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Auto Industry Looking for Some Help from the Feds; U.S. Embassy Targeted in Yemen; John McCain Blasting Wall Street for its Failures; Financial Firms Crash and Their Ads in the Rubble
Aired September 17, 2008 - 9:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN ROBERTS, CNN ANCHOR: Thanks so much for joining us on this AMERICAN MORNING. We will see you back here. And you want to make it bright and early tomorrow morning. Don't be so late like you were today.
KIRAN CHETRY, CNN ANCHOR: That's right.
Meanwhile, "CNN NEWSROOM" with Heidi Collins starts right now.
HEIDI COLLINS, CNN ANCHOR: The world's biggest insurer looking for a savior, and guess what, it's you. Taxpayers pick up the bill for an AIG loan. Why the deal may be sweeter for you than for the company.
And U.S. embassy, attacked. Ground-shaking car bomb blast in Yemen. Al Qaeda, blamed.
It's September 17th. I'm Heidi Collins. You are in the CNN NEWSROOM.
It's a financial lifeline tied to your wallet. "ISSUE #1" is always your money, and this morning it's our top story yet again. The federal government saving insurance giant AIG from possible collapse with an $85 billion loan.
All of it, your tax money.
The Feds say doing nothing could have cost a lot more. It could have delivered a crushing body blow to the nation's fragile economy and further undermine confidence.
AIG, the world's largest insurer is the latest casualty of the nation's worst financial crisis in decades. Less than two weeks ago the government guaranteed $100 billion to mortgage giants Fannie Mae and Freddie Mac.
Well, there's a lot going on this morning and our CNN money team is, of course, all over it for you. CNN's Susan Lisovicz is awaiting the opening bell on Wall Street. Jim Boulden has the rescue of another Wall Street icon. Details about that are unfolding right now. And in New York senior correspondent Allan Chernoff.
Let's go ahead and begin now with Allan right outside the AIG headquarters. How does it look there this morning, Allan?
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well, a lot of happy faces walking in the door over here. In fact, one woman said to me, boy, am I relieved I'm walking into my job this morning.
But this is an extraordinary deal, as you said. $85 billion in taxpayer money, high interest rates for the U.S. loan and also the taxpayers get 80 percent of this massive insurance company.
Now, of course, this is not the way capitalism is supposed to work. But it's an extraordinary deal here.
Why was it done? Because, well, let's think of the financial world as a human pyramid, and AIG as one of the pillars of that. If AIG had collapsed, it would have caused billions of dollars in losses, not only for the company, not only for financial institutions, around the country, but it really would have threatened the global economy.
It would have created a horrific credit crunch around the world. That's why the U.S. government stepped in with our money to bail this company out. Quite the deal. And this is history in the making, there's no question about it.
Now it's going to be controversial, at the same time. Nancy Pelosi, the House speaker, has already criticized it. And you better believe we're going to hear plenty of calls for lots of regulations, because the financial contracts that AIG wrote that got the company into trouble, there's no regulation over that -- Heidi?
COLLINS: All right, Allan. We'll continue to come to you this morning as you continue talking to people going in and coming out of that building right behind you, AIG headquarters there in New York.
Allan Chernoff, thank you.
We are just minutes away from the critical measure of the government's bailout now. How will investors react on Wall Street? CNN's Susan Lisovicz waiting for the opening bell yet again today.
Susan, pretty surprising yesterday what we saw. The Dow actually closed up and then this news came late in the evening. Any idea what's going to happen today?
SUSAN LISOVICZ CNN CORRESPONDENT: We're going to have a lower open, Heidi. At least that's what futures are telling us. 27 minutes away from the opening bell. And, yes, we did have a triple-digit gain at the close yesterday.
But a lot of that was centered on this chatter all day that the Fed was going to reverse itself because traders are telling me all day that, you know, the private banking industry didn't have the cash. And that the government was going to blink.
It was a game of chicken, if you will, and that it was too big to fail. And -- AIG, that is. And that really gave the markets some support. Having said that, AIG shares, which have collapsed over the last few days, are down another 40 percent in premarket trading.
You know, AIG's work is -- you know, it's not done now. AIG has to sell parts of its business. This is a short-term loan and it's at very high interest rates. So, AIG has to scramble.
And it's -- its shares are under pressure. So are Morgan Stanley's, despite the fact that that company reported better-than-expected earnings after the closing bell yesterday. Its shares are down 16 percent.
You know, this all relates to this -- to the housing bubble that burst, right? Well, guess what? We got bad news on the housing sector. Building permits and housing starts declined in August.
What is higher is oil prices. After a few days of pretty sharp declines, oil's up a couple of bucks. Oh, and by the way, I think Jim Boulden will be talking about how parts of the Lehman Brothers' carcasses being picked apart.
COLLINS: Yes.
LISOVICZ: And the first big bidder is, I guess, Barclays.
COLLINS: Yes.
LISOVICZ: So, we've got a lot to absorb and we're going to have a lower open.
