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Massive Bailout by the Government; Bipartisan Promises from Congress on Fixing the Economy

Aired September 19, 2008 - 14:00   ET

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

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KAREEN WYNTER, CNN ENTERTAINMENT CORRESPONDENT (voice-over): Talk about competition and another Emmy first, Sunday's show will have not one but five co-hosts who will share the stage. The deal here, the five are also competing in a new Emmy category this year, outstanding reality or reality competition show host.

Kareen Wynter, CNN, Hollywood.

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BUSH: These measures will require us to put a significant amount of taxpayer dollars on the line. This action does entail risk, but we expect that this money will eventually be paid back.

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BETTY NGUYEN, CNN ANCHOR: Will the big banks gain be the taxpayers' loss? The White House gambles that a monumental Wall Street bailout will payoff for everybody. They are watching from the sidelines now, but not much longer. John McCain and Barack Obama look for political capital in the economic turmoil. And it's not called a depression for nothing. Economically we're nowhere near it, but medically, millions are suffering. Our Dr. Sanjay Gupta looks at the price we pay for chronic financial stress.

Hello everybody on this Friday. Boy, it's been a long week, hasn't it? I'm Betty Nguyen in for Kyra Phillips, live at CNN world headquarters in Atlanta and you are in the CNN NEWSROOM.

All right. Straight up a big vote of confidence on Wall Street for something most free market business types would ordinarily hate, but these aren't ordinary times and you can tell it by looking at the stock market. Although it's looking pretty good today, up 364 points. Investors they are just thrilled to see Washington getting into their business on a historic scale.

The Bush administration wants congress to buy up the bad debt and shake the securities that have taken such a toll on Wall Street's biggest institutions. By some estimates that could cost half a trillion, with a "T" dollars. To shore up investor confidence the government plans to guarantee deposits in money market mutual funds and bar the so-called short selling of stocks in financial companies. Well time is short no doubt and the stakes are huge and CNN is all over the story for you. Lawmakers of both parties plan to work through the weekend on the big bank bailout plan.

We're there. Susan Lisovicz looks toward the close of a manic depressive week on Wall Street, and Brianna Keilar has the president's plans of the biggest government intervention in the financial system since the great depression. So, let's start this hour on Capitol Hill. If the devil is really in the details, then it will be a hellish few days for lawmakers who until now have watched this crisis from the sidelines. Here is CNN's Kate Bolduan.

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KATE BOLDUAN, CNN CORRESPONDENT (on camera): It's a rare showing of bi-partisanship here on Capitol Hill. Congressional leaders from both parties, both chambers coming together with the government's top money man to agree to work together on a comprehensive plan to get the country out of this credit crisis. This all started late last night with that dramatic meeting of congressional leaders and of government officials, specifically, Treasury Secretary Henry Paulson leading the way. Today, what we're hearing from lawmakers is they seem to agree on concept. They agree that something needs to be done. It needs to have a significant impact and it also needs to happen quickly, but what we're also hearing from lawmakers is now they want details. They're waiting to see this proposal and on top of their list of concern is who this helps. The lawmakers really want to make sure that the struggling homeowner is a major part of this plan, not just the banks. Listen here.

REP. ROY BLUNT, (R) MINORITY WHIP: We want to do the best thing for taxpayers, the best thing for pension funds, the best thing for mom and pop businesses, the best thing for people who have a mortgage that they're concerned about, and I think there is a way we can do that, and we'll just have to see if that's what happens. You know, it's going to take the democratic majority also has to be committed to solving this problem, or it won't be solved.

SEN. CHRISTOPHER DODD, (D) BANKING CMTE. CHAIRMAN: I have never been in a more sobering moment in my 28 years, with the language that was used, careful language used by the financial leaders of this administration of the country. That's why all of us are gathered here at this moment. That's why all of us are prepared to do whatever we can this weekend working with the administration as they present their plan to fashion a proposal here that will get us out of this mess.

