Return to Transcripts main page

CNN Newsroom

Watching Hurricane Ike's Path; Government Bails Out Mortgage Giants; Pakistan Welcomes New President

Aired September 08, 2008 - 10:00   ET

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

HEIDI COLLINS, CNN ANCHOR: Good morning, everybody. I'm Heidi Collins.
Stay informed all day in the CNN NEWSROOM. Here's what's on the rundown now. Mortgage giants rescued. Prospective home buyers may get a break. Current homeowners may get angry.

Hurricane on the run. People rolling out. Ike cuts across Cuba, forcing nearly a million people to flee. Next expected landfall, the United States.

And this hour, Joe Biden town hall meeting. We plan to bring you the Democratic VP candidate today, Monday, September 8th.

You are in the CNN NEWSROOM.

Your money and the economy. It's issue No. 1. The big news that could affect your wallet this morning is the unprecedented government takeover of mortgage giants Fannie Mae and Freddie Mac. Stock markets around the world soaring on news about the rescue plan. The move could shore up the shaky U.S. housing market which is suffering from record foreclosures.

The bailout could cost taxpayers billions of dollars. So what does all this mean to you? Here to talk about it. Ali Velshi, CNN senior business correspondent and Christine Romans, part of our CNN Money Team.

So, Ali, why did the government think this takeover was necessary? How's it all going to work? Everybody wants to know how much they're going to have to pay?

ALI VELSHI, CNN, SENIOR BUSINESS CORRESPONDENT: Well, it used to be that banks loan money out to people for mortgages when they had that money, when somebody deposited money. That system changed some years ago where banks would take those loans, resell them to somebody else, get new money, and that would be the money they gave out for mortgages. Well, what happened is that with this whole credit crisis that we've seen over the last year and a half, that well of secondary money has dried up, and really the only big player in this game now is Fannie and Freddie.

Some $5 trillion worth of loans, more than half the U.S mortgage market is flowing through them. So if they were to somehow fail, the money for mortgages could dry up, and interest rates could start to go up. So the federal government had no choice, some say, but to step in. Here's how Henry Paulson described it.

(BEGIN VIDEO CLIP)

HENRY PAULSON, TREASURY SECRETARY: Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in the financial markets, here at home and around the globe. This turmoil would directly and negatively impact household wealth from family budgets to home values to savings for college and retirement.

(END VIDEO CLIP)

CHRISTINE ROMANS, CNN CORRESPONDENT: And that was a risk the United States government clearly just didn't want to take. In fact, this makes the government of the United States of America, the largest mortgage lender in the country. This is a huge move by the Bush administration. An aggressive move really getting into the housing market here, Heidi.

COLLINS: So what about those mortgage rates? I think we have some numbers that we can show people how things may shake out.

ROMANS: Right. In the short term this could mean, I think Ali (INAUDIBLE) his sources too, it could mean that the 30-year fixed rate mortgage is going to go down from somewhere around 6.39 percent to maybe 6 percent. I just talk to Mark Zandi's office at Moody.com. He's even saying that it could go below six percent. So, if you're in the market for a fixed rate mortgage in the near term, it could be good for you. If you already have a mortgage, it's not good for you.

VELSHI: It's not going to do anything for you.

ROMANS: It can't do anything for you. In fact, if you're a taxpayer, as you probably are -

VELSHI: You may get saddled with the bill for this.

ROMANS: We're going to pay for this. We're going to pay this. Now there are, we're told there are taxpayer protections that the Bush administration was very, very concerned about having taxpayers foot the bill for this. Make no mistake about it. We are. But the shareholders of these two companies are going to be potentially wiped out. Right, Ali.

VELSHI: Yes. That's right. And you know, the cost of this, Heidi, some say it could be $30 billion. The federal government says they're putting aside $200 billion for it. And Christine heard from somebody that it could even be higher than that.

ROMANS: Now, keep in mind, after September 11th, the bailout for the airline industry, the help for the airline industry after September 11th was like $15 billion. So put that in perspective.

VELSHI: And Bear Stearns was $29 billion. So $30 billion to $100 to $200 billion. ROMANS: It's our money. It's your money. It's our money. So that's why the candidates were briefed, we're told, about this before it happened. It means something to every single American.

COLLINS: Yes and I imagine they will be talking about it on the campaign trail today and for many days to come.

All right, guys. Thanks for the breakdown on that. Christine Romans and Ali Velshi helping us figure it all out.

Also, helping us to look at some of these numbers, Susan Lisovicz is going to be joining us a little bit more on the market's reaction. But you could see if for yourself there. The Dow Jones Industrial average up about 236 at this point. I think we were up 340 at one point of the open of the trading day. So, Fannie Mae and Freddie Mac certainly impacting the trading day.