COLLINS: Yes, we will be talking with Jim about that coming up shortly. And, Susan, we'll come back to you when the opening bell rings.
Thanks so much, Susan Lisovicz...
LISOVICZ: You're welcome.
COLLINS: ... from the floor of the New York stock exchange.
You know the failure of AIG could have had far-reaching impact around the world. In fact, when Washington announced its rescue plan, it helped calmed rising tensions including a near panic in the Asian country of Singapore.
CNN's Eunice Yoon is there.
(BEGIN VIDEOTAPE)
EUNICE YOON, CNN CORRESPONDENT (on camera): Hundreds of people were lining up in Singapore, outside the Asia subsidiary of AIG. This subsidiary is called AIA and many people here were very concerned about its financial health despite the company's insistence that it has enough capital in order to meet and make good on all of the policy claims despite the fact that the financial health of its parent is in doubt.
Now people were awaiting the lines for over an hour. Some of them were very concerned, saying that they were hoping to cancel their policies in order to try to get their money back from AIG.
The company officials were passing out their own statements, saying that they did have enough money in order to try to make good on these policy claims. They also were handing out press releases of the Federal Reserve, straight from the Federal Reserve, trying to explain what that bailout really means for AIG.
However, this is what one retired teacher had to say about those statements.
UNIDENTIFIED TEACHER: It's insurance, very little insurance to me, because to stop people from panicking and withdrawing. But it looks like nothing has stopped us from panicking.
YOON: And that retired teacher said that she's so panicked that she's fine with losing over $1,000 by canceling that policy.
Eunice Yoon, Singapore.
(END VIDEOTAPE)
COLLINS: One of the two Wall Street icons that crumbled earlier this week has a new leased on life, at least in part. A British bank has agreed to buy key parts of Lehman Brothers.
CNN's Jim Boulden is in London now with details on this.
Good morning to you, Jim.
JIM BOULDEN, CNN CORRESPONDENT: Good morning, Heidi. Yes, it should be very good news for 10,000 Lehman employees in the U.S. because Barclays will be buying what's called a broker/dealer part of Lehman's. And also the Lehman's building in Manhattan and two call centers or data centers in New Jersey.
Barclays is ecstatic that they've got this. And analysts are really surprised they haven't paid as much money for this as, of course, they would have just last week.
COLLINS: So, Jim, what about the London arm of all of this? I know that there was a lot of hope anyway that Barclays could possibly also buy that portion. Is that something that's still being discussed? Or would they then be overextending themselves?
BOULDEN: Well, Barclays had an analyst call. We were listening in to that and they said, look, we have no obligation for any part of Lehman's outside of North America. They have options. But frankly, they don't need it. They already have their big tower here in the center of London and in there is something called Barclays Capital.
They already do that work. So, frankly, no, the Lehman's employees here on Monday were told to go home.
COLLINS: Yes, we saw all of that with you live actually on our program.
Jim Boulden, thanks so much, live from London this morning.
Your money, your concerns, "ISSUE #1 Help Desk" is open beginning this morning at 11:00 Eastern. Our CNN money team will be answering your questions. Just go to twitter.com/issue1CNN. Again, twitter.com/issue1CNN.
You can also e-mail us at issue1@CNN.com. Make sure you get your questions in.
Bloodshed in Yemen. The U.S. embassy target of a dramatic and deadly attack. Authorities say attackers dressed as (INAUDIBLE) forces initially opened fire outside the building in the capital Sanaa. Then it was rocked by two car bombs. 10 police officers and civilians are dead so are six attackers.
No embassy workers were killed. Yemeni officials blame al Qaeda. Media reports said a group affiliated with al Qaeda claims responsibility.
And this just in from the National Security Council spokesman, Gordon Johndroe, says this. "The United States condemns this attack. We offer our sincere condolences to the loved ones of the Yemenis lost in today's violence. This attack is a reminder of the continuing threat we face from violent extremists both at home and abroad."
We're going to be talking with our State Department correspondent, Zain Verjee, coming up a little bit later in the hour.
Back here at home, an oil chain, the House passed an energy bill last night that clears the way now for more offshore drilling. The vote? 236-189. Under the measure now drilling would be permitted in areas between 50 and 100 miles offshore. The Senate could vote on similar legislation as early as this week.
Well, you may or may not have noticed, if you filled up this morning, the gas prices are up for the eighth straight day. AAA says the nationwide average, rose a tenth of a penny overnight. In fact, 11 states now paying more than $4 a gallon.
We're watching those numbers for you.
So, you think you're spending too much at the pump? Well, think about the gas station owner.
(BEGIN VIDEO CLIP)
UNIDENTIFIED GAS STATION OWNER: Everybody thinks it's our fault, like we're doing the price gouging. That's not the case. You -- keep your price according to the street, you will go broke, because there -- the guy down the street might have got a load yesterday for 90 cents less than you got a load today.
(END VIDEO CLIP)
ANNOUNCER: CNN NEWSROOM brought to you by...
(COMMERCIAL BREAK)
COLLINS: If you have questions concerning your bank, your stocks, your financial futures, the CNN money team's help desk is open for business. Just go to twitter.com/issue1CNN. You can also e-mail us at issue1@CNN.com.
(COMMERCIAL BREAK)
ANNOUNCER: Live breaking news, unfolding developments, see for yourself in the CNN NEWSROOM.
COLLINS: Some 1.3 million homes and businesses in Ohio waking up to a third straight day without electricity. Columbus, Cincinnati, Dayton, all hit hard by the remnants of tropical storm Lowell and Hurricane Ike.
Crews have restored power to half of the people who lost it. But it's another day off for school for many kids. Their parents, meantime, facing long lines at grocery stores and hardware stores.
Batteries and ice literally being grabbed off the shelves just as soon as they're stocked. Restaurants that do have electricity are reporting a brisk business as you would imagine.
Far from home, but they can still go to school. Gulf coast families who evacuated their hopes because of Hurricane Ike enrolling their children in other schools in Texas. Parents of school officials say it gives kids a sense of continuity and it's a welcome break from the boredom of the shelters.
(BEGIN VIDEO CLIP)
PASCUAL GONZALEZ, SCHOOL ADMINISTRATOR: They're welcome as long as they're here to be in schools. We prefer that they're in schools and not in a shelter, obviously.
SID LAWRENCE, SCHOOL COUNSELOR: One of the best ways for people to handle stress and anxiety in a situation like this is to maintain as much routine as is possible.
(END VIDEO CLIP)
COLLINS: The Texas public school curriculum is the same across the state, so the kids now going to school in San Antonio can pick up where they left off in Galveston.
Damage from Ike expected to be in the billions of dollars in Texas affecting all kinds of businesses.
CNN's Susan Roesgen is joining us now from an amusement park in Kemah, Texas where the rides took a ride, if you will.
Hi there, Susan.
SUSAN ROESGEN, CNN CORRESPONDENT: Hey, Heidi. You can sure say that. I think the scariest ride in this amusement park was Hurricane Ike. This is an amusement park that's true in Kemah, Texas but it's actually part of a 50-acre entertainment complex.
They have restaurants and shops and an inn here. This is the major economic engine in this area, in Kemah, Texas, a town of about 2,300 people but they bring in about 3 million tourists every year to come and ride the Ferris wheel which, as you can see, the cars are dangling upside down.
They found some of the seats from these rides, Heidi, as far as a mile away. There was a carousel right in the center area. The entire carousel is gone now. We saw some of the horses that were blown away. This is the ride called, appropriately enough, Chaos. The guts of it, the whole mechanical engines that moves it, has been blown out.
The restaurants here, every one of them, is shut down. They're all damaged. This was actually where parents and children would get on a little train to sort of ride a little rail track around the whole park area.
Again, this is an entertainment complex that really built up the city of Kemah, Texas. It started about 10 years ago. They've added and added every year. They employ 2,000 people, and Heidi, there are only 2,300 people who live here in Kemah.
So, this is a huge economic loss. But they are out here already, trying to get started again, trying to get it going again. And the people here need it -- Heidi?
COLLINS: Yes, definitely. Boy, quite a bit of damage we see just all around you there.
Susan Roesgen, sure do appreciate that, from Kemah, Texas this morning.
Relief agencies are mobilized to help victims of this storm.
There are ways that you can help, too. Just find out at CNN.com's "Impact Your World" page. You'll find links to organizations offering assistance. Again, CNN.com/impact.
Want to take a moment to get over to Reynolds Wolf who's standing by in the Severe Weather Center now with more on what we can expect.
Still, obviously, going to be talking for a long time, Reynolds, about the cleanup after Hurricane Ike.
REYNOLDS WOLF, CNN METEOROLOGIST: There's no question about it. I mean they've got their work cut out for them in parts of Texas. It's just a disaster with the dealing with a nightmare for many of these people.
You know what they really could use, Heidi, would be a great strikes of nice decent weather, and that's going to be pretty much the story across the good part of the country. A relatively tranquil day. In fact, right now, some of the roughest weather we have is actually offshore, moving away from the Carolinas, both South and North Carolina. The outer banks -- if you were to look out, say, from Wilmington, look out your window out towards the coast you might see just a little boom of lightning here and there.
Meanwhile, the other thing we're dealing with some fairly pleasant conditions. I mean here we are in Atlanta, and -- yes, I know it is a temper, but if you happen to have a day where it's 79 degrees this time of year, you got to be thankful, and that's exactly what we've got here.
In D.C. it's 80 degrees up at the tidal pool. In New York, we're looking at 76. 77 in Chicago in Wrigley Field. 93 Las Vegas and 98 degrees in Phoenix.
Now in the Pacific Northwest mainly 70s and 80s up there. But you got something else to contain with and that will be a red-flag warning 's going to be in effect for parts of Washington state, back into Idaho and even into portions of Oregon until 11:00 p.m.
Basically when you have a red-flag warning that means you get really, really dry conditions, very low humidity, some strong wind gusts, and the potential for wildfires to spread. So certainly an area of concern for us.
That is the latest we got on your forecast. Heidi, let's send it back to you.
COLLINS: All right, very good. We'll check in later. Thank you, Reynolds.
WOLF: You bet.
COLLINS: Well, it's not your typical treadmill. Our Dr. Sanjay Gupta gets vertical.
(BEGIN VIDEO CLIP)
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: I really got to really work to just even walk. I am feeling my entire body weight pushing against this treadmill. Every last pound.
(END VIDEO CLIP)
COLLINS: Now that is quite a gadget. Dr. Gupta joining us to explain the health risks that's out of this world.
(COMMERCIAL BREAK)
COLLINS: Giant leaps for mankind don't actually burn very many calories. And getting exercise is actually a real problem in the final frontier. That's why NASA spent millions of dollars to simulate jogging at zero gravity by turning a treadmill sideways.
Our chief medical correspondent Dr. Sanjay Gupta is here now.
So, Sanjay, you actually went to NASA's Glenn Research Center... GUPTA: Yes.
COLLINS: ... and tested this equipment. How did you do? I mean, I've seen the video. I can't lie. It's great.
GUPTA: I did pretty well. You know, it's funny how many times you get an opportunity to simulate weightlessness on and exercise as if you were in a space station. That's what we were doing.
But I learned a lot of things along the way. I mean if you're going to exercise out in space, it's got to be something that's very comfortable, so -- also the exercise equipment can't affect the spacecraft itself and it is essential, you have to exercise or otherwise some very tragic, very devastating things can happen to your body as we found out.
Take a look.
(BEGIN VIDEOTAPE)
GUPTA (voice over): It orbits the earth at a speed of 17,500 miles an hour, hovering 240 miles above the earth's surface.
The International Space Station is home to astronauts who live, work, and exercise in zero gravity, which poses health risks which increase every day.
DR. PETER CAVANAGH, UNIVERSITY OF WASHINGTON SEATTLE: Bone loss in space is an extremely significant problem. Astronauts lose about 10 times more bone every month than a post-menopausal woman on earth loses.
GUPTA: That happens even after the astronauts are given 2 1/2 hours a day for exercise in set up. So, researchers are trying to cut the risk through running vertically.
(On camera): 24 pulleys are holding me up here. This is quite a contraption, sort of trying to simulate weightlessness. Now comes the true test, though. What is it really going to feel like when I start to walk vertically?
How much does a system like this cost?
(Voice over): All told in the low millions.
(On camera): I feel good, you know. I feel like each step is like I could bounce and jump with each step.
(Voice over): Researchers say bone loss occurs because astronauts are not getting enough load-bearing exercise in space. Bungee cords can help, but it's extremely uncomfortable.
CAVANAGH: It's as though you have another person of your body weight on your back and then we ask you to get on the treadmill and run.
GUPTA (on camera): So now you really got to really work to just even walk.
UNIDENTIFIED FEMALE: Yes.
GUPTA: I'm feeling my entire body weight pushing against this treadmill. Every last pound.
CAVANAGH: We feel that bones need this constant mechanical stimulation to stay healthy.
GUPTA: That was easier than I thought it was going to be for sure.
(Voice over): But, of course, that's only after 20 minutes. It will be a tougher task for the months or even years it will take to get to the moon, Mars and beyond.
(END VIDEOTAPE)
GUPTA: We have the neatest job sometimes.
COLLINS: Wow, no kidding.
GUPTA: To actually do that. But, again, you know, coming back to this idea that you lose so much bone mass because you don't have gravity. Gravity can work for you when you're here on earth, but up in space you don't have that, and your bones start to literally wither away. As that one doctor said you lose it 10 times faster than a post menopausal woman.
COLLINS: Wow, that's unbelievable. I just have to ask about the 24 pulleys? Like, how much do you weigh?
GUPTA: Nice.
COLLINS: No, but I imagine, you, it would take more if you were a larger person.
GUPTA: It's 30 percent people. That's right. Yes.
COLLINS: Yes, right.
GUPTA: Well, it's all counterweighted. So that they can really -- they truly measure every part of your body and they can truly simulate weightlessness, so you're just literally floating, everything, your arms and your legs.
COLLINS: It looked really, really hard. So, listen, this bone loss thing, though, it is serious. Do they ever get that back? I mean do they have to take medications?
You know I'm thinking like Fosomax...
GUPTA: Right.
COLLINS: ... and things like that to get that density back?
GUPTA: The medication question is a good one. I don't know the answer to that. But I can tell you that -- and this is a little bit depressing. Beyond the age of around 25 or so, all of us start to lose bone mass. That's the peak. We start to lose it after that.
So you imagine adding this space flight to it, it really puts you behind the curve.
COLLINS: Yes.
GUPTA: It takes about 1,000 days, they told me, to get back on the curve of just normal bone loss. The problem is, as you know, a lot of astronauts might go back up within that time frame.
COLLINS: Sure.
GUPTA: So it is a real problem. The bones get so brittle that they can spontaneously break upon returning to earth.
COLLINS: Yikes. They really got to be careful when they come out.
GUPTA: They do. They do.
COLLINS: All right, well, Sanjay, great report.
GUPTA: Thanks.
COLLINS: Loved it. Thanks so much.
GUPTA: Appreciate it, Heidi. Thanks.
COLLINS: We'll see you again soon.
Meanwhile, get all the health information that you need by logging on to CNN.com/health.
Don't worry, be vigilant. Some financial experts say all is not bleak on the streets.
(COMMERCIAL BREAK)
HEIDI COLLINS, CNN ANCHOR: Want to take you to the opening bell, happened just a couple of seconds ago on this Wednesday. And what an interesting/scary week it has been so far. So, on hump day we will be watching these numbers just as we have done every day here very, very closely.
Yesterday, kind of a bit of a surprise. Dow Jones Industrials closed up by the end of the trading day about 141 points or so. There you have a live shot. We will be watching all those numbers and, in fact, watching all of Wall Street as investors react to the government's rescue of the world's largest insurer. I'm talking about AIG.
Want to check in with CNN's Susan Lisovicz at the New York Stock Exchange now with more on this.
So, $85 billion, Susan, what are we going to see at the market? We've actually down about 165 right now. SUSAN LISOVICZ, CNN CORRESPONDENT: There you go. There you go. The investors have spoken. It's the shock market, I think, not only today but over the last two weeks. I mean, the body blows that the street has absorbed. And I think that, you know, basically there are concerns that, you know, maybe we haven't seen the floor yet.
Every time you have these kind of headlines, you think, wow, Fannie Mae, Freddie Mac, that maybe this is it. You know, these are extraordinary -- extraordinary things that are happening in order to stem this financial crisis. And yet, there are unfolding chapters that continue to really shock us. You know, but interestingly enough, the market rallied yesterday. I was really -- the talk of the streets all day yesterday.
COLLINS: Yes.
LISOVICZ: Was the government going to reverse itself and step in, because private banks are just saying, you know -- or banks, large financial institutions said they could not put up the money in that short of time to help prop up AIG.
And the government obviously ultimately felt the alternative was just so much worse. AIG shares, by the way, which have collapsed, are down an additional 35 percent. Right now, trading at $2 and change. This is a stock that was trading at $70 at its high over the last year.
And, you know, it's not all bad news. I mean, Heidi, Morgan Stanley moved up its quarterly earnings by a day in order to calm the jittery markets.
COLLINS: Confidence.
LISOVICZ: It's made money. It made money, that's right, to try to restore some confidence in there. It made money, a lot more money than analysts expected. And Morgan Stanley shares are down right now 19 percent. The whole financial sector is under pressure.
Of course, this all stems from the housing market, right? The bubble that burst there. And we did get some new data on that. And that is that we got housing, construction starts on new homes plummeted in August to a 17-1/2-year low. That came out an hour ago.
Builders are scaling back, to try to cope with this, you know, the housing slump which is considered the worst since the Great Depression. I mean, one of the big problems there is that there's just so much inventory, 11 months or more, of unsold homes.
And obviously this crisis isn't going to really -- really going to end until we get some sort of stability in the housing market. Right now, though, we're seeing a 200-point loss in the Dow in the first couple of minutes of trading.
Heidi?
COLLINS: Yes. We sure are. All right, Susan, we'll check back later on to see how things move around today. Well, as Susan said, though, maybe all is not doom and gloom on Wall Street. While some firms are obviously floundering, experts say opportunity knocks for businesses and for you. Here now, CNN's Tom Foreman.
(BEGIN VIDEOTAPE)
TOM FOREMAN, CNN CORRESPONDENT (voice-over): What do Paramount Pictures, the nation's railroads, Macy's, Campbell's Soup, Hertz Cars, Continental Airlines, IBM and Halliburton have in common? All have grown with the help of Lehman Brothers. So, consumers of all kinds could be dramatically affected by the firm's collapsed and the shaking financial markets, right? Well, maybe. Tim Hanson is with the investment advice company, The Motley Fool.
TIM HANSON, THE MOTLEY FOOL: Those of us who are long-term thinkers think of now as a very optimistic time to be an investor. It's a great time to be buying stocks. But there are other investors out there, momentum players, for example, who are extremely pessimistic.
FOREMAN: On the pessimistic side, the problems plaguing the financial markets right now could certainly hurt if your savings or retirement plan is heavily invested in stocks. Wall Street goes down, so does your bottom line. If consumers get scared and tighter with their wallets, businesses across the nation could delay plans for growth, hiring and product development. Further hurting the struggling job market.
Then, home loans, which are already harder to come by, could be even tougher to get. That could hurt construction businesses, landscapers and retailers who sell building supplies and home furnishings, and on and on and on it goes.
(on camera): Or, on the optimistic side, maybe nothing will happen to consumers. Financial analysts point out that every time the market plunges, some companies see opportunity to step in and grab the business that others have lost.
(voice-over): So, the advice from some analysts right now? Keep watching for financial ripples that might head your way, but try not to worry too much. Tom Foreman, CNN, Washington.
(END VIDEOTAPE)
COLLINS: Gasoline, pretty expensive for some people. Almost impossible to get for others. Gas lines snaking across parts of Texas, the very heart of U.S. oil country.
Cars and trucks here in Houston, just sitting on the highway. Waiting to get into a station. Relief may be in sight, though. Some of the refineries shut down by Hurricane Ike looking to get back up and running soon. We'll keep our eye on that part of the story for you.
So, you're looking for gas at the pump, and meanwhile Detroit is looking for some help from the Feds. That's right, the auto industry, coming to Uncle Sam with its handout. CNN's Kathleen Koch has that story.
(BEGIN VIDEOTAPE)
KATHLEEN KOCH, CNN GENERAL ASSIGNMENT CORRESPONDENT (voice-over): Detroit is hurting. Gas prices are up. SUV and truck sales are slumping, and at the same time it's facing staggering cost to build more fuel-efficient cars. So, it's asking Congress for help. $25 billion worth.
RICHARD WAGONER, GENERAL MOTORS: General industry conditions and credit conditions have gotten so difficult, it will be very helpful if that funding could be approved.
KOCH: Automakers argue Congress promised the loans last year when it mandated tougher gas mileage rules. Detroit also knows it has election-year politics on its side.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: And we're going to make sure those cars aren't built in Japan, aren't built in China or Korea, but are built right here in the United States Of America.
KOCH: Both Barack Obama and John McCain support the loans. Perhaps no surprise for the states that would benefit most, Michigan, Ohio, Indiana, and Missouri are critical battlegrounds.
JOAN CLAYBROOK, PUBLIC CITIZEN: It's all politics all the time. The presidential candidates if they said don't do this bailout, they'd lose the election they think.
KOCH: Michigan lawmakers like Mike Rogers insist this is not another Bear Stearns, nor like Fannie Mae and Freddie Mac.
WAGONER: We're not giving them anything. They're going to have to pay it back.
KOCH: Still, it is a tough sell. The House Republican leader has doubts.
UNIDENTIFIED MALE: It looks like a bailout to me.
REP. MIKE PENCE (R), INDIANA: Walks like a duck, quacks like a duck, it's probably a duck.
KOCH: Even some lawmakers from auto making states fear taxpayers will again be left holding the bag.
PENCE: One more bailout to one more industry is not the way to put our fiscal house in order.
KOCH: The loans are expected to be made parts of a must-pass spending bill to keep the government operating which could be voted on as soon as this week.
(on camera): And Congress could be hearing from Detroit again. If the economy and credit availability don't improve, automakers say they may need another $25 billion in loans. Kathleen Koch, CNN, Capitol Hill.
(END VIDEOTAPE)
COLLINS: Your money, your concerns, the "ISSUE #1," Help Desk is open. Beginning this morning at 11:00 Eastern, our CNN Money Team will be answering your questions. Just go to twitter.com/issue1cnn. You can also e-mail us at issue1@cnn.com.
On to this story now. U.S. Embassy targeted. A car bomb attack in Yemen, our State Department correspondent is working on the story and has an update shortly.
(COMMERCIAL BREAK)
COLLINS: More on the big story we are following out of the Middle East this morning. Officials are blaming al Qaeda for a deadly attack on the U.S. Embassy in Yemen's capital. A top State Department official says the attack involved at least four explosions. One of which was a car bomb and sniper fire. Ten Yemeni police and civilians are now dead.
Our State Department correspondent Zain Verjee has been following the story from Washington, and she joins us now live.
Zain, why don't you update us on what you've been able to learn so far.
ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Heidi, 16 people were killed today, including six terrorists. What we know is this. The attack happened at about 9:15 in the morning in Yemen as embassy staffs were just coming in to work.
Now, a senior State Department officials is saying that the embassy was first rocked by gunfire, then a car exploded outside the entrance of the embassy. It's not really clear whether it was a car bomb or a rocket-propelled grenade that caused the explosion. Then we hear that there were up to four more explosions.
It's not clear exactly what those were. There's damage to the outside of the embassy, Heidi. Embassy personnel that were outside the compound were just asked to report to the British embassy. The U.S. Embassy for now is temporarily closed. All embassy staff have been accounted for. No one was injured or killed.
So, the bottom line according to Yemeni officials is that six Yemeni security guards were killed. Four bystanders were killed and six terrorists in all were killed.
Heidi?
COLLINS: All right. Obviously, that is clearly an update to the story that we have been following this morning. So, once again, Zain, what we know at this point is now 16 people killed in this explosion, and possible car bomb, which I know you are still checking in to for us. Let us know what else you learn. Sure do appreciate it. Zain Verjee from Washington this morning. How your dollars go to save the world's biggest insurer. We follow the AIG money trail. Coming up.
(COMMERCIAL BREAK)
COLLINS: On the campaign trail, it's still the economy. No surprise there. John McCain is blasting Wall Street for its failures.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Too many people on Wall Street have forgotten, disregarded the basic rules of sound finance. In an endless quest for easy money, they dreamed up investment schemes that they themselves don't even understand. With their derivatives, credit default swaps, and mortgage backed securities, they tried to make their own rules. But they could only avoid the basic rules of economics for so long.
Now, as their schemes unravel in bankruptcies and collapse, it's once again the public who is left to bear the costs. And I promise you that on my watch, we're never going to let these kinds of abuses go uncorrected or unpunished.
(APPLAUSE)
Members in both parties must accept a share of the responsibility. Some members seemed to measure the financial health of banks and lenders by the size of their political contributions, instead of the extent of their debt. They listened to the lobbyists, instead of the accountants. I can promise you the days of dealing and special favors will soon be over, and in a McCain-Palin administration the public interest will always come first.
(END VIDEO CLIP)
COLLINS: McCain vows to rid Wall Street of what he calls reckless conduct, corruption and unbridled greed. He will take that message of reform to Michigan later this morning. He's got a town hall meeting tonight Grand Rapids.
Barack Obama focuses on the economy in a new two-minute campaign ad. He reiterates his proposal for tougher regulations on Wall Street and tax cuts for the middle-class. Obama says taxpayers should not be forced to bear the burden of unsavory practices by financial giants.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: The American economy does not stand still, and neither should the rules that govern it. The evolution --
(APPLAUSE)
The evolution of industries and new financial instruments often warrants regulatory reform to foster competition and lower prices or to replace outdated oversight structures. Old institutions cannot adequately oversee new practices. Old rules may not fit the roads where our economy is leading.
But instead of sensible reform that rewarded success and freed the creative forces of the market, too often we've excused an ethic of greed, corner-cutting, and inside-dealing that threatens the long-term stability of our economic system.
(APPLAUSE)
Remember, we've seen this before. It happened in the 1980s when we loosened restrictions on savings and loans, and appointed regulators who ignored even these weaker rules. Too many S&L's took advantage of the latch rules set by Washington, to gamble they could make big money in speculative real estate. Confident of their clout in Washington, they made hundreds of billions in bad loans, knowing that if they lost money, the government will bail them out, and they were right.
The gambles did not pay off. Our economy went into recession and the taxpayers ended up footing the bill.
(END VIDEO CLIP)
COLLINS: Obama heads out west today for campaign stops in Nevada. So keep up-to-date on all the actions in this presidential race. You can logon to cnnpolitics.com.
All right, your money, your concerns. Obviously the issue number one for everybody it seems right now. So we want to let you know about a new thing we're starting today. "Help Desk," it is open beginning at 11:00 this morning. Our CNN Money Team will be answering your questions. All you have to do is go to twitter.com/issue1cnn. You can also e-mail us at issue1@cnn.com.
So, I bet you want to know how on earth all of this works.
(CROSSTALK)
So, to explain Twitter, we see Don Lemon standing right over here to talk a little bit more about how people had been following along. Twitter is on all a buzz right now. And we want to show everybody how to get involved.
DON LEMON, CNN CORRESPONDENT: Yes. And, you know what, I'm working with a computer that a lot of people use here. So I went to my Twitter page because I know the log in (INAUDIBLE), but it's very easy. All you do is go to twitter.com, and it's issue1 -- twitter.com/issue1cnn. And you can put your comments there.
And a lot of people have been logging on already and sending questions. And at 11:00 today, we're going to go to our money team in New York, and they're going to take your questions at the "ISSUE#1" desk. Remember that show, Heidi, that used to air at noon?
COLLINS: I do.
LEMON: Issue number one, of course, is the economy. That's what we're going to do. So you go on. All you do is go on. And you've got your replies here. Just go up to this and just send the replies. Send what you want.
I want to know why the Feds -- you don't have to spell it right like me -- are bailing...
COLLINS: Thank goodness.
LEMON: ...out companies. Right?
COLLINS: Yes.
LEMON: And put it in there. And then, Christine Romans and our money team, you hit update, and they will get it. And so, again, go to issue1cnn -- twitter.com/issue1cnn. And that's where you go.
This one is twitter.com/donlemoncnn. And if you send me a question there, I will get it over to the "ISSUE#1" people so that we can answer your questions on air. I'll be participating on that as well. We're going to do that today from 11:00 to 1:00. All day, today, in the CNN NEWSROOM.
Because, you know, Heidi, a lot of people had been asking questions. They had been -- a lot in the 12, I should say. They've been wanting to know -- well, what this means to me. What does this mean to my 401(k), my investments? What should I do?
We keep telling people bad news about the economy. You know, the Feds are bailing out this company. This company is going into bankruptcy. This company is asking for help. So, people want help. So, that's what we are doing here at CNN.
We're trying to get you interactive and to get some help for you as well. We know that you have money people that -- many of you who can afford that -- have money people watching your money.
COLLINS: Yes.
LEMON: But a lot of folks can't afford that.
COLLINS: Absolutely.
LEMON: So, we are trying to use the resources that we have here at CNN, and help you out with that. I know that this weekend when we knew on Sunday that this was going to be a huge story, we had our Gerri Willis on.
She talked about that. She also talked about Bank of America taking over companies as well. And some people are wondering why would a big company like that take over another company when there's such financial discord going on in the country? What does that mean for my bank account? What does it mean for my 401(k)? What does it mean for my mortgage? So, we'll answer all of those questions for you.
Also, you can go, of course, to cnn.com and go to iReport. And send us an iReport. And we will get that on the air. We love your pictures. But if you have a video iReport that you want to send us with a question, we'll take it at our iReport and we'll get on top of that.
But here we go again. It is twitter.com/donlemoncnn. But really, that's only if you can't get on to the issue page, issue1 page, but I don't think you'll have a problem with that. Twitter.com/issue1cnn, and we'll be taking your questions at noon and hopefully providing some information for you that will make you feel a little bit more comfortable about what's going on with this environment.
COLLINS: Yes. Because, really -- I mean, we talked just a little while ago, Don, that there are some opportunities out there as well. Unfortunately with all of the news that's happened this week, we haven't had that much time to talk about sort of the good side of this, because they are there. So interesting stuff. Sure do appreciate that.
LEMON: 11:00 a.m. Eastern. 11:00 to 12:00, we'll be taking your questions.
COLLINS: That's right.
LEMON: Thanks, Heidi.
COLLINS: Thank you for explaining it.
LEMON: All right. Thank you.
COLLINS: See you later.
When bullish turns to bull. Financial firms crash and their ads are in the rubble.
(COMMERCIAL BREAK)
COLLINS: If there's one thing more illusive than truth in advertising, it's truth in hindsight. Our Jeanne Moos goes hunting for both in the graveyard of Wall Street's failed firms.
(BEGIN VIDEOTAPE)
JEANNE MOOS, CNN CORRESPONDENT (voice-over): Stock market, shock market. Do you know what gets me? The advertising for all these financial companies that flop --
UNIDENTIFIED MALE: No adversity lasts forever.
MOOS (on camera): You know, in retrospect, all those ad slogans really do seem like bull. Take Merrill Lynch.
UNIDENTIFIED MALE: Merrill Lynch for all intents and purposes is gone.
MOOS (voice-over): But what will never be gone is that old slogan.
UNIDENTIFIED MALE: Because at Merrill Lynch, we're bullish in the future.
MOOS: That one even made it into the Ad Slogan Hall of Fame, number 16. Then there's AIG, the insurance giant everyone is worried about.
UNIDENTIFIED FEMALE: The AIG companies, a strength to be there.
UNIDENTIFIED CHILD: Does your retirement plan provide the predictability of income and protection against market risk?
UNIDENTIFIED MALE: Buddy, we're with AIG.
UNIDENTIFIED CHILD: Oh.
MOOS: He should have said uh-oh. But investors seem to be taking stock market losses in stride?
UNIDENTIFIED MALE: Oh, I've lost a lot of money, yes. A lot of money. But I'll get it back. It's in the hundreds of thousands.
MOOS: It's enough to cause this guy to rename his 401(k).
(on camera): Have you lost much money in the past couple of days?
UNIDENTIFIED MALE: No. Let's put it this way. I've got a 201(k).
MOOS: A 201(k).
(voice-over): Now that Lehman Brothers has failed, folks are putting souvenirs like key chains and stress balls from the failed investment bank on eBay. There's a mouse pad that says "safe."
A former employee put up this mug with the Lehman Brothers slogan, "Where vision gets built." Talk about a vision. Some jokester offered a piece of toast with LB for Lehman Brothers on one side and BS for Bear Stearns on the other. Wall Street tourists are still bullish. Bullish on every angle of the famed bronze bull. And not everyone dreads getting their brokerage statement.
UNIDENTIFIED MALE: Carl is currently eating our Merrill Lynch check. We wanted to show you his interpretation.
MOOS: Let's hope that's not his college fund. Jeanne Moos, CNN, New York.
(END VIDEOTAPE)
COLLINS: Another day of nail-biting, big board watching. We're finding out how Wall Street is reacting to the latest government lifeline. Will financial fierce continue? Also, following this story and getting more details by the minute. U.S. Embassy targeted. Car bomb attack kills ten and six terrorist in Yemen. It is Wednesday, September 17th. I'm Heidi Collins. You are in the CNN NEWSROOM.
It's a financial lifeline tied to your wallet. Issue number one is always your money.
