimulus package, too. But can they and the president come to terms on the details? Let's ask Congressman Barney Frank, chairman of the House Financial Services committee. He joins us now from Capitol Hill.

Thank you, sir, I have to say for joining us today. I know it's a very busy time for you. First of all, are you buying it? Are you encouraged by it?

REP. BARNEY FRANK, (D) MASSACHUSETTS: Very much so. Speaker Pelosi, I think, has set a very good tone here. A little over a month ago, she convened a panel of economic experts that advised us to get ready for a stimulus package and we've been reaching out to the administration. There have been conversations. I talked to Secretary Paulson and she's spoken with him and Chairman Bernanke and other Democratic leaders have.

And yes, frankly, we kind of welcome the president here. A couple of weeks ago, he was telling people the economy was in great shape and there was no need for this. So we've been ready for this and hoping to work together. We also -- I appreciate the fact that in his speech today he separated a short-term stimulus from longer-term questions about making his tax cuts permanent.

We will have legitimate, philosophical and ideological differences to debate, but we can put them aside, or even keep doing them, while we do a short-term stimulus. And we do agree -- in fact the amount he talked about today, was even a little more than people were proposing. There had been a discussion about $100 billion -- they talked about one percent of GDP which is like $130 or $140 billion.

We have an agreement, I think, we the administration on individual tax relief. There's a question about how you get to it. We do want to make sure that it goes to people who need it and who are likely to spend it very quickly.

LEMON: All right, so the Democrats are agreeing with the administration. We have to mark this day on our calendar, Congressman Frank. But here's what -- the president also talked about the temporary, must take effect right away and he said no tax increases.

Take a listen, I want you to respond.

(BEGIN VIDEO CLIP)

BUSH: This growth package must be temporary and take effect right away, so we can get help to our economy when it needs it most. And this growth package must not include any tax increases.

(END VIDEO CLIP)

LEMON: Can you do it without increasing tax?

FRANK: Of course. I don't know why he even said that. No one is proposing tax increases. We're talking about economic stimulus, classic, basic economics. That means you cut back on taxes and you increase spending in areas like unemployment compensation. You help the states which have been hurt by this, the states and the cities, maybe by increasing food stamp money or Medicaid money.

The president there has just slayed a dragon that never existed. No one is proposing any tax increases now. And as to our agreeing with him, frankly -- yes, we've been saying this for over a month. At a time when the president was saying the economy was fine, we said, let's do a stimulus. We now believe that with an agreement to put aside broader ideological questions like the tax cuts of 2010 that will be coming due, we can work this out.

We have one difference with the president, but I think these can be worked out. We both agree that there is short-term tax rebating going on, particularly for the people in the middle and working class areas who will spend it. We also believe that unemployment compensation is open -- it's a classic counter-recessionary tool, that some help, maybe through food stamps or Medicaid, should go to the states.

And finally, I think we have an agreement here, we want to do some things that will help forestall foreclosure. Both the House and the Senate have passed, and the administration has agreed with, a bill to expand the role of the FHA in helping people, both at the higher and the lower end, and that could be part of the stimulus package because we've got to directly address housing.

LEMON: And I wanted to address that more. Because, from what my research -- it appears that you don't think the president offered enough for mediation when it comes to foreclosures, when -- in his speech and also Secretary Paulson, when they spoke today.

FRANK: Well, there is a difference. There is some further points that the president put out. He does mention housing, some things to do with housing in there. What he talked about today, individual tax relief and some business depreciation, literally does zero for housing. But in fairness to him, I think they are in agreement.

I talked to Secretary Paulson about it even this morning. Both the House and the Senate have passed the bill that would expand the role of the Federal Housing Administration. One of the problems we have now is if you're living in California, Massachusetts, places with high costs, you can't get any FHA or help from Fannie Mae or Freddie Mac, because we've got an arbitrary limit of $400,000, and that -- housing prices in some areas are substantially beyond that.

LEMON: OK. Congressman Frank, I hate to cut you off, because we're running out of time. And I just, real quickly to let our viewers know, because people are concerned. How fast -- he's counting on the Congress to pass this legislation -- how fast can you get it done? I think that's the question that consumers want to know.

FRANK: It shouldn't take a month. Again, we've been doing a lot of the groundwork. While the president was overseas, as he should have been, there's been a lot of conversations between the Democratic leadership and the administration, particularly Secretary Paulson. And, I think you're likely to see an agreement on a package -- that includes some tax relief for individuals. The administration will want something for business. We'll want to do something about unemployment compensation and some aid to states.

LEMON: Right.

FRANK: And in the area of about $120, $130 billion, I think we can have that into law and the FHA bill, I think that can be law by the 1st of March.

LEMON: So you're on board. OK, Congressman Barney Frank. Thank you, sir.

PHILLIPS: It truly is the first day of the rest of his life and you won't believe what this college freshman went through to get there.

LEMON: Their bodies are a perfect match, and their brains apparently are, too. We'll tell you about Nebraska twins who just aced the ACT.

(COMMERCIAL BREAK)

PHILLIPS: Live pictures now from the nation's capital. Just getting word in, the U.S. capital police say they have detained a man who apparently was just walking around with a shotgun there on First Street, Northeast, between Union Station and the upper Senate park.

If you're familiar with the Washington, D.C. area, it's a heavily populated area with locals there using the train station, at Union Station there and also during lunchtime it's very busy. It's very close to all the main parts, the center there of Washington, D.C., not far from the Mall.

Apparently, police are trying to determine why he was there, who he is, why he was wandering around this shotgun. His car apparently has been located near that same area, just off of North Capital Street and Louisiana Avenue. Police are inspecting the vehicle now. He is in custody. When we get more details, we'll let you know what is going on.

LEMON: What a difference a year makes. This time last year, a young Georgia man was looking through prison bars, unsure whether he even had a future. Well today, Genarlow Wilson is a former inmate and college freshman. He's also all about the future.

CNN's Rick Sanchez shows us what he went through to get there.

(BEGIN VIDEOTAPE)

RICK SANCHEZ, CNN ANCHOR: A freshman at Morehouse College in Atlanta. But this student took a road here like none of his classmates. Not even out of high school, Genarlow Wilson found himself in prison, serving a ten-year sentence. He was ensnared by a law designed for adult sexual predators. Georgia legislators later changed that law because of his case. Wilson was convicted of having consensual oral sex with a teenage girl. He was 17 at the time, she was 15.

(on-camera): At no time did you tell that young lady that she had to give you oral sex?

GENARLOW WILSON: No, sir.

SANCHEZ: There was an international outcry over Wilson's sentence. But when Georgia legislators changed the law, they did not make it apply retroactively to Wilson. I confronted the president pro tempore of the Georgia Senate after hearing him say this...

ERIC JOHNSON, GEORGIA SENATE PRESIDENT PRO TEMPORE: Are you aware that these boys videotaped that -- that rape?

SANCHEZ: I reminded Senator Johnson that the jury convicted Wilson of aggravated child molestation, not rape, for a consensual act.

(on-camera): Do you feel bad about the fact that you characterized this as a rape when you were talking yesterday in the Senate?

JOHNSON: No. No. No.

SANCHEZ: You don't have any problem with that?

JOHNSON: No.

SANCHEZ: Because it wasn't a rape.

JOHNSON: It's rape in my mind.

SANCHEZ (voice-over): Genarlow Wilson sat in prison for more than two years, through countless legal ups and downs before a judge ordered him freed and said, he did not have to register as a convicted sex offender.

UNIDENTIFIED FEMALE: We won!

UNIDENTIFIED MALE: Yes? He's out?

SANCHEZ: But the legal roller coaster Genarlow was caught up in was far from over. To the shock of most people, Georgia's attorney general appealed Wilson's release, and he remained behind bars. Finally, last October, the Georgia Supreme court ruled that Genarlow Wilson's sentence was cruel and unusual and grossly disproportionate to what he did.

WILSON: From day one I said that, you know, not just me but, you know, all of us, you know, we made decisions that I felt like could have been better. But, you know, I felt like we've all learned from that experience. You know, all we can do is move forward. You can't step back. SANCHEZ: So how do you restart your life? For Wilson, it's here as a freshman at Atlanta's Morehouse College in his dorm room, preparing for his first day of class.

WILSON: You all told me to be myself, so I'm going to be myself. I'm going to wear my shades and everything.

SANCHEZ: Wilson was an honor student in high school, and the foundation of radio host Tom Joyner gave him a scholarship for college. Wilson's new mentor, Morehouse Dean, Alvin Darden.

ALVIN DARDEN, DEAN, MOREHOUSE COLLEGE: That's why I want you to, you know, stay close to me.

SANCHEZ: Dean Darden expects a lot of his new charge.

DARDEN: Regardless of what has happened in the past, he's a human being. And I believe and I expect him to march on this (INAUDIBLE) campus one day, not five or six years, but I expect four years, to be a Morehouse graduate.

SANCHEZ: It's Genarlow Wilson's plan as well. A plan that includes getting to the head of the class.

WILSON: I'm going to try to sit as close as I can to the professor or the teachers.

SANCHEZ: After a long, painful road, Genarlow Wilson is back on track.

Rick Sanchez, CNN, Atlanta.

(END VIDEOTAPE)

PHILLIPS: A legend who shocked the world dies in his adopted land. We're going to look back at the exotic life of chess master, Bobby Fischer.

(COMMERCIAL BREAK)

PHILLIPS: Well, an update now on a developing story out of Washington, D.C. It's happening on Capitol Hill. Live pictures now, U.S. Capitol police say they've detained a man who was apparently walking around with a shotgun. Ted Barrett on the phone for us. He's our Congressional producer.

Ted, what do we know?

VOICE OF TED BARRETT, CNN CONGRESSIONAL PRODUCER: Kyra, what I can tell you what I've learned in just the last couple of minutes is that this man made it as far as a barricade, police barricade at First and C Street Northeast, just a few hundred yards from the Dirickson (ph) Office Building and the Russell Office Building and I was just told by some Capitol Hill employees who witnessed it that he walked right up past the guard shack, and -- or right in the area of the guard shack, and several police officers responded with their guns drawn and put him on the ground immediately.

But that is closer to the Capitol Hill facilities than we were originally aware. We thought it was a little bit further away, closer to Union Station, the train station. So, we -- it was interesting that he was able to walk this close to the Capitol facilities.

PHILLIPS: Ted, were they -- apparently, they were going to look inside his car. Have they done that yet? Have they found anything inside his car?

BARRETT: There is a car that they are looking at. They've got the bomb team out. The dog -- the dog teams out. And that is about two blocks away, near the intersections of North Capitol Hill and Louisiana Avenue on the edge of the Capitol campus. And it's my understanding that they are doing that investigation right now. But we don't know any results.

PHILLIPS: Did he make any threats? Did he say anything to anybody?

BARRETT: We don't know of any threats or -- or any motive at all as to why he would be walking in such a heavily policed area with a visible shotgun.

PHILLIPS: And it was totally visible. I mean, he was just walking around, holding this shotgun.

BARRETT: Well, I don't know for sure, but that's how police describe it, that he was carrying a shotgun.

PHILLIPS: All right, CNN's Congressional producer Ted Barrett. Ted, we appreciate it. Let us know if you get any new develoopments.

BARRETT: Thank you.

LEMON: Their bodies are a perfect match and their brains apparently are, too. We'll tell you about Nebraska twins who have just aced the ACT. Not an easy feat

(COMMERCIAL BREAK)

LEMON: Well, if you want to make a splash in Hollywood, the place to be right now is Park City, Utah. It is the home to the Sundance Film Festival, where independent movies are the stars.

Our Brooke Anderson is in the middle of it all. She joins us now. And she's somewhere down there. Brooke Anderson? We've got a ...

BROOKE ANDERSON, CNN ENTERTAINMENT CORRESPONDENT: Can you see me?

LEMON: No, we had a live shot of the street. Like -- there you go. We see you. I know you're cold, because I saw you ...

ANDERSON: OK. LEMON: ...in the preview monitor here shivering. It's chilly, huh?

ANDERSON: I think it's about 10 or 15 degrees, Don. But it's worth it. It's beautiful. It's a lot of fun here. I don't know if you can see the snow flurries, but it's lightly snowing all day, so it's a winter wonderland here.

And Sundance really is considered the premier showcase for independent filmmaking. Quentin Tarantino, Kevin Smith, Michael Moore, they all launched their careers right here at Sundance. Robert Redford has led this effort for more than 20 years.

I spoke with him and he told me that actually the writers' strike that's happening right now could benefit the Sundance Film Festival due in terms of acquisitions due to the halt right now in Hollywood film production.

Listen to this.

(BEGIN VIDEO CLIP)

ROBERT REDFORD, FOUNDER, SUNDANCE FILM FESTIVAL: You just don't know what's going to happen, and that's the part I like. It's very, very unpredictable. It's full of surprises. But I think -- I guess theoretically, yes, I would imagine, because of the strike, because of the climate, because of the nature of our business right now, that it will be a -- probably something of a buyers' market.

(END VIDEO CLIP)

ANDERSON: We're only on day two of the Sundance Film Festival and already a couple of films have been snapped up for distribution. They expect many more to be bought over the next nine days.

The opening-night film last night was "In Bruges" starring Colin Farrell and Brendon Gleeson. I spoke with them about an hour ago. They told me they are thrilled that their film received the coveted opening night slot. Their movie already is locked down with a distributor, it will be out next month, early February.

And another movie getting a lot of buzz here, a lot of recognition is the documentary "Where in the World is Osama bin Laden?" It actually chronicles the journey of filmmaker Morgan Spurlock as he tries to hunt down Osama bin Laden. And he actually does it with his trademark sense of humor.

I spoke with him and asked him how he can lighten up such a heavy subject. Listen to this.

(BEGIN VIDEO CLIP)

MORGAN SPURLOCK, "WHERE IN THE WORLD IS OSAMA BIN LADEN?": That's a good question because I'd like to think that, you know, "Where in the World is Osama bin Laden?" is the funniest movie ever made about terrorism. But we'll see. The jury is still out on that. You know, I think that, you know, for me, I just went into this whole -- this whole journey, this whole trip of making this film just trying to be myself and to try and really find real people and have real conversations with people and funny things come out of those situations. Funny things usually come out of the worst situations.

(END VIDEO CLIP)

ANDERSON: I will have more with Spurlock and his documentary on "THE SITUATION ROOM" with Wolf Blitzer later on today. Spurlock was actually here at Sundance four years ago with his movie "Super-Size Me." You may remember that. He told me that Sundance has really changed his life, really launched his career.

Don, more than 20,000 people on average normally attend the Sundance Film Festival. So, it will get very crowded here on Main Street, especially congested over the weekend.

LEMON: Yes, and you know -- you said that the independent film stars, but tell us, who did you run into? We saw you with Colin Farrell. Give us some names, some heavy-hitters you've run into, Brooke.

ANDERSON: Well, there are a number of celebrities who will be gracing the streets here at Sundance. In addition to speaking to Robert Redford, you've also got Amy Adams who will be here, Robert De Niro, Alan Arkin, Jack Black. So, the list is endless.

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