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McCain Gains in Polls; Feds Bail Out Mortgage Giants; Hurricane Ike Strikes Cuba; Florida Keys Evacuates Ahead of Ike

Aired September 08, 2008 - 13:00   ET

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

BETTY NGUYEN, CNN ANCHOR: All right. Well, hello to you, Tony. Got a lot coming up. Take a listen.
(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Seeing the gas cans on top of the cars and then actually seeing businesses boarded up. The resort you're staying in, the lower floors, they're boarding up. It's like you realize this is for real. They're not kidding around.

(END VIDEO CLIP)

NGUYEN: Absolutely not. The Florida Keys keep a close eye on Ike, and so do we. It is a monster storm on a sadly familiar course. We are live this hour in Havana, a city which is under siege.

And major financial housekeeping underway in Washington. The U.S. government moves in to shore up the very foundation of the mortgage markets. We're going to see what that means for borrowers, lenders, and homeowners on the brink.

Hello, everybody on this Monday. I'm Betty Nguyen, in for Kyra Phillips at CNN world headquarters right here in Atlanta. And you are in the CNN NEWSROOM.

Let's get you some live pictures right now from Lee's Summit, Missouri, where Republican presidential candidate John McCain is just wrapping up a campaign rally, as you see right there. We're going to hear more from the senator just a little bit later, right here in the NEWSROOM.

But in the meantime, a brand-new CNN poll shows the race couldn't be tighter. Let's get the news behind the numbers right now with CNN senior political analyst Bill Schneider.

So Bill, looking at these polls, we're seeing a bit of a difference today.

BILL SCHNEIDER, CNN POLITICAL ANALYST: Before the two conventions, the race was tied, 47/47. And now, the weekend after the convention, we interviewed voters again. And the race is tied, 48/48. Can't get any closer than that.

Now, several other organizations have also been doing polls, and they're also showing a very close race. In our CNN poll of polls, which includes both our poll, the Gallup tracking poll and a poll by Viagio for the Hotline, the result shows McCain 47, Obama 46.

Again, very, very close race. Those other polls have a slightly higher number of unsure voters. But again, no matter what poll you look at, it's a very close race as the campaign begins in earnest.

NGUYEN: But Bill, isn't it true that this is the first time that we have seen in this poll of polls that McCain is ahead of Obama?

SCHNEIDER: Well, it's only by one point. So I wouldn't make a great deal out of that.

NGUYEN: Well, those in the McCain camp probably are.

SCHNEIDER: I'm sure they are.

NGUYEN: When we talk about this poll, in the different graphics, where do people differ?

SCHNEIDER: Well, we're seeing some interesting demographic differences: two in particular. Men and women, that's been a difference throughout. Right now, men are voting for John McCain by a margin of seven points. Women are voting for Barack Obama by a margin of seven points. That's why it's a dead heat nationwide.

Interestingly, women are voting for Barack Obama 52 to 45, even though there's a woman vice president on the Republican ticket.

Another, even bigger interest is by generation. Voters under the age of 50 are voting for Barack Obama by an 11-point margin. Voters 50 and over are voting for John McCain by a 12-point margin. Again, a mirror image of the two generations, older and younger voters, very much the opposite of each other. Men and women, the opposite each other. If you average them all out, you've got a dead heat.

NGUYEN: The last poll we saw a 13 percent of people who were undecided. Are you seeing in these latest polls that more people are making up their minds?

SCHNEIDER: Well, we're showing -- we press people hard to make up their minds, so we have only about 4 percent of the voters who say they cannot make up their minds. They won't vote for either one or they have no opinion. So if you press people now to make up their minds, that's what gives us that dead heat.

NGUYEN: All right. Always enjoy it. Thank you, Bill. See you a little bit later.

You know, Obama holds a town-hall meeting a little a little bit later this hour in Flint, Michigan. His focus, issue No. 1, of course, that being the economy. You're going to hear his comments just a little bit later today in the NEWSROOM.

And speaking of issue No. 1, we are talking about the economy today, and we're talking mortgages. Millions of them, maybe even yours, are in Uncle Sam's hands right now about after an extraordinary government takeover in mortgage -- of mortgage giants Fannie Mae and Freddie Mac.

Now, stocks are rallying on this news, and hopes are surging that mortgage rates will drop. So let's get the big picture from CNN's Christine Romans in New York.

So explain to us what this means for people who hold mortgages right now, Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: Well, what this means, Betty, is the United States government had to go in with an extraordinary intervention and basically take over these two companies. These companies together hold about -- more than half of the nation's mortgages, some $5 trillion. This makes the United States government the nation's largest mortgage lender.

Taxpayer money has to be used to do it, because the government is run with United States taxpayer dollars, so this is going to be some $30 billion, according to the Congressional Budget Office estimate. Or what that really means is that the Treasury Department is saying it's going to use $200 billion of our money, if necessary, to shore up these two companies. So that's $200 billion in the treasury backing, and that is our money.

Now, we're told that the whole plan basically gives shareholders almost nothing. They'll get paid less, of course. And that there are some taxpayer protections in there. But indeed, this is your money and my money going to help out these two companies.

