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Lehman Brothers Files For Bankruptcy; Karl Rove Criticizes Presidential Ads

Aired September 15, 2008 - 15:00   ET

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

(BEGIN VIDEOTAPE)
RICK SANCHEZ, CNN ANCHOR (voice-over): Direct to you, the video I brought back from Ike and the guys who tell me how they pull this off.

Decimated. As aerials come in, we will turn them for you.

Decimated again, the U.S. economy reeling, Lehman Brothers bankrupt, markets tanking, and Greenspan calling it the worst in 100 years.

Karl Rove criticizes Obama. Duh. But then he calls John McCain less than honest. Karl Rove questioning your campaign tactics?

Simple question, America: Are you getting gas gouged? We will tell you.

And which one of these is not Sarah Palin? L.A. lunchtime, as in laugh time. Why not? There's enough bad news out there.

I'm Rick Sanchez. We're interactive. That means right now.

(END VIDEOTAPE)

SANCHEZ: Hi, everybody. I'm Rick Sanchez.

We have got so much to get to during this hour. There are some 18,000 of us right now having an interactive conversation while we're on the air doing this newscast. Pretty cool, isn't it?

I am going to tell you how we can connect in just a minute. My trusty producer over here, Michael Herd (ph), and road buddy on hurricanes is putting everything together for us.

But, first, let me tell you what the whole country is talking about today. This is one of the worst days in the U.S. financial history. Even usually super-mellow Alan Greenspan is saying this.

He's saying it's a once-in-a-century crisis that we're going through right now economically. The Lehman fallout, the market suddenly dropping, we're all over this.

But here's what I want to do first. Take a look at some of these pictures as they come in. First, I want to show you a map of where we're talking about and then I am going to show you the area that we're talking about. All right, there's Galveston. You see it? It's like the southern-most or western-most point there in that chain.

Now let's go to the pictures that we got in just moments ago from Galveston. That's right. There are houses next to boats, because it's impossible to tie up your boat, when suddenly the seas go up 20 feet. So, whatever moorings they had are ripped out. The boats are all over the place. There are picture after picture that we can show you from Galveston which is just going to amaze you with much stuff is strewn about.

Now let's go to the next location. This is Bolivar. Bolivar is right across from Galveston. You see where Galveston is? See that little point? Now, there's an inlet that cuts right between Galveston and Bolivar and there's the proper city of Bolivar. This is what it looks like there. Unbelievable.

Those are homes, or used to be homes. Wherever you see these little sticks sticking out of the ground, like tons of these little sticks sticking out of the ground, those were essentially the foundations of what were homes. About one -- I had a conversation with Coast Guard officials who have been flying these missions and showing these videos, recording these videos.

They say about one out of maybe every 20 homes is still standing. All right, see the sticks there on the left, those sticks right there? That's where a home used to be. And it's repeated over and over and over again for mile and mile and mile.

All right, let's go back to the map now. I want to show you another location. If you go further down from Bolivar, you come a place that is called Crystal Beach, there and another place called Gilchrist as well. Let's go to the video of that now as it starts to come in. There you go. That's also along the shoreline. And that also seems to be missing most of the things that were once places where people lived.

Also, all the refuse, all this debris is being pushed on to the shore, and for the most part, accumulating in places like that. Now, that is most of the Gulf of Mexico. That has all but taken over the area that was a community. There it is.

All right, let's do one more. Let's do La Porte now just to give you a sense of what's going on in this area and the areas that have been hit the worse. La Porte, see La Porte? Now, La Porte is not on the Gulf. La Porte is on the Bay, Galveston Bay. That's that dark spot that you see there that's just east of Houston. All right, let's go to the video of La Porte now and you will be able to see what that looks like.

Remember, this is where I was filing live reports from the other day while we were awaiting the hurricane. There are some of the homes across the bay. I think we're going to go in tight on one coming up right here. Our thanks to KHOU for letting us see this video, by the way.

All right, there, look at that home, very little left of that. The shoreline obviously came up on some of these homes, doing a whole lot of damage to some of them as well, like that one right there.

All right. Let's do this. Now we have got another piece of video we have got coming in. This one came in just moments ago. This is from Gilchrist. Gilchrist would be -- I just showed you Crystal City. Gilchrist would be just a little further north from there, and east, I should say, as well, kind of a northeasterly correction.

Let's bring in Chad Myers. He's going to break this down for us. He's been watching this video that came in over the last couple of minutes.

Chad, what do you got?

CHAD MYERS, CNN METEOROLOGIST: Well, this Bolivar Peninsula has just been just really hit so very hard. I have been looking at some of these pictures here. And they have been flying over homes that are basically now just slabs. And the slab was the concrete part that was under the building, under the house, as they parked their car under there, put a refrigerator under there. But when you know that there was a home above that, then you know -- let's go to see if we can find this other video here that we used just a little bit ago.