Hurricane Ike already a killer. It's stirring new fears now from Florida Texas. Dozens of people dead in Haiti. The storm unleashed mud slides and massive floods there. In Key West, thousands of people have obeyed the orders to evacuate. We're going to have a live report from the Florida Keys coming up in just a few minutes, to get the very latest from there.

It is too early, though, to know exactly where Ike is headed. But one thing does appear certain, it's expected to grow stronger when it begins its trek across the warm Gulf waters. Landfall is likely somewhere along the U.S. Gulf Coast. Ike expected to regain strength over those warm waters.

And CNN meteorologist Rob Marciano is in the weather center now with more on that. Wow, look at that NASA imagery.

ROB MARCIANO, CNN, METEOROLOGIST: Yes, that satellite is cool from NASA. It gets real close. We got that picture yesterday. It really highlights the structure of the storm, when it was a major Category 3 storm, heading towards the northeastern tip of Cuba and just tearing apart some of these islands in the Turks and Caicos. Making landfall at Category 3 with 125 mile an hour winds. The eye is close just a little bit or at least become cloud veiled and less organized. We got winds at 100 miles an hour. That's still a Cat 2. It might go down to a Cat 1 but it looks like it wants to skirt the coastline there of the southern part of Cuba into the Caribbean.

If that happens, then it may tap some of that warm water and hold itself together just a little bit better. Here's a closer up shot of it. The forecast is for it to pretty much ride the southern coastline or ride the spine of the island of Cuba over the next 24 hours. It's still over 300 miles from Havana. It's moving west, about 14 and 15. And if rises, the spine of the island, it may reemerge as only a tropical storm. So right now the forecast is for it not to do that. And we got hurricane watches and tropical storm warnings up for the Florida Keys.

It doesn't take much for the keys to flood. So if you got two to four foot storm surge, which is very possible with this thing, you're going to get flooding from that and then we'll have tropical storm force wind. It's not a huge storm as far as the wind field is concerned. It's got winds that extend 50 miles out as far as hurricane force goes. But once we get into the Gulf of Mexico, we'll probably see it regain some strength. Maybe back to Category 3 status with winds of 115 or greater and the timing of it is Thursday into Saturday morning.

Some time in there, anywhere from the Florida panhandle to parts of southern Texas, even there's a slight chance of it going into Mexico. But, Heidi, once it gets into the Gulf, then it's surrounded by land. So that's what makes the Gulf so ominous because it got to hit somewhere at that point.

COLLINS: Yes. I know it does. All right, Rob. We'll check back later on.

Right now, Hurricane Ike is tearing across Cuba as Rob said. The island has been pummeled by waves as tall as 50 feet. Homes have been blown apart. Trees torn from the ground and more than 1,000 homes damaged or destroyed. Losses are sure to mount as Ike breaks the island over the next 36 hours.

In Key West, thousands of people have scrambled to get out of the way of Hurricane Ike's unpredictable path. CNN's Susan Candiotti is on the chain of islands for us this morning.

Hi there, Susan. It looks beautiful behind you, but I imagine that could likely change.

SUSAN CANDIOTTI, CNN CORRESPONDENT: That's right. And probably they'll start feeling the effects by tomorrow afternoon. But for now and throughout the weekend, it's been bright, sunny, and very, very warm down here. So it's kind of hard to understand why there is an evacuation order when you look at it that way. But emergency management officials say we don't want to take any chances.

Look, after all, there is a hurricane watch. Which means hurricane conditions are possible. And as you just heard, was it Rob say, they're talking about tropical storm conditions at the very least, which means a storm surge, it's easy to flood here.

We're standing in this marina about two feet above sea level. So there will be some flooding if at the very least we get a tropical storm. Here at the marina, a lot of people have secured their boats and we're here to talk to a boat owner, Kathleen Phillips. You have a couple of sailboats that we can see over your shoulder there. One is called the "Blue Ike" and the other one next to it --

KATHLEEN PHILLIPS, FLORIDA KEYS RESIDENT: "Jesse Lee."

CANDIOTTI: "Jesse Lee." Now, what have you done to make sure that the boats are safe in harbor?

PHILLIPS: Pretty much, we doubled up the lines, tripled them in some cases. Put in safeguard, they keep lines from chaffing and just hope that we stay here, not in Texas. CANDIOTTI: How did they make out during Fay, just this month?

PHILLIPS: Oh, we've been OK. We have had no damage. Actually, we've been sitting in the cockpit watching the wind indicator the whole time. So everything has been fine.

CANDIOTTI: I have to ask, if there's an evacuation order that is in effect and everyone really was supposed to be out by noontime today. You're still here. Why didn't you leave?

PHILLIPS: We have boats that we have to take care of. And can't take the chances. My boyfriend and I live on a boat. And that's our home. We can't take the chance of anything happening to that.