It could lower mortgage rates in the very near term for people who are going now to get a new mortgage. It's about 6.39 percent right now, Betty. Could go down to maybe 6 percent. Mark Sandy at RuesEconomy.com (ph) earlier said maybe even below 6 percent, so if you're in the market for a mortgage, it could be good for you. It's going to help kind of grease the wheels of the home mortgage system. That's good. That will keep the housing market from getting any worse, many are hoping.

NGUYEN: Isn't it true that for those 30-year fixed mortgages, those might be going down a little bit because of this plan?

ROMANS: That's right. Might be going down a little bit. Like we said, it's right now about 6.39 percent. Could go down to maybe 6 percent or maybe even a little bit lower.

If you have a mortgage right now, it's not going to do anything for your fixed-rate mortgage right now. And so that's causing some grumbling around. People are saying, "Wait, why is my taxpayer money being used to -- to rescue -- maybe potential rescue people who -- who, you know, who aren't going to make good on it?"

NGUYEN: Yes.

ROMANS: Right, right. But what the treasury secretary and what businesses are saying is that without this, things could be much, much worse for the economy, globally.

NGUYEN: Well, that's not good news, especially when taxpayers could be footing the bill on this one.

All right. Christine Romans, thank you so much.

So how is this bailout playing on Wall Street? What kind of effect is it having today? Let's ask Susan Lisovicz. She's at the New York Stock Exchange.

And there was a lot of worry over the weekend, Susan, when this news came out, that, you know, the markets were really going to take a tumble today. But so far, how's it looking?

SUSAN LISOVICZ, CNN CORRESPONDENT: Looking good, except if you're a shareholder for Fannie Mae or Freddie Mac, it's an entirely different story, Betty.

The government's takeover of Fannie Mae, Freddie Mac giving investors all around the world a huge shot of confidence. The hope is that the bailout will jump-start the housing market and lead to a global economic recovery. Major markets in Japan, Hong Kong and Paris, soared 3 to 4 percent.

But a lot of folks here say, "What took you so long? We're glad the cavalry's arrived. It just took an awful long time, a lot of pain and duress before it did arrive."

Check it out. The Dow industrials, which had soared more than 300 points earlier today, given up about half the gains, up 174 points. Financial stocks, in particular, doing very well. The NASDAQ composite is down a couple of points. Fannie and Freddie shares are down about 83 percent. And trading about a dollar -- at about a dollar each. Shareholders not the top priority for the government right now.

NGUYEN: So does that mean these companies are going bankrupt?

LISOVICZ: No. I mean, the government is propping them up. But the point is, is that the government -- the government's intervention, Betty, was not precipitated by what the stock was doing. It's what's happening to the -- to the credit markets and the housing markets as a whole.

There's another story, though, we have to tell you about, too. And that's shares of United Airlines. Trading was halted earlier today amid bankruptcy rumors. It's since resumed, but shares are down 8 percent. At the low, shares went down 99.9 percent, Betty, an extraordinary sight. UAL, or UAUA shares were trading on -- my screen is still up (ph) -- one penny, Betty.

NGUYEN: So therein lies another bankruptcy question. You know, one penny?

LISOVICZ: Yes, I mean, you know, what's interesting here is, I mean, we have seen bankruptcies in the airlines sector, unfortunately, way too frequently. We know what the soaring cost of jet fuel has done to them. But there's another story here. And that is the way traders react to news. United said it was just a rumor and completely false. United says it stems from the "Florida Sun-Sentinel" posting a six- year-old story from the "Chicago Tribune." That was the year United actually did file for bankruptcy. But then the "Sun-Sentinel" posting, United said the date was changed to make it look current. An investigation is being launched. And United says its liquidity remains strong.

The damage certainly has been done. Like I said, its shares are down 8.5 percent right now, trading at about $11 and change. So a lot of drama here on Wall Street.

And in the next hour, too, another high-profile CEO gets the boot, and he's coming from the financial sector. So more on that in the next hour, Betty. In the meantime, I'll throw it back to you.

NGUYEN: So much financial news today. All right. Thank you, Susan. Do appreciate it.

LISOVICZ: You're welcome.

NGUYEN: And speaking of news, Hurricane Ike, it is crashing into Cuba, and it takes aim at the U.S. So find out where the storm is headed to next.

Also, remember that face? Here we go again. O.J. Simpson back in court for another trial.

(COMMERCIAL BREAK)

NGUYEN: Want you to check this out. This is video that we're going to be showing you. After smashing into Cuba, powerful and unpredictable Hurricane Ike could soon take aim at the Gulf Coast. Look at those waves.

Amazing scenes as the storm slammed into Eastern Cuba late yesterday. Homes and businesses there, no match for the power of this big storm.

You know, forecasters think Ike will pick up steam after it clears the island and heads into the Gulf of Mexico. Over the weekend, though, folks in the Florida Keys boarded up. They packed up, and they headed north. The storm may not be as bad as feared in the Keys, but still, evacuees are being told to stay away until they get all clear for them to return.

You know, right now, tracking models indicate Ike may slam ashore near the Texas and Louisiana state line Saturday. But the entire Gulf Coast is obviously still on alert.

Some 50-foot waves crashing over buildings, 100-mile-an-hour winds just ripping off roofs, that's what Hurricane Ike had in store for Cuba as it swept ashore, and it is still pounding the island.