BOLDUAN: It's still unclear when the administration's proposal will make its way here to Capitol Hill, but we're told by one democratic aide that they hope to see the proposal late this afternoon, early this evening, and when they do get that proposal, they are going to be hunkering down in closed door meetings. They expect throughout the weekend to really start working on this plan, hopefully in a bi-partisan way and administration officials as well as lawmakers say they do hope they can get this bill passed and really moving forward by the end of next week. But leaders here on Capitol Hill say they are prepared to stay here as long as they need to get this passed. Kate Bolduan, CNN, Capitol Hill. (END OF VIDEOTAPE)

NGUYEN: Well, today's ban on short selling of financial stocks follows a similar move in Britain. The practice in general is legit, but many say it is partly to blame for Wall Street's recent problems. So here is how it works. An investor who thinks a particular stock will go down borrows shares which he quickly sells. Now he waits for the price to fall and then buys them back at that lower price, returns the shares to the original owner and then pockets the profits, minus a broker's commission. Easy money unless the stock goes up and in that case the losses could be limitless. CNNmoney.com editor Paul Lamonica joins us later this hour to explain what all of this means to short sellers and to everybody else. So definitely stay tuned for that.

But in the meantime though, as for the stock market, maybe the week on Wall Street will have a happy ending after all thanks to those big moves by the federal government. Susan Lisovicz is at the New York Stock Exchange with more on how all this news is shaking out with investors and so far they like what they see Susan.

SUSAN LISOVICZ: That's right, and hopefully everybody will like what they hear over the course of the next week if it really can get done. But you're hearing expressions and words like game changer, seminal moments, really, hope that we haven't seen in the marketplace for sometime with this broad-based plan. It's a historic week on Wall Street and has a profound reaction worldwide. Bloomberg says this is the best global two-day rally ever. Asia is closed, Europe is closed, and we're talking about 9 percent jumps in major indexes on the back of this news. Where is it coming from mostly? Well, the financial sector, the badly beaten down financial sector and stocks like Morgan Stanley up 25 percent. Merrill Lynch up 28 percent, Bank of America up 19 percent. Yes, some of it helped by this temporary ban on short selling in a lot of financial stocks, but the point is the NASDAQ for instance which is not as exposed to financial stocks is up 2.5 percent. So there is a very positive response and it comes in a week, Betty, remember we saw the two worst point selloffs of the year for the Dow Industrials, and now you're seeing, you know, certainly one of the best gains. Two of the best gains of the year, back-to-back.

NGUYEN: A little bit of a sigh of relief, but I don't think it can make up for all of the stress that we've been dealing with and all that's to come.

LISOVICZ: And there's a lot of questions.

NGUYEN: Exactly, that's what I'm talking about, all of that is to come on top of this. Thank you, Susan.

LISOVICZ: You're welcome.

NGUYEN: Let's take you to the White House where President Bush admits his bailout plan carries huge risks for taxpayers, but says it's a risk that we have to take. CNN's Brianna Keilar joins us now with the latest on that. All right, so lay out this risk for us.

BRIANNA KEILAR, CNN CORRESPONDENT: Well, the risk is that it's going to cost a lot, hundreds of billions of dollars is the estimate of one of the president's top economic advisers, but President Bush saying today that it will cost a whole lot more if this action isn't taken. The fallout from not acting at this point. So what is this plan? Well, the headline of it is what the Bush administration calls a troubled asset relief program. Basically, having the federal government take over these bundled bad loans, these lapsed mortgages so that taking them over from financial institutions and banks so that there can be increased liquidity in the markets. President Bush obviously not wanting to step in, but saying that it's definitely necessary in this case that to not act would cause even bigger problems.

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BUSH: America's economy is facing unprecedented challenges. We are responding with unprecedented action. Secretary Paulson, Chairman Bernanke and Chairman Cox have briefed leaders on Capitol Hill on the urgent need for congress to pass legislation approving the federal government's purchase of illiquid assets such as troubled mortgages from banks and other financial institutions.

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KEILAR: So there you heard the president talking about that troubled asset relief program. President Bush saying that he wants to act, because it's necessary in this case. Again, the fallout would be far greater than acting at this point, he said. So those were the president's first remarks about a comprehensive strategy for dealing with the financial crisis right now, instead of what we've heard in the past days and weeks which was sort of on a case-by-case basis, the actions taken for AIG, Fannie Mae and Freddie Mac. Instead of looking at individual institutions, this is more of an overarching plan. Betty?

NGUYEN: All right, so you know, as we are seeing too, and I think you just mentioned that as well, the White House is using some really strong language, in fact a lot stronger than it has been using.

KEILAR: No, that's right. One of the things we've heard President Bush say over the past few days, we heard him use this term yesterday and on Monday, he referred to adjustments and that the economy was making. We heard White House Press Secretary Dana Perino talking about market corrections. And that is mooted language when you consider a lot of analysts say this is the worst week for Wall Street since the great depression. But today we did hear from Dana Perino, she called this a severe disruption. You heard President Bush as you just heard, say this is an unprecedented challenge. But it's really a fine line for the White House to walk here, because on one hand they face criticism, for instance as they have from democrats on the hill who say their language doesn't really show that they have a perception of how dire the situation is, but on the other hand the White House has to consider that if the president comes out and says the sky is falling, that could really affect the markets. Because what he says is obviously taken very seriously on Wall Street, I should say. Betty?

NGUYEN: Yeah, it's a balancing act, no doubt. Ok, Brianna Keilar joining us live. Thank you Brianna.

You know, it is the economy and nothing but the economy. John McCain, Barack Obama telling voters in some big battleground states how they'd fix the country's financial mess.

All of this Wall Street news might have your head just spinning. Viewers have sent us lots of questions and really good ones like this one. Take a listen. "Why are my tax dollars being used to bail out companies whose bad business practice got themselves into a mess?" Well, Suze Orman tackles that answer right after the break.

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NGUYEN: Here is a question. If you have lost everything including your computer and your phone, have no power, how are on earth are you supposed to get in touch with FEMA for help? Well, we're going to tell you what one Texas congressman did to help.

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NGUYEN: On the campaign trail, it's all about the economy. Barack Obama is supporting the federal bailout plan to deal with the country's deepening financial crisis. The democratic presidential candidate is campaigning today in Florida ahead of a rally in Coral Springs though, he met with a team of high-powered economic advisers and among them three former treasury secretaries and a billionaire investor Warren Buffett.

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SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: We did not arrive at this crisis by some accident in history, and what led us to this point was years and years of a philosophy in Washington and on Wall Street that viewed even common sense regulation and oversight as unwise and unnecessary that shredded consumer protections and loosened the rules of the rope. CEOs and executives got reckless, lobbyists got what they wanted, politicians in both parties looked the other way until it was too late. It is now the American people who have paid the price. The events of this week, I believe, have rendered a final verdict on that failed philosophy. And it will end if I am president of the United States.

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NGUYEN: The financial mess is also John McCain's focus today. The republican candidate and his running mate, Sarah Palin, are campaigning in the Midwest, and just a short time ago at a rally in Blaine, Minnesota, McCain had this to say.

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SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: While Fannie and Freddie were working to keep congress away from their house of cards, Senator Obama was taking their money. He got more in fact than any other member of congress, except for the democratic chairman of the committee that oversees them. And while Fannie Mae was betraying the public trust, somehow, its former CEO had managed to gain my opponent's trust to the point that Senator Obama actually put him in charge of his vice presidential search.

(END OF VIDEO CLIP)

NGUYEN: McCain says that if he is elected, he will set up a new federal agency to deal head-on with any immediate financial crisis. Here is another story for you. A group staging a rally next week in New York against Iran's president has yanked Sarah Palin's invitation saying that it has decided that it doesn't want any political personalities there. Both Palin and Hillary Clinton had been scheduled to appear, but earlier this week Clinton pulled out after it was announced that Palin would also be there. Here is what Palin has to say about being uninvited.

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GOV. SARAH PALIN, (R) VICE PRESIDENTIAL CANDIDATE: You may have heard also that I had planned to speak out on the threat posed by Iran next week in New York. I was scheduled to appear at a rally with Senator Clinton, whose commitment to this I appreciate. This is a critical issue. It should be an issue that unites all Americans. Iran should not be allowed to acquire nuclear weapons, period.

(END OF VIDEO CLIP)

NGUYEN: In a statement, John McCain says that he is disappointed in the decision to uninvite Palin. You know you can get all the latest campaign news at your fingertips. Just go to cnnpolitics.com, you see it right there. We'll also have analysis from the best political team on television, it's all there, cnnpolitics.com.

So earlier we passed along this viewer question about the financial mess. Here it is. "Why are my tax dollars being used to bail out companies whose bad business practices got themselves into this mess?" Well, why is that, Suze Orman?

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SUZE ORMAN, FINANCIAL ADVISER: Watch what's happening here very closely. You want to keep your money safe and sound now. You are putting it into where treasuries, because treasuries are backed by the taxing authority of the United States government. What's a three-bill treasury paying you right now? Nothing. Like a quarter of a percent -- nothing! So we are lending our money to the government in essence to keep it safe and sound just so that nothing happens to it at a zero percent interest rate now so that they can use it to bail out everybody and hopefully make money, it's the only place that has money. You can't get money anywhere else so I have to say it falls on us, but it has always fallen on the taxpayer, and this isn't something new.

(END OF VIDEO CLIP)

NGUYEN: In just a few minutes, Suze answers a viewer question about paying off the mortgage when the lender is flirting with bankruptcy. You definitely want to stay tuned for that.

Only on Wall Street though, can you legally sell what you don't own. We're going to look at the long and short of short selling and why the government is setting new limits.

FEMA wants evacuees to apply for help either online or by phone. Easier said than done when you have lost everything. So one Texas congressman he's changed the whole thing. What he is going to do is something really neat. You're gong to have to stayed tuned for that.

(COMMERCIAL BREAK)

NGUYEN: All right. So, you want to buy some bad debt? You probably will in the very near future even if you have never heard of a mortgage-backed security. As you know if you have been watching CNN, President Bush is proposing a huge and historic government bailout of Wall Street banks and brokerages that haven't yet collapsed.

(BEGIN VIDEO CLIP)

BUSH: Problems that originated in the credit markets and first showed up in the area of subprime mortgages have spread throughout our financial system. This has led to an erosion of confidence that has frozen many financial transactions, including loans to consumers and to businesses seeking to expand and create jobs. As a result, we must act now to protect our nation's economic health from serious risk. There will be ample opportunity to debate the origins of this problem, now is the time to solve it.

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NGUYEN: And joining me now to fill in some of the many blanks is Joel Kaplan, deputy White House chief of staff. Joel, we do appreciate you being with us today. I want to really touch on something that we heard the president say in that little piece of soundbite there that we'll have ample opportunity to debate the origins of this problem. A lot of critics are saying, you know what, we should have debated the origins of it a lot earlier than now, and why are we doing it at this point when this thing should have been tackled with, you know, weeks or maybe even months ago? Why was there such a delay?

JOEL KAPLAN, WHITE HOUSE DEP. CHIEF OF STAFF: Well, Betty, first of all, we don't think that right now when the goal is to improve investor confidence in our financial markets and stabilize those markets, now is not the time to talk about blame, although there are plenty of instances where this administration has asked for assistance from the congress as long ago as five years ago the president began talking about the need to provide a strong regulator for Fannie and Freddie and unfortunately congress didn't act on that request until several weeks ago. But there have been other dramatic actions in the last couple of weeks as these problems have manifested themselves, but Secretary Paulson and Chairman Bernanke advised the president that now was the time for a bold and dramatic action to address the underlying causes of the instability in the financial markets. That's these illiquid assets, most notably mortgage-backed securities on the books of financial institutions. We need that action quickly. That's what the president talked about this morning and that's what we'll be working with congress over the next week or so to provide.

NGUYEN: We need it quickly and I think a lot of taxpayers we actually had a question not too long on this very show, that said, you know why are we the taxpayers having to bail out the companies for having bad business practices, obviously something has to be done, but how do you answer that question?

KAPLAN: Well, look, the key is as the president discussed in his remarks this morning, we need to have confidence in our financial markets, and these actions are imperative to restore that confidence. Your viewers need to recognize that while this action is directed at the assets on the books of these financial institutions, the beneficiaries are every business, every worker, every family in this country that relies on credit for student loans, for home loans, for car loans, for credit card debt and for investment in their places of work that create jobs. So this is important not just for financial institutions, but for main street, and the people in businesses that rely on those institutions for the health of our economy.

NGUYEN: Joel, very quickly, is the situation going to get worse before it gets better? Because obviously the government has to borrow money to make all of this happen, this comprehensive plan, which could lead to higher interest rates. Is it going to get worse before it gets better?

KAPLAN: Well look, so far the response has been very good to the proposal both in the markets and on Capitol Hill. We need congress to act to ensure that the authorities that the treasury is asking for get put in place, and we can begin addressing this problem. Obviously, these problems were not created overnight and it will take some time to work out, but I think we have made very good progress so far with the series of steps, the treasury and the fed and the SEC have taken and we'll make even greater progress when congress acts very quickly and urgently to pass this needed legislation, and once and for all get at the root causes of the instability in our financial markets.