CANDIOTTI: What about the loss of revenue because one of those is a charter boat?

PHILLIPS: Right now, it's bad for everybody. With the tourists gone, we believe we're living in the tone of bankruptcy. Sad to say, yes. And it's very hard. Most of us all work on other boats here, too. So you know, no tourists, no money.

CANDIOTTI: Well, we wish you the best. Let's see what tropical storm or Hurricane Ike rather has to offer. They are having a meeting of emergency management officials in just about a half hour from now. And Heidi, we'll get back to you when we hear what they have to say.

COLLINS: OK. Very good. Susan, keep us posted. Susan Candiotti in Key West for us this morning.

So let's not forget about Tropical Storm Hanna either. The one- time hurricane dumped heavy rains this weekend as it churned up the East Coast of the U.S.. This may be the most dramatic image. In Springfield, Massachusetts, a woman was trapped when torrential rains triggered a landslide of a nearby hill of sand. Look at that.

Hurricane Gustav has put the Red Cross in the red. The Red Cross says Gustav will cost a minimum of $70 million in aid. So far, donations for Gustav relief have reached only the $5 million mark. The relief agency says it's borrowing money now to help. The Red Cross right now is helping people who need shelter or hot meals because they have no power to cook at home. You can donate by calling 1-800-REDCROSS or just go to redcross.com.

Once again, we want to let you know we are watching and waiting for this event. Senator Joe Biden is going to be Green Bay, Wisconsin, there. He's going to be holding a town hall, talking with voters, of course. We will bring you a little bit of that when it happens, coming up at CNN NEWSROOM.

Primary adversaries now breaking bread? What's on the menu for Barack Obama and Bill Clinton?

(COMMERCIAL BREAK)

COLLINS: Capitol Hill getting back to business today. You see a live shot there. Recess is over and Congress returns to work fired up over energy. Many heard from angry voters demanding something get done about the high cost of fuel.

Senator Ted Kennedy fighting brain cancer will be working from home, though. Aides say doctors are pleased with his progress but want him to stay put. Kennedy says he plans to return to the Senate in January.

Presidential politics now. John McCain closing the gap on Barack Obama. The latest CNN poll of polls shows Obama ahead by a single point. Polls taken before last week's Republican convention had McCain down by six.

The candidates return to battleground states in the heart land today. John McCain was campaigning with his wife over the weekend. But now he and running mate Sarah Palin are headed to Missouri. Our Dana Bash is covering the McCain campaign and joining us now from Lee's Summit, Missouri.

Hi there, Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Hi, there.

Well, this is a place where Republicans really pretty much have to not only win, in order to win this very important state of Missouri but win by pretty big margins. And that is one of the reasons why Senator McCain and his running mate are coming here this morning, Heidi.

And what we're told is they're going to emphasize is something that we've been hearing since the convention. Pushing hard this idea that they're a pair of mavericks. And also perhaps more importantly McCain aides say for voters is pushing the idea that they insist that Barack Obama is not, is not the kind of change agent that he says he is.

And, in fact, we're told that John McCain will have some more sharper lines in his stump speech here in a couple of hours about Barack Obama and about the idea that he insists that Obama says that he's going to work across party lines, but he says that his history proves otherwise. So that's the kind of thing that we're going to hear, Heidi, from both John McCain and Sarah Palin in just a little while here in Lee's Summit, Missouri.

COLLINS: Well, yes and if I understand correctly, Sarah Palin wasn't originally going to be traveling with him on this one.

BASH: You're exactly right. In fact, as of late last week we were told that she was going to go out on her own. Have her maiden solo campaign trip. And it was supposed to be in and around Philadelphia but in fact, I'm told John McCain decided himself once he saw the stunning crowd, absolutely totally different from what we had seen pre-Palin that he said, you know, I want to keep her with me for a little while. So, that's why they changed it. This event wasn't even on the books until pretty much over the weekend. They decided to keep Sarah Palin with John McCain. And you know, I got to tell you, just since going outside and talking to some people who are waiting in a very long line. Lines that again didn't exist at McCain events, and I've been covering him for months and months. I've talked to a lot of people, especially interestingly women, who says that yes, they're Republicans but they weren't so sure about John McCain. It definitely didn't feel that they were going to go out and push for him and they weren't energized for him. But they say now that they - that Sarah Palin is on the ticket, not only did they want to come to events like this that they didn't before but they are willing to get out and try to work for the ticket.

COLLINS: All right. CNN's Dana Bash coming to us live from Missouri today. Thank you, Dana.

Democrat Barack Obama heads back to Michigan again today. He will be talking about the economy. It's Obama's third visit now to the battleground state in nine days.

The Clintons jumping on board the party train. Senator Hillary Clinton is stumping for Obama in Florida. And Obama had a luncheon date with former President Bill Clinton on Thursday, September 11th. Obama and McCain hold a joint appearance at ground zero that day to commemorate the 9/11 attacks.

And once again, we just want to let you know that we are waiting for the Senator Joe Biden event to begin. You're looking at Green Bay, Wisconsin, with the nominee for the Democrat side of things. The vice presidential candidate will be talking to voters there. We're going to bring you that live when that happens.

Two mortgage giants teetering on collapse. Your tax dollars to the rescue. Gerri Willis breaks it down, what it all means to you.

(COMMERCIAL BREAK)

COLLINS: Listen to the music. So there you have it. Dow Jones Industrial averages up significantly today. Right now we're up about 247 and watching those numbers continue to go up and down at the start of the day. Ended up about 340 at the start. So we're down from that but obviously still triple digit gains.

Nasdaq up about 18 points as you see there in the lower right- hand of the screen. All of this interesting today especially because of what happened with Fannie Mae and Freddie Mac federal bailout. We're keeping our eye on that and all of the rest of the numbers throughout day.

As I mentioned, this weekend the government took drastic action to shore up the housing market by taking over Fannie Mae and Freddie Mac. But what does it all mean for your wallet. Personal finance editor Gerri Willis is joining us here with answers.

Hi there, Gerri.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hey good morning, Heidi.

COLLINS: A lot of people are wondering, OK, this is great or whatever they think about it. How does this affect me, my wallet, my monthly payments, my mortgage? So on, so forth.

WILLIS: Well, the objective of yesterday's announcement is to bring some much-needed confidence to the mortgage market. And by extension, the housing market, Fannie Mae and Freddie Mac together own or back $5 trillion in mortgage debt, or about half of the mortgage market. Now, shoring up these two entities should help bring stability to both the markets and the economy. This announcement ends months of speculation about the fate of the two firms. Heidi.

COLLINS: Yes. So what does it mean then for your mortgage? This good news? Depending on what you have.

WILLIS: Well, if you're looking for a mortgage. If you're looking for a mortgage or a mortgage seeker, you should celebrate. One banking expert I talked to said the move could bring mortgage rates down by anywhere from one eighth of a point to three quarters of a point from their current levels of 6.39 percent. And that's real savings to buyers.

On a mortgage for a medium-priced home, for example, the half point drop in rates would mean monthly savings of $70. If you're in an adjustable rate loan, and has re-set higher maybe it's squeezing your budget, now is the time to investigate getting a new loan and getting out of those painful resets.

COLLINS: Yes, definitely. You probably shouldn't expect too much from all of this.

WILLIS: You know, the deal isn't going to fix absolutely everything. Regardless of the optimistic tone surrounding coverage of the move and the fact that the markets went up 300 points at the open. It doesn't mean that the housing crisis is fixed. Experts expect housing prices to continue their downward trend. However, prices should stabilize more quickly than they otherwise might because of the Treasury Department's move. It reassures the market to capital that would still be available in the mortgage market and that's very important.

Also, you should note if you have a home equity line of credit that's been frozen by your bank, maybe you're thinking that you're going to get some help here, the Treasury's move may not help you very much. Banks froze the popular products because of changes in housing prices, not the credit crunch. But lending standards will probably remain tight. Remember, lenders require credit scores above 700 and downpayments of 20 percent for the best terms on new mortgages. That's not likely to change soon.

COLLINS: Yes. And really at this point, we don't know how much capital the Treasury Department is going to provide. So we don't know how much it's going to cost us, but that's what everybody wants to know. I mean, how much am I going to have to pay? WILLIS: I wish I could answer that question. It's really impossible to say how much this takeover of Fannie and Freddie will cost. Here's what we do know. The companies will probably need tens of billions of dollars in the next year. And taxpayers will be on the hook. Ultimately maybe as much as $20 billion. We're still waiting to see. And of course, taxpayers will be on that hook for that money ultimately. So we're all going to pay for, you know, what could be $30 billion. What could be $200 billion.

COLLINS: Boy, that's a huge margin, too. We're going to have to wait and see.

WILLIS: Yes. It really is.

COLLINS: All right, Gerri Willis, our personal finance editor. We sure do appreciate it. Thank you.

WILLIS: Thank you.

COLLINS: And you can follow your fortunes at CNNMoney.com. We've got all the day's market news and numbers, expert analysis and much more. So keep your eye on that.

Also, we are keeping our eye on this event happening in Green Bay, Wisconsin. Democratic vice presidential nominee Joe Biden will be there to speak with voters, holding a little town hall. And the crowd has gathered. We'll keep our eye on that and bring it to you live when it happens.

A trio of tropical system brings misery to Haiti, a city cut off by high water. How will rescuers get aid to the people now.