CNN's Morgan Neill joins us now by phone from Havana. We would have had him live, but because of the elements outside in Hurricane Ike, he is on the phone.

So tell us what you're experiencing right now, Morgan?

MORGAN NEILL, CNN CORRESPONDENT: Well, Betty, right now we've moved a little bit west of the capital. We're in a small community that is very apt to flood.

We came here to check out the evacuation, see just how this sort of thing works. Let me give you just an idea of how sort of low-tech some of this is. I've just seen a guy on a three-wheel pedal bicycle, with a good two homes worth of furniture stacked onto the back, and he's just making his way to higher ground, getting that furniture out of the way so that the people here can get through the storm better.

But as you pointed out, the big damage from this storm has come in the eastern-most parts of Cuba and moving toward the center a bit. We saw some tremendous storm surge and waves in Baracoa, the eastern- most point there in Cuba.

We just heard from some members of the military at Guantanamo Bay, the base there, that the rain's dying down as of Monday morning. They believe that they have gotten through the worst of this storm as it's moved westward of where they are.

Now the other astonishing thing about this storm in Cuba is the absolute massive number of evacuations we've seen. We've heard numbers going as high as a million people evacuated in the path of this storm. And a lot of this has to do with just what that path was, and it's gone essentially the length of the island, from the eastern- most now moving southward as it goes west. But that means province after province had to prepare for the arrival of this storm.

In Havana, what we've seen is people are essentially stocking up, making sure vehicles are gassed up. A lot of state vehicles out on the roads. We've seen state vehicles doing things like picking up refrigerators from areas that may flood, get them out of those danger zones so that they can be returned later, safe and sound.

You have to remember, Cuba is not, as authorities often point out -- this is not a wealthy country. They have to make sure not only that the human lives are saved, but although -- also that they do the best they can to preserve the economic resources that they have -- Betty.

NGUYEN: Doing the best they can at this point. All right. Morgan Neill, joining us live by phone from Havana.

You know, just about 100 miles to the north in the Florida Keys, Ike may not be as bad as first expected, but evacuees are still being told to stay away for now.

Our Susan Candiotti joins us now live from Key West.

I know people have been making preparations for this, at least for the past few days. SUSAN CANDIOTTI, CNN CORRESPONDENT: They have been. And -- and in beautiful weather, I might add. Look, it's gorgeous right now. Hot, sunny. Look at this marina. Although as you can see, the boat owners here have put out extra lines to make sure that their boats are secured. So people have been making preparations all weekend long.

Now, the word they're getting is that they probably will be experiencing hearing -- here in the lower and middle Keys light to moderate tropical-storm winds as early as this afternoon, certainly tonight, and probably through tomorrow.

Here's how people spent the weekend getting ready.

(BEGIN VIDEOTAPE)

CANDIOTTI (voice-over): For free-roaming roosters, it's just another day in downtown Key West, but residents are boarding up and telling Ike to take a hike. This shopkeeper is protecting his business, but not yet ready to leave.

UNIDENTIFIED MALE: I have no reason, other than I really don't have any other place to go.

CANDIOTTI: Fifteen thousand tourists peeled out of town Saturday, as ordered. The last flights took off Sunday.

UNIDENTIFIED FEMALE: They're saying you have to leave, and nobody's going to put you up. And you're like, what are you going to do?

CANDIOTTI: For now, the Gruesons (ph) are staying. They've been through several storms in 14 years, yet only evacuated once.

UNIDENTIFIED MALE: I know people think Key West is party time and "ha, ha, ha," but people are looking at this storm, and if it veers at all north or anything, people are going to be leaving.

CANDIOTTI: Authorities admit most who live in the so-called Conch Republic are not taking the evacuation order seriously. Sunday meant one more day at the beach, getting around town, sweeping the streets, taking in the action, and enjoying the calm before the storm in a typically Key West way.

MAYOR MORGAN MCPHERSON, KEY WEST, FLORIDA: Conks have a tendency to be hard-shelled. And those that have, you know, whether you're born here or live here, they get that hard-shell attitude. And you just have to be prepared.

CANDIOTTI: Preparations that for some, included prayer. After the boarding up and sandbags, it's time to wait.

(END VIDEOTAPE)

CANDIOTTI: And you can see by these gathering clowns -- clouds, that the weather is starting to turn just a bit. Again, we might start seeing some weather, some rain showers as early as later this afternoon.

Now, just because the evacuation order was allowed to expire, Betty, it doesn't mean that it's all-clear sign. What this means is, if you were leaving the Keys, you had to get out by noontime today. Once the storm passes, that's when residents would be allowed to come back in, as early as Wednesday, they're thinking, and tourists as early as this weekend.

Back to you.

NGUYEN: Just in time for the weekend -- just in time for clean up. OK, Susan Candiotti joining us live. Thank you, Susan.

Meteorologist Jackie Jeras is tracking this extremely dangerous storm from the CNN hurricane center. And for good reason, because there's a lot to talk about with this storm. And it's making its way over Cuba, and it's a powerful one.

JACQUI JERAS, CNN METEOROLOGIST: Yes, it really is. You know, it's weakened a little bit, but still, we're talking 100-mile-per-hour maximum sustained winds. And that can cause a lot of damage. And in addition to that, some very heavy rainfall, on the order of six to 12 inches, maybe even isolated amounts of a little bit more than that, especially in the higher elevations.

We hit Eastern Cuba last night and throughout the evening hours. We can still see some of those rain bands, which has been swooshing through the area.

Now, the center of circulation is just south of central Cuba now. So we think it's back over the open waters or almost all the way over the open waters. And if it stays there for any length of time, we could see it start to ramp up just a little bit, but it's got to get its act together again and get a little bit better organized.

The longer it's over land, the weaker this thing is going to be, which is ultimately good news for a lot of people.

The showers and thundershowers are moving in. We heard that report from Susan Candiotti. The Keys are already ready getting some occasional showers and thunder showers. They have the threat of isolated tornadoes in those tropical-storm force winds coming in late tonight.

We could see also see a little bit of surge from this, too. Maybe on the range of about one to three feet. So a little bit of water moving in. The hurricane watches and tropical storm warnings do remain in effect in that area.

All right. Where's Ike headed? Ike is on a westerly track right now. It's been that pretty steadily overall. But we do think even in the next 12 hours or so, we're going to start to see more of a west, northwesterly turn. And that's going to bring it just south of Havana then and then back into the open waters.

Even though it's going to get down, potentially, to a weak hurricane, it's going to spend several days over the open, warm waters of the Gulf of Mexico, which means it's going to ramp right back up. And a major hurricane aiming towards the western and northern Gulf will likely happen late Friday into Saturday -- Betty.

NGUYEN: Here we go again. OK, thank you, Jacqui. We do appreciate it.

All right. We want to get the latest now on this poll. As we told you, we here at CNN have this poll of polls, and according to the new poll numbers, we see McCain is leading Obama, just by one percentage point. That's a bit of a difference.

Here's a look at it right now: McCain, 47 percent; Obama, 46 percent. Unsure, just 7 percent where it was 13 in our last one. So that has changed, as well.

Tucker Bounds is the national press secretary for the McCain campaign. He joins us now, live from Arlington, Virginia.

You must be happy with this poll. What do you think is the result of it? Is it a post-convention bounce?

TUCKER BOUNDS, NATIONAL PRESS SECRETARY, MCCAIN CAMPAIGN: Well, Betty, what it is, is it shows that the election is neck and neck. We've always expected that this will be a very competitive race, and we think that this election presents a clear choice.

Voters are going to be able to choose between John McCain's record of reforming Washington, taking on the establishment, taking on his party, wasteful government spending, and the like in Washington, compared to a candidate in Barack Obama, who doesn't have a lot of a record of taking on and making change.

So actually, the numbers that are in the CNN poll verify that, as John McCain is outperforming what a Republican would otherwise do. If you look at it, if it was a Republican versus Democrat, we'd be losing by 10 or 12 points. But where we are is neck and neck, and that's because John McCain is a different type of Republican that has an established record of making change, reforming the status quo. That's what his candidacy is all about, and that's why people are excited to be supporting him.

NGUYEN: All right, Tucker. When you talk about change, there's been a lot of criticism from the Obama camp, saying that, you know, you haven't talked enough specifics. You're talking about what you're going to do, but we don't have the details of that. Is that going to come in the coming weeks?

BOUNDS: Well, Betty, I think it's an ironic complaint from a campaign that's built entirely on rhetoric.

What we're saying is judge John McCain on his record. His record is reforming government. It's working across the aisle. He's a bipartisan senator that's worked for bipartisan reforms: the campaign finance reform, wasteful government spending, taking on prescription drugs companies and global climate change. You name it. He -- on the big issues, he's worked with Democrats. He's worked with the Republicans, because he wants to make change, and he has a record of doing it.

Where the specificity is lost is it's lost on Barack Obama's side of the aisle, where he's talking about change, a lot of rhetorical calls for action, without a lot of rhetoric, not a lot of points on the board on his side of the aisle. And I think what we're seeing is that voters are beginning to recognize that.

NGUYEN: We're going to talk to the Obama camp shortly, but I want to ask you one more question. And I found this very interesting. On the CNN/Opinion Research Corporation poll, when it showed the difference between McCain and Obama, and between men and women, more men were likely to vote McCain, but for women, it looked like 52 percent of them would vote Obama, compared to 45 percent for McCain. So does that strike you as kind of odd, especially when you put Palin on the ticket, as obviously a draw?

BOUNDS: Well, Governor Palin's fresh to the ticket, and this is a -- we have a long way to go before election day.

John McCain's record on issues that are important to women and men alike, is very strong. All Americans agree we need to change Washington; we need to grow jobs. We need sensible energy solutions, an all-of-the-above approach that include solar, wind, alternative fuels. That's the type of agenda that John McCain has for the country for the next four years, and he has a record to support it.

NGUYEN: All right. We do appreciate your time with us. Thank you so much.

And like I said, we're going to be speaking with the Obama camp, as well, to give them both equal time here. And that's going to happen in about 30 minutes. Bill Burton with the Obama campaign will join us live in the CNN NEWSROOM, so stay around for that.

(COMMERCIAL BREAK)

NGUYEN: Welcome back, everybody, on this Monday. I'm Betty Nguyen, in today for Kyra Phillips.

Well, it is about 28 past the hour. And here's some of the stories that we're working on right now.

