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Bailout Bill: Back to the Drawing Board?; Wall Street Nightmare Tanks Markets Overseas
Aired September 30, 2008 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HEIDI COLLINS, CNN ANCHOR: A day after the drubbing. Wall Street reopens after its biggest one-day loss ever. Could the numbers actually go up today?
The market massacre tied to lawmakers rejecting the bailout bill. Can the rescue plan be saved or is it back to the drawing board?
It is Tuesday, September 30th. Hi, everybody. I'm Heidi Collins. You are in the CNN NEWSROOM.
The nightmare on Wall Street leads to sleepless nights overseas. World markets toss and turn, Asia sees big losses, Europe no gains.
Have your stocks hit bottom, or is your dream about to take an even bigger hit today?
That is the question. Congress rejects the bailout plan. Washington is stunned and world markets scramble. This morning European leaders are urging the United States now to step up and rein in the crisis as it spreads overseas.
CNN's Adrian Finighan is in London this morning with the very latest.
Adrian, good morning to you.
ADRIAN FINIGHAN, CNN CORRESPONDENT: Morning, Heidi.
The mood here in London pretty much well matching the weather today. It's grim. There is a feeling of frustration that what's in need of a quick fix is not the U.S. financial system but the U.S. political system.
People here just amazed that having voted down a rescue package that the president says is necessary to prevent global market meltdown, U.S. lawmakers won't vote again until Thursday at the earliest.
Now that shot confidence to ribbons and there's a feeling of hopelessness of people's inability on this side of this Atlantic to influence world events. The consensus is that there will be some sort of rescue package. The worry, though, is when and if it will be enough to restore confidence and liquidity to the system.
A couple of other factors weighing on people's minds here. The Irish government guaranteed today to safeguard all deposits regardless of size in Irish banks. Now that puts pressure on the British government to introduce a similar guarantee as it puts British banks at a commercial disadvantage.
And the failure of yet another Benelux bank, Dexia, which specializes in loans to local government, has been badly hit by losses in its U.S. operations and had to be thrown a lifeline by the governments of France, Belgium and Luxembourg.
Now after yesterday's sharp falls European shares have been trading in and out of negative territory all day, forced in banking of financial shares being offset by bottom-fishing bargain hunters.
So very much a feeling of anxiety here in Europe as we watch and wait for Washington -- Heidi?
COLLINS: Yes, it's going to take quite a bit of patience, I think.
All right, Adrian Finighan, sure do appreciate that. Live from London this morning.
For whom the bell tolls. Not sure we want to relive this. But more than half of all American households own stocks so that means most of us took a big hit yesterday. You see the numbers there, down 777 points by the time the market closed.
So will the market bounce back today?
Here to guide us through all of that, CNN's senior business correspondent Ali Velshi.
Ali, if you could tell me that those numbers are going to go up today you would instantly become one of my most favorite people.
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Yes, I have to tell you, I can probably give you some indication that if nothing serious were to happen in the next 27 minutes the Dow will open up on the positive side.
The futures which are bets that people place sort of their investments on how the Dow is going to open are indicating a positive open. Probably a triple-digit positive open but that's prefaced by the fact that nothing is a sure thing at all. And who knows what's going to happen.
Right now the markets are entirely dependent on the tone that is coming out of Washington. What sense there is that this deal will actually get done or some deal will get done, and if there's some sense that the -- that public sentiment continues to grow against this and that Congress will act on that, then we have other problems.
So I would suggest that if you are an active investor, you don't leave your computer today. And if you are not, meaning, if you're like the rest of us, and you have 401(k)s and IRAs you try and keep the panic level down, because there's nothing in particular that you can do about these financial markets. You can only do things about your own investment.
But we are getting a ton of questions, Heidi, about whether people should or shouldn't be investing at this point, whether they should be taking their money out. Remember, 777 points, Heidi, we've done this long enough to know that you can make that up in a few days if that were the sentiment.
COLLINS: Right.
VELSHI: The bigger problem here is the credit market. And I'm going to be back to talk to you about that in about 20 minutes.
COLLINS: Yes. And we don't have a number on that. I mean you can't really...
VELSHI: No.
COLLINS: ... watch some sort of number to see how that ebbs and flows.
VELSHI: Correct.
COLLINS: Which is, I think, probably one of the scariest things.
VELSHI: Right. And we do have the number for the Dow.
COLLINS: You can't (INAUDIBLE).
VELSHI: And we have that board. And that's -- you know on some levels it's great and on some levels it's troublesome. Because as important as the Dow is, it is not a full gauge of the economy. It's a gauge of what investors are saying, investors are...
COLLINS: 30 companies.
VELSHI: ... big part of the economy. But -- so is housing and so are jobs and so are oil prices. You know what I mean? It's -- the viewer needs to keep that in perspective. Over time, markets do well.
While this is biggest point drop we've ever had, it's not the biggest percentage drop we've ever had. It's not even in the top 10, you know, so perspective.
COLLINS: Yes, we like the perspective.
All right, Ali, we will talk with you again shortly.
VELSHI: OK.
COLLINS: Thanks so much for that.