(COMMERCIAL BREAK)

COLLINS: Hurricane Ike is days away from a likely landfall somewhere along the Gulf Coast. Evacuations are under way in low lying Key West. Thousands of people have packed up and left the area. A tropical storm warning is in effect for the Keys.

Let's check in now with CNN meteorologist Rob Marciano to make sense of all of this for us. It's hard, Rob. Because obviously we don't know exactly where this thing is going. We never really know. But we got to keep the people safe at the same time.

MARCIANO: Yes, you want to throw out the flag as early as you can. But days four and fives are typically the lowest amount of confidence the National Hurricane Center has as far as how strong this is and where it goes. The margin of error on day five is 300 miles. So, that's a lot.

So we're going to go through this. Let's break it down. Hurricane Ike with winds of 100 miles an hour. We're going to get the next update here, probably before the end of this hour. And that may very well highlight some further weakening. Right now, it's a minimal Category 2, might be a cat 1. But It looks like it wants to reach out into the Northern Caribbean. And that may help keep itself together. Here it is again. Eye -- distinct eye, monster eye rolling right into the coastline there. This could go down as one of the worst hurricanes that that part of the island has seen. And it's pretty mountainous over here, as well. This side, a little bit more flat so it won't be knocked down as much. Hurricane warnings posted for all the island. We have tropical storm warnings posted for the Florida Keys and hurricane watches, meaning that it's possible to get hurricane condition. Especially if this thing draws a little bit farther to the right. They will get a storm surge and it doesn't take much in the Keys to get flooding. So, they will have issues there, no doubt.

Here we go. Category 1 storm expected tomorrow late, off the coastline of Cuba. It's going to take all day today and through most of tonight to get through Havana and then into the Gulf of Mexico. And here's our margin if error. Anywhere from Mobile, Alabama, to say, Corpus Christi, Texas, right now is where the cone of uncertainty is. And the timing would be Thursday afternoon to say, Saturday morning, or even Saturday afternoon. That's a possibility of seeing some landfall.

So, that's where we're looking at as far as hurricane Ike is concerned. And once we get into the Gulf, it's surrounded by land. And that's the biggest concern, as you know.

So Heidi, I ran out of my battery. So, I can't hear you, or see you.

COLLINS: I know, I know. All right. I'll take it back from here. And I know you're watching that closely for us. We'll check in later on with Rob.

Meanwhile, I want to show you these pictures just in now to the CNN NEWSROOM. Our affiliate there in Baltimore, WBAL, has these pictures for us. It's a shopping center that's on fire. As you can see, the words on your screen there, three-alarm blaze, in fact. And I have a little built of information on it. This is a clothing store, hair and beauty supply and gift store. And they were all sort of in one of those little strip malls, I believe. If you happen to know the area, this is Edmonson Avenue.

But again, pretty unbelievable flames. Obviously have no idea at this point how it all started. But you see how intense they are, flames just shooting out of there. Crews are trying to knock that down, of course. Just wanted to give you an idea. And there is a wider angle obviously, from a helicopter in the sky. Again, those pictures just coming into us from Baltimore, Maryland, WBAL. If we learn anymore about that, we will certainly give you the information. And again, another view. All the water coming down on top there. Hopefully they will get that under control. Apparently it broke out at 9:20 eastern time. So, a little more than an hour ago and it still looks like that. Lots and lots of thick smoke there. So, we'll keep our eye on it for you and get more information hopefully into the CNN NEWSROOM.

First Gustav, then Hanna, now Ike. Haiti has been pummeled by three tropical systems in a row, with more than 200 people killed.

CNN's Karl Penhaul has the story now and a warning. You may find a few of these images disturbing.

(BEGIN VIDEOTAPE)

KARL PENHAUL, CNN VIDEO CORRESPONDENT (voice-over): The flood waters just go on rising in Haiti. The body count, too. In the mountain town of Cabaret, a river burst its banks early Sunday, killing men, women, and children as they slept. Some tried to make a run and died, too. Haiti's Red Cross said at least 52 people died here alone. More are still missing.

UNIDENTIFIED MALE (through translator): It started around 1:30 in the morning. And then 2:00, 3:00, 4:00. All the time it was raining heavily. A lot of water fell over here.

PENHAUL: In another incident Sunday, Red Cross officials say they dragged 21 bodies of fishermen from the sea along Haiti's north coast. The rain unleashed by Hurricane Ike compounded the misery caused by the one-two punch of Hurricane Gustav and Tropical Storm Hanna, in the last two weeks.

The Red Cross has confirmed at least 150 dead in the coastal city of Gonaives, from those two storms. Highways and bridges to the city have been washed away and aide agencies say survivors are getting desperate because they cannot get sufficient relief supplies.

Citizens waded to higher ground as the rain beat down on Gonaives again. And as a CNN team tried to reach Gonaives from the north on Sunday, its advance was blocked by this landslide. Volunteers shoveled to move the rocks and debris.