Dead even. Barack Obama and John McCain are tied at 48 percent each among registered voters in a new CNN/Opinion Research Corporation poll that was taken after the Republican convention. Now, only 3 percent of voters are undecided.

Now don't come back until you get the all-clear. That's another story that we're working on for you. That's the message for thousands of people who evacuated the Florida Keys ahead of Hurricane Ike. Forecasters say Ike will veer away from the Keys, but officials are warning evacuees to wait for the all-clear.

And no word yet on what caused this raging four-alarm fire at a Baltimore shopping mall. No one was hurt. The flames, though, did spread through a clothing store, a beauty supply store and a sandwich shop.

O.J. Simpson is back in court today. Jury selection is beginning in the former football star's trial on kidnapping and armed robbery charges. The 61-year-old Simpson says he has faith in the jury system and believes that he will be acquitted.

He's accused of robbing two sports-memorabilia dealers at gunpoint last September in a heated encounter at a Las Vegas casino hotel room. Jury selection is expected to take at least a week and, if convicted, Simpson could face up to life in prison.

Billions of dollars of your money to bail out the mortgage giants Fannie Mae and Freddie Mac. Whether you own, rent, looking to buy, we're going to tell you what you need to know right now.

And wow, some scary video of Hurricane Ike. Check this out. We've got your iReports from the storm. And Jacqui Jeras is coming back with the latest on the forecast.

(COMMERCIAL BREAK)

NGUYEN: Issue number one, the economy. And today, we are talking mortgages. Lots of them, maybe even yours. More than $5 trillion in home loans are now in government hands after federal regulators took over mortgage giants Fannie Mae and Freddie Mac. It's the government's most dramatic move yet to shore up the housing market after it's been battered by record foreclosures.

Fannie and Freddie, they are government sponsored enterprises and that means private shareholders own and operate them. But the federal government financially protects them. Combine, they own or back around half of the mortgage debt in the U.S. And combined, they had a loss of about $12 billion since last summer. So, bail out or all out take-over, whatever you call it, you're probably wondering what does this mean to me.

Well, let's bring in Jeanne Sahadi from CNNMoney.com. And one of the big questions for people, especially those who have a mortgages, really, how does this affect me. What does this, buy out, bail out, whatever you call it, what's that going to do for me and my mortgage?

Well what it does immediately for people who are looking to buy a home, if they have good credit and they've had a hard time finding a bank that would be willing to give them a loan, because banks are very scared to make loans lately. This will make it easier to find a loan and very possibly, at a lower rate. In fact, mortgage rates fell a bit this morning. Experts expected that on the news of this plan from the treasury.

NGUYEN: All right. So with this rescue plan in place, is it a good time to maybe buy or sell a home?

SAHADI: The fundamentals of whether you should buy or sell haven't changed. It's for people who are already in the market to buy and are having a hard time finding a loan. The point of the treasury plan isn't really to get help individual homeowmer per se, it's really to get the mortgage market going again. So, it's the more macro approach.

NGUYEN: But it will help you say, you want to get a 30-year fixed mortgage, I mean, isn't that going to be a little bit cheaper because of this plan?

SAHADI: For people with good credit, it is.

For homeowners or home buyers who have had bad credit, or for homeowners who want to refi who've had a lot of trouble with their mortgage, this is not the plan that's going to help. There are other plans in place from the government. One of which is going into effect in October, that's designed to help troubled borrowers. But, yes, for people who've got great credit and are looking for a loan, this will help you find one at at a lower rate.

NGUYEN: You know, a lot of people watching this, Jeanne, they're wondering, how is this going to affect me? Because this does fall on the backs of the taxpayers. And it could possibly mean that taxpayers could get stuck with a $200 billion bill for this buyout.

So, how does this affect us, as taxpayers?

SAHADI: Well, a little bit of good news. Treasury Secretary Paulson got a lot of high marks from folks who were looking at this plan, yesterday. In the sense that he took the taxpayer protections very, very seriously. What he did essentially was say, the taxpayer is going to be paid before any other shareholder in Fannie and Freddie, if money is there to be paid. Or, if money is to be lost, the taxpayer will get those losses last. It's the shareholders who will bear the brunt of that first.

So, he really put in a lot of provisions that would either minimize our losses or maximize our returns from the treasury's investments in these companies. There is no telling yet how much this will cost taxpayers, if anything. Everything really depends on how well the housing market recovers and how many losses Fannie and Freddie sustain in their portfolios. But, the Treasury has gotten a lot of credit for being very, very careful about putting in a lot of provisions that have the taxpayer in mind first and foremost.

NGUYEN: And speaking of that credit, didn't you speak with a bond guru? I know you wrote an article where it says that, actually, the government can make money by this bail-out plan? Because they stepped in, they can actually make some money from it?

SAHADI: Right. And that's a potential.

Treasuries can invest in three different ways in Fannie and Freddie. In one instance, it's going to open a line of credit and it's going to put a favorable rate on that loan that Fannie and Freddie will have to pay, with the taxpayers interest in mind. It will also invest in Fannie and Freddie's mortgage-backed securities, which are income producing assets. So we're going to be getting money back as we invest in them from the get go. And then long term, if the mortgaged-backed securities market improves, and the treasury then sells those NBS's they stand to make some money there.