Is that on 65, Dave? Yes. Let's see if we -- guys in the booth there can find 65, because I think it tells a better story, because it's a little more zoomed in, homes that were on the beach -- yes, there you go. Here are the area -- this is a road. Now, you talk about sticks, Rick. Look at this. I mean, gone. Gone. OK, whoops, still standing. Gone, gone, gone, gone. I mean, and this is for miles and miles near Gilchrist -- Rick.

SANCHEZ: How is it possible that one home stands and the other ones don't? Is there any way...

MYERS: No.

SANCHEZ: Is that just happenstance and luck, man?

MYERS: It is. You put these pillars in. You put these pilings in, and you drive down. Maybe some steel ones do better than the wooden ones. Some houses are newer, different standards. And that's just the only -- it's basically luck.

SANCHEZ: So, that's that whole area. Let's show them the peninsula again.

Hey, Dan, put up that map again, because I know sometimes in this business we just show people pictures and they don't know -- they can't have a reference point to it. You see that place there, Bolivar? And then you see Galveston. Then you see Crystal Beach. Then you see Gilchrist, which is what Chad was just showing you? That's really like a -- it's like a peninsula, almost like a long, skinny land line.

And that's where all of those homes are. So, on one side of them is the bay. On the other side of them is the Gulf of Mexico. They're sandwiched. And that's why, when they get a huge tidal surge, like Chad was just talking a , well, they really have no place to go.

MYERS: I heard of lot of complaining about this "certain death" statement that the Weather Service put out. And let me tell you, if you were in one of these houses and you didn't evacuate, that's what they were talking about.

That right there is certain death, because there's nothing left. OK, that house still standing, but the pillars and the pilings next to it, that's where a house was -- once was. And now it's not.

SANCHEZ: Yes. And that's a whole lot of homes. I don't think we have got an official count yet, but when we do we will bring it to you.

MYERS: Let's just hope that was completely evacuated.

(CROSSTALK)

SANCHEZ: Hey, let's stay on this topic if we can real quick. Now I want to show you something else. This is something that I brought back with me from Ellington Air Reverse Base in Texas. These guys that I met there and worked with are incredible.

I want you to watch some of the rescues that they shared with me. Take a look at this. All right, these are Coast Guard guys, two really cool guys who actually do this for a living. In fact, that's them on the video that you're looking at right there. One of them is hoisting. The other one is a swimming. He's down there saving peoples' lives who were stuck in this thing.

Joining us now are flight mechanic James Russell and rescue swimmer Shane Moore (ph).

Hey, guys. Good to see you again. I ran into you out there the other day, but let's take the viewers through this, if we can.

This particular video that we're looking at now, explain to the viewers what you're doing, where you are.

Shane, get us started, since you're the athletic one, the swimmer.

SHANE MOORE, U.S. COAST GUARD: OK.

Well, at this point, we -- we got down to the truck and -- or there was a couple of survivors. And we lowered the basket and we put the survivor in the basket. And the survivor is coming into the helo right now.

SANCHEZ: What do these people say to you when you get down there? First of all, I imagine they're panic-stricken because of what's going on. And then you are telling them to get into some basket and float for 1,000 feet in the air in the middle of hurricane- force winds. How do they react?

MOORE: Well, at first, I think a lot of them are scared, but then they're very happy. They're very thankful. And I'm just glad that I could get them out of harm's way.

SANCHEZ: James, you're in charge of making sure that that tether comes all the way up. How do you keep that thing from swinging wildly with your buddy on board or some of these people that you're bringing up?

PETTY OFFICER JAMES RUSSELL, U.S. COAST GUARD: A lot of times, when we hoist, some people choose to hang on to the cable. Some don't. It's going come to all the way up and the pilots have some control over whether it swings or not. So, it's just cable management and timing how fast you bring them up, and, if you have to, just hanging on to the cable.

SANCHEZ: Is that you hanging on to the cable right there? Who is that?

RUSSELL: That's me.

SANCHEZ: Why are you hanging on to the cable? What are you doing that for?

RUSSELL: It's kind of a comfort thing for me to kind of have an idea of what's going on with the hoist. You can feel defects in the cable if there are any. Plus, you have some control over the swing.

SANCHEZ: Right. Who is this guy? And what is it like to get him on board the helicopter? And how relieved are they?

RUSSELL: Usually, when you get them in up the plane, they're pretty relieved. The hard part, a lot of times, is to get them to wait until we actually have them in the door. A lot of people try and climb out of the basket before they're actually safe.