NGUYEN: We'll be watching anxiously to see what kind of plan they come up with over the weekend. Joel Kaplan, we do appreciate your time with us today. Thank you.

KAPLAN: Thank you for having me.

NGUYEN: Well, investment banks bought out bankrupt or bailed out by the government, how can you understand exactly what went down this week? And get the information that you need to feel secure about your money and your investments? We'll get the answers on a special edition of "Your Money," that's Saturday, 6:00 eastern only on CNN.

And it's not just the Dow that's been down this week, your spirits may have taken a dive as well. Our Dr. Sanjay Gupta has a prescription for market stress.

(COMMERCIAL BREAK) NGUYEN: A live look at Washington, D.C., a lot of discussions being made there today as we deal with this financial crisis, but on another news story that we've been following very closely. It's been six days since hurricane Ike roared ashore in Texas, about 1.5 million people still don't have power. Of 56-ike-related deaths in the U.S., 22 are in Texas, and Galveston isn't ready for its people to return just yet. The small town of Gilchrist was virtually wiped off of the map, but some people who lost their homes are frustrated with FEMA. CNN's Susan Roesgen has their story.

(BEGIN VIDEOTAPE)

SUSAN ROESGEN, CNN CORRESPONDENT (voice-over): Walk into Erica Chambers' Houston apartment and you will notice two things, no lights and an awful smell from wet and moldy walls. Erica and her two daughters can't stay here, so this is where they wound up. Erica is one of thousands here with no way to apply for FEMA-paid housing.

UNIDENTIFIED MALE: Have you already done your initial application?

ROESGEN: People who have lost everything don't have the money to pay for a motel room up front, and to apply for FEMA's help, they have to have access to a computer to apply online or a working phone to call FEMA. These people didn't have either.

REP. NICK LAMPSON, (D) TEXAS: It needs to be lean and mean and it needs to be able to go out and get its work done and get its work done quickly.

ROESGEN: Texas Congressman Nick Lampson is so fed up with FEMA, he got permission from House Speaker Nancy Pelosi to bring 200 computers and 200 phones owned by the House of Representatives to Houston. So far, more than 5,000 people have used them to apply for FEMA help.

LAMPSON: The apartment is uninhabitable and she cannot get a claim number. We can do better, and then we must.

ROESGEN: In response, FEMA tells CNN that the agency has had 300 employees helping people in shelters sign up for assistance. And while the agency appreciates the congressman's help, FEMA's first priority was the life-saving supply of food, water and medical aid.

Erica Chambers agrees that those things were essential right away. But without some place to live, she is afraid that many people's misery will last much longer.

ERICA CHAMBERS, HURRICANE VICTIM: I see if it was Katrina when we didn't have a good understanding, we didn't know how to handle these disasters like this, these mass problems. But Katrina should have been a lesson learned.

ROESGEN: Now she feels that at least the wheels are in motion.

(on camera): Right now, these people are just grateful to have a way to reach the outside world, a way to ask somebody for help.

Susan Roesgen, CNN, Houston.

(END VIDEOTAPE)

NGUYEN: Well, Ike isn't just a Gulf Coast story. Just ask thousands of people in the Midwest who would love to turn their lights back on. In Ohio alone more than 350,000 homes and businesses still don't have electricity. That is down from the 2.5 million Ohio customers who lost power when Ike blew through Sunday. Now to Indiana. They are down to 40,000 customers with no power.

People with electric heat are going to be glad to have their power back on. It is going to be cool weekend that's shaping up in some spots. Jacqui Jeras joins us now with a look at that.

Hey, Jacqui.

(WEATHER REPORT)

NGUYEN: My goodness. All right. Thanks for reminding us, Jacqui.

So, are you losing the money and your mind? I know a lot of folks are. Has stressing over your money sent you into a mental whirlwind? Our Dr. Sanjay Gupta has a prescription for market stress.

And it's a new day for America's historically black colleges and universities. And that means new opportunities and many new challenges.

(COMMERCIAL BREAK)

NGUYEN: It is 36 past the hour. And here are some of the stories that we are working on right here in the CNN NEWSROOM.

The intersection of Wall Street and Washington. The Bush administration is working on a plan to let the taxpayers take over the bad debt and shaky securities that are weighing down the big firms on Wall Street. That plan could cost -- ready -- half a trillion dollars.