Thirdly, they're going to be receiving what are called senior preferred stock in both companies. And that means that they again, the government gets paid first if there are dividends to be paid and the government takes the losses last if the company sustains losses.

When it comes time to sell those shares, if the companies recover, it's possible their prices will be higher than the government got in on. So, you know, there's potential there to make money. It's not a guarantee. Losses are also a potential.

NGUYEN: OK. But on that topic, if the government does make money, for example, say the government loses and we foot the $200 billion bill. Because you know, it falls on the taxpayers' back. But, if the government makes money, are we going to reap any of those rewards?

SAHADI: Well, it's really not that direct. Right now, the government is deficit-financing itself. In order words, for every dollar the government spends, it's borrowing it.

So, that's really going to be on the taxpayers' back long term. You know, if the government spends $200 billion tomorrow and I should say, that there is absolutely no certainty that that's how much it will cost the treasury. They may not need to spend that much on Fannie and Freddie. That's just the cap they set on how much they're willing to back the debt.

NGUYEN: Kind of a worst case scenario.

SAHADI: Yes, that's the worst case scenario. But what happens is, it's not like the president's going to call you up tomorrow and say, hey guess what, your rates are going up on your taxes. Thanks so much, keep paying us some more. But, because we have such a large deficit to begin with, and this is really going to be an issue for the next president, tax rates may go up not just as a function of a particular bailout, or a particular move. It's really an aggregate. And right now, we're looking at close to a $500 billion deficit for this year along. And in long term, we're talking trillions of dollars in debt. So, people really need to think, sort of in a more macro sense --

NGUYEN: Yes. There's a lot of things in play here.

Jeanne Sahadi, senior writer for CNNMoney.com. We do appreciate you breaking it down for us today. Thank you.

Well, no doubt bruised and battered. Cuba is taking a beating this hour from hurricane Ike. Let's take a look at these incredible scenes along the Cuban coast as huge waves, look at that, just crashed ashore. The powerful Category 2 hurricane has driven almost a million people on the island from their homes.

And in the Florida Keys, Ike may not be as bad as first predicted, but still some 18,000 people who fled north from the Keys over the weekend, are being told to stay away until they get the all- clear to return. And after Ike clears Cubs, where is it heading? Well, that's anyone's guess. But, right about now, it is looking like the region around the Louisiana and Texas state line could be in the bull's eye just a few days from now. And that's definitely an area that doesn't need to see anymore hurricane-like weather.

So, dangerous hurricane Ike, up close and personal. You know, our iReports are letting us know about the power of this dangerous storm.

CNN's John Levs joins me now. He's been taking a look at these iReports. What are you seeing?

JOSH LEVS, CNN CORRESPONDENT: Yes. Wow, Betty. Some of this is really amazing stuff. I was actually just looking at the some of the most recent ones that we've got. They're on the board, behind me.

I want to bring you in right here. Because I was just taking a look at this. This is iReport.com, we're looking at it the same way you would. These are some of the first images of Ike. Now, this comes from Turks and Caicos. IReporter Balman Chan (ph), who says he's lost radio signal, lost TV signal. You can get a sense of what's going on there.

Let me just flip you through a couple more. This one comes to us from Brooklyn. And these are some of the results of what was going on yesterday, we're told in the wake of Hanna, and earlier this week. We got this one from Quinn Carter, who took this from the fifth floor of his own apartment. Who says, it almost never looked like this when he's looked on.

One more I want to show you right here in iReport.com. This one's pretty amazing. This shows a car attempting to get through a ton of water. This comes to us from Shawn Withers (ph) in Bloomfield, New Jersey. Now, you can tell here at iReport.come, we get videos. I want to bring up one of these videos for you right now. Let's watch and listen to it, from Virginia.

(BEGIN VIDEO CLIP)

There you go. You can hear the gushing. This comes from Antonio Merrick, that's in Alexandria, Virginia. And honestly, it wasn't until I started seeing the iReports over the weekend, that I realized how bad some parts of Virginia were really getting it. He says, look, whenever there's a downpour, this canal gets a lot of water in it. Usually, he says, that what we're seeing here, there's a path that you can walk to the other side. Compare that to this. You can get a sense of how massive this downpour was in that are.

(END VIDEO CLIP)

And now this one more video I want to show you. Let's listen to her.

(BEGIN VIDEO CLIP) And you can't hear her talk. But, that's what I wanted you to hear. This comes from Danville, Virginia. She was vacationing. Rather, (INAUDIBLE), North Carolina, near Nags Head. Look at that, I mean, you can hear the wind, you can see the water come rushing in. Now, we got that from Nicole Detweiler.

(END VIDEO CLIP)

Now, I want to emphasize everything you just saw was taken safely. Everyone's fine. We checked first, the people are safe. Don't go into any danger iReport.com. But, if you have pictures, video, stories you want to send to us taken in a safe way, go to iReport.com. We'd love to share them with people. And Betty, we're going to keep an eye on this and we're going to let you know from some of the best ones are that we get. Keep bringing them to you, right here.

NGUYEN: Oh, absolutely. Because a lot of the people still in the line of fire from the storm.

And speaking of, meteorologist Jackie Jeras is tracking Ike in the CNN Severe Weather Center.

