Return to Transcripts main page
CNN Newsroom
Bailout Bill is Debated & Foreign Markets Tank: Southerners are Desperately Seeking Gas; Citigroup Buys Wachovia's Baking Assets
Aired September 29, 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: Let's just listen to that for a while. Bruce Springsteen there singing at the New Orleans jazz festival a couple of years ago. Just want to let you know that Boss is joining the list now. Bruce Springsteen will perform at the Super Bowl half time show. The game is set for February 1st in Tampa. Springsteen will follow other big rock acts that play in the Super Bowl including U2, the Rolling Stones, and Paul McCartney.
Another lightning strike in the financial storm, Citigroup will buy Wachovia's banking assets. What does this news mean on Main Street and on Wall Street?
Plus selling the deal in the House. Right now, lawmakers have their say on the $700 billion rescue plan. And later today they'll have their votes.
It's Monday, September 29th, I'm Heidi Collins. You are in the CNN NEWSROOM.
$700 billion. It's your money. It's their decision. Right now House lawmakers debating the financial rescue plan. They've expected - they are expected, I should say, to vote within a few hours. We're hearing around noon or so Eastern time. Earlier President Bush said it is a passage that is critical.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This legislation has been agreed to by leaders of both parties. It must be passed by Houses of -- both houses of Congress. I fully understand that this will be a difficult vote. But with the improvements made to this bill I'm confident that members of both parties will support it. Congress can send a strong signal to markets at home and abroad by passing this bill promptly. Every member of Congress and every American should keep in mind, a vote for this bill is a vote to prevent economic damage to you and your community.
(END VIDEO CLIP)
COLLINS: All right. So let's look at the big board. Investors certainly weighing in on Wall Street. A live look here. Down 270 points for the Dow Jones industrial averages. We are watching all of those numbers. The Nasdaq and S&P down as well.
CNN's money team is in place from Wall Street to Capitol Hill. Our Kate Bolduan is following the House debate. And in New York, Christine Romans has the big picture for us.
Let's begin in New York, Christine with you. Break it down for us, here we have a lot to talk about regarding the bailout and also Wachovia.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, let's talk about the bailout first. What it aims to do and then some concerns about just how far it goes? Who will benefit? We talked about this over and over. This is about mopping up toxic securities off the books of banks, credit unions, other investors who got them. It could help taxpayer, there are some taxpayer credit protections in there and homeowner protections as well.
Let's talk about taxpayers first. What's in it for taxpayers? Well, the government can step in and buy stock in the rescued firms. They're going to get a stake in some of these firms to recover the tax payer investment. If the firms fail, the government is the first to recover any assets. Of course, all of this is about extending credit to small businesses. And that helps everybody. What's in it for homeowners?
Well there's some language in there that really a lot of people have been pushing for. Some language to facilitate changes to home loans, to expand the help against foreclosures. But still no changes in bankruptcy laws. And that's what a lot of neighborhood community activists had wanted. They wanted the bankruptcy law to be changed to protect a home. So that the home, you could rewrite some of the terms of a home loan in bankruptcy, which you cannot do right now.
Remember, the core of this Heidi, is about getting the free flow of credit running again. That's the number one aim of this. And some of these other provisions are ways to kind of assuage the frankly, the very, very raw and real concerns of constituents out there. But the number one goal of this thing is to get the credit flowing again.
COLLINS: Absolutely. I need to ask you though about the Wachovia deal.
ROMANS: Yes.
COLLINS: Citigroup are going to be buying them?
ROMANS: That's right. And the government helped this one. FDIC stepped in last night and with the Treasury and the Fed said listen, this is a bank in distress. Before it fails, we're going to help usher the sale to the Citi. Now this is what Sheila Bair, who is the chairwoman of the FDIC said. She is very clear saying that they orchestrated this sale but there will be no interruption in services and bank customers should expect business as usual. So another bank being sold. Another big bank in distress. The shareholders have already essentially been wiped out in this. And now for those people who still bank at Wachovia, Citigroup is now your new banking company.
COLLINS: All right. CNN's Christine Romans, breaking it all down for us.
ROMANS: Sure.
COLLINS: Christine, thank you.
Now I want to get to Capitol Hill now where that House debate is under way at this time. And an all important vote drawing nearer. CNN's Kate Bolduan is there with the very latest.
I can see them on my monitor talking, and talking, and talking, Kate.
KATE BOLDUAN, CNN CORRESPONDENT: And they're going to keep talking and talking for a couple of hours at least, Heidi. I was there. The debate is under way. This is heading toward the first of two voting obstacles this bill needs to overcome before it can head to the President's desk.
Now Democratic Congressman Barney Frank is one of the key negotiators of the bill. He opened up debate earlier today, saying he understands very well that this is a tough vote for members. It's tough for anyone to sign onto $700 billion. But he says it's necessary and they need to pass it today. Listen here.
(BEGIN VIDEO CLIP)
REP. BARNEY FRANK (D), FINANCIAL SERVICES CMTE. CHAIRMAN: Today is a decision day. I wish it weren't the case, but I am convinced if we defeat this bill today, it will be a very bad day for the financial sector and the American economy, and the people who will feel the pain are not the top bankers and the top corporate executives but average Americans. They don't see it yet. Pain eroded is not a bank that we can get a lot of gratitude but that is what is coming.
(END VIDEO CLIP)
BOLDUAN: And the basis of this bill remains the proposal brought over by Secretary Paulson, the need to get an influx of money to buy up troubled mortgage assets. But there are some key compromise and some modifications that are in this bill in order to get lawmakers to sign on to it. One being some strong oversight. There are two oversight boards here - Congressional Oversight Board and a Federal Oversight Board as well as cap on executive pay and those golden parachutes that we've been talking about. So that executives of these companies that are going to benefit from the bailout, they don't also pad their pockets at the same time. Heidi.
COLLINS: All right. CNN's Kate Bolduan on Capitol Hill where all the action is today. Kate, thank you.
The rescue plan one -- lawmakers say it's not a bailout, it's a "buy-in." So what can we expect as we return on our investment? Gerri Willis is taking a look.
Also, quick check of the big board now. Down 288 for the Dow Jones industrial averages. We'll be watching those numbers all day here and certainly as the vote gets closer. About two hours they are expecting to actually take that vote on the bailout plan. Meanwhile, world markets reacting to the U.S. economic bailout bill now. We're going to take a look in the next half hour.
Hurricane Kyle is done. And it's now tropical storm. This is battering the Canadian Maritime at its worst. The winds knocked out power to more than 40,000 customers in Nova Scotia. Kyle kicked up a surf and dumped a lot of rain from Massachusetts north ward. But New Englanders who are used to nor'easters really weren't that impressed. One called it a "run of the mill" type of storm. Reynolds Wolf in the weather center now.
I guess, you know, it's what you're used to.
REYNOLDS WOLF, CNN METEOROLOGIST: Yes, I mean, storm shmorm (ph). These guys are into everything, aren't they?
The folks in New England, they can handle it all. They're a rugged bunch. Great people. And I tell you what, it's going to be a rainy day for at least the first half of it is going to be. And speaking of first halves, they have a double header yesterday in Boston. They're not able to escape much of the raindrops.
Now conditions are getting better there but getting worst in the northern Atlantic. The reason why is not because of Kyle which is now part of history but rather this tropical storm which is Laura with winds of 60 miles an hour, gusting to 70. Moving west, north west at 8 miles per hour. The great thing about this storm is it's not expected to really cause any major issues, which is certainly some good news. However, what may cause some issues is something we're seeing now in the East Coast but in other parts of the Midwest.
As we zoom around, let's show you a few things. As we go from the eastern seaboard, we're going to leave these scattered showers and make your way back towards the Midwest, from Milwaukee, southward through Chicago and seen down towards St. Louis. We had some scattered showers and a little embedded thunderstorms, nothing severe. Still gray skies are going to prevail for a while. Take a look at the shot that we have, in the St. Louis area.
Here it is, KSDK, the St. Louis power house station, beautiful shot of the arch there. Looks pretty good there. No delays at the airport at this time. As we pull away and go back to the weather computer and take a look at the temperatures we can expect around the country. A little bit warmer in parts of the southeast. In Atlanta, high temperatures going right back up to the 80s.
For Tampa and Miami, also 80s in those locations. Dallas, with 90 degrees. Houston, 88 and near let's see down in Houston, even in Galveston, kind of a warm. They're still cleaning up there and this will be a warm day for them. In Phoenix, in Los Angeles, 80 degrees. In Portland, 88 degrees on the banks of the Columbia River. That's a look at your forecast. Let's send it right back to you, Heidi.
COLLINS: All right. Reynolds, thanks so much. I don't know if you've seen this video yet, Reynolds, but wow. Knocked down and blown away. WOLF: Wow.
COLLINS: Imagine getting caught in this storm. Powerful typhoon barreled through northern Taiwan yesterday. Flooding villages and leaving many people in the dark. In fact, two people died in this. I-reporter Neil Moore recorded this scene just above Taipei City. The typhoon is the fourth and most powerful to hit Taiwan this year.
U.S. Navy ships gathering near a Ukrainian cargo ship off the coast of Somalia. The ship was seized last week by pirates. The ship was loaded with Soviet tanks, and weapons. The Russian freight is on its way to the area. The pirates have lowered their ransom demand now from $35 million to $20 million.
Bloody Sunday in Baghdad. Dozens of explosions rock Iraq's capital as the holy month of Ramadan draws to a close. The government reporting at least 35 people killed. More than 111 wounded in just that one day. Iraqi security forces have found a suicide vest at the site of one of the bombings. They believed it belonged to a would-be bomber who did not get killed.
He's moderating the final presidential debate. What did Bob Schieffer learned from the first one? He's here to tell us.
(COMMERCIAL BREAK)
COLLINS: Well, 36 days and counting until election day. And the main party presidential candidates aren't wasting a single moment. Senator John McCain takes the Republican message to Columbus, Ohio, this morning and Des Moines, Iowa, this afternoon. His Democratic rival, Senator Barack Obama is campaigning in Denver, Colorado. Both presidential campaigns have been distracted by the government's rescue plan. Remember how it threatened to torpedo Friday night's debate?
Well, our guest this morning was there. He's the author of "Bob Schieffer's America." And the man who will also be moderating the final presidential debate that will be happening October 15th. CBS anchor man Bob Schieffer.
Welcome to you. Welcome to the NEWSROOM in person this time.
BOB SCHIEFFER, CBS ANCHORMAN: Well, thank you.
COLLINS: You were in the audience at Ole Miss. What did you think?
SCHIEFFER: I thought it was tie basically. I thought Obama really held his own with McCain on foreign policy. But I thought McCain came off very well, too. This, Kiran -- Heidi, I'm sorry.
COLLINS: That's OK.
SCHIEFFER: This race is still to be decided.
COLLINS: Yes. SCHIEFFER: And I think these debates may be crucial in how it comes out. It's really closer than any race I can recall this far into it.
COLLINS: Well, I know you had the opportunity to interview Barack Obama yesterday. So I want to go ahead and play some of that sound and get your reaction here.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: This is probably the most serious financial crisis we've faced since the Great Depression. And what we can't do is do nothing. What I absolutely insists on though is that the same sense of urgency that we have about Wall Street, we have about folks on Main Street who have been struggling for a long time.
(END VIDEO CLIP)
COLLINS: We also heard from Senator John McCain as well on ABC. Let's listen to that.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Let's get this deal done, signed by the President, and get moving. Because the real effect of this is going to restore some confidence and get some credit out there, and get the economic system moving again, which is basically in gridlock today.
(END VIDEO CLIP)
COLLINS: Bob, we keep hearing this is unprecedented. These are waters unchartered and you I said in the introduction that the presidential candidates were actually being distracted by this financial bailout plan. But how can you be distracted when we're talking about something this big? How do you think the events in Washington have been handled by the candidates?
SCHIEFFER: Well, it's very interesting. And you kind of saw John McCain you know, kind of, a let's put it all up on the line. He stops his campaign, goes back to Washington. Barack Obama was a little more of the analyzer. More cool about it. I don't know how that plays with either one, but you know the thing, Heidi, that I think most difficult for both of them, they're both kind of saying I'm going to hold my nose and vote for this because I think it's serious. I kind of know how they're feeling. I covered every kind of story from hub cap fees to armed control negotiations. Never as a reporter have I been more unsure of what the government is proposing here.
I know this is very serious. Is this the right thing to do? I really can't figure that part out. I just don't have the technical expertise. And I think you're seeing the candidates in the same kind of position here.
COLLINS: I wonder if when you watch these debates because you will be moderating the very last of them, and I'm sure you watch very, very closely. Will anything that you saw on Friday night change the way you'll handle things on October 15th?
SCHIEFFER: No, I'm just going to try to stick straight to issues. I mean there are plenty to talk about.
COLLINS: Yes. This will be certainly be one of them.
SCHIEFFER: We're talking the domestic policy, and this is just overwhelming everything. But there's a couple of other things that people are interested in. Immigration, for one. You haven't heard a peep our from either candidate on this lately. Education, entitlement programs, somebody is going to have to set some priorities here. We're in a different world now with this big bailout. There's not going to be much money to do much of anything from here on then. How are they going to handle this? I'm going to try to pin them down on that. So far they haven't pin but we'll see what happens.
COLLINS: And it was hard too because this debate was supposed to be about foreign policy, the one that happened Friday night at Ole Miss. An interesting trivia because I know the last time you were in Oxford was 1962, right? When you actually covered the enrollment of the first African-American to the pool.
SCHIEFFER: James Meredith. And there were riots. Two people were killed, 166 people injured just to try to prevent an African- American from attending a tax-supported state school. And I thought, you know, what a remarkable thing this was when this debate happened on that campus and you had an African-American nominee for one of the major party. This was more than a debate, Heidi. It was a magnificent moment in American history.
COLLINS: Yes. And people not have related the two. So I'm really glad you said that. We obviously had a chance to talk with some of the students here the NEWSROOM. They were so excited about it.
SCHIEFFER: We have a long way to go. But we've also come a very long way.
COLLINS: All right. We sure do appreciate your time here. We'll be watching you on October 15th, when you handle that debate as well. CBS' Bob Schieffer, nice to see you.
SCHIEFFER: Thanks,
COLLINS: The debate between the two running mates is set for Thursday in St. Louis. CNN of course will bring that to you live. All the latest campaign news is at your fingertips. Just a reminder, go to CNNPolitics.com. We also have analysis from the best political team on television. It's all at CNNPolitics.com.
The search for gas. It's a treasure hunt without a map. That's for sure. Southern drivers driven to extremes.
(COMMERCIAL BREAK) COLLINS: OK. So here's how bad gas shortages have gotten in the south. Authorities in a suburban Atlanta county are actually asking people to stop calling 911 to ask which stations have gas. Can you believe it? Those calls apparently tying up the emergency line.
Our Rusty Dornin has been talking to drivers in Atlanta. She's joining us now live from one gas station.
So the last time we talked to you, Rusty, you said it was kind of an even flow. Did it change at all?
RUSTY DORNIN, CNN CORRESPONDENT: Well, actually the line has been longer over the past hour, Heidi. And we just talked to the station owners. He showed us they have got about half the gas they had when they started out this morning. And he said maximum, they got about two hours worth of gas left. You know, they've had reports of people even following gas trucks, stalking the gas trucks camping out of gas stations, that sort of thing.
And there was some controversy this weekend. If you remember, there was a film distributor that said they should postpone the University of Georgia football game. Because people may get into trouble with gas.
Well, we just ran into a driver who went to the game over the weekend, Alex Caulk, who did exactly that, had problems, right? What happened?
ALEX CAULK, MOTORIST: Yes, ma'am. I spent a large part of Friday afternoon talking the on the phone to my dad who was at work navigating me around the city looking for a gas station with gas.
DORNIN: So he was on the Internet trying to find a gas station for you.
CAULK: And he led me to a bunch of different ones who the Web site was being updated continually. But every time I got to a gas station they had ran out by the time I got there. By the time I finally found one I waited about 45 minutes -
DORNIN: How did you find this station? How did you know this station had gas?
CAULT: Well, I'm actually a student at Georgia Tech. So I live just right up the street. I pass it every day. And I happen to have a couple of hours on my hand. So I decided now would probably be a good time to come by.
DORNIN: All right. Alex Caulk, thank you very much. It sort of catches catch can. Interesting thing, earlier this morning, there were U.S. postal trucks lines up here in the station. There's a distribution point nearby. And rain, sleets, snow, that's no problem in terms of delivering mail, but when there's no gas, that can be a problem.
COLLINS: All right. CNN's Rusty Dornin, Rusty, thanks for following that story for us. We will keep our eye on all of that because it's kind of a weird story. That's for sure.
In fact, if you live in other parts of the country the picture at the pump a little better. The average price a gallon for regular unleaded fell for the 12th straight down to about $3.64. So a shortage of gas in the southeast or a bit of fear. Could it actually spread and become more severe? We're going to take a closer at all of it coming up in today's "Energy Fix."
Well, it is another extraordinary day on Wall Street. Investors are waiting the congressional vote on the $700 billion bailout plan. We've been talking about it for several days.
And another leading bank becomes a casualty of the credit crisis. Susan Lisovicz, I know you're turning around to look at the numbers. Because now we are down what, I think the last time I looked about 330, Dow industrial averages.
SUSAN LISOVICZ, CNN CORRESPONDENT: We're off the lows, believe it or not. Just below a 300-point decline, Heidi. I guess we kind of know the tone of the market when the opening bell didn't ring. The opening bell didn't ring because the primary and backup bail failed.
COLLINS: Oh, no.
LISOVICZ: Set the tone for the day.
COLLINS: This is not a good sign.
LISOVICZ: Not a good sign, but there are a lot of troubling signs, and I think that's what investors are reacting to. You know, it's not like some congressional leaders took out a playbook and said here's how to sell all the toxic assets. You know, that Wall Street has been writing down for the last year. You know, this is historic. It's massive. And it hasn't even passed yet.
Meanwhile, you know, the information that is bombarding the marketplace with you know Citigroup's move to buy Wachovia's banking operations. You know, information like that just shows you how fragile the financial sector is. Wachovia shares have yet to open for trading, but they were down 90 percent in the free market, and trading under a dollar. Three of the biggest losers of the Dow 30 are JPMorgan Chase, American Express, Bank of America all down more than four percent.
Meanwhile international markets showing sharp losses after three major European banks were bailed out there. So this is a broad based sell off we're seeing here at the NYSE. For every stock that goes up, there are nine on the downside. And you can see by the numbers what kind of point declines we're seeing. The Nasdaq is down much worse, it's down 4 1/4 percent. And the S&P 500 down about, nearly 3.5 percent Heidi. It's a tough day on Wall Street.
COLLINS: Very quickly, Susan, as the vote gets closer and closer about an hour and a half away, we are expecting that they're going to take that vote on the bailout. Big question still, is it going to work? LISOVICZ: We don't know. You know, the basic idea, the goal is to free up the credit market.
COLLINS: Right.
LISOVICZ: We haven't seen that yet so that lenders will lend. That will help companies big and small and consumers. If the question is will it help the economy, that's another story. I think most people say a recession is unavoidable and that, you know, the writing is on the wall. The U.S. economy has given up jobs every month this year. Wages aren't keeping pace with prices. And it's just trying to stop a freight train that's going downhill. We learned before the open that personal spending fell in August. Even though incomes rose, we do get Friday's job reports, job reports I should say for September.
COLLINS: All right.
LISOVICZ: We're expecting another loss. Heidi.
COLLINS: All right. We'll be watching all of it closely. Susan Lisovicz, thanks so much for that.
LISOVICZ: You're welcome.
COLLINS: Meanwhile, you can follow your fortunes at CNNMoney.com. We got all the day's market news and numbers, expert analysis and you may have some of your questions answered right there. So make sure you check it out.
$700 billion. It's awfully hard to wrap your head around that number. So CNN's Gerri Willis will be breaking it down for us. What is the bottom line cost to you and to me?
(COMMERCIAL BREAK)
COLLINS: The $700 billion rescue plan on the Hill and under the microscope. House lawmakers could vote on it within the next 90 minutes or so. But, it's not clear if there's enough support for it to pass.
Earlier this morning President Bush weighed in. He said only swift passage can contain the crisis and keep it from souring the entire economy. House Speaker Nancy Pelosi agrees. She says the rescue plan is not a bailout, but a buy in.
So, if it really is a tax payer investment, what can you expect in return? Here to break it down for us, personal finance editor, Gerri Willis. A lot to talk about here. In fact, Gerri, before we get to that, we've been talking a lot about Wachovia this morning and the fact that Citigroup has bought the banking operations.
People who bank with Wachovia now want to know, business as usual today, or am I going to find hiccups?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: It's definitely business as usual. Look, if you have money in a savings account, a checking account, you are safe. Don't worry about your money at Wachovia. This isn't an FDIC takeover. This is an acquisition. It continues business as usual. Go use your ATM card. You're going to be fine.
We have calls into Citi right now. We're going to find out details like will your certificates of deposit still pay the same rate? What will be your rates of interest on your checking account? We're trying to find out those kinds of details right now. Because I know people really care about that.
The bottom line is your money safe? Yes, it is. Heidi, we also want to talk about this congressional bailout and what it means for consumers. You know, we talk a lot about how fast it can pass and that kind of thing. But at the end of the day you want to know what it means to your wallet.
Let's start off by talking about what it means if for the financial markets. It eases the credit crisis that we've heard so much about. But it also should put a floor under stock prices. Stocks down now about 255 points. I hate to think where it would be right now if we did not get this train back on the tracks with this package. Ultimately, I think you're going to see stocks continue to do better, start to turn around here.
But, right now stocks still focusing on the trouble in the banking industry. As one financial adviser put it to me this weekend, he said, you know, now we've got the fire out in the theater, but now you want to know if the movie is any good. In other words, stocks are going to be trading on fundamentals. And clearly from today's trading, people don't like what they're seeing with the banking stocks.
Loan availability should also improve. If you've been in the market for an auto loan, or a home loan, you'd have a had a hard time getting these loans. This should start to improve now. Not today, not tomorrow, but over the next few weeks. And rates, mortgage rates could go lower. We talked to the folks at bankrate.com. They expected to see the rates come down a little bit over coming weeks as liquidity in the market place improves. But, the good news here, of course, is that this credit crunch that's easing for banks, which is what we've focused on here, it's also going to ease for consumers -- Heidi.
COLLINS: OK. Well, we hope that is the deal, certainly. It's all about that credit and then the confidence. That word, we keep hearing confidence, as well.
Gerri, we're going to continue to watch those numbers. Thanks so much.
In fact, when Wall Street sneezes, the rest of the world catches a cold. You know the old saying. It could be proving the true this morning. Markets have tanked today from Asia to Europe, and the ripples have reached cities around the globe. We checked in with some of our reporters. (BEGIN VIDEO CLIP)
JOHN DEFTERIOS, CNN CORRESPONDENT (on camera): I'm John Defterios in Beijing, where people on the ground are starting to feel the pinch of the U.S. credit crisis. Growth is expected of around 9 percent this year, which is stellar by world standards but well off the peak of last year.
Asian bankers broadly happy with the agreement that's on the table but makes no doubt about it, this agreement will bring the U.S. and China closer together. The world economy is depending on China's growth and U.S. will be ever more dependent on China's vast reserves fund its budget deficits.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
SON JIE AE, CNN CORRESPONDENT (on camera): I'm Son Jie Ae in Seoul, with the Korea Exchange, where the board behind me is mostly green reflecting market losses as well as the not so optimistic reaction to the news coming out of Washington.
Traders tell us that when the market first opened investors were initially optimistic about the bailout plan, hoping that it would bring stability to Wall Street and Seoul. But as the day progressed, any type of initial gains were overweighed by questions raised about the effectiveness of this plan as well as concern about the Korean economy, especially the rising of the U.S. dollar against the Korean won.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
PAULA HANCOCKS, CNN CORRESPONDENT: I'm Paula Hancocks in Jerusalem's central market. Israelis are rushing to finish last- minute preparations ahead of Rosh Hashanah, the Jewish new year, which starts Monday evening.
It's a time of celebration and as you can see, all but frantic spending. But there is an underlying fear of the unknown. A fear of how U.S. financial problems will affect Israel. Now, the local currency, the shekel is still strong. The governor of the bank of Israel, says the banking system is still strong and it's very unlikely that any bank will fail. But growth forecasts for this years have been lowered. They've been lowered to 3 percent, which is still fairly respectable.
(END VIDEO CLIP)
COLLINS: Here's another sign of the bailout's far, reaching impact. Now, oil prices dropped more than $5 a barrel this morning. The reason -- concerns economic growth will slow across the globe.
Rusty Dornin told you about the gas lines we've been seeing in the south. And while so far it is a regional phenomenon, some people are concerned the problem could become more severe and more widespread. CNNMoney.com's Poppy Harlow has our Energy Fix now, from New York.
Big question down here, Poppy. Is there really a shortage or is it people are afraid they're not going to be the gas and so they go and they fill up many more times than they usually do?
POPPY HARLOW, CNNMONEY.COM: Well, that may be the case, Heidi. But we are talking a real shortage here of gas. We're working on razor thin margins right now, in terms of supply. We've been hearing so much about a run on the banking sector.
But when panic causes a lot of people to demand their money from the banks, now there's concern about a run on gas supplies. The shortages we've seen in the south have caused a wave of panic buying. That's what you're talking about. What's interesting, it's also affecting some trucking operations. Which really could have broad implications for consumers, for businesses. If there's a serious run on gas, trucks could be idle. That could mean a shortage of supplies at your local grocery store or your local Wal-Mart.
The scenario goes like this. Really, shortages lead to panic buying. Consumers top off the tanks, draining precious supply. Trucks don't have the gas they need to deliver food. And everything that we use on a daily basis.
Heidi, remember we saw this back in the 1970s. So, a lot of people are talking about that now -- Heidi.
COLLINS: This all goes back to the hurricanes, in case people forgot, that actually hit along the Gulf Coast earlier this month. That was the initial interruption, if you will.
HARLOW: Well yes, that interrupted not only oil supply, but turning that oil into gasoline, so refining that oil. And a lot of those refineries remain shut down.
But it's highlighting really a bigger issue here. Gas supplies are extremely low, as I said earlier. We're working on razor thin excess capacity margins. "Fortune" magazine sited a Barclay's report recently saying right now in this country, gas inventories are at the lowest level we've seen since 1967. That's pretty amazing.
As of the latest Department of Energy report -- that said there have been about a dozen refineries operating below capacity. Six refineries right now not running at all. That's more than two weeks after those hurricanes hit. So despite the shortages and high prices in the south, as Rusty just told us all about, nationwide though, Heidi, this is interesting, gas prices are down. They are down four cents today -- $3.66 a gallon. Oil prices down more than six bucks right now.
And you know what, Heidi? This all comes down to a weakening global economy. A lot of people say that means less demand. And that's what we're seeing. But still major, major shortages across the country, Heidi.
COLLINS: Yes, I've driven past many of those lines in my own neighborhood in fact. It's pretty unbelievable.
All right, Poppy Harlow, appreciate that.
Sulfur Springs, Colorado, where the rubber meets the road. Road to the future, that is. This house made almost entirely of tires from the foundation to the roof -- 17,000 tires in all. The rubber holds in heat during the day and then releases big savings on cold winter nights.
(BEGIN VIDEO CLIP)
JON HAGAR, HOMEOWNER: Neighbors around here spend $400, $500, $600 a month on heating bills. We're hoping to be $50 to $100 a month.
(END VIDEO CLIP)
COLLINS: Hagar hopes to finish his 2 year project within the next month. He says several more homes like this are already under construction.
A message of hope and faith for all of those people who have come back to Galveston, Texas, in search of belongings and family. The city took a direct hit, as you know, from Hurricane Ike. The storm swept away a lot of homes and possibly a lot of people.
Yesterday, those on the island packed the churches to pray for the people still missing.
(BEGIN VIDEO CLIP)
BOB SMITHERS, LAURA RECOVERY CENTER: Their houses aren't there anymore and no sign of the person. And they know that they did not evacuate. So -- those situations may not turn out good.
CHARLES CHAPMAN, PAUL CHAPMAN'S BROTHER: You feel hopeless. It's like well, is he OK? And I kept telling her, I said, I just hope he made it out of the storm all right.
(END VIDEO CLIP)
COLLINS: Nearly 400 people are still unaccounted for, more than two weeks after Ike slammed ashore.
CNN's Reynolds Wolf in the weather center now to keep his eye on some of these other disturbances that are happening.
Hi there, Reynolds.
WOLF: Hi there.
We've got kind of good news and bad news with regards to our tropics. We of course had Kyle. Kyle is no longer an issue. It's now moving -- actually dying out and moving well to the north. The National Hurricane Center has already issued its final advisory in that system.
We're still seeing some scattered showers moving off the New England coast. We are also seeing another storm. This is a tropical storm, Laura, with winds of 60 miles per hour gusting a bit stronger to 70 miles an hour. This storm moving west, northwest at 8 miles an hour, expected to continue its march to the north and veer off to the northeast out of harm's way. It's not expected to make landfall at all. It's going to remain a fish storm just out to ocean.
Meanwhile, we're going to head back to the U.S. and make your way from the East Coast back into the center of the U.S., where we see some scattered showers. Now earlier this morning, these storms were just firing up like gangbusters. Just near Chicago, now driving south into parts of Illinois -- Champaign, Illinois, near the campus of the state university south toward (ph) places like Saint Louis -- you're going to have the rain, but it's going to trickle off as we get to the late afternoon hours. High pressure is going to be building behind. And with that some drier air and fairly calm conditions. But right now you'll notice the heaviest rain now moving towards Farmington, later on in Carbondale, south into Cape Girardeau, that rain will begin to pick up.
Take a look at some of the temperatures we can expect across the nation from places like Atlanta, southward to Miami and Tampa. High temperatures mainly into the 80s today. On the other side of things, take a look -- here's that frontal boundary moving northward into say Minneapolis -- Twin Cities, 64 degrees the expected high. 72 in Denver. 86 in Salt Lake City. Double 88s in Portland, beautiful day out by the Columbia River. And north of that up in Seattle 79 degrees. 97 in Las Vegas. 82 out by Chavez Ravine in L.A.
And again, nation's capital, 78 degrees by the reflecting pool, under partly cloudy skies. Should be a great day.
Let's send it back to you, Heidi.
COLLINS: All right, Reynolds, thank you.
WOLF: You bet.
COLLINS: A new victim of the Chinese milk scandal to tell you about -- it's chocolate. Recall under way. We'll tell you if you're affected.
(COMMERCIAL BREAK)
COLLINS: The Chinese toxic milk scare spreading to chocolate now. Cadbury is recalling all of its candy products made in China. They are sold in Hong Kong, Taiwan and Australia. A spokesman says preliminary tests showed they contained trace amounts of melamine. The chemical turned up earlier in Chinese made baby formula. No need, though, for American choco-holics to worry, Cadbury chocolates sold in the U.S. are made by Hershey's.
In China there's not much help for families whose babies were made sick by the tainted milk. Our Kyung Lah reports now from Beijing.
(BEGIN VIDEOTAPE)
KYUNG LAH, CNN CORRESPONDENT: Tens of thousands of babies sickened, parents distraught over what's safe to feed their infants or where to turn for answers.
"We have no idea what to do," says this grandmother.
Attorney Li Fangping hopes to help -- forming a nation-wide network of 124 volunteer lawyers offering free advice to the parents and legal representation if they want to sue the milk companies for damages. But his efforts landed him in trouble.
UNIDENTIFIED FEMALE: So where are we going now?
"To the Beijing Justice Bureau," says Li.
This week all government offices are closed for a national holiday. But the Beijing Justice Bureau re-opened and called Li in. Li's volunteer attorneys have gotten similar calls. Told to stop helping the parents or face consequences. Li says attorneys are dropping out.
"The pressure is very organized," says Li. "This kind of situation there is fear."
China's government, closed for the holiday, did not reply to repeated calls from CNN. But in a nation that remains heavy handed with dissidents, Li knows what his meeting this morning means.
Li is experiencing a very different government than the public image on television. Chinese Premier Wen Jiabao visited hospitals, apologizing and comforting the sick babies. Then over the weekend at the World Economic Forum, Premier Wen pledged this --
"The whole 'Made in China' will become reputable products. My government will lead people to get through this difficult period."
But Li believes these pledges are short-term fixes to China's food system. And the pressure facing the attorney shows China's government won't change in the long term.
"I've done nothing wrong," says Li. "I followed Chinese law. More importantly, these victims need our help. Because of these reasons, I will survive a deal with the pressure from the government."
We leave Li several blocks away from his meeting, so our camera is not spotted. Li goes on his way, saying this is just part of life in China.
Kyung Lah, CNN, Beijing.
(END VIDEOTAPE)
COLLINS: Add one more company to that tainted milk scare now. A New Zealand dairy says it detected melamine in one of its milk products. The product is used in baby formula. Health officials say the amount is not dangerous, but the company is stopped exports just the same.
To get your daily dose of health news online, just log on to our Web site. There you will find the latest medical news, a health library, and information on diet and fitness. That address -- CNN.com/health.
Seeking young Jewish families in the Bible belt. Have they got a deal for you? $50,000 to move there.
(COMMERCIAL BREAK)
COLLINS: The Supreme Court today considering the fate of a Georgia death row inmate. Troy Davis was convicted of killing an off- duty Savannah police officer in 1989. No murder weapon was ever found, neither was any DNA evidence or fingerprints. Since his trial, 7 of 9 witnesses who testified against him have recanted.
In Las Vegas, O.J. Simpson expected back in the courtroom this morning. Michael McClinton on the stand. McClinton testified Simpson told him to bring a gun and -- quote -- "look menacing" when they confronted memorabilia dealers in a hotel room last year. Simpson is charged with armed robbery and kidnapping in a botched attempt to reclaim his memorabilia.
Southern Alabama the promise land? A Bible belt Jewish community is seeking to survive by offering cash incentives to (INAUDIBLE). Well remember this one? We told you about it. Now our John Zarrella has an update.
(BEGIN VIDEOTAPE)
JOHN ZARRELLA, CNN CORRESPONDENT: When members of Temple Emanu- El in Dothan, Alabama arrive for services it's clear-- they're mostly older, and there aren't very many of them -- 50 families. So Larry Blumberg, a wealthy member of the temple, decided his community needed more Jews.
LARRY BLUMBERG, CHMN., BLUMBERG FAMILY RELOCATION FUND: We felt like it needed to be something that had enough sizzle that it would get attention. And it really has.
ZARRELLA: Blumberg put up $1 million to help relocate 20 young families with children to Dothan, a town of 60,000 nestled in the southeast corner of Alabama. Response to ads in Jewish newspapers has been over the top.
ROB GOLDSMITH, EXEC. DIR., JEWISH COMMUNITY SERVICES: China, Ecuador, Cuba, South America, all over Israel.
ZARRELLA: Rob Goldsmith runs the relocation project. They are targeting families in the United States who will have to sign a multi- year deal, and could get up to $50,000 each. GOLDSMITH: It's a five-year agreement, like a sports star -- that you will be behave, that you'll be a good contributing member to the community and to our congregation.
ZARRELLA: Dothan, known for its murals, there's one on just about everything but the water tower, also prides itself in being different from the stereotype of a deep south city.
MAYOR PAT THOMAS, DOTHAN, ALABAMA: There's ignorance everywhere. There's ignorance here in Dothan as well, but you just have a great community here. You have a community that's very open to other faiths. And I think that's a great strength here.
ZARRELLA: A city that practices, the Jewish families here say, not just religious tolerance but religious acceptance.
DARYL SHAPIRO, TEMPLE MEMBER: Being a Jew, living in Dothan for 20 years, I have never experienced any anti-semitism. Not one time.
ZARRELLA: The Jews here say they have no problem using dollars as an incentive. It's a matter of survival, says Rabbi Lynne Goldsmith --
RABBI LYNNE GOLDSMITH, TEMPLE EMANU-EL: We don't want it to do die.
ZARRELLA: -- and an opportunity to stop the exodus of young Jews from small southern cities.
(END VIDEOTAPE)
COLLINS: The Jewish community is hoping to move four families a year over the next five years. The first two, they hope, will be living here by Hanukkah. And that holiday is in mid-December, as you well know.
Well one of the great movie stars of the century, a philanthropist , and a family man. We'll hear from Paul Newman's daughter.
(COMMERCIAL BREAK)
COLLINS: Actress Heather Locklear's mug shot. She was arrested in Southern California Saturday night, booked on suspicion of driving under the influence of prescription drugs. Her arrest came after a highway patrol officer saw her driving erratically. Locklear was later released. Back in June the actress was treated for anxiety and depression.
Paul Newman, a star for the ages. People who knew him remember him as a working actor, not a movie star, a talent who inspired and set the bar very high. Newman died at his Connecticut home on Friday after battling cancer.
(BEGIN VIDEO CLIP) UNIDENTIFIED FEMALE: He was a beautiful person. And the whole experience has really been difficult, but lovely in its own way. He is, was, and always will be an incredible man. And -- I'm just blessed to have been part of him.
(END VIDEO CLIP)
COLLINS: Fans have flocked to Newman's star on the Hollywood Walk of Fame. They recall his many roles in classic films like "Cat on a Hot Tin Roof," Cool Hand Luke," "Butch Cassidy and the Sundance Kid," and "The Color of Money," which won him his only Oscar. Paul Newman the actor, devoted husband and father and philanthropist was 83 years old.
I'm Heidi Collins. Join me again tomorrow morning starting at 9:00 a.m. Eastern.
For now, CNN NEWSROOM continues with Tony Harris.