And no water, no sewer, no power, no going back to Galveston, Texas, at least for now. The commissioner of health in Texas says the city just does not have the basics to keep its citizens healthy.

And just a week after that deadly train collision outside of Los Angeles, a light rail train crashed into a bus near downtown. At least a dozen people on the train were hurt. They should be OK. The transportation official says the bus was out of service and turned in front of the train, but it is not clear which one had the right of way.

All right. So here is how it works, right? You buy low, you sell high. The formula for riches on Wall Street. But you don't have to do it in that order. Doing it backwards, selling high and buying low, is called selling short. And it's not for the faint of heart. As of today, it's not for anybody who wants to sell short financial stocks.

Government has called for a temporary halt of it. And Paul La Monica can tell us why that matters. He is editor-at-large at CNNMoney.com

All right. What kind of sense does this make? Does it really help the situation here? Or, is it keeping people from trying to recoup some of their losses from doing so?

PAUL LA MONICA, EDITOR-AT-LARGE, CNNMONEY.COM: I think really what the SEC was trying to do was to put an end to the panic selling, because it just fed on itself and it contributed to the collapse of Lehman Brothers and AIG. And it is arguably the reason why Merrill Lynch has decided to merge with Bank of America as opposed to remaining independent.

NGUYEN: OK. But how does short selling contribute to that? I mean, people are going to selloff when they hear the news. There's one thing if the short sellers are spreading rumors and things that are false about companies, it's another for doing short selling, which is completely legit.

LA MONICA: Yes, and that is a very good point.

Personally, I think the SEC's move may be a little misguided here, because what is going on is they are not really addressing the real problem which is that there were some speculators out there that were clearly spreading rumors and trying to drive prices lower. And that obviously is illegal and should be cracked down upon.

The act of just selling a stock short is not only legal, it's also something that can be very beneficial. Remember when we had all of those accounting scandals a few years ago? A lot of short sellers identified the Enrons and the WorldComs of the world before the rest of the market did.

NGUYEN: Yes. So they identified some of those troubled companies which gave investors a little bit of a heads up.

Let me ask you something, because I have read your article today on CNNMoney.com. And you spoke with a guy who said this, and it's very interesting, especially if you are going to put a halt on short selling, he says -- what is the SEC going to do next? Outlaw all selling?

He really doesn't make any sense. I mean, I know he is joking about it. But try to make sense of this. Is this just a band-aid to the problem?

LA MONICA: I think it is. It is clearly -- what the SEC is hoping to do is over the next few weeks, until the ban lifts October 2nd, try and get some sense of what is going on on the market, maybe have people take a closer look at financial stocks and decide for themselves whether or not they are actually worth buying again. Because I think the big problem that differs from short selling in other companies, particularly when you are talking about fraud cases, is that every bank, regardless of whether or not they had good quality assets or bad quality assets, was really getting punished and probably targeted unfairly by the short sellers. And I think the SEC realized that certainly a bank like Lehman Brothers had many, many problems. But there are lots of banks out there that don't have that extent of core credit problems, and they don't deserve to be punished to the extent that they have.

NGUYEN: I asked this question a little bit earlier -- where is the government going to get this money? And if the government has to go and borrow to get this money to bail out this financial crisis, does that mean that this is going to hurt more to begin with before things start to settle down. Meaning that interest rates will go up. Once they borrow, they pay a high interest rate, that gets passed on to us, folks who are trying to get loans from the government.

So is this going to hurt more in the beginning before we see things start to settle?

LA MONICA: It is really hard to say at this point. I think that is a very, very legitimate concern right now.

The biggest wild card, I think, here is just how much of these -- quote, unquote -- "toxic assets" get liquidated and cleared out of the system? And then how many companies that are taken over by the government get sold piecemeal, possibly at better prices now than they would have if they all were forced to go into bankruptcy?

The key with the AIG loan, for example, is it's $85 billion over two years. That gives the government a little bit of time to have an orderly sale. And that would not have happened if AIG filed for Chapter 11 the way Lehman Brothers did earlier this week.

NGUYEN: Yes, and why knows, maybe the government can actually make some money off of some of this? We'll see how that happens in the end. But it's going to take a little time for that.

Paul La Monica, editor-at-large for CNNMoney.com.

Thanks for your time today.

LA MONICA: Thank you.