So, once they're in the plane, we have got to make sure they're safe and they're in the back and they're not going to hurt themselves or us while we're trying to get the rest of the crew back.

SANCHEZ: Well, I will tell you, I watched you guys work out there the other day. And I am just -- I am amazed by what you do. I'm amazed at how well you do it. Obviously, training has a lot to do with this.

Look at this. You're bringing up somebody else now.

Do you ever establish contact with these people again? And, I mean, what is it like to save someone's life? Do they ever like try and reach you again and say thank you or do they send you anything?

RUSSELL: A lot of times, people don't really put it together that it's actually people that are out there flying to come to get them. They just see the big orange helicopter and they are happy to be picked up.

SANCHEZ: Wow.

Job well done, guys. Appreciate it. Good to see you once again. MOORE: Thank you.

RUSSELL: Thank you.

SANCHEZ: By the way, we have been asking you to send us some of your reactions as we go through this newscast. And it's on Twitter.com/ricksanchezCNN. That's how you can reach us.

We use Twitter because it's the pithiest way of having a conversation with you, without having to go through paragraph after paragraph of information. It's easy to do.

The economy is the thing that you have been talking about. As a matter of fact, I am going to see if I can put that one up here in just a little bit. We will share some of those with you as we go to our favorites. We separated many of these comments throughout the day. And we're going to see if we -- we were having some problems getting this thing up just a while ago. So, I want to see if I can get some of these up for you.

"Lehman story resounds with me because I know people who work there, who have shares in the company. Really, it's shocking. Lehman, another sign of our bad our economy is deteriorating, different from the Depression, our economy more intertwined with world than in 1928."

"The tech market, my client base has been solid through credit crunch. Hope this will not affect clients selling to financials."

So, obviously, this is -- I will do one more. "Yes, the country is getting weaker and weaker. It seems to me no one understands it until it reverberates across the country."

Talking about the financial news that we're going to sharing with you today. We will have more of your reactions throughout this newscast.

Also, this. Did you see this? Karl Rove criticizes the honesty of both Barack Obama and John McCain's campaign ads.

(BEGIN VIDEO CLIP)

KARL ROVE, FORMER SENIOR ADVISER TO PRESIDENT BUSH: McCain has gone in some of his ads similarly gone one step too far and sort of attributing to Obama things that are, you know, beyond -- beyond the 100 percent truth test.

(END VIDEO CLIP)

SANCHEZ: All right. Here is your Twitter question.

Karl Rove saying somebody else's campaign ploys are less than honest is like "blank." You finish that sentence off for me. I will read what you have to say on the other side.

Stay with us. (COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: From Washington to Wall Street, the top of our economy is broken. We have seen self- interest, greed, irresponsibility and corruption undermine these hardworking American people, the fundamental of America.

(APPLAUSE)

MCCAIN: We're going to put an end to the abuses in Washington and on Wall Street that have resulted in the crisis that we are seeing unfold today. Enough is enough.

(END VIDEO CLIP)

SANCHEZ: Welcome back to the world headquarters of CNN. I'm Rick Sanchez here.

All the candidates speaking loudly today about what's going on, on Wall Street and the problems in the financials, more developing news as we come in. The market is tanking because this is a historically bad day for the American economy.

A cornerstone of the U.S. banking business has gone belly-up. After tense negotiations, the feds say no to trying to bail out another one, this time, the legendary Lehman Brothers. So, early this morning, the century-and-a-half-old financial institution filed for bankruptcy protection.

Here is what Lehman owes its creditors. Are you ready for this? -- $613 billion?. Those are bills that Lehman is unable to pay the banks that lend you and me money or have. Did you get that? That's why this is such a shocker on this day.

Let's look at the big picture, Bear Stearns, Fannie Mae, Freddie Mac, huge financial institutions, all bailed out by the feds, the housing market still crippled, credit markets squeezed. How rare is it? To hear words this blunt that I'm about to let you hear from former Fed Chairman Alan Greenspan is in fact rare. Take a listen.

(BEGIN VIDEO CLIP)

ALAN GREENSPAN, FORMER FEDERAL RESERVE CHAIRMAN: I can't believe we could have a once-in-a-century type of financial crisis without a significant impact on the real economy globally, and I think that indeed is what is in the process of occurring.

(END VIDEO CLIP)

SANCHEZ: This is not the kind of guy who goes around saying a once-in-a-century crisis often. That's what he said. That's Alan Greenspan.

What say you, the people? We asked people in Atlanta, went downstairs with our cameras, beginning with a simple question. Here it is.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Lehman Brothers. Does it mean anything to you?

UNIDENTIFIED MALE: No, it does not.