This woman said she had set out in the flood-stricken city the previous day. She says the only possessions she now has left are the ones in the plastic tub on her head. She leaves, but says she doesn't really know where she's headed.

(on camera): That woman like thousands of other Haitians, just hopes the rain will cease and they can finally find some dry ground.

Karl Penhaul, CNN, Cape Haitian, Haiti.

(END VIDEOTAPE)

COLLINS: And if you'd like to get involved in relief efforts for those effected by the hurricanes and tropical storms, just go to CNN.com's Impact Your World page. You'll find links to groups providing food and shelter to people in need. Once again, that address, CNN.com/impact.

New evidence now raising questions about how many civilians were killed in a U.S. military strike in Afghanistan last month. Reports from the region including a U.N. review, have said as many as 90 civilians may have been mistakenly killed in the August 22nd strike in Herat. Now, NATO military officials tell CNN it looks like cell phone pictures taken by locals from the region, back that up. This comes as a human rights group says U.S. and NATO airstrikes have nearly tripled from 2006, and is fueling a public backlash.

Nearly one year after assassins killed Pakistani Prime Minister Benazir Bhutto, her widower will be sworn in as the president tomorrow. Asif Ali Zardari won the country's presidential election over the weekend and hailed his victory as a triumph for democracy. Zardari took over Bhutto's party after she was assassinated late last year. He replaces President Pervez Musharraf who was forced to resign last month.

Still overseas now, French president, Nicolas Sarkozy, is in Moscow today. He's holding talks with Russian officials hoping to persuade them to finish withdrawing from Georgia. Nearly a month after a five-day war last month, troops remain entrenched deep inside the Russian territory. Russia says those troops are peacekeepers and they are allowed under a peace accord.

Our next guest is best known for her role in the TV sitcom "The Nanny." But her new role is certainly no joke. Just minutes ago, the State Department named Fran Drescher its newest public diplomacy envoy. She'll focus largely now on health issues and tap into her experiences as a cancer survivor.

Fran, thanks for being with us. I know you're coming to us from the Treaty Room there at the State Department. Have you ever been there before?

FRAN DRESCHER, U.S. PUBLIC DIPLOMACY ENVOY: No, I haven't. It's beautiful and so exciting. I just feel so privileged to be a part of this. It's unbelievable. It's like not bad for a chubby girl from Queens.

COLLINS: Well tell us a little bit about how it all came about.

DRESCHER: Well, I was lobbying in Washington for the Gynecological Cancer Education and Awareness Act, and I was speaking with the First Lady's staff and expressing that I felt that my message of women's health and self-empowerment and early detection was something that I should take locally. And they were the ones that connected me with the State Department.

And I had several meetings with them, discussing what my vision was. And -- and that led to this most distinguished appointment.

COLLINS: Well, as you mentioned, you are a cancer survivor, uterine cancer. You had already been doing quite a bit on the cancer front with your nonprofit foundation -- Cancer Schmancer -- is one of the sort of issues that you raised.

How does this change things now when you go global? What exactly will you do?

DRESCHER: I'll be talking to women all over the world about taking control of their body, recognizing what the early warning whispers of the cancers that could affect them are, understanding that they have to let go of the Victorian sensibility if you put your, you know -- if you can grin and bear it, do so, because your family comes first. Because when you put your family first, you're really putting them last because you're useless to them when you're six feet under.

Women are the caregivers to the children, the spouse and the elders in almost every home worldwide. So at all costs, she must keep herself alive. And as a society, we have to respect the importance of her role that she is basically the very glue that keeps the family together -- and protect her health and well being.

COLLINS: Yes, and I know one of the other things that you talk so much about and is very important to you, and other people, is managing your own health care. I know it took two years and something like eight doctors for you to get an accurate diagnosis. And listening to your body is something I know you mentioned in your comments to the State Department.

I would love to talk to you forever, Fran, but we certainly appreciate your time here today and congratulate you, too, on becoming a new public diplomat. Thanks so much, Fran.

DRESCHER: Thank you. I'm very proud. I appreciate it.

COLLINS: Absolutely.

We've got some breaking news to get to here now. Out of Baltimore, Maryland, once again this fire that we've been showing you is really -- doesn't look like it's gotten any better at all. This is a three-alarm blaze, a lot of crews on the scene. You can see all the water coming down on top of that. It's a shopping center that apparently housed a clothing store, some hair and beauty supply shop and a gift store. So obviously very, very active flames still at this point. We're going to keep our eye on top of that for you and follow it throughout the morning here.

Also, keeping our eyes on the numbers as promised. Fannie Mae and Freddie Mac really shook things up. All of that happened over the weekend, as you know the federal bailout there. Right now, the Dow Jones Industrial average is teetering right below 300 at 293 to the positive. And the Nasdaq is up, last time we checked, I think it was about -- there it is -- 26 points or so. We'll keep our eye on it for you.