NGUYEN: Economic stress and global depression. Millions of us are feeling it. Our chief medical correspondent, Dr. Sanjay Gupta, looks at how financial turmoil can take a dangerous toll on your health.

(BEGIN VIDEOTAPE)

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, it's probably no surprise that there are psychological things that can lead to physical problems. We've known this intuitively for some time. This idea that your mind and your stress can cause physical ailments is something that is really coming to light. The American Psychological Association decided to take a closer look at it, trying to figure out what some of the biggest anxiety provokers were.

No surprise, I guess, to a lot of people, the economy, concerns about the economy, overall, the No. 1 cause of anxiety right now. 74 percent of people say work or money is causing a great deal of stress. Compare that to 2006. I mean, the economy has always been a source of stress -- 59 percent, though, back then. So the numbers have gone up. And this particular survey was done in June. So things have gotten worse even since then.

Now, what does stress do to the body? It can do all sorts of things, starting from head to toe. It can cause you to clinch your jaw a lot, which you may not recognize, but can cause headaches. If you go down to the heart, it can increase your likelihood of developing heart disease, blood pressure regulation problems. And the digestive system -- you can get stress-related symptoms, including heartburn, stomach problems, a loss of appetite. And in the body, overall, lack of sleep can depress your immune function. This is something that a lot of people suffer from.

Now, there are some red flags, if you will, to look for in yourself or a loved one -- difficulty concentrating, irritability, sleep problems, suicidal problems -- ideations, I should say -- and the key thing here is that people are going to have ups and down overtime, but if some of these symptoms last longer than two weeks, then it really is going to be something you should have looked into.

Overall, what to do about it? Obviously everyone is going to be different and I don't want to give advice on individual's specific situations. But I think that overall if you can make a plan or a budget in some way, have a family meeting about it, make sure the family is incorporated into those discussions. And be realistic, overall, about what you can control. I think that's going to be important.

I'll add one more as a doctor. Try not to fall into a spiral of bad behavior or addictive behavior. A lot of people start to smoke, they start to drink, they start to actually, overall -- some addictive behavior. So try and avoid that.

Back to you for now.

(END VIDEOTAPE)

NGUYEN: All right. Thank you Dr. Gupta.

Some middle school students in Indiana -- they are caught up in a health scare in fact. At least 16 kids are being tested for blood borne diseases after three classmates pricked them with lancettes. Those are the needles diabetics use to test their blood. The lancettes that the suspect brought to school had not been used, but health officials want to make sure nobody was sickened by cross contamination. The three students have been charged with battery and face expulsion.

Well, sometimes hard work breeds success and new challenges. That is the case for some of the nation's historically black colleges and universities -- competing maybe as never before for freshmen and funding.

CNN's T.J. Holmes reports.

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T.J. HOLMES, CNN CORRESPONDENT: Historically black colleges and universities, also known as HBCUs, make up less than 5 percent of all colleges and universities in the entire United States. However, they account for one-third of all black college graduates in this country.

TERRENCE DIXON, ASSOCIATE DEAN, MOREHOUSE COLLEGE: I think that HBCUs are a lot stronger than they have ever been. HBCUs are as relevant or more relevant than they have probably ever been in the history of their existence. I think that what is happening with HBCUs is that they are -- they are now finding themselves in the mainstream of competition with other institutions.

HOLMES: Now that black colleges and universities, like Morehouse, Spelman and Clark Atlanta, find themselves thrust into the mainstream, new challenges have risen for their administrators -- recruiting and retaining students, securing grants and alumni donations and of course there is also the challenge of getting government support.

CARLTON BROWN, PRESIDENT, CLARK ATLANTA UNIVERSITY: I am not convinced, necessarily, that all of the agencies of the federal government, including some parts of Congress, actually understand the reality of these institutions. Also, certain that they are not able to see where the quality of the product that comes from these institutions is necessary for America.

HOLMES: HBCUs were originally established at a time of segregation and were virtually the only option for a higher education for blacks. But today, black students have other options.

ARLENE CASH, V.P. OF ENROLLMENT, SPELMAN COLLEGE: So you are looking at -- will you have a opportunity to be in a diverse community? Are the facilities up to snuff? Do they have the same kind of facilities there? Will I have had an opportunity to have a global experience in the HBCU?

People are looking at schools like Spelman, and other HBCUs possibly, as still being the 1920s, 1940s kind of institutions or 50s institutions.

