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President Obama and Middle East Peace; U.S. Security Concerns; Testing the Banks
Aired May 05, 2009 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
T.J. HOLMES, CNN ANCHOR: All right. Well, President Obama facing head on two major foreign policy issues, Middle East peace, also the advances by the Taliban in Afghanistan, as well as in Pakistan. The Afghan president, Hamid Karzai, is in Washington for meetings with the president and congressional leaders. He spoke moments ago about his strategy for the war against the Taliban.
(BEGIN VIDEO CLIP)
HAMID KARZAI, AFGHAN PRESIDENT: In a very important time for Afghanistan, and for partners, the United States of America and Afghanistan, we are not only going to elections in three months' time, we are also going to the next step in Afghanistan towards stability, towards institutionalizing our democratic gains, and towards a firmer, stronger partnership with the international community, in particular with the United States.
(END VIDEO CLIP)
HOLMES: Well, we'll turn to more on Afghanistan in just a moment.
This hour, the Middle East is occupying President Obama's agenda. He's meeting with Israeli President Shimon Peres.
Our Suzanne Malveaux looks at what's on this agenda.
(BEGIN VIDEOTAPE)
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT (voice-over): For President Barack Obama and Israeli President Shimon Peres, it's a first step.
SHIMON PERES, ISRAELI PRESIDENT: Let me make it clear, we trust the leadership of President Obama.
MALVEAUX: The two leaders top priority, peace in the Middle East starting with the Israelis and Palestinians.
BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: I am a strong supporter of a two-state solution.
PERES: I have a simple question. Why wait? Israel is prepared today to bring peace closer. Today.
MALVEAUX: But even the Israeli leadership is split over whether that's even possible. Israel's newly elected prime minister, Benjamin Netanyahu, has not endorsed the two-state solution. Mr. Obama would like that to change.
OBAMA: My hope would be that over the next several months that you start seeing gestures of good faith on all sides.
MALVEAUX: Already, some Arab states are encouraged by Mr. Obama's early outreach to the Muslim Arab world.
KING ABDULLAH II, JORDAN: That has gone down extremely well, and really begins, I believe, a new page of mutual respect and mutual understanding between cultures.
MALVEAUX: But Iran continues to threaten the region with its nuclear ambitions. The U.S. and Israel believe the regime is intent on developing nuclear weapons.
PERES: Iran is not threatened by anybody.
MALVEAUX: But President Obama believes opening a dialogue with Iran's regime could change its behavior.
OBAMA: Tough, direct diplomacy has to be pursued without taking a whole host of other options off the table.
MALVEAUX: Former Republican House Speaker Newt Gingrich slammed the president's approach telling the "Jerusalem Post" it was a fantasy, part of a policy very dangerous for Israel. But Peres told CNN's Wolf Blitzer he didn't have a problem with Mr. Obama reaching out to talk to Iran's leader.
PERES: Look, if they'll be successful, God bless them. Who wants a war? We're not crazy.
MALVEAUX (on camera): Shimon Peres is a highly respected elder statesman, but his post is largely ceremonial. It's the newly elected prