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FDA Continues Investigation of Tainted Milk in China; Flu Shot Season; Investigation Looks at Financial Icons Involved in Financial Crisis
Aired September 24, 2008 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HEIDI COLLINS, CNN ANCHOR: I'm Heidi Collins. You're in the CNN NEWSROOM.
Your money -- issue #1. New developments, new concerns this morning. The Fed's launch new investigations into the financial icons at the center of the crisis. And more of your money heads overseas. So what are we getting for it? We'll break it down for you with our money team. I want to begin with Christine Romans this morning in New York.
Hi there, Christine?
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Hi there, Heidi.
A slim five-point gain for the Dow Jones Industrial Averages.
COLLINS: Yes.
ROMANS: But you know, we'll take that I think after what we've seen lately in these markets. We're watching today Warren Buffett, the oracle of Omaha, the legendary investor who put a cash infusion of some $5 billion into Goldman Sachs. Remember just a week or two ago we were all watching Goldman Sachs concerned about what was happening with this company, so many people were selling the stock and the stock was tumbling. We were worried about the future of investment banks. Well he has put $5 billion into it. And that's is seen as a vote of confidence in the beleaguered financial services sector indeed.
Remember, this is a man who didn't invest in tech stocks during the bubble because he very publicly said listen, I don't understand them. If I don't understand something, I won't buy it. Him buying Goldman Sachs, investing in Goldman Sachs $5 billion is seen by many people as a vote of confidence that someone was buying a big piece of what has been a very beleaguered part of the market -- Heidi.
COLLINS: Yes. And what about the FBI launching an investigation? I think it was you who said earlier that we'd probably be more surprised if there wasn't some sort of investigation, right?
ROMANS: That's right. We knew there was a subprime investigation that's been going on for months now. Because this is a very big crisis. And the government is looking to see just what kind of laws may have been broken, what was going on there to cause this. And now we're hearing that this investigation also includes some of the companies that have been bailed out by the federal government, Fannie Mae, Freddie Mac, Lehman Brothers, AIG.
We don't know an awful lot of details. I don't tend to comment on these sort of things. But we do know that there's a big investigation under way. And as I've said, the surprise would be if there weren't. We're talking about taxpayer money and government intervention into these companies. You know, I would be surprised if the government weren't looking very, very closely at the run-up to this crisis.
COLLINS: Well, all right. We will be staying on top of all of it, hopefully, anyway and certainly alongside you.
Christine Romans, sure do appreciate that.
Also, I want to mention quickly, we just noticed that Fed Chairman Bernanke has walked into the room. And as we've just mentioned earlier he'll be talking before the Senate Joint Economic Committee. There you see alive picture right there of him. We will bring you portions of that. At least we'll be monitoring it and bring it to you should we find it worthy of that.
Meanwhile, there's the Dow Jones industrial averages up about 16 points right now. Keep our eye on that as well.
The bailout plan back on Capitol Hill, along with the money men who designed it. For the second day, as we said, they are about to face a grilling from lawmakers in both parties. Chuck Schumer there.
CNN's Brianna Keilar sets the stage for us.
(BEGIN VIDEOTAPE)
BRIANNA KEILAR, CNN CORRESPONDENT: Dire warnings from the two top money men in America if Congress doesn't come to Wall Street's rescue.
BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: I believe if the credit markets are not functioning, that jobs will be lost, the unemployment rate will rise. More houses will be foreclosed upon; GDP will contract that the economy will not just be able to recover in a normal healthy way no matter what other policies are taken.
KEILAR: Fed chairman Ben Bernanke and Treasury Secretary Henry Paulson were on Capitol Hill selling their $700 billion bailout. But senators aren't ready to buy it.
SEN. JIM BUNNING (R), KENTUCKY: This massive bailout is not a solution. It is a financial socialism and it's un-American.
KEILAR: Two GOP members including the banking committee's top Republican condemned the plan.
SEN. RICHARD SHELBY (R), BANKING SENATE CMTE. RANKING MEMBER: How do you rationalize or justify bailing out banks and so forth that caused - are the root cause of a lot of this problem? HENRY PAULSON, TREASURY SECRETARY: It may make you angry. It makes me angry. When you ask about the taxpayers being on the hook. Guess what? They're already on the hook. They got put on the hook by the system we have. If this system is not stabilized, they're going to bear the costs.
KEILAR: The Democratic chairman of the committee worried about rushing a bill to the president.
SEN. CHRISTOPHER DODD (D), BANKING COMMITTEE CHAIRMAN: The Secretary and the administration need to know what they have sent to us is not acceptable. This is not going to work. And they're going to have to come back and work with us.
(END VIDEOTAPE)
COLLINS: CNN's Brianna Keilar joining me now to talk a little bit about this as we've been mentioning we're in day two of this now. There is a time line that we keep hearing from the Treasury Secretary any way that we have got to do this now and the clock is ticking.
What is that time line?
KEILAR: Well, as you understand, I'm sure you heard the aim was by the end of the week. There's some discussion about maybe that isn't possible. But I just spoke with a Democratic leadership aide who told me that Congress will not be leaving for its planned recess until they can push some legislation through on this.
So maybe not by Friday, Heidi. Maybe perhaps by Saturday, maybe into next week. But we understand they're not going to be leaving without taking care of passing some legislation. Now, the problem, however, is - as Democrats see it, is that there's some lacking Republican support. They can't guarantee a time line on exactly when they're going to pass something.
They're urging the Bush administration to get more Republicans on board. Because as the Democrats see it, they say this is a problem created by the Bush administration. This is what Democrats say. And Democrats don't want to be seen as pushing through a proposal for a solution without being joined by Republicans in that.
COLLINS: All right, CNN's Brianna Keilar for us on Capitol Hill.
Thank you, Brianna.
The bailout plan raising concerns on both sides of the political aisle, as you just heard. We're going to be talking with two senators, one a Republican, the other a Democrat. They're coming up right here in the NEWSROOM.
President Bush heading home early to work on the bailout plan. The president is in New York this morning and had planned to travel on to Florida. But instead, he will skip a fund-raiser there and return to Washington. Yesterday in an address before the United Nations General Assembly, you saw it here in the NEWSROOM. The president predicted quick passage on the bailout plan. So many lawmakers have voiced concern, that passage does not appear imminent.
North Korea now flexing its muscle again. There are new signs that it's making good on threats to restart the nuclear program. The U.N. nuclear watch dog group says at North Korea's request it's removed surveillance equipment and seals from a key nuclear facility. The move clears the way for the country to reactivate the plant. North Korea has told the U.N. agency, it will reintroduce nuclear material in a week or so. North Korea insists its program is peaceful.
A national day of mourning in Finland. It follows a deadly shooting at a small town college. Nine students and a teacher were killed by a masked gunman who police say turned the gun on himself. Today we found a community filled with grief, disbelief and fear.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Right now I feel unsafe. I don't want to go to school tonight.
UNIDENTIFIED FEMALE: There's guns, shooting people. What? How this could happen in Finland?
(END VIDEO CLIP)
COLLINS: The day before the shooting Finnish police say they questioned the young man identified as the shooter about some of the videos he posted on YouTube. But they said they had to let him go because he hadn't directly threatened anyone.
Cars are backed up for miles on the causeway leading to Galveston. This is the first time now many residents are being allowed back, 11 days after Hurricane Ike slammed into their island city. Even though there's a lot of rebuilding to do, and services aren't fully restored, city leaders say the reopening of the island seems to be going smoothly. That's a good thing to hear.
Rob Marciano standing by now in the weather center to talk more about all of the country and what we're looking out for.
You got more activity there on the East Coast?
ROB MARCIANO, CNN, METEOROLOGIST: Yes. They were just clamoring, folks were just clamoring to get back on the island.
COLLINS: Oh, I know. Yes.
MARCIANO: To check at least the three sides of the island. The main side where that storm wall was, protected that part pretty well. But the other side just got a lot of water. So it's going to be a nasty cleanup for sure.
All right. Folks in Carolina no stranger to hurricanes. This is not a tropical system yet. But it's looking more and more like one. It's been a big red L that's been festering off the coastline for a good couple of days now. It's creating some heavy rains across the Carolina coastline. Now it looks like it's tapping into the Gulf stream, which has waters that are over 80 miles and hour or 80 degrees, and that will tend to feed the tropical system. So it looks like it's taking on some of those characteristics.
The National Hurricane Center has just kind of put a red flag on this, saying it could develop into something and already rain bands are beginning to show up on the scope just offshore of the Carolina coastline. So you got that red L, you got this big blue Hs, just feeding some gorgeous weather across the northeast. So that's what's instigating these winds here. So this will hit the Carolinas with storms regardless of what it's classified as. And it shouldn't be much more than a tropical storm, if it is. And probably along the northwest, northwest by the way pretty potent cold front coming your way, cool you down and bring you some rain.
Meanwhile, kind of chilly in New York, 71, 67 in Boston. 82 kind of warm and ahead of this cold front across parts of the Midwest and 78 degrees expected in Denver, Colorado. That's the latest from here. Also got a little something that's over the island of Hispaniola. OK. A lot of heavy rain in Puerto Rico. That may develop into something as well. We got a few days to play with on that.
COLLINS: Yes. Fingers crossed, it doesn't.
MARCIANO: Yes.
COLLINS: All right, Rob, thank you.
MARCIANO: You got it.
COLLINS: Hey, quickly I want to get this out to everybody. We are just now learning -- we have confirmed here at CNN that in fact President Bush is now considering making a primetime speech. It could happen as early as tonight, to put pressure on Congress to approve the $700 billion plan to bail out Wall Street. This is according to a senior administration official, told us here at the network that that is something that the president is considering. Again, possibly speaking tonight during primetime about this $700 billion bailout. We will keep you posted on that.
Saving the financial sector, but endangering the taxpayer? The bank bailout plan generating lots of buzz. We pick it up on Capitol Hill.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Why should it make you mad? It's just part of the business cycle that we're going through and part of the excesses that we've had as a nation as far as the way we spend our honey and the way we don't save. I mean, it's an issue we're just going to have to deal with, take it one step at a time and go from there.
UNIDENTIFIED MALE: I don't see how that's going to help anything, just raising everything up. People can't spend money if they're not making any money.
(END VIDEO CLIP)
COLLINS: Your money, your voice. I went out with a camera crew yesterday just to hear a little about what you had to say about the bailout plan. Your comments this morning, we will have them through out the NEWSROOM.
So the $700 billion bailout plan, we the taxpayers foot the bill. But who wins, who loses and who is watching out for us.
Louise Schiavone takes a look.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT: There's a growing sense on both sides of the aisle that as long as taxpayers are coughing up to close to a trillion dollars, they should be stakeholders in the recovery that follows.
SEN. CHRISTOPHER DODD (D), BANKING COMMITTEE CHRMN: If you're going to be on the downside of this, you ought to be able to say to people that we're going to be a beneficiary if this works as well.
SEN. RICHARD SHELBY (R), BANKING CMTE. RANKING MEMBER: I think we have to look at alternatives. I think the Secretary now realizes what he sent us is not just going to be rubber stamped.
SCHIAVONE: As crafted, the Treasury proposal gives authority to the Secretary and whomever he decides to use taxpayers' billions to buy soured asset-backed securities from financial institutions. For starters, who gets bailed out?
DAVID JOHN, HERITAGE FOUNDATION: We already see worries that it would be worried to bail out Goldman Sachs, Secretary Paulson's former employer, or something along that line. And one of the things that's going to be crucial here is going to be an ongoing level of oversight to make sure we don't have sweetheart deals.
SCHIAVONE: Once these securities are in the hands of the government, the treasury may or may not be able to sell them at a profit, but for $700 billion the question is asked, shouldn't the taxpayers get more for their money?
ALAN BLINDER, PRINCETON UNIVERSITY: My fear is that putting Wall Street first - I think we should be putting Main Street first. Congress should try as hard as we can to make sure that the taxpayer gets back the upside.
SCHIAVONE: One idea suggests that taxpayers get an ownership piece of the Wall Street firms they're rescuing, the government selling off the stock at a profit when Wall Street recovers.
(on-camera): No one questions these are extraordinary times and something must be done. The challenge is how to make a fiscally painful investment work for the people who are paying for it. Louise Schiavone for CNN, Washington.
(END VIDEOTAPE)
COLLINS: More and more people are tapping into their nest egg. And others may have stopped contributing altogether. Personal finance editor Gerri Willis is here on why you need to keep investing, even now.
It's something that we've been talking about for several days, Gerri. Why is it a bad idea to stop contributing to your 401(k) in a situation like this?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, Heidi, you can't really time the market. I know folks out there, they think the market is going down. It will keep going down but you simply don't know. And if you look back at the history of when people pulled out their money, it's always at exactly the wrong time.
Take a look at these numbers from Edward Jones. I want to show you a chart here, a graphic that will help describe what I'm talking about. This dip you see on the left, this is a measure of people taking their money in and taking their money out of U.S. stock funds, U.S. stock equity funds. So you see the folks are taking their money out, way back in '88-'89, they pulled their money out. Guess what? That's just ahead of the biggest bull market in history. They do it again, you can see right on this chart in '02-'03, the market doubles right after that.
Of course, you can see right now we're on track for some of the worst consumer pulling out of the market that we've seen in history. It's happening again. And you have to ask yourself, will history repeat itself? You know, I can't tell you where the market is going next, but what I can say is that historically folks pull their money out at exactly the wrong time.
CHETRY: Hmmm, well you also have to know your risk, too, have a good idea of what you can handle. I mean forget about emotionally, too, right?
WILLIS: It's totally true. You know, I know people out there are really worried. And if you're close to retirement, you're probably doing something totally different from folks who have 10, 20 years to retirement. But I have to tell you, you can't predict the turns in the stock market.
Look, if you had invested $10,000 a decade ago and you kept your money in place, you'd have about $13,000 right now. But if you had pulled your money in and out of the market, you got in, you got out, guess what? You missed the best 20 days in the market, you would have lost 43 percent of your money, 43 percent. That's the penalty for not staying invested. So I just want to remind people that at the end of the day, you really have to think these things through. Pulling your money out may not be the safe bet.
COLLINS: So then how do investors really weather the storm the best way, the smartest way possible?
WILLIS: Well, OK, so you want to keep your money and invest it. Obviously you want to stay the course, be sure that you're diversified so that any category that's doing well you're participating in that upside. And you want to make sure that you're not paying too much in fees. Real killer for people's returns in their 401(k), high fees and the fact that they are not diversified well. These are the things to really stay focused on right now, make sure that you have your money in a lot of pots and it's not costing you too much to do it -- Heidi.
COLLINS: All right. CNN's personal finance editor, Gerri Willis. Gerri, nice to see you. Thank you.
WILLIS: My pleasure.
COLLINS: You can follow your (INAUDIBLE) at CNNMoney.com. We've got all the market's money news and numbers, expert analysis and much more. So make sure you check that out.
Meanwhile we're checking this out for you. It's day two on Capitol Hill. We're also watching the big board, as you see there. Now to the negative about 40 points or so. But we are watching for Fed Chairman before the Senate Joint Economic Committee. We are also later on today going to be hearing from Treasury Secretary Paulson and Ben Bernanke again before the House Financial Services Committee, more talk about the $700 billion bailout plan.
(COMMERCIAL BREAK)
COLLINS: Concerns echoing loudly on Capitol Hill. In the background, urgent calls from the White House to act quickly on the $700 billion bank bailout plan. We have two lawmakers today, one Democrat, the other Republican, to share their views. I want to begin with Senator Robert Menendez. He has some reservations about the plan that he wants address.
Senator, good morning to you. Appreciate you being here. If you would, start by listening in with me to Treasury Secretary Henry Paulson for what he said on this.
(BEGIN VIDEO CLIP)
HENRY PAULSON, TREASURY SECRETARY: I'm convinced that this bold approach will cost American families far less than the alternative, a continuing series of financial institution failures and frozen credit marks unable to fund everyday needs and economic expansion.
(END VIDEO CLIP)
COLLINS: Senator, are you going to vote against this bill?
SEN. ROBERT MENENDEZ (D), NEW JERSEY: I'm sorry.
COLLINS: Are you going to vote against this bill?
MENENDEZ: Well, I think the reality is that we realize that we need a very strong response. But we also need a response that is smart, calibrated and has the appropriate oversight. What was originally sent to us by the Treasury Department was $700 billion, give me all the authority, no oversight, no guidelines, no conditions and no judicial review, and trust me that we'll do the right thing. That simply is not acceptable. So what we've tried to say is that we need to have an oversight board that can make these decisions along with the Secretary. We need to make sure there are taxpayer protections which I don't think the original proposal had.
COLLINS: How long do you think all of that - pardon me.
MENENDEZ: We need to make sure that Main Street is also - that Main Street is protected as much as Wall Street in protected.
COLLINS: How long do you think all of that will take, to get into play?
MENENDEZ: Well you know it depends upon how willing the administration is to be flexible in incorporating ideas into their proposal. If they have the flexibility that is necessary, if they understand that not all good ideas reside with the Treasury Department which in some part has been lax and has created touchdown environment where we are today, then I think it can move relatively quickly, within this week or even at the very latest part, the beginning of next week.
So we just want to see, you know, part of our challenge here is no one really knows the values of these assets. If we're going to pay for these assets in a way that we are giving a premium, then the taxpayer should enjoy the benefits in the future and they should get some equity in these companies as one example. At the same time, that we should do something more about foreclosures.
COLLINS: That said take a look at its poll, if you would with me, from CNN and the Opinion Research Corporation. The question was this are you worried that the economy will worsen without the bailouts. 79 percent of people very or somewhat worried. 21 percent, not worried.
Is it possible because we heard many analysts say that right now the important thing and we certainly heard the Treasury Secretary say it that you pass the bill first, worry about the details later or is that nut possible?
MENENDEZ: Well I think that clearly there needs to be a response. And the lack of a response I think could only lead us, moving down the road in a direction in which we will see increasingly frozen credit that has consequences to businesses up and down the scale including the mom and pop store as trying to expand their business. Consumers as well as a tightening in the marketplace and that has economic consequences to the average person.
The question is not just doing it quickly but doing it right. And I think having taxpayer protections, trying to deal with the foreclosure rates and giving equity to the taxpayers, if they're going to be on the risk - when I looked at Secretary Paulson and Chairman Bernanke yesterday, I said look me in the eye and tell me this won't cost the taxpayers a dime at the banking hearing - they said to me well we can't say that.
COLLINS: Yes. I don't think they've ever said that. All right. We certainly do appreciate your time here today. Senator Robert Menendez. Thanks so much. And I also want to make sure that we make it clear to everyone, we will be talking to Senator (INAUDIBLE), the Republican side of things coming up a little bit later on today.
For now we want to remind you that we are watching everything happening today, two different events will be taking place. Fed Chairman Ben Bernanke is before the Senate Economic Committee. That happening now. And a little bit later on today, around noon or so we are expecting Treasury Secretary Paulson and Bernanke to go before the House financial Services Committee. We'll have all of it for you.
Meanwhile, just moments ago we did learn that President Bush is considering giving a speech tonight during primetime, trying to put pressure on Congress to approve this $700 billion plan. Our Ed Henry is working on that story and he's joining us from New York with a little bit more.
So is there a confirmation that he will, in fact, now go on the air tonight, Ed?
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: No, Heidi. We're hearing that the President is seriously considering delivering that primetime address as early as this evening. As you know, the president for the last couple days has been here in New York at the U.N. General Assembly meetings. He was supposed to go from here to Florida for a fund-raiser, but that has already been cut short.
The President canceling that visit to Florida. Instead he's now headed back to the White House. That obviously opens up his schedule for tonight, leaves open that possibility. The senior administration official telling CNN this morning that they're now seriously considering the idea of a primetime address as early as tonight, to try to put more pressure on Congress to pass this $700 billion bailout package.
It's not just about potential Democratic opposition. You heard Senator Menendez there just a moment ago -
COLLINS: Right.
HENRY: Raising concerns. But more importantly for this White House is the fact that there have been some very loud Republican voices in his own party saying they're deeply skeptical. Some of them calling it socialism for the government to be stepping in. So I'm told there will be a couple of factors that will help this as to whether there is a primetime address.
Number one, they want to see what Secretary Henry Paulson says not just on the Hill but what he's hearing this morning. He was meeting behind closed doors with the Republican lawmakers. Will it help or hurt to get the president more actively involved here. Secondly, they want to see what happens to the markets. We've all been watching that very closely, the White House fully aware that anything they say or don't say is going to be read very closely by the markets.
So they want to be careful about stepping into the middle of all this. And I think obviously the other thing, the backdrop that we have to pay attention to is the politics of all this. A lot of Democrats saying that unless Senator John McCain signs on to this bailout package, then they're not going to sort of walk the plank and support something that McCain and other Republicans will then bash and say is a give-away to corporate fat cats on Wall Street.
Secondly, if the president does give a primetime address, what will John McCain think about that? Obviously he's been trying to separate himself from the president, specifically on the economy. So that will sort of complicate things for Senator McCain if the president takes a bigger role in all this. Heidi.
COLLINS: Difficult to do. He is still in office. No matter what anyone says about that.
HENRY: Still has that bully pulpit. Absolutely.
COLLINS: Absolutely. And no doubt, too, Wall Street, without question, has moved to Washington for now.
CNN's Ed Henry -- Ed, thank you for that.
And as a reminder, we did just speak with Democratic senator Robert Menendez about this bailout plan. Now we want to go to someone who fully supports the plan. Senator Judd Greg is a Republican from New Hampshire.
Senator, welcome to you as always.
I want to begin -- to start with this -- in an editorial that we found today in the "New Hampshire Union Leader." That is your hometown newspaper. It says this -- we can see it on our screen now -- "This isn't a plan. It's a Hail Mary a fraction of a second before a sack."
You support the bailout. Tell us why.
SEN. JUDD GREGG (R), NEW HAMPSHIRE: Well because the consequences of not doing anything could be catastrophic for Main Street America. People will lose their jobs. It will be an economic meltdown. Banks will fail. People will potentially lose their savings. We're looking at potentially a massive disruption of our financial markets, which means that leads to a massive disruption of the economy. And last week we came very close to that event. We've got to face up to reality.
This is a time to put aside the hyperbole and the theater and the politics and get down to a common sense, matured approach to how we address this. What we're proposing here -- what's being proposed here is not in the sense of $700 billion of tax money being thrown out the window. In fact it's just the opposite. Assets will be purchased. And in fact, as a practical matter this will hardly even score against the deficit because there's an assumption that those assets will have value and that they'll be a recovery to the taxpayer. It could be less than $700 billion, it could be more than the $700 billion. But it will certainly be a substantial portion of that money which is put up.
And as a practical matter, the response will be a stabilizing of the markets which will generate economic activity. The option is a destabilized market, which will generate chaos and cost us a lot in a lot of areas, including tax revenues.
COLLINS: I'm sure you know, and we heard from your counterpart, Senator Menendez, just moments ago saying that, we don't have proof of any of that. In fact, what we're concerned about is that we need to push this through, but we need to push it through right.
Is there the time to do that? Or is it possible -- it's the same question I asked him -- to push it through now, worry about those exact details and many, many more later on?
GREGG: Well, you know, God so loved the world, he didn't send a committee and he certainly didn't send the Congress. In this instance you're looking at a crisis situation. The proposal is a reasonable proposal. Sure it can be tweaked in ways which will make it more politically acceptable and I assume it will be. But the basic proposal is pretty simple, pretty straightforward. And I believe that it will actually end up saving this country a lot of money in the long run because it will avoid a financial meltdown which would lead to chaos.
COLLINS: We appreciate your time. Senator Judd Gregg, a Republican today in support of the bailout plan.
Thank you, Senator.
GREGG: Thank you.
COLLINS: It was a push that prompted loud protest in Congress, but it will end in little more than a whimper. Democrats will let a 26-year ban on offshore drilling expire. A provision that would bar the drilling has been left off a spending bill the House is expected to approve today. House Democrats had previously pushed back against President Bush's call for the ban to be lifted. But, with a likely veto looming over the broader spending bill, the Democrats conceded. The issue will probably be revisited in the next session.
Help for a gas crunch. Georgia gets a temporary EPA waiver to sell a higher sulfur fuel in the Atlanta area. Several other southern states also dealing with gas shortages and long lines at pumps. The shortages are expected to continue until the Gulf Coast refineries shut down for Hurricane Ike are fully operating again.
Meanwhile, gas prices have dropped for a seventh straight day across the country. The average now for a gallon of regular unleaded, around $3.71. Alabama's Gulf Coast is going green. A first of its kind windmill has been set up at Lulu's restaurant in Gulf Shores. The turbine is designed to generate power all day, all night. A good thing since the Bahama Breeze Bar (ph) is hooked up to it. Very important.
Stubbornly high gas prices are shaking up the lives of many Americans, even some who are not old enough to drive a car. Poppy Harlow went to Minnesota to find out about one school district's energy fix.
Hi there, Poppy.
POPPY HARLOW, CNN CORRESPONDENT: Hi there, Heidi.
You know it is every kid's fantasy, a three-day weekend every weekend. I would have liked that. Maccray School District in Minnesota has canceled class on Mondays. The savings are impressive.
(BEGIN VIDEOTAPE)
RICK MERSBERGEN, SACRED HEART, MINNESOTA: Hey Bud, time to get up
HARLOW: Zack Mersebergen and his father Rick are heading out to work on their farm in Burrell (ph), Minnesota. A few miles away, 11- year-old Natalie Rosen is practicing before her piano lesson. And at the local school, not a student in sight.
MATT ROSEN, CLARA CITY, MINNESOTA: It hasn't fully hit us that today is actually a Monday.
HARLOW: A Monday, like most Mondays this school year, where the kids won't be in school.
GREG SCHMIDT, SUPERINTENDENT MACCRAY SCHOOL DISTRICT: The decision was we either reduce our expenses somehow or we cut teachers.
HARLOW: Superintendent Greg Schmidt says that choice prompted many parents to lobby for a four-day school week to cut expenses.
R. MERSBERGEN: It's a big -- important to me because now my kids are still allowed to earn some of their college credits in the high school program.
HARLOW (on camera): It all comes down to this -- the price of fuel. It's not cheap to fill a 65-gallon bus.
SCHMIDT: Last year we spent $120,000 more than we had the year before on fuel oil and diesel for buses.
HARLOW (voice-over): The district hopes to save $100,000 a year with the new plan.
SCHMIDT: And the price for busing kids on our routes (ph) for 172 days was this amount -- $563,000. When we went to a modified schedule, 149 days, the amount was $497,000. HARLOW (on camera): From the classrooms to the hallways, the lights are out on Monday. The question remains, of course, will the students be left in the dark when it comes to their education?
SCHMIDT: In other situations where schools have done this, they haven't seen any drop in academics.
HARLOW (voice-over): There are dozens of schools around the country that have four-day weeks. At Maccray, school days are now about an hour longer.
ZACHARY MERSBERGEN, 10TH GRADER: The teachers don't know how it's going to go so they're trying to put five days in four days.
NATALIE ROSEN, 6TH GRADER: The first day was really long because you didn't know how long it would be.
HARLOW: Childcare is another concern. But on this first Monday off, Greg Schmidt says he hasn't heard of any problems. And the families we spoke to are embracing the change.
M. ROSEN: Our jobs do allow us to have a little bit of flexibility, so -- and our daughter is getting old enough now to where she can keep track of her little brother on Mondays if -- if -- something comes up where we can't be here.
HARLOW: And while it's an energy fix for Maccray, it will only get an A if students continue to make the grade.
(END VIDEOTAPE)
HARLOW: Now the idea of a four-day school week -- it's not a new idea. It was actually first used in the 1970s in response to the energy crisis we saw then. Now we're seeing it across 17 states, everywhere from Arizona to Michigan. If you're one of the lucky kids out there only going to school four days a week, let us know. Tell us your story at ireport.com/energyfix.
Don't you wish you had that, Heidi?
COLLINS: Yes, and we're both from Minnesota. It definitely wasn't happening when we were in school, huh?
HARLOW: It wasn't.
COLLINS: Good story. Thanks so much. Poppy Harlow -- I appreciate it.
Want to let you know we, of course, are following all of the numbers on Wall Street. We are also monitoring Fed chairman, you see him there, Ben Bernanke right now before the Senate Joint Economic Committee. And later on he will be appearing with Treasury Secretary Paulson before the House Financial Services Committee talking all day about the $700 billion bailout plan.
(COMMERCIAL BREAK) COLLINS: The nation's financial crisis -- everyone seems to have an opinion about how to fix it. Lawmakers are working on a plan. And the two major party presidential nominees will be voting on it.
Some thoughts from Senator Barack Obama who is in Florida prepping for his first debate with his Republican challenger.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Now, there are many to blame for causing the current crisis, starting with the speculators who gamed the system and regulators who looked the other way. But all of us now have a stake in solving it and saving our financial institutions from collapse. Because if we don't, the jobs and life savings of millions will be put at risk.
Given that fact, the president's stubborn inflexibility is both unacceptable and disturbingly familiar. This is not the time for my way or the highway intransigence from anybody involved. This is not the time for fear. This is not the time for panic. It's the time for resolve and responsibility and reasonableness.
(END VIDEO CLIP)
COLLINS: Senator John McCain taking the Republican message to New York today after a town hall meeting with supporters in the Grand Rapids, Michigan, yesterday. Here is what he had to say a short time ago.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Most Americans feel very strongly that this isn't their fault, that it's Wall Street and Washington and the (INAUDIBLE) relationships that have caused a great part of this problem. So any package that we come up with has got to have transparency, accountability, CEO responsibility and, obviously, be in the best interest of people of this country who are going to pay $10,000 per household in order take the necessary measures to restore our economy.
(END VIDEO CLIP)
COLLINS: Even though Friday's debate between Senators McCain and Obama focuses on foreign policy, political observers say don't be surprised if the economy creeps into that discussion. All the latest campaign news is at your fingertips. Just go to CNNPolitics.com. And later today you can look for new poll numbers from the battleground states. We also have analysis from the best political team on television. It's all right there, CNNPolitics.com.
Speaking of the financial crisis, I had a chance to go out yesterday and ask people who were actually stuck in long gas lines -- I figured they couldn't get away from me -- so maybe they would talk to me -- about what they thought about the bailout. Let's listen to what Jim had to say.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: The whole crisis here, you know, it's been coming for a while. And anybody who couldn't see it and couldn't see the debt that this nation has carried, both as a nation and as individuals, you know, has been ignoring the issues. What's going on today as far as the bailout of AIG and some of the other companies -- probably a necessary evil to keep some stability. But as far as AIG goes, as far as I can see, the underlying insurance companies are solid. And people just need to be steady, hold what they got and all this stuff will come out in the wash.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
COLLINS: On Wall Street, that Buffett bounce isn't shaping up as well as investors had hoped. Susan Lisovicz on the floor of the New York Stock Exchange with more on what the famed investor is doing and how that is playing out in the market.
Come on, Susan. What an hour into -- hour and fifteen into the trading day?
SUSAN LISOVICZ, CNN CORRESPONDENT: Yes, one trader said the Buffett bounce has become the Buffett burp (ph). Nonetheless, it's a big headline, no question about it.
COLLINS: $5 billion.
LISOVICZ: Yes, $5 billion -- buying into a financial institution. Some would call that heroic. But look, Warren Buffett has a track record that is unmatched. And it's his first big play in financial stocks since the credit crisis erupted last summer.
Another story we're watching today revolves around the housing market. We got existing home sales, the biggest part of the market, fell 2.2 percent. That was more than expected. The National Association of Realtors says, you know what? People can't get mortgages.
That is an example, Heidi, of the credit crunch. Home prices aren't going to stabilize if people can't actually buy homes. And by the way, home prices fell by a record 9.5 percent last month.
Checking the numbers, well, the Buffett bounce, if you will, the Dow is up 19 points. The Nasdaq is up 17 points. We're on the plus side at least, Heidi.
COLLINS: Yes. It's kind of a bet, isn't it? Even though it's -- $5 billion to him is obviously --
LISOVICZ: Chump change.
COLLINS: Yes. But it's still a bet that he's taking here.
LISOVICZ: Yes. And I mean Buffett is a smart guy. And you know it's not like he's gone easy on financials. I thought you would like this quote that came from his annual letter to shareholders. He says, "you only learn who has been swimming naked when the tide goes out. And what we are witnessing in some of our largest financial institutions is an ugly sight."
So, he's been horrified like the rest of us in what we've been seeing. Having said that, Goldman Sachs has not posted any losses since the credit crisis erupted. Certainly their profits have been hit, their stock has been hit. He calls it an exceptional institution.
More importantly, Heidi, it's cheap. Its shares have declined about 50 percent over the past year. He's getting also something the rest of us can't, warrants to buy more even more shares at a discounted price. And the preferred stock that he is buying will pay a 10 percent dividend.
Anyway, Warren Buffett, wading deep into the waters. And that is not such an ugly sight when the "Oracle of Omaha" goes in.
Heidi, back to you.
COLLINS: All right. Thank you, Susan. Appreciate that.
LISOVICZ: You're welcome.
COLLINS: So it's time to get your flu shots, and the CDC has some advice for millions of school-age kids.
(COMMERCIAL BREAK)
COLLINS: Flu shot season is here. Time to roll up your sleeves and get that shot. The CDC now says more people need it, in fact. CNN medical correspondent Elizabeth Cohen, here to talk about this.
Really? More people?
ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: More young people.
COLLINS: OK.
COHEN: This is actually very surprising in a way. The CDC used to say that kids ages six months to five years need a flu shot. Now they're saying, ages six months to 18 years. So, your school child, your teenager, they are now supposed to go out get a flu shot. The CDC says, kids get the flu. They miss school. They take up the pediatrician's time. They use antibiotics. For all those reasons, they say those kids need flu shots now.
COLLINS: So, are they saying that if your child goes to the pediatrician, that you automatically get a flu shot for them?
COHEN: The CDC says actually that a lot of doctors don't. And they're supposed you. I mean, you're supposed to just show up for your -- you know, let's say you have an annual physical for your kid in October. They're supposed to say, hey, your kid needs a flu shot. Often times they don't. So, if you want that flu shot, if you want to follow the CDC's directive, you may have to be the one who says to the doctor, hey, isn't my kid supposed to be getting flu shot.
COLLINS: Right. But, to be clear, not mandatory, obviously?
COHEN: Not mandatory, mandatory. I mean, no one's going to get arrested if they don't get their 15-year-old the flu shot. But it is recommended by the CDC.
COLLINS: OK. Last year the flu shot didn't work very well.
COHEN: No.
COLLINS: I mean, we're still talking about the flu here, which to me is so indicative of how much we don't know about it. Because there's like a billion different strains.
COHEN: Right. And they have to change it every year. It's not like a measles shot, which is the same year to year. The flu shot has to change every year. And last year they didn't quite get it right. And a lot of people who got the shot also got the flu. This year in a press conference, the head of the CDC Julie Gerberding, she said, don't worry, this year we have it right. All is fine.
COLLINS: OK.
COHEN: Of course, the proof of that will be when flu season arrives.
COLLINS: Exactly. All right. CNN's Elizabeth Cohen. Thank you, Elizabeth.
More people are getting sick from tainted milk in China. Even though there have been no traces of the contaminated milk products in this country, the FDA has taken a precautionary step of expanding its inspection. Four babies have died in China. Nearly 53,000 children have gotten sick there. All from infant formula or other products contaminated with the chemical melamine. That's the same chemical from China that poisoned and killed thousands of dogs and cats in United States last year.
And we want to let you know about a big change coming. Just a few minutes from now, a major announcement coming to the Impact Your World web site. Millions of dollars, countless opportunities to improve the world we live in.
(COMMERCIAL BREAK)
COLLINS: Very quickly we want to get this out to you. We are getting some live pictures coming in, aerials obviously, over St. Mary's County. This is southeast of Washington, D.C. Here's what's happened as far as we know it according to our affiliate there. Police are now looking for two suspects who apparently kidnapped a bank employee and then robbed a bank this morning. It was a woman and her children who were abducted from their home actually, then taken to the bank. The hostages were released, but then the victims took off in a truck. That truck has also been recovered by police. However, the police are now still looking for the two suspects, got away I guess, in another vehicle or maybe even on foot. They are considered, again, according to our affiliates there in the Washington, D.C. area, St. Mary's County, armed and dangerous. Most importantly here from what we can tell, all roads leading in and out of St. Mary's County are not secured while police continue to look for these suspects. Again, they're looking four at least two suspects in all this. A kidnapping and then bank robbery. Happening in St. Mary's County, southeast of Washington, D.C. We'll keep an eye on that one for you.
Great story here. Florence Washington was eligible to vote for FDR. But has taken Barack Obama's candidacy to finally get her registered.
(BEGIN VIDEO CLIP)
FLORENCE WASHINGTON, FIRST-TIME VOTER: He look like he from black and white. And that's why I like him. He's not for the white particular and not for the black particular. He said we're all one and that he mean it. And I believe he mean it.
(END VIDEO CLIP)
COLLINS: The 95-year-old woman's daughter says she's tried to get Washington to vote before. But this year Washington's enthusiasm has energized the whole family.
Voting in cyber space. Indiana will offer Hoosiers in the military the option to vote in the November election by e-mail. Officials say so many men and women serving overseas either don't get their ballots in on time to vote, or the ballots don't arrive back in the United States before the deadline. So now, with the click of the mouse it is done.
I'm Heidi Collins. Join me again tomorrow morning, starting at 9 a.m. Eastern. For now, CNN NEWSROOM continues with Tony Harris.