Let's turn -- from Wall Street now to the White House. Just a few minutes ago you may have seen here on CNN President Bush called on Congress to waste no time in passing a rescue plan.
There you see the president there. You also see Kathleen Koch who is standing by to talk a little bit more about this.
And Kathleen, tell us what your take is. This is the second time now that the president has come out. He's given a very, very short and curt statement about what is happening and what he hopes will happen.
Is this helping in any way? A lot of people might have been thinking, boy, there could have been a State of the Union type of address coming from the president at a time like this.
KATHLEEN KOCH, CNN CORRESPONDENT: Well, Heidi, obviously, the administration continues to do what it can to try to help this situation. The president this morning clearly trying to send a signal to the markets to calm them and a signal to Congress about just how serious this situation is.
What they're doing here at the White House today is regrouping, trying to come up with a plan b. Let's look a little bit at what the president had to say this morning. Obviously, he said he was disappointed by what happened yesterday. He said it was a difficult vote.
He insisted, though, this was not the end of the legislative process. He said what matters is that we get a law, and the president went on to say that we are at a quote -- "critical point" for our economy.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: But the reality is that we're in an urgent situation and the consequences will grow worse each day if we do not act.
Dramatic drop in the stock market that we saw yesterday will have a direct impact on the retirement accounts, pension funds and personal savings of millions of our citizens.
(END VIDEO CLIP)
KOCH: The president went on to insist that Congress must act. He said that we're facing, quote, "a choice between action and the real prospect of economic hardship for Americans."
So Heidi, the president really was really reaching out, trying to make lawmakers understand that this situation is real, this crisis is real, pointing, as you saw, to what happened in the markets and insisting something must be done.
And that's what they're going to try to do now -- talk to lawmakers, try to get this ball rolling again.
COLLINS: All right, CNN's Kathleen Koch right outside the White House, appreciate that -- thank you, Kathleen.
As you know, many of the efforts are taking place behind closed doors. We don't see a lot of those dynamics live on television. CNN's Kate Bolduan is on Capitol Hill this morning to talk a little bit more about that.
And that seems to be the question, because, boy, oh, boy, the politics that have now been injected into what is happening with the bailout plan.
KATE BOLDUAN, CNN CORRESPONDENT: Yes, it's funny, Heidi. We talked about bipartisan spirit, bipartisan spirit, and then if you take a look at those press -- conferences after that vote you saw anything but bipartisan spirit.
Today the House is out, the Senate is in, but there are no votes scheduled. So a lot of these discussions, as you have mentioned, are behind closed doors. A lot of phone calls going on.
Really the name of the day is let's find a game plan, let's find a way forward and find a way to get the -- some of the Democrats and Republicans who voted no on the bailout to get them on board. At the same time, some of those no votes today are explaining their decision.
Listen here.
(BEGIN VIDEO CLIP)
REP. SHEILA JACKSON LEE (D), TEXAS: We understand the crisis that is in place, but we also want you to know that this crisis was brewing for one year and this administration did not tell the Congress that we were facing this kind of collapse.
And so there has to be, in essence, a balancing of the responsibility of where we are today.
REP. MARSHA BLACKBURN (R), TENNESSEE: What we have to do is address this liquidity issue right now. We have to address it in front of us this week. We have to find a resolution, and there are some other components of this that ended up on the edit room floor, if you will, that need to be revisited.
(END VIDEO CLIP)
BOLDUAN: So what now? Well, it seems that leaders agree on the point that this will be more a tweaking of the existing bill rather than starting back at square one. It seems like that would be just too much of a hefty proposition to take on especially when they talk about urgency is still needed here.
And one of the things that has been tossed around, where there are a lot of conversations, Heidi, tossed around among Republicans, is the idea of raising the FDIC insured cap on bank deposits.
It stands at $100,000. If they raise that significantly, as it was put it by one -- put by one aide, that could help out small business and help out main street. That's one thing that's being tossed around. Clearly many more conversations need to happen.
COLLINS: And the earliest this a vote could come, again, is now Thursday, right, Kate?
BOLDUAN: That's what it's looking at. Right now, and maybe we'll see some -- a statement come out to change that, but Thursday seems to be -- seems to be when the House is going to be coming back.
COLLINS: All right, CNN's Kate Bolduan on Capitol Hill for us, thank you, Kate.
BOLDUAN: Thank you.
COLLINS: Same party, different sides. Two House members justify their bailout plan votes and talk about the chances for a redo.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: They should just get the bill don and then blame people afterwards. We can go on with our lives.
UNIDENTIFIED MALE: Nobody comes and bails me out, you know, when the economy got tough and our sales dropped down here in the last few months. You know, we've gotten behind on some bills and nobody's come -- having a session to help put Rich's, you know, bills back in line.
(END VIDEO CLIP)
COLLINS: And joining us now, two lawmakers on opposite sides of the issue. Representative Joe Sestak is a Democrat from Pennsylvania, he voted for the rescue plan. And voting against it, fellow Democrat, Lloyd Doggett, a congressman from Texas.
All right. To the both of you, I'm going to put the same question out.
Representative Doggett, why did you vote the way you did?
REP. LLOYD DOGGETT (D), TEXAS: Well, I think this bill lacked sufficient protection for the taxpayer. I want Wall Street to pay to bail Wall Street out rather putting -- rather than putting the burden on people who had nothing to do with this.
Unlimited discretion to the administration. This is a serious problem that needs a serious solution but we need to consider other alternatives, I believe.
COLLINS: Representative Sestak?
REP. JOE SESTAK (D), PENNSYLVANIA: On Friday, the Federal Reserve ended a week where it gave $200 billion out of its vaults to banks in America that could not get money from any other bank because they wouldn't lend to them.
It gave $290 billion to European banks and yesterday another $470 billion was given from the vault to the Federal Reserve. Unprecedented highs. And now in my district Wachovia has now failed. And now we cannot get any education loans given by Pennsylvania Higher Education Assistant Agency. Therefore, I voted for this bill because small businessmen won't be able to get loans.
And if I learned anything, that if they can't get loans, you will then not have jobs and incomes will go down. That old mariner adage that woe be the seaman that doesn't take precautions, lest they might prove to be unnecessary.
This is necessary. And that's why I felt we needed to act now. But I believe we will come together and make it happen this week.
COLLINS: You do.
Representative Doggett, do you agree with that? I mean I'd love the take from the both of you about what is going on behind the scenes. You were both in the same party, one of you voted against, one of you voted, you know, for this, as we've just heard.
What sort of discussions are taking place to come together for an agreement to be made?
And Representative Doggett, I'll let you answer.
DOGGETT: Well, of course, if this had been left to Joe and me we would have worked this problem out a long time ago. Unfortunately, we were presented with a take it or leave it proposal that gave great discretion to the administration to do pretty much whatever it wanted to do. I just...
COLLINS: Yes, but that was the first time around. This vote was taken on the second bill that was reworked.
DOGGETT: Well, yes, it was reworked. It took the three pages of what Secretary Paulson said he would do and combine 97 pages of what he could do. I don't think it provided adequate protections.
I can understand why Joe voted for it, because it's a very serious matter. But my vote was a vote to say, protect the taxpayer first, don't give President Bush unlimited discretion. We know where that's taken us before on other matters.
And I believe we can work together. I'm in Washington today, as are a number of our colleagues. Some will be calling in. We're looking for alternatives that can be presented.
I think it would be a real mistake if we followed the approach President Bush took on television a little while ago which is again to not assume personal responsibility and suggest it's my way or the highway.
COLLINS: And meanwhile, yesterday Wall Street wiped out -- and I'm looking down at my notes here -- this is something that is coming in to us from Wilshire Associates -- $1.2 trillion in market value.
Representative Sestak, I wonder how much you think that politics played a role in this particular vote. And the reason I ask that is because of the election that's coming up obviously. There are an awful lot of tight races state by state as we look forward to re- election.
SESTAK: I believe on the whole that men and women on both sides of the aisle voted, as Lloyd did, for what they believed was best. That said, I think Representative Boehner, the minority party leader, spoke quite candidly on the House floor when he said he understood that there was political risk for members on both sides of the party.
But what I most believe is this -- we saw that $1.2 trillion was lost in pensions and 401(k)s and savings yesterday. The market may steady a bit today with confidence that the Senate and we will be coming back will act.
But I believe that eventually any of that political risk that may have been there will be removed as we come together for a more accountable, as Lloyd wants perhaps, bill. But I believe without a question you will now see votes coming together to make sure that this possibility -- and I believe a probability we'll go into deep, long, protracted recession if we don't -- will occur.
We will come together this week without a doubt. And political risk will be placed aside more.
DOGGETT: Let me say, Heidi...
COLLINS: Representative Doggett, do you see that change as a possibility?
DOGGETT: Well, I'll say -- I would say that...
COLLINS: Do you see this week being it?
DOGGETT: Yes, that I fully agree with Joe. And that the markets can be confident that Congress will respond. The question is how we respond and how promptly we respond. And I think the chances of an effective response are far improved if we don't continue to be wed to just one approach -- the Bush approach or no approach.
There are alternatives. One of them being that the Bush administration could use authority it already has before it asks for more authority, and that's the increase the limits for FDIC insured banks so that all depositors will know that their deposits are safe.
The FDIC could do that without any act of Congress by using its emergency powers. There are other emergency powers the administration could use. I would say do that today...
COLLINS: OK.
DOGGETT: ... to assure confidence.
COLLINS: All right, to the both of you, we sure do appreciate it. You're both on the same political aisle and interesting to hear your perspectives being that one of you voted for and one against. Representative Joe Sestak, thanks for your time, and Representative Lloyd Doggett. Thanks so much.
SESTAK: Thanks, Heidi.
DOGGETT: Thanks so much.
COLLINS: Knowing your food's nationality. New labeling rules take effect. Why some items actually won't be affected at all.
(COMMERCIAL BREAK)
COLLINS: More fallout today from the tainted milk problem in China. Food giant Unilever is pulling some of its Lipton brand milk tea powder off store shelves in Hong Kong and Macau. The company said it found trace amounts of the chemical melamine in the product.