HOLMES: Though times have changed, the mission statements of many HBCUs essentially remains the same, to provide a quality education. But the decision to attend them goes well beyond what is taught in the classroom.

CANDACE SMITH, SPELMAN STUDENT: Yes, I would definitely say that the experience is totally different. I had full scholarships to many majority-white institutions back home in Louisiana. But I felt like Spelman offered something different that I would not get at any other school. CHADRICK MANCE, MOREHOUSE STUDENT: I was looking for a place that was really in touch with who I was as a person. So -- growing up in a small town that was 85 percent Caucasian, you know, approximately 9 percent African-American, and the other kind of miscellaneously populated -- I kind of needed a deeper sense of self.

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NGUYEN: That was CNN's T.J. Holmes reporting.

In other news, a cement plant takes recycling to a whole other level. You've got to hear this story. They are machines run partly by diaper power.

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NGUYEN: There is a growing food safety scandal in China and the country state-run media says that testing on milk and yogurt from three of China's leading dairies show traces of the dangerous chemical melamine. That is the same substance that has recently turned up in baby formula there, killing at least four infants and sickening thousands more. Supermarkets are pulling the products off of the shelves. At least 18 people have been arrested so far, including two milk suppliers who are reportedly accused of watering down their milk, then adding the chemical to fool inspectors. We will stay on top of that story.

And this one, disposable diapers go green. Yes -- they are the bane of most environmentalists, but diapers are actually one of the waste materials that help run this Utah cement plant. Don't worry, we are not talking poopy power here. These are leftovers from a Huggies' factory so they haven't been used, I don't believe. The cement plant also burns cardboard and old tires to reduce its dependence on coal.

That's one way to do it.

The military informed them their soldier son was killed in Iraq, but the media had to tell them how.

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NGUYEN: Heart broken and angry. The father of a U.S. soldier killed in Iraq says he has heard shockingly little from the military. Darras Dawson (ph) was one of two troops fatally shot Sunday by a fellow soldier. Dawson's dad, a veteran, says the military told him nothing beyond the fact that his son was dead. Everything else he knows came from TV and newspaper reports.

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DARRYL MATHIS, SLAIN SOLDIER'S FATHER: We know that he was in a dangerous situation when he went over there. We know that. But to not know what happened, that is the thing, that is the most puzzling, that's the most hurtful thing at this point. And to get bits and pieces from the media -- it is just not right.

(END VIDEO CLIP)

NGUYEN: The military now says that the accused shooter is in custody and an investigation is under way.

So if you are looking to save money on vacation next year, here is a Mickey Mouse option for you. There is a way that you can get into Disney for free. Yes, absolutely free. But only on a certain day, a day you know well.

And Suze Orman will answer this viewer question. Here goes.

"We have our mortgage with Washington Mutual. There is talk of bankruptcy. Will there be a time that they be willing to accept a payoff lower than what we owe?" "We have a $77,000 loan -- is what they owe right now -- but they have, "excellent credit."

So, Suze is going to answer that question coming up.

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NGUYEN: All right. So just before the break, we showed you this viewer question, here it goes.

"We have our mortgage with Washington Mutual. There is talk of bankruptcy. Will there be a time that they will be willing to accept a payoff lower than what we owe? We have excellent credit and owe $77,000."

Well, here is what Suze Orman has to say about that.

(BEGIN VIDEO CLIP)

SUZE ORMAN, FINANCIAL ADVISER: When you have excellent credit, they know you don't want to ruin your credit and they need your money, they need your monthly payments. So, at this point, they are not going to be willing to take less than that. They only are usually to take less when you have lousy credit and they'd rather get $50,000 than nothing. But when you have great credit, they want all of the money.

(END VIDEO CLIP)

NGUYEN: Too bad. OK. And don't forget tomorrow night at 6:00 Eastern, a special "Your Money: Emergency Edition." Find out exactly what went down this week and get all of the information that you need to feel more secure. That is tomorrow night at 6:00 p.m. Eastern only on CNN.

And while we're talking about your money, here is a way to save a little bit. Disney will let you in its parks for free -- absolutely free -- on your birthday. And that birthday treat begins in 2009. But if you plan on bringing a friend, you're going to have to pay a little bit extra. Those ticket prices have gone up. So, go on your birthday and maybe you can maybe split the cost.

NEWSROOM with Rick Sanchez coming right up. Hi, Rick.