UNIDENTIFIED MALE: Does the name Lehman Brothers mean anything to you?

UNIDENTIFIED MALE: No.

UNIDENTIFIED MALE: No?

UNIDENTIFIED MALE: Does the name Lehman Brothers mean anything to you?

UNIDENTIFIED MALE: Yes, it does. Yes, I heard about that this morning on the radio, that they're -- they're in pretty deep trouble.

UNIDENTIFIED FEMALE: It makes me wonder what's next. What other bank is going to close? Is it going to be my bank that I bank through or that I have my home mortgage through?

UNIDENTIFIED MALE: Well, some of the decisions that have been made by some of these companies have been very poor. And now that they're paying for it, now of course they're looking for the government to bail them out of these kind of things. And I don't want to see my taxpayer money used for that.

UNIDENTIFIED MALE: Does stuff like that worry you?

UNIDENTIFIED MALE: It certainly does, especially for retirement and the things that are going to happen in the economy, jobs, and just the standard of living, which we're gradually losing.

UNIDENTIFIED MALE: A lot of banks are going bankrupt these days. Is that something that worry you?

UNIDENTIFIED MALE: Well, if it didn't, I would be a crazy man.

(END VIDEO CLIP)

SANCHEZ: All right, you see that right down there, that little square on the bottom of the screen as we're looking at it? It's right above my hand right now, right there. See it? -- 394. Just moments ago, it was reading 400. That's where the Dow is right now, obviously not a good day.

Are people responding to this? Absolutely. Let's go to Facebook. I put the question out on Facebook and look what people are saying.

It says: "I think I may sell my house and my car and cash out all my accounts and move to some remote area of the world and live with natives."

This one says: "There's probably more to come. Sad but true." That's from Francis (ph) there.

"I'm very worried now. I don't want to think of what's next."

By the way, this one over here came in from Galaxy Girl, the one who says she may want to end up living with natives given what's going on right now in the economy.

So, obviously, this is something that has got a lot of people shaken up.

Oh, and there's one other thing I haven't told you about yet, another household name, Merrill Lynch, an investment firm, in deep trouble, scooped up by the Bank of America today. They were in big trouble.

The next domino to fall, quite possibly, AIG, the nation's largest insurer. My goodness. When does the bad news stop?

Andy Serwer is joining us now, managing editor of "Fortune" magazine and on old friend, who probably would like to talk to me on a day when it wasn't so bad.

But how bad is this? You go through the list, Bear Stearns, Fannie Mae, Freddie Mac, countless small lenders, Lehman Brothers, we're not talking about a single troubled firm here. We're talking about an entire financial system. Where is this heading in?

ANDY SERWER, MANAGING EDITOR, "FORTUNE": Well, you know, no one knows, unfortunately Rick. It is a really bad situation. We're gripped by uncertainty and fear.

And, as you suggest, we don't know when it's going to end. And I do know that the folks in Washington, Ben Bernanke and Hank Paulson, the treasury secretary, are working very hard at this. That's the good news.

On the other hand, it's sort of the bad news, in that the crisis has no end right now. So, you know, there is some fear. How much control do we have over these events? Yes, we need market forces, but we also need a strong presence from Washington to reassure Americans, investors, and our economy, not just here, but of course globally as well.

SANCHEZ: People are angry and they want to know what is going on and what brought this about. Let me show you this one.

This one come from Harrity. This is on Twitter.com/ricksanchezCNN.

SERWER: Right.

SANCHEZ: "Lehman and other financial institutions, it's the result of the fox guarding the henhouse. It's a sad day for all Americans."

You know what they're getting at there? You let a bunch of business guys run their own business, with no checks, no regulation, this is what's going to happen. Are they right, in some measure?

SERWER: Well, this speaks to a timeless question in American society. How much regulation is proper? How much do we believe in free markets? How much do we believe that Washington should have a hand in running things? You could argue that perhaps that we had a little bit too little regulation, and that these companies were able to get themselves in trouble.

I think, really, though, at the root of it, Rick, is ignorance and greed, greed because these companies wanted to produce ever-higher returns, and ignorance in that they were getting into financial products that they didn't fully understand themselves, never mind to the people they were selling it to.

SANCHEZ: My wife and my four kids and our little family, how are we going to get hit by something like this? And I speak for all the other little families in America.

SERWER: Well, let's not forget, Rick, first of all, you already have been hit, because the housing market has tanked. This all started back in August of 2007. And it started in subprime and loans, loans that were made to people who had no business getting them.

And that is what started this crisis. And what's made it continue to unfold is a lot of those interest-only loans and teaser loans were triggered now at higher rates and people can't repay their loans. So, the housing market has tanked. So, you're already feeling that effect.

Now the question is, how is this going to spread to Main Street?

SANCHEZ: Yes.

SERWER: And we're starting to be credit card companies raising rates, banks and credit card companies not lending out as much as they used to, which might be a good thing, actually, of course, too.

SANCHEZ: I have a feeling this won't be our last conversation about this thing.

"Fortune" magazine's Andy Serwer -- thanks, Andy. Hey, good to see you again.

SERWER: Thanks, Rick. Yes, you, too.

SANCHEZ: All right.

I just got off the phone this afternoon with the governor of Florida in his office. He wanted to come on and talk about something, but he can't because he's doing a rally with John McCain today in Florida, being a fellow Republican. But he's planning to join us tomorrow. Why is he so furious? Gas-gouging in the aftermath of Hurricane Ike. He seems to be convinced it's going on.

That story, gas-gouging, when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Today offers more evidence, Colorado, that too many folks in Washington and on Wall Street weren't minding the store. Well, for -- for eight years, we have had policies that have shredded consumer protections, that have loosened oversights and regulation, and encouraged outsized bonuses to CEOs, while ignoring middle-class Americans. The result is the most serious financial crisis since the Great Depression.

(END VIDEO CLIP)

SANCHEZ: You heard from John McCain on this day. There you hear from Barack Obama as well.

(BUSINESS REPORT)

SANCHEZ: There's a lot of people out there who are curious about, well, what's next?

As a matter of fact, look at -- this is on Facebook. We had a discussion going earlier today when I first came into work. And I asked the question. And people are saying, you know, look, "Lehman Brothers has been in business for over 150 years. It's weathered the Great Depression and other financial calamities. The bankruptcy of the firm and the Merrill Lynch buyout doesn't affect the big people, (INAUDIBLE) L.B. CEOs who took a home and a $22 million bonus last year. It affects us, the people who have our 401(k)s slammed by this" -- exactly the point that Susan was making just moments ago.

And, by the way, when we come back, going to be talking about that Karl Rove comment. I asked the question, Karl Rove telling somebody that their campaign is less than honest is like what? Fill in the blank. I got a couple of them to share with you real quick here.

The first one says, "It's like Darth Vader saying, too much dark side with this one," or "like Orson Welles calling Bill Richardson a little chubby."

"Preston on Politics" next.

(LAUGHTER)

SANCHEZ: We will be right back.

(COMMERCIAL BREAK)

SANCHEZ: Boy, are you getting in touch. Welcome back. I'm Rick Sanchez here in Atlanta. You're in the world headquarters of CNN in Atlanta.

Karl Rove wrote the book on bare-knuckled politics, but everyone is talking about what he said about the McCain campaign yesterday, as well as the Obama campaign. The long-time Republican strategist started out by accusing the Obama campaign of unfair tactics. No surprise there. But then listen to what he said about a fellow Republican, John McCain.

(BEGIN VIDEO CLIP)

KARL ROVE, FMR. PRESIDENTIAL ADVISER: McCain has gone, in some of his ads, similarly gone one step too far and sort of attributing to Obama things that are beyond the -- beyond the 100 percent truth test.

(END VIDEO CLIP)

SANCHEZ: Beyond the 100 percent truth test. In other words: not honest. So we asked this question. Let me bring in Political Editor Mark Preston, from Preston on Politics.

I just want to look at his expression before we do this. There he is. You ready for this?

I asked the folks who watch us here, because we like to do this interactive newscast. We want people to be joining, while you and I are having the discussion, they're having a discussion, too. So I asked them this question. Having Karl Rove criticize your campaign politics is like -- blank.

Let's go to the responses. Ready? "Is like Al Capone preaching at Martha Stewart for breaking the rules." But wait, wait until you see this one. You'll love this one, Mark." It's like Imelda Marcos saying that Oprah owns too many shoes."

All right, Mark, I don't expect you to be as quite as witty as some the people who are watching this newscast and answering back, but this is the kind of thing that I imagine there are people that there are some people in Washington shaking their heads about, right?

MARK PRESTON, CNN POLITICAL EDITOR: No question. Let me be a little more politically correct than some of the viewers who are writing in, Rick.

Look, who better to answer this question than Karl Rove, who arguably is the, you know, the smartest political mind that we've seen in the last 10 years, certainly here in Washington. He got George Bush elected to the White House twice. So Karl Rove coming out and saying something, this really shows you what the state of the campaign is right now.

And really, I would say that it has gone south in the last six weeks or so. It has gotten so negative, so divisive, and I only expect that it will get worse in the final 50 days.

SANCHEZ: Let me just add my own caveat. Smart doesn't always necessarily mean honest. So we'll leave that one at that.

By the way, let's talk Minnesota. It was Obama's for a while there, wasn't it? But I understand now this thing has really tightened up.

PRESTON: It was Obama's and even today, Rick, CNN has changed its electoral map. We had Minnesota and its 10 electoral votes in the lean Obama column. Just in the past few hours we have switched that now. It is a toss-up state. There are a couple of reasons. One of them is the fact that a new poll has come out in the last 24 hours that shows that John McCain has turned this race around. This poll was out by "The Star Tribune", which really flies in the face of a poll that CNN did. Now, we can't compare apples to apples here. They're two different polls, but a poll that CNN did right before the Republican convention showed that it was Obama's to win.

Why is John McCain doing so well, Rick? A couple of reasons. One is, he's outspending Barack Obama, seven to one in the last 30 days in Minnesota. And let's not forget at this point that this is where the Republican convention was held. It was held in St. Paul. There was an incredible amount of media attention in on that state.

And what is the Sarah Palin factor? Does she speak, you know -- does she have those northern values that, you know, the McCain campaign was hoping would resonate in the Mountain States and up along the border? Perhaps. We're certainly going to be watching this. Right now, it is a toss up state in CNN's estimation.

SANCHEZ: There you go. Watching the market, by the way, as well, see that little square there right under Mark's lapel? It is 332. It was under 400 earlier. We'll take it with you to the very end.

Hey, Preston on Politics, Mark Preston, thanks for being with us. >

PRESTON: Thank you.

SANCHEZ: When we come back, watch this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: That's an unauthorized container.

UNIDENTIFIED FEMALE: If you brought a Home Depot bucket, gonna fill it up with gas?

(END VIDEO CLIP)

SANCHEZ: These are real people. American's fighting among themselves for really a pittance. Getting new photos of the situation with Ike. How people are responding to it. Also, the aerials that really do best tell the story. We'll be right back.

(COMMERCIAL BREAK)

SANCHEZ: What is the devastation from Hurricane Ike? I'll give you two perspectives. First, big picture, aerial views; and then I'm going to give you little picture, how people are being affected.

Let's start with the big picture, all right?. From up above, this is -- look at that. That is Gilchrist, Texas, folks. That was a main road. Believe it or not, there was actually another road that went through that way as well. This over here is the Gulf of Mexico. And these were all homes in here as well as in that area right there. All of them, just wiped out.

And this lonely guy right here, one wonders what they did to build an extra special foundation.

Let's go to the next place. Let's go to Crystal Beach. You'll see some of the areas there. This is really the same area around Crystal Beach and Gilchrist. This one is Gilchrist, I believe. Yes. There you see some of the other pictures of what's being affected there as well. Every single structure on the beach is about destroyed.

Let's move on to the next one now. Sharing these with you as they come in. This is also Crystal Beach.

All right, this is coming in from Orange, Texas, now. Yes. This is some of the things we were talking about earlier. Flooding is causing caskets to pop out of the ground. Difficult as it may be. There you see people showing up. And what they find is their dead, lost relatives are suddenly coming up out of the ground because the foundation, down here, is getting so wet, it's causing that to happen. I mean, there's the kind of thing that you often have to deal with after a hurricanes. It is extremely difficult.

Here's another one now. Watch this. This is going to show you how hard it is to fill up in Texas today. These people are lined up for gas, not in their cars, but on foot. See, they're all bringing containers. Hurricane Ike has shut down more than a dozen refineries and some gas stations are sold out. Where they do have gas, emotions are running very high. Watch this report Betty Nguyen does. She put together this by just walking over to a gas station. Watch this. I mean, it's so revealing.

(BEGIN VIDEO CLIP)

BETTY NGUYEN, CNN CORRESPONDENT (voice over): The hunt for gasoline in Houston has lines nearly four hours long.

KENNETH POPE, NEEDS GAS: I never thought I'd wait this long.

UNIDENTIFIED FEMALE: But you need it.

POPE: But I need it. I got to have it. That's the only way to run my generator.

NGUYEN: As lines wrapped around the block, frustration began to set in.

DANNY POPE, NEEDS GAS: The cops are up here to keep the people from fighting. All of us, young, old, everybody is up here ready to swing at each other about these lines up here. NGUYEN: But ahead in line, there are signs this station is running low. Meanwhile, an argument breaks out in another line.

UNIDENTIFIED MALE: Can't put gas in an unauthorized container.

UNIDENTIFIED FEMALE: She brought a Home Depot bucket, going to fill it up with gas?

UNIDENTIFIED MALE: And two milk cartons, she's going to put gas in, too.

UNIDENTIFIED FEMALE: They're not going to let you put gasoline in milk cartons.

UNIDENTIFIED FEMALE: But what can I do? Now, is everywhere is closed.

UNIDENTIFIED MALE: We only have super.

NGUYEN: Back at the pump, the only thing left is super unleaded.

(On camera): You weren't planning on paying those super prices, though, were you?

UNIDENTIFIED MALE: No, sure wasn't. But it's better than nothing.

NGUYEN (voice over): Especially when you're already out of gas.

(On camera): Are you helping so you can get further up in line or are you helping because you're just being a good Samaritan?

UNIDENTIFIED MALE: Both.

NGUYEN (voice over): Aid also comes in the form of a donated gas container. The only problem, this station is on empty.

NGUYEN (On camera): Can you make it to another gas station?

Then, you have folks like this that don't even have enough gas to get to another station.

What are you going to do now?

UNIDENTIFIED FEMALE: We're going to push the car over here and then call a friend to come out here and give us a ride.

NGUYEN: The trick now is finding another place to fill up. Betty Nguyen, CNN, Houston.

(END VIDEO CLIP)

SANCHEZ: I had a -- I mentioned to you just moments ago that I had a conversation with the governor's office in Florida. I'm from Florida. So I called there today. They say that Governor Crist is furious about what's going on. Gas prices are way up, in case you haven't noticed. I'm sure you have. Not just in Texas, but here's the really strange thing about this. Crude oil prices are plunging.

How can that be, you ask? Right? They hit a seven-month low today. Several states are investigating. They're trying to find out whether retailers are using Hurricane Ike as an excuse for price gouging. Florida's attorney general is serving subpoenas to four companies today. Nationally, gas prices have gone up an average of 17 cents a gallon; that's just over the past three days.

By the way, we've got a new segment coming up. It's called "Laugh at Lunch" or "LA Lunch" For all you Angelinos, and everybody else out there.

All right. I'll show you some video. You ready? Here it is. Which one of these is not Sarah Palin? Again, which one of these is not Sarah Palin? OK. We made it too easy. We picked video that actually shows somebody next to her that tells you.

Your answers on Myspace and Twitter, when we come back.

(COMMERCIAL BREAK)

SANCHEZ: A lot of people are writing in about what's going on with the economy, especially with the market down as it is, 399. It's about to hit the 400 mark once again. You're looking that square there, at the bottom of the screen, right about there. Oops, wait. Right about there; 398 at this point. It's scaring a lot of Americans.

Let's go to my Facebook page. I opened it up a little while ago, I asked this question

"We need help, but where is it going to come from? That is what is scary."

"Rick, this collapse is all about greed." This is from Lee Ann Taylor (ph). She's watching us right now and she says this collapse is all about greed.

"I am tired of it. America has learned by example that it has created" --. Let me get rid of that. "Created a domino effect. Alan Greenspan is right. The worst is yet to come."

We continue to get more and more of your comments, both here and on Twitter, as well. One final comment that I wanted to share with you, real quick, we asked a little while ago. Go ahead and take that big top one there, if you could Robert.

We asked a little while ago about Karl Rove. I asked the question: Karl Rove criticizing somebody's campaign tactics is like -- blank.

This one came in just a moment ago from Englanda, she says, "It's like Wolf Blitzer saying that beards are not cool." We'll be joining Wolf in just a little bit, by the way.

Oh, Tina Fey imitated Sarah Palin this weekend on "Saturday Night Live." Could you even tell the difference? You tell us on Facebook, Myspace, Twitter.com/ricksanchez.com.

All right, ladies. Here we go.

(COMMERCIAL BREAK)

SANCHEZ: Did you see the Sarah Palin spoof that they opened "Saturday Night Live" with ? It's a perfect dead-on impression -- maybe one of the best impressions they've ever done. Face, hair, glasses, that voice. It's so convincing that we challenge you to be able to tell the difference between the real Governor Sarah Palin and SNL's version. Here's the montage for you.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: And nearly half a billion dollars in wasteful excesses spending. Well, that's what vetoes are for.

I reminded people that, no, government is not always the answer, in fact, too often, government is the problem.

TINA FEY, COMEDIAN: Hillary Clinton who came so close to the White House and me, Sarah Palin, who is even closer.

PALIN: And I put the state government's checkbook online for all to see.

FEY: And I can see Russia from my house.

PALIN: You're right. Are you right. Drill, baby, drill.

FEY: To the White House to my road to the White House.

(END VIDEO CLIP)

SANCHEZ: Tina Fey, big talent obviously. And forget her politics. She can count on lots of work if the McCain team gets into the White House. Go on. Let's see some more of that "Saturday Night Live" sketch. Here we go.

(BEGIN VIDEO CLIP)

FEY: While our politics may differ, my friend and I are both very tough ladies. You know, it reminds me of a joke we tell in Alaska.

UNIDENTIFIED FEMALE: Oh, boy.

FEY: What's the difference - .

UNIDENTIFIED FEMALE: Lipstick.

FEY: Between a hockey mom. UNIDENTIFIED FEMALE: Lipstick.

FEY: And a pit bull.

UNIDENTIFIED FEMALE: Lipstick.

FEY: Lipstick.

UNIDENTIFIED FEMALE: There you go.

FEY: Just look at how far we've come. Hillary Clinton, who came so close to the White House, and me, Sarah Palin, who is even closer. Can you believe it, Hillary?

UNIDENTIFIED FEMALE: Hmm. I cannot!

FEY: It's truly amazing, and I think women everywhere can agree that no matter your politics, it's time for a woman to make it to the White House.

UNIDENTIFIED FEMALE: No, mine! Supposed to be mine.

(END VIDEO CLIP)

SANCHEZ: All right. That was SNL cast member Amy Poehler, by the way, she's doing Senator Hillary Clinton in that.

Senator Barack Obama was scheduled to appear on the show, too, about he took a pass though because of Hurricane Ike. He didn't want to come across seeming insensitive.

All right, moving on. Coming up, Lehman Brothers, it is what everyone's talking about. It's what's doing this to the market today, 455. That's as high as we've seen it yet. We'll be queuing in on that in a little bit. Stay with us.

(COMMERCIAL BREAK)

SANCHEZ: Before we do anything else, let's look at the Big Board one more time. My goodness, take a look at that, 432. It is pretty much staying consistently over 400 now. At least for the last five or10 minutes, since we've been watching it. Let's bring in CNN's Wolf Blitzer, who's been following this as well as the politics it might stir, in his show today, "SITUATION ROOM."

Wolf, what you got?

WOLF BLITZER, CNN ANCHOR: We're going to be following the story. It's literally something every American should be worried about, Rick. One of the most disturbing days in the history of America's financial markets. The largest ever bankruptcy in the United States, the takeover of another major Wall Street firm, all of it causing nightmares for Wall Street and Main Street. So who's to blame? What's to blame? The presidential candidates say they know. We're going to let you hear how they describe what's happening. And in Texas, many people who left their homes are warned don't come back, at least not yet. We're following Hurricane Ike's aftermath and how what happened in Texas could affect all of us. Stay tuned for that.

Rick, all of that coming up, a lot more, right here in "THE SITUATION ROOM."

SANCHEZ: And, Wolf, you would never say that beards aren't cool, right? Because I've got somebody who obviously loves and watches you saying that would be like Wolf Blitzer saying beards aren't cool. Those words would never be uttered from you.

BLITZER: Beards are cool on Wolf, not necessarily on Rick.

SANCHEZ: Maybe a moustache. Thanks so much, Wolf. We'll look forward to your show. It's going to be good as usual.

Let's go over to Susan Lisovicz now. See how the markets have been doing. See if it has been changing. We'll do that in about two minutes. Stay with us.

(COMMERCIAL BREAK)

SANCHEZ: And welcome back to the CNN NEWSROOM. Boy, we are getting so many responses on this from people. Let's hold off on those for just a bit. Let's go real quick on this historic day. Lehman Brothers files Chapter 11, Merrill Lynch sold, AIG fighting to survive.

Sue Lisovicz, joining us now from the New York Stock Exchange. Where do you begin, Susan?

SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: We haven't seen a day like this before. In terms of news and in terms of the selloff, we haven't seen a day like this in years. It is going to be the worst selloff, both point-wise and percentage-wise since 2001. And the news continues to unfold.

Real uncertainty about AIG, the nation's largest insurance company. Now, this is something everybody can relate to. Just look at the damage of Hurricane Ike. Not only the kind of losses that it would take from a hurricane like that, but also from its exposure to those bad mortgage-related assets. We will are seeing, "The Wall Street Journal" is reporting, that the federal government is asking Goldman Sachs and JP Morgan to lead a $70 billion to $75 billion lending facility for AIG. Why is that? The nation's largest insurance lost half its value today alone and in stock price. We'll end with a big, big loss.

SANCHEZ: Wow.

LISOVICZ: The market will close -- at it's close, 400 points, nearly 500-point loss on the day. See you tomorrow, Rick.

SANCHEZ: Yes, for a while there it looked like it would be under the 400s, maybe into the high 300s, but 469. That's a big nut.

Let's take it over to Wolf Blitzer now. He's going to be following up on this during his show "THE SITUATION ROOM."

I'm Rick Sanchez. I'll see you again, tomorrow.

BLITZER: Rick, thanks very much.