We've heard the name of that chemical before. Last week Unilever pulled Lipton green milk tea off shelves in Taiwan.
So are you ready for some cool food? New food safety rules are going into effect so now you'll be able to check the country of origin label. Get it? COOL to see where your food comes from. But there are still some loopholes.
CNN's chief medical correspondent Dr. Sanjay Gupta is joining us now. So All right, COOL, we do get it.
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: I'm not as cool as the label.
COLLINS: Yes, well, you know, we're (INAUDIBLE) so I don't know. Foods are requiring to get this new label, though, right?
GUPTA: Yes. And this has been a long time coming. People have been talking about it more since the food outbreaks. The people have been saying, you know, how do we figure out where our food comes from...
COLLINS: Sure.
GUPTA: ... and let the consumer know for some time? So there are certain foods that are going to sort of fall under this net of requiring a label.
Overall, meat, including whole cuts and ground meat. Fish and shellfish, you may have seen some labels already in grocery stores. They've been labeled for some time. Fruits and vegetables, that's a big one. Nuts and even some supplements as well.
Let me point out something that I think is interesting, Heidi, when we dug into this a little bit deeper, is that there are certain foods that are going to require labels but if you change them even a little bit they won't anymore.
For example, went to the grocery store. Raw chicken, something like this.
COLLINS: This smells terrific, by the way.
GUPTA: You're -- (INAUDIBLE) this every morning. Raw chicken, by the way, will require a label.
COLLINS: OK.
GUPTA: But if it's processed, cooked in any way, it doesn't require a label. That may make sense...
COLLINS: Yes, sure.
GUPTA: .. because when you cook it -- you know. When it comes to nuts, for example, though, raw peanuts, these would require a label. If you roast them, they won't. The biggest problem, though, and I think, and this speaks back to some of these food outbreaks, is these fruits and vegetables.
Cantaloupe, for example. This would require a label but simply cutting it up, putting in a salad, not cooking it in any way, no longer requires a label. And here -- and it's part of the problem that you are referring to as these loopholes.
You can figure out if your lamb comes from New Zealand or your grapes are Chilean but some of these things you're not going to know quite enough information.
COLLINS: Yes, definitely not. And because, of course, you think it's from the grocery store. By the way that it's packaged, I mean, clearly it's not. But when they put it in a salad form, like this...
GUPTA: That's right.
COLLINS: ... you think, oh, this is, you know, whatever grocery store chain you go to.
The reason behind the new labeling law, I mean, obviously, food safety issues or no?
GUPTA: Yes. What -- you know, I think it's food safety primarily, although since 2002 they've been sort of pushing for this which predates a lot of the most recent big food outbreaks.
Keep in mind, though, besides the fact that you can still get around this a little bit, some of the food outbreaks have come from within the United States. You mentioned the milk from China, there's been some other food products from China. There was tomatoes and jalapenos from Mexico.
COLLINS: Oh my gosh, yes.
GUPTA: But one of the biggest outbreaks, E. coli in spinach, was from California. And having some sort of a label like this wouldn't change that at all because it would just say "Made in the United States" or "A Product of the United States. You wouldn't know specifically.
COLLINS: Yes, and so great, if I learn that wherever my produce is coming from is that part of the world. What do I do then? Do I call somebody? I mean what good does it do?
GUPTA: Right. I think part of it helps in terms of food outbreak. So let's say you and I are talking on television, and we say tomatoes from Mexico are now on the do-not-eat list. You're going to be able to go and see that these tomatoes are from Mexico, don't buy those.
COLLINS: Yes.
GUPTA: So I think it's going to help in the short term if there is a food outbreak. But I think your point is a good one. In the larger scheme of things this is a little bit of a stop gap. It doesn't really solve the problem completely.
COLLINS: Yes. Is everybody going to be required now to use these labels or not?
GUPTA: Butcher shops won't be required to use them. Some boutique stores won't be able -- required to use them, but most of the grocery stores across the United States will have them.
And they come in a sticker, a little twist tie or sometimes just a little sign in front of the food so going to have to look for it a little bit.
COLLINS: Yes. Going to have to look. Grocery shopping is going to take even longer.
GUPTA: That's right. But it's going to be very COOL.
COLLINS: It will be COOL.
GUPTA: Country of Origin Labels.
COLLINS: Yes. That's right. I like it.
All right, Dr. Sanjay Gupta, thank you.
GUPTA: Thanks, Heidi.
COLLINS: After a possible bailout breakdown, would there be a possible bounce back? We're going to be watching Wall Street all day long. Open for business right after this.
(COMMERCIAL BREAK)
COLLINS: Watching for the opening bell on Wall Street today after a dramatic plunge yesterday. Are those stocks going to rebound?
Ali Velshi and Susan Lisovicz, part of the CNN money team, looking at signs and listening to the bell opening the day for trading right now. First, Susan, we want to go to you, of course, right in the middle of it all at the New York Stock Exchange. But yesterday the bell didn't even work and we were worried about that off the top because it malfunctioned. And then look at how it closed down, 777 points.
SUSAN LISOVICZ, CNN CORRESPONDENT: Yes. We really called that one, that it was an omen, it was a bad omen, and it was a day of reckoning.
And Heidi, maybe we have a bounce at the open -- we do. Is it a dead cat bounce? Well, we can't answer that just yet. And what we can say, today is the last day of September, which is traditionally the worst month for the stock market.
The bad news is tomorrow is the first day of October, which has had its own infamous history. We've had some crashes in October. But the folks at Standard & Poor's says that 5 of the last 9 bear markets in the past 50 years ended in October.
Let's hope so because we're certainly in a bear market now. We're coming off, of course, nearly 800 points, plunged the biggest one-day point loss ever, and we've got a triple-digit move in the first minute of trading.
We saw, of course, a big loss that we have to make up more than $1 trillion lost yesterday for publicly traded stocks. That is more than the massive bill that was rejected. And Heidi, I have to say, there was disbelief on the floor here yesterday, not on the trading floor, but on the floor of House of Representatives.
Everybody was watching what was happening and it was a shock and that shock translated to the markets. We are expecting lighter volume today because of the Jewish holiday, but we are expecting a rebound in financial stocks and we're seeing it right at the open.
AIG shares are up 21 percent. Wachovia up 27 percent. Citigroup up 8 percent. You get the idea, Heidi, that they have a lot of ground to make up.
Just one other thing, though. We have to watch the credit markets. There's a key global lending rate that surged the most on record to date. That is not good. That indicates that borrowing is tight and it is more expensive.
And that is what you call a credit crunch. But enjoy the numbers. We're seeing a big bounce back at the open. Of course we've got nearly 800 points or nearly 800 points...
COLLINS: Yes.
LISOVICZ: ... to make up, Heidi.
COLLINS: Yes, we do. All right, CNN's Susan Lisovicz -- thank you, Susan, for that.
LISOVICZ: You're welcome.
COLLINS: Ali Velshi, a lot of us are trying hard not to look at our 401(k)s at this point. And the rest of the people just want to know, all right, today is a new day, where do we go from here?
VELSHI: All right. Well, I'm going to pick up Susan's invitation to talk about the credit markets...
COLLINS: Credit, you got it.
VELSHI: ... which is something we don't typically talk about. We've talked about it the last couple of weeks. But let's just explain to you why this is important to you. The credit markets around the world are much bigger, in fact, than the stock markets.
And it is major institutions like banks and hedge funds and pension funds and sovereign wealth funds, central banks, governments. And they, with institutional banks, want to get a return for the money that they had.
They've got money and they lend it out. Now they sometimes lend it directly to consumer banks and that affects you directly because that is your ability to get a loan, an auto loan, a car loan, a student loan, a home equity line of credit or a mortgage.
And we already know that, in many cases, unless you have perfect credit, you're buying a house with a big down payment, that's in a very safe area that's going to appreciate, you're having trouble getting that loan. Number one, that's a way it affects you.
Number two, you're trying to sell your house, maybe you want to get out under this heavy mortgage, you want to avoid foreclosure, but the buyer can't get the mortgage...
COLLINS: Yes.
VELSHI: ... because they, too, are subject to the same credit freeze.
Number three, it is typical for companies to borrow money on a short-term basis, sort of like a bridge loan, to get them over some period between when they're getting some money in versus when they have to pay it out.
They use that money for operating expenses, day-to-day expenses, rent, utilities, supplies, and in some cases payroll. So there are dangers that some companies may have to lay people off or may have to close down shifts or may have to suspend business for a few days, and that, of course, gets to you as well.
So I have perfect example of that, if you work for Wachovia or Washington Mutual and you're one of these branches that's going to be closed now that those banks have been merged. What did you do to contribute to this mess?
So that's got nothing to do with fat cats and Wall Street. The bottom line here is that whether it is this bailout in this fashion or it is some other form of rescue plan, or perhaps nothing, the credit markets are frozen because they are waiting for something to happen out of Washington and it is not happening.
And the inaction is causing the freeze-up of the credit market and that's how it affects you. So I've been sort of saying that, you know, we have to be careful. When people characterize this as a Wall Street bailout, understand that it affects you.
And the other thing, Heidi, by the way, back to Susan being at the stock market, 50 percent of Americans are invested in the stock market...
COLLINS: Right.
VELSHI: ... through their 401(k)s and their IRAs. So again, when you feel like you want to punish Washington -- you want to punish Washington and Wall Street...
COLLINS: Yes.
VELSHI: ... be careful because it's your investments.
COLLINS: Yes. It's you, too.
VELSHI: Yes.
COLLINS: It's exactly the point. All right, Ali Velshi thank you for that. Appreciate it.
In fact, you mentioned small businesses, and that's exactly what we want to talk about right now. These days hard not to get a knot in your stomach when you worry about your financial future.
People everywhere paying attention to this crisis trying to figure it out. In fact, our Susan Roesgen is in Oak Park, Illinois now.
Susan, I know you are with a small business owner there, wondering how he's coping.
SUSAN ROESGEN, CNN CORRESPONDENT: Well, you know, he's learning to cope this week. I think, you know, Heidi, you can walk really into any locally owned shop in any town in the country today and you're going to see how close the financial crisis is coming to you.
This is a popcorn shop. You know popcorn is a luxury, it's not a necessity. And the owner here says that his business has gone down some as the economy has gone down in the past few years, but what's happened in the last week is affecting him much more seriously and a lot of other shop owners here, too, Heidi.
This is Erik Claesson, the owner.
Erik, Wall Street is more than 700 miles away. How has what's happened in the past week really affected you? ERIK CLAESSON, MADLY POP'N: Well, the tightening credit market has affected us because we're a very seasonal holiday business. And this time of the year is usually when we draw up our line of credit. But because our whole -- the rest of the year was slow with the economy being slow we tapped into that line of credit earlier.
So now when we usually tap into it this time of the year it's -- we've already extended -- we've already used up all the credit that we had out there.
ROESGEN: And even worse, your bank was Washington Mutual which basically went belly-up before it was bought by JPMorgan Chase, so you don't really feel like you can go there and ask for more money, right?
CLAESSON: Well, I don't think that they're probably giving out much money these days. But, yes, you know, we didn't even go to the bank and ask about it. It's just one of those things that the money isn't available and so we have to make payroll for our employees and stuff.
But as a business owner, it's my responsibility to make sure the bills get paid. So I'm the one who's gone without the paycheck for the last couple of months.
ROESGEN: You have a handful of employees but you yourself haven't given yourself any money, haven't actually been paid because of what's happened because your credit line ran out earlier in -- you said couple of months?
CLAESSON: Yes. Three months ago. So it's just one of those things that you just sort of suck it up and you find a way to get through it and try and make ends meet. You've got to keep the employees paid to keep them here.
And as the owner, you -- I have a mortgage at home and I have four kids and I have bills to pay and stuff, too. But it is my business so I have to take that -- take the hit on it.
ROESGEN: Well, Erik, I think what you found is what a lot of store owners are finding. Here in Oak Park, Heidi, I walked just next door, there's a toy store, a locally owned toy store. They're struggling.
Across the street, a locally owned pharmacy, a locally owned bookstore, everybody's talking especially about this credit crunch. What will they do if they need more money to keep their payroll going and to buy things that they might need if something should happen.
They just don't have the rainy day fund, I think you could say, Heidi, and it's really cutting close to everybody's bottom line -- Heidi?
COLLINS: Yes, boy, sure do love all those cute little stores. Everyone of us loves to walk into the mom and pop stores. Sure do appreciate the interview with Erik there. Wish him the best of luck. To keep up with everything that's going on in this financial crisis, you can log on to CNNmoney.com, get some of your questions answered right there.
Well, we've heard how yesterday's House vote and stock plunge are playing on Main Street and on Wall Street. But how about on the campaign trail now?
For that we turn to CNN's Ed Henry who's joining us now live from Washington this morning.
And you've heard it a thousand times, I think, already, Ed, that politics is definitely right smack dab in the middle of Wall Street now.
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Oh no doubt about it, Heidi. And, obviously, there is some political peril for John McCain, in particular, because as you remember, he really raised the stakes himself last week when he declared that he'd be suspending his campaign going back to Washington to try and push forward and get a deal on this bailout.
So McCain is trying to go on offense by charging, look, Barack Obama was on the sidelines, at least I was engaged in this process, trying to -- you know, broker a compromise.
And, in fact, McCain, again this morning, on the phone with President Bush making suggestions saying, for example, that the Treasury Department should use existing powers that they already have to buy out more than $1 trillion in mortgages. If that would help, try to just get something else going.
And on CNN's "AMERICAN MORNING," McCain even suggested he'd suspend his campaign again if he thought it would help. Take a listen to what he had to say.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: We haven't convinced people that this is a rescue effort, not just for Wall Street, but for Main Street America, for working families, for small businesses, for the heartland of America, all over America, where people are going to lose credit.
They're going to lose their ability to make purchases of automobiles, of other necessities of life, and we didn't do a good enough job.
(END VIDEO CLIP)
HENRY: Now Senator Obama put out a written statement this morning with a bit of a new proposal saying that he wants to raise the level of insurance for FDIC deposits and banks saying, quote, "That is why today I'm proposing we also raise the FDIC limit to $250,000 as part of the economic rescue package, a step that would boost small businesses, make our banking system more secure, and help restore public confidence in our financial system."
That would raise the cap from $100,000 on deposits to $250,000. Interesting, on "AMERICAN MORNING," John McCain said he's in favor of that as well. So maybe we found a little bit of common ground here, at least on one little proposal.
Lawmakers in both parties on the Hill are saying that's the kind of proposal that might actually get these talks restarted by putting a provision in there that sort of may make it more palatable for lawmakers in both parties to say, OK, this is going to help people with their deposits, not just bailing out people on Wall Street -- Heidi.
COLLINS: There's a couple of things I don't get, Ed. Number one, the Democrats hold the majority of Congress. 59 votes against this bill. So is it true -- or fair to ask if they really wanted it to pass they could have made it pass?
And number two, the question still remains to me that it doesn't make a whole lot of sense why people aren't talking. I mean it seems like all that talking could come later. Is that not right?
HENRY: Well, certainly. I mean, look, on the first point, Democrats are under some pressure. You can't just say this is about John McCain and the president not delivering Republican votes.
You have to say Democrats are in charge on the Hill now. They've been in charge for almost two years. They're going to be on the ballot in November. Speaker Pelosi, her leadership, that's going to be on the line in terms of, you know, can she deliver?
And the bottom line is, is there were 95 Democratic votes, as I remember, against this bill. But in fairness you also have to point out there were 133 House Republicans against this bill.
So Nancy Pelosi has...
COLLINS: Yes, you wonder why they even took the vote. They said they weren't going to take the vote.
HENRY: Yes -- well, bottom line is Nancy Pelosi delivered far more "yes" votes for this than the Republican leaders did. Sure, could there be more votes on either side? You can second-guess it on either side.
But the bottom line is there were far more Republican no votes, and that's why the Democrats are sort of jumping on McCain a bit.
You know on the other -- on the point about talking, I mean, obviously, no -- nothing bad per se could come from talking, at least trying to move forward, but at this point things are pretty stalled. I anticipate later in the week they'll finally get down to talking.
COLLINS: All right, sure do appreciate that. CNN's Ed Henry -- thank you, Ed.
HENRY: Thank you.
COLLINS: We'll bring you live coverage of John McCain's economic roundtable in Des Moines, Iowa. That'll be happening today coming your way, 11:00 a.m. Eastern right here on CNN.
A plea for help being made on the behalf of perspective Texas voters. Citizens groups are now asking the governor there to extend the upcoming registration deadline because of Hurricane Ike.
The deadline is October 6th. But a whole lot of people still in temporary shelters. Plus libraries where they pick up forms to register are still closed.
(BEGIN VIDEO CLIP)
MAUREEN HAVER, HOUSTON VOTES: We have fundamentally been derailed because of Hurricane Ike and if people throughout the rest of the state of Texas were able to register to vote during that time we deserve that same right to register to vote.
(END VIDEO CLIP)
COLLINS: The groups are asking for a seven-day extension in the 29 counties declared major disaster areas after Ike. There's been no official response from the Texas governor Rick Perry.
Rob Marciano joining us now to talk a little bit more about the weather situation all across the country. We're still talking about Laura here. Still subtropical?
ROB MARCIANO, CNN METEOROLOGIST: Yes, and still way out there. Not a problem. Sorry to throw it to you because we have been talking about Ike.
(WEATHER REPORT)
MARCIANO: But right now Miami, let's take a look. It's shabby. We'll take that. WSVN, our affiliate, (INAUDIBLE), 75 degrees, overcast. And you'll have a threat for thunderstorms throughout the day today.
Daytime highs will eventually get up into the mid 80s across parts of southern Florida, Tampa included. 84 in Atlanta. It will be 71 New York. But look at Chicago, look at Minneapolis, 60 degrees. Break out the parkas. Winter is right around the corner - Heidi?
COLLINS: Did you just say parka? What about galoshes?
MARCIANO: Easy now. That's -- you know, that's hard core. Parkas can be nice and stylish.
COLLINS: Yes, it can. All right, Rob Marciano, thank you. We'll check back later on.
MARCIANO: All right, see you. COLLINS: Quake on Wall Street felt round the world. Our global markets on firmer ground today? International market roundup coming up.
(COMMERCIAL BREAK)
COLLINS: OK, let's take a look now. Dow Jones Industrial Average is up 220 points. We did expect a little bit of a bump. Obviously, very early on here. 20 minutes into the trading day. So we'll keep our eye on those numbers for you.
Also NASDAQ up about 48 points, S&P up 28.
One day after U.S. stocks plummeted, markets in other countries opened lower, but our correspondents in China, India and Italy say, hold on, not all is doom and gloom.
Let's go first to Hong Kong.
(BEGIN VIDEOTAPE)
HUGH RIMINTON, CNN CORRESPONDENT: I'm Hugh Riminton in Hong Kong. Now an intriguing thing is taking place on Asian markets after what took place in Washington and in Wall Street. The markets trek downwards right at the open, and it was mainly financial stocks bearing the brunt of it.
But as the day went on they started to find some resilience. Why might that have been? Two major reasons. One is analysts and dealers here say the markets are factoring in the possibility that despite all the gloom out of Congress, probably at some stage, a bailout plan will go through.
The other factor, though, is even more intriguing, and that is that Asian markets have started to convince themselves that they are not Wall Street, that Asia is not the United States, and the contagion that is taking place in the U.S. need not affect Asia.
MALLIKA KAPUR, CNN CORRESPONDENT (on camera): I'm Mallika Kapur in Mumbai. Traders here feared the worst if you watched Wall Street stumble last night. Instead, they got a nice little surprise on Tuesday because the Indian stock markets are actually in positive territory.
That's right, we are seeing Indian stocks make some gains today. Traders say that's because the Indian stock market fell to such low levels on Monday, the Fed says lowest levels for the year and that encouraged some investors to jump back into the market and start buying up stocks.
But make no mistake, there's still no euphoria in the markets. People aren't getting excited just yet. And traders say the mood in the stock market does remain very, very cautious.
ALESSIO VINCI, CNN CORRESPONDENT (on camera): I'm Alessio Vinci in front of the Italian Ministry of the Economy. And this is where, for the third time in two weeks, top Italian financial officials met to discuss the crisis.
Policymakers here are appealing for calm. They're saying there is enough cash in Italian banks to sustain the impact and they will be able to ride this crisis out. If people think that governments will give in to fears, they are wrong, said the Italian head of the central bank, adding that the response of central banks and governments throughout Europe has been wide-ranging and strong.
However, Italian markets are reacting with skepticism. Shares of all major Italian banks are down significantly with one major Italian bank losing 10 percent in just one day dropping to its lowest levels in a decade.
(END VIDEOTAPE)
COLLINS: Shoppers are cutting costs now, too, with cheaper cuts. Forget the fillet. How about roasted bone marrow or ox heart? Yummy.
(COMMERCIAL BREAK)
COLLINS: Slow down in the south. Drivers may be dealing with gas shortages until the middle of next month. The shortages tied to post hurricane supply disruptions have now led long lines and very short tempers.
Police in the Atlanta area have been called to deal with line cutters in gas stations and traffic jams outside of the stations. Two suspects were arrested for siphoning gas from a day-care center van.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: You know, that's pretty low.
KAREN HILL, DAYCARE CENTER OPERATOR: Just a sign of the times. Desperate people do desperate things. The thing that -- I would just hope that this -- wouldn't happen to someone else and that things will turn around soon for all of us.
(END VIDEO CLIP)
COLLINS: An auto club spokesman says Nashville, which had significant shortages last week, is nearly back to normal now. But Chattanooga and Western North Carolina still dealing with shortages.
So how are you dealing with the economic problems? In England, the credit crunch is forcing some people to consider a drastic change to their diets, from choice cuts to odds and ends.
CNN's Atika Shubert takes a look at that.
(BEGIN VIDEOTAPE)
ATIKA SHUBERT, CNN CORRESPONDENT (voice over): Looking to save money?
(BEGIN VIDEO CLIP, "OLIVER") MARK LESTER, "OLIVER": Please, sir, I want some more.
(END VIDEO CLIP)
SHUBERT: Consider a traditional Victorian die eat ala Oliver Twist. The manual of Workhouse cookery has been republished for the first time in more than a century extolling the virtues of frugality, complete with a recipe for gruel.
Is the credit crunch really that bad? Not quite. But shopping habits are changing.
(on camera): With rising food prices and a credit crunch, many shoppers are looking for ways to cut costs, and supermarkets are responding.
(voice over): Waitrose Supermarket has a forgotten cuts campaign, promoting cheaper meats from liver to pig's feet, ingredients common a generation ago, but not today.
The difference is substantial, 25.99 British pounds per kilo for a juicy sirloin stake, more than $20 a pound, just 3.99 a kilo for a shoulder of lamb, about $3.45 a pound.
GILLIAN SMITH, WAITROSE SUPERMARKETS: We found that less than half of 18 to 34-year-olds were regularly making a stew which is sad because actually that's a big part of British cooking tradition. And it's a very economic way of cooking.
SHUBERT: Consumers, it seems, are happy to embrace some cheaper cuts, but not all.
UNIDENTIFIED FEMALE: I couldn't eat awful to save my life. And I wouldn't do that, I'd rather have lentils.
SHUBERT: British chef Fergus Henderson insists that what he calls traditional nose to tail dining can be tasty, too.
His restaurant menu includes traditional favorites like Chitterlings, a more appetizing word for intestine, also rose bone marrow and ox heart.
FERGUS HENDERSON, RESTAURANT OWNER: This animal nose to tail seems to be polite, (INAUDIBLE) from the head, or (INAUDIBLE) common sense, trite.
SHUBERT (on camera): That's right, tripe. Yes.
FERGUSON: Which is terror for everyone, the word tripe. But it shouldn't be. It's the most soothing, (INAUDIBLE), and uplifting dishes.
SHUBERT (voice over): Perhaps the financial crisis will renew a taste for nose to tail delicacies, but save the gruel for when things get really bad.
Atika Shubert, CNN, London.
(END VIDEOTAPE)
COLLINS: I feel like I owe a personal responsibility to apologize to the people on the West Coast who are just now probably trying to east their breakfast. So there you have it.
Dog's best friend. A man goes after his pet's attacker which turns out to be a shark.
(COMMERCIAL BREAK)
COLLINS: Man turned out to be dog's best friend in Florida, saving a rat terrier from the jaws of a hungry shark.
(BEGIN VIDEO CLIP)
GREG LENOIR, DOG OWNER: A big, dark green shape which I realized was a big shark's head zoomed up from under Jake. Jake screamed -- you don't want to ever hear -- it was such a death scream and it sucked him under.
(END VIDEO CLIP)
COLLINS: The dog's owner dove in the water off the Florida Keys and barbed the shark on the snout. He said it felt like concrete. The shark let the little dog go and swam away. The dog suffered some deep cuts but is OK, even though he may not want to go for another swim any time soon.