So Jacqui, where is Ike right now and any indication of where the cone of uncertainty is going to next?

JACQUI JERAS, CNN METEOROLOGIST: Right. Well, it's very near the coastline of Cuba, right now here. In central parts of the state. You know, those iReporters by the way, would be real interested to see some more stuff coming in from the Turks and Caicos.

We're getting reports that as much as 90 percent of the homes have been damaged or destroyed in that area. And also some big problems. Because you know, this was a Category 4 when it moved on through here. Now we're looking at the Category 2, maximum wind of 100 miles per hour. But continue to just scrape along or near Cuba, you know, this island, over 700 miles long, so it still has a long ways to go. And we're not talking until late tomorrow morning before it's going to merge back into the Gulf of Mexico.

It should have weakened by that time, but we're talking a good couple of days in the middle of those warm waters. So intensification will be very likely, unfortunately before a potential U.S. landfall. And that should happen sometime on Friday or Saturday. Notice that cone of uncertainty really from the Mississippi River on westward. You know, once we get back into the waters, we'll have a better idea of where this is going. There's a high pressure area that's being a little uncertain on how strong it wants to be. So, we'll see what kind of hold that's going to have on Ike -- Betty.

NGUYEN: All right. We will be watching. Thank you, Jacqui.

All right. Here's a question for you. So, what's for lunch today? Maybe some ham and cheese, a little turkey and swiss. Well, before you or your kids have that bologna sandwich, you need to stick around to hear the latest health warning. (COMMERCIAL BREAK)

NGUYEN: Well, you know, it's often called mystery meat and it used to be a staple in some school cafeterias. But many school lunches have gotten a healthy makeover since then, or have they? The kids back in school, there are new worries about processed sandwich meat and an actual link to cancer.

Our medical correspondent Elizabeth Cohen is here. So, Elizabeth, when when we hear meat and cancer we want to know specifics. So, which one are we talking about?

COHEN: Well, this is where the debate has come across, Betty. We're talking about meats that are processed using nitrates. Lots of discussion, lots of debate.

(BEGIN VIDEOTAPE)

COHEN (voice-over): They've been a staple of school lunches for decades. Hot dogs, pepperoni pizza, ham. But now, there are increasing calls to drop processed meats from your child's menu. The reason, nitrates that some studies have linked to cancer.

Dr. Walter Willett is chair of the Department of Nutrition at the Harvard School of Public Health.

DR. WALTER WILLETT, HARVARD SCHOOL OF PUBLIC HEALTH: If you care about the health of your child, you don't want your child to be eating processed meats for lunch at home or at school.

COHEN: The American Cancer Society says, "Eating processed meats increases exposure to potential cancer-causing agents and should be reduced as much as possible." The American Institute for Cancer Research says simply, "Avoid processed meat."

But not everyone agrees. Randy Huffman is president of the American Meat Institute Foundation, an industry-sponsored advocacy group. He's taken his case to right to today's version of the public square: YouTube.

RANDY HUFFMAN, AMERICAN MEAT INSTITUTE FOUNDATION: If you like cured meats that contain sodium nitrate, you should eat them with confidence.

Huffman points out, there are studies showing a link between cancer and processed meats. But there are also studies that do not show a link.

HUFFMAN: The science is not certain on this issue.

COHEN: He says many foods like spinach or pomegranates, naturally contain nitrites.

HUFFMAN: A liter of pomegranate juice contributes about 100 times more nitrite than this hot dog.

COHEN: We put that to Dr. Willet.

WILLETT: On my book, this is just plain bologna.

COHEN: Willett and many other experts say nitrites are fine in fruits and vegetables, and are only a problem when combined with protein, like in meat.

The meat industry disagrees.

HUFFMAN: What you're referring to is an old theory.

COHEN (on camera): We showed that YouTube video to several experts and they said they found it very misleading.

HUFFMAN: I don't know your experts, but you're not talking to the right ones.

COHEN: So, while experts debate, processed meat won't be disappearing from school lunch menus, anytime soon.

(END VIDEOTAPE)

COHEN: We spoke with officials from the School Nutrition Association, they represent dietitians in school districts across America. And this is what they had to say. They said the science behind the calls to eliminate processed meats from schools is far from conclusive -- Betty.

NGUYEN: (INAUDIBLE).

COHEN: Right.

NGUYEN: Thank you, Elizabeth. We do appreciate it.

OK. So has the U.S. been spying on the prime minister of Iraq? Are U.S. troops using a secret strategy against al-Qaeda? Those are some controversial claims in a new book about the war in Iraq. And we're going to get a fact check, straight ahead.

(COMMERCIAL BREAK)

NGUYEN: Let's get the latest political news. We showed you a little bit earlier today the new CNN Poll of Polls. And it does show John McCain leading Obama, 47 percent to 46 percent, with just a 7 percent of undecided votes there. We spoke a little bit earlier with McCain national press secretary Tucker Bounds. Now, we want to speak with Bill Burton, national spokesman for the Obama campaign, who joins us from Chicago.

Some of these polls have you dead even. But our Poll of Polls shows for the first time McCain is leading. What do you make of this?