Quick break here.

(COMMERCIAL BREAK)

COLLINS: Now, more on the major story out of the financial sector that we are following today -- the government's dramatic bailout of Fannie Mae and Freddie Mac. Let's go to Susan Lisovicz now, on the floor of the New York Stock Exchange, to see how investors are reacting.

And Susan, it's kind of been all over the map it seems like today. SUSAN LISOVICZ, CNN CORRESPONDENT: Well, yes, basically very, very optimistic. We don't see these kind of opens very often. And the Dow is pretty close to where it opened at its high, up nearly 300 points.

Heidi, the hope is that this extraordinary move by the government will help kick start an economic recovery, or as one analyst puts it, prevent an economic Armageddon. And this kind of optimism is something we've seen in financial markets all around the world.

Japan's Nikkei soared 3 percent, Hong Kong's Hang Seng was up 4 percent, major averages in Europe rallying anywhere from 2 to 5 percent.

And check out the big board. The blue chips are up 296 points. The Nasdaq is up 30 points, the broader S&P 500 is up. A completely different reaction for shares of Fannie Mae and Freddie Mac, which have lost 95 percent of their value over the last year. They're down about 80 percent each just today. And the fear is that this government bailout will completely wipe out any remaining value, Heidi.

COLLINS: What did you say, Susan? A little while ago, last time we talked to you there, trading at $1 a share?

LISOVICZ: They're trading a little over $1 a share each, Heidi.

COLLINS: Well, it seems like when you look at the broad market reaction, that you can tell how important Fannie and Freddie are, not just to the U.S. but then the global economy as well.

LISOVICZ: That's right. When you have a housing market that has been consistently called the worst since the Great Depression, consumers aren't spending. And the U.S. economy is the engine for global economic growth. So that's one aspect.

But the other aspect is that Fannie Mae and Freddie Mac debts are owned by institutions and governments overseas. So we're all interconnected. And that's huge.

But no one is calling this a bottom to the housing market definitively just yet. The problem is, Heidi, something we talked about on Friday -- the U.S. economy is losing jobs. Many economists say the U.S. economy is in a recession. So when people are losing jobs, the number of foreclosures rise. When foreclosures rise, the number of unsold homes rise. When the numbers of unsold homes rise, the value of home prices plummet, and the value of what Fannie Mae and Freddie Mac holds declines. And that is a huge problem.

You know, it's not like, you know, the labor market is going to suddenly improve just on this news. So it's a complicated problem. It's one of the reasons why Wall Street was really begging a lot of economists -- a lot of analysts were saying you need to get in here; this is a serious problem. So we don't know whether this is the bottom. And we don't know, ultimately, what you and I and millions of other taxpayers are going to ultimately pay for this extraordinary bailout.

COLLINS: Yes, that's the big question, obviously.

All right, Susan Lisovicz, appreciate that.

LISOVICZ: You're welcome.

COLLINS: Joe Biden getting pushed out of the picture. The media spotlight on Sarah Palin may leave the Democrats in the dark.

(COMMERCIAL BREAK)

COLLINS: Don't look now, but oil prices are back on the rise as traders focus on Hurricane Ike. CNNMoney.com's Poppy Harlow has our Energy Fix from New York this morning.

Hi, Poppy. This isn't what we want to hear.

POPPY HARLOW, CNNMONEY.COM: It's not. And it's just one storm after the other. We all know Hurricane Ike already caused big problems in Haiti and in Cuba. But what will be its effect here in the U.S. when it comes to oil? That's a big focus.

Right now oil is up 60 cents. But just an hour or so ago it was up about three bucks, so very volatile for the oil market this Monday. And remember, the oil industry is still trying to recover from Hurricane Gustav. As of yesterday morning, that more than 87 percent of the Gulf's oil production is still shut down, and nearly three quarters of the natural gas production is not slowing either. Gustav was considered a relatively mild storm.

So right now it really might not make sense for workers to return to those offshore rigs, try to get them restarted, because who knows? They may have to be evacuated again pretty shortly. No one is quite sure yet how big Ike will be when it reaches the Gulf, but it's already responsible for massive damage and, Heidi, as you know, the death of 73 people in Haiti. So this is a serious storm.

COLLINS: Yes, that number has gone up a bit, too. I think we're going to find out even more about that, unfortunately, as the days go on here.

When we talk about gas, though, it seems like it hasn't really had much of an effect.

HARLOW: It hasn't. But you have to remember gas prices lag oil prices by about two weeks. So far not a big effect because of these storms on gas prices, even though six refineries in the Gulf of Mexico region remain shut down. We've seen really long lines for gas in places like Key West as people try to flee that (INAUDIBLE). It hasn't impacted prices nationwide. The national average fell again today to $3.66 a gallon. But oil prices may be held in check right now because of two factors: a strengthening U.S. dollar and weakening global demand.

That helps out when you're talking about the supply and demand issue. But the big question remains: how much damage will Ike cause? We have to wait and see. The answer, as Bob Dylan said, is certainly blowing in the wind -- Heidi.

COLLINS: That's for sure. All right.

Poppy, thanks so much. Appreciate that.

HARLOW: You're welcome.

COLLINS: Placing his faith in the jury system one more time. O.J. Simpson goes on trial in Las Vegas. As he heads to court, we look back on a winding legal journey.

(COMMERCIAL BREAK)

COLLINS: In Las Vegas today, jury selection in the O.J. Simpson robbery and kidnapping case. The fallen football great is accused of robbing two sports memorabilia dealers at gunpoint. The alleged incident happened in a casino hotel room last year. If convicted, Simpson faces life in prison. Simpson has been in and out of court with legal troubles ever since his ex-wife was murdered 13 years ago.

Our Ted Rowlands takes a look back.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: The Los Angeles Police Department right now is actively searching for Mr. Simpson.

TED ROWLANDS, CNN CORRESPONDENT (voice-over): From the slow- speed chase to the trial of the century, O.J. Simpson went from ex- football star to an American obsession.

UNIDENTIFIED MALE: Free the juice, let the juice loose.

ROWLANDS: Tens of millions watched as Simpson stood accused of murdering his ex-wife, Nicole, and Ron Goldman.

FRED GOLDMAN, FATHER OF RON GOLDMAN: Ron and Nicole were butchered.

UNIDENTIFIED MALE: Absolutely, 100 percent not guilty.

ROWLANDS: Inside the courtroom, America was introduced to celebrity justice, including a judge trying to keep order.

UNIDENTIFIED MALE: Would you please draw the number of alternate juror.

ROWLANDS: DNA evidence and an unforgettable group of attorneys.

UNIDENTIFIED FEMALE: No one planted any evidence at any time.

UNIDENTIFIED MALE: There, how about that, Mr. (INAUDIBLE)?

UNIDENTIFIED MALE: He did not have the right to do what he did. JOHNNIE COCHRAN, O.J. SIMPSON'S ATTORNEY: If it doesn't fit, you must acquit.

ROWLANDS: Even some of the witnesses turned into household names.

UNIDENTIFIED FEMALE: And now you're changing that testimony, is that what you're doing, sir?

UNIDENTIFIED MALE: Yes.

UNIDENTIFIED MALE: Was the testimony that you gave completely truthful?

UNIDENTIFIED MALE: I wish to assert my Fifth Amendment privilege.

ROWLANDS: When it was over --

UNIDENTIFIED FEMALE: Orenthal J. Simpson not guilty of the crime of murder.

ROWLANDS: -- O.J. Simpson was a free man, but his troubles with the law would continue. For a while after losing the civil trial in 1997 Simpson went to Florida, where, aside from the occasional golf course siting, he stayed out of the spotlight.

In December of 2000, Simpson was back on the front pages, this time accused of assaulting someone in a road rage incident in Miami. The case went to trial. Simpson was found not guilty. In 2005, Simpson was found guilty and fined $25,000 for stealing satellite television. Then in 2007, Simpson wrote, "If I Did It," which detailed the murders of Nicole Brown and Ron Goldman. Public outrage kept the book off the market, and a judge awarded 90 percent of the proceeds of the publishing rights to the Goldman family.

Then, on September 16th, 2007, Simpson was arrested in Las Vegas on multiple felony charges, including armed robbery and kidnapping.

UNIDENTIFIED MALE: Mr. Simpson is present in custody.

ROWLANDS: Simpson has pled not guilty. If convicted, the now 61-year-old could be sentenced to as much as 30 years in prison.

Ted Rowlands, CNN, Los Angeles.

(END VIDEOTAPE)

COLLINS: The next hour of NEWSROOM starts with Tony Harris. Coming up shortly here -- what -- in about three minutes? Be quick, Tony.

TONY HARRIS, CNN ANCHOR: About three minutes. We'll get it going right here in the CNN NEWSROOM.

Good morning, everyone. I'm Tony Harris. Thank you, Heidi.

See events come into the NEWSROOM live on this Monday, September 8th. Here's what's on the rundown for you.

Ike crashes into Cuba. It looks like the hurricane will scrape the whole length of the island. The Florida Keys could get sideswiped.

A rich uncle throwing a lifeline to two mortgage giants. Uncle Sam, yes. How the government bailout may help you, in fact, and cost you at the same time.

The sandwich under attack. Some say that meat between the bread could be harmful. Others say, bologna. A crisis in the lunchroom in the NEWSROOM.