BILL BURTON, OBAMA CAMPAIGN SPOKESMAN: Well, I think folks ought to take a deep breath. This is a close race, we're a deeply divided electorate. And at the end of the day, this is going to come down to who the American people think can fundamentally bring about change to Washington.

And on all the important issues, George Bush and John McCain are in the exact same place, from the economy to energy to education. And if people want change, Barack Obama is the candidate.

NGUYEN: But in earlier polls, Obama did have a slight lead. It was not anything that was tremendously huge. It was slight, though. And it seems in the latest poll, you've lost that lead.

Is that worrying the Obama camp at all?

BURTON: Well, trust me. Nobody's losing any sleep at our campaign over a one-point deficit in the national poll. These national polls right now are completely meaningless.

What we're looking at is what's happening in the states. And in the states you see that folks are really responding to Senator Obama's message of changing the economy, fundamentally strengthen it, so that we can create new jobs and move in a fundamentally different direction than George Bush.

John McCain has yet to articulate where he would be different from George Bush when it comes to the economy. And I just think that if this is an election about change and who can fundamentally change the ways things in Washington, you've got Barack Obama, who's got a plan with specifics to really change how things going in the economy, get a tax cut to the middle class. And you've got John McCain, who is in lockstep with George Bush and who's campaign is run by some of the top lobbyists in Washington.

NGUYEN: You're right, it does matter what happens in those states. That's the key here. But, when it comes to demographics, I want you to take a look at this.

The CNN Opinion Research Corporate Poll shows that when it comes to men, more men are likely to vote the McCain ticket, 51 percent to 44 percent for Obama. And more women more likely to vote the Obama ticket, with 52 percent compared to McCain's 45.

So since McCain is leading in the male demographic, are you doing anything to try to shore that up?

BURTON: Well, I think what we're doing out there all across the country -- and there's polls that say different things. And like I said, Betty, these polls are going to go up and down and the national polls are pretty much completely meaningless at this point.

But what we're going to do with men voters and with women voters is explain the choice in this election between Barack Obama and John McCain, on who can really bring about change to the economy.

You know, for women, a lot of people don't know that John McCain has an extreme position on abortion. He wants to outlaw it. Barack Obama is pro-choice, he will protect a woman's right to choose. On equal pay, Barack Obama is for men and women getting an equal wage. John McCain has opposed efforts to let folks sue in order to make sure that men and women are paid the same.

So I think that there are big issues in his election. And there's a big choice between Barack Obama and John McCain. And if it comes down to change, Obama is the only candidate in this race who truly can bring about the change that this country needs right now.

NGUYEN: OK. Bill Burton, national spokesman for the Obama campaign as we're giving them both equal time on the latest news of these poll results. Thank you.

BURTON: Thanks, Betty.

NGUYEN: OK. Secret strategy, controversial planes. Bob Woodward's new book about the war in Iraq. We're going to have the information next, right here in the NEWSROOM.

(COMMERCIAL BREAK)

NGUYEN: Detached, slow to react, but also focused and determined. That's how Bob Woodward describes President Bush's handling of the war in Iraq, the last couple of years. Woodward's new book, "The War Within: A Secret White House History" hits the shelves today and it's already gotten a sharp response from the White House.

Let's get more now from CNN's Brianna Keilar in Washington.

There's a lot of things leveled in this new book.

BRIANNA KEILAR, CNN CORRESPONDENT: There sure are, Betty. You recall back in January of 2007, when President Bush announced the surge. He said it was in direct response to what was being requested by commanders on the ground in Iraq.

Well, in this book, "The War Within," by Bob Woodward, he said that actually, it was very different. That really, the idea of the surge started at the White House and was basically forced upon the president's top military commanders -- the joint chiefs of staff and also forced upon those military commanders on the ground in Iraq.

Woodward, of course, of Watergate reporting fame. He's written extensively about the Bush administration and the war in Iraq. He said that the military commanders, they wanted to focus instead on training Iraqi troops so that U.S. troops could give some of the control over to Iraqi troops. And he said that some of those commanders were very worried that moving so many U.S. troops to Iraq for the surge would make the U.S. vulnerable to other potential threats.

Well, today, White House Press Secretary Dana Perino said conclusions in this book are not based on fact.

(BEGIN VIDEO CLIP)

DANA PERINO, WHITE HOUSE PRESS SECRETARY: I also take issue with the notion about a war within. I can't imagine that anybody in Washington would be shocked that if you bring people together to talk about one of the most difficult problems in our time, that they might have a disagreement over what is the best option. And in fact, we should all want that to happen.

(END VIDEO CLIP)

KEILAR: So Dana Perino saying this was an open debate and a debate that was held in private for good reason, so that all of the advisers involved could put their points out there on the table and give President Bush as many option as possible. From the White House's perspective, they say President Bush made the right decision, the surge worked, violence decreased because of the surge. And that is a point that Bob Woodward takes on in this book as well, suggesting that instead of the surge having an impact on reducing violence, it was really a number of other things, things, for instance, like an improved targeting of al Qaeda figures -- Betty.

NGUYEN: All right. CNN's Brianna Keilar joining us live from the White House.

And we do want to let our viewers know this. Bob Woodward will sit down with Larry King tonight to talk more about this new book. "LARRY KING LIVE" is at 9:00 Eastern, right here on CNN.

And the next hour of CNN NEWSROOM starts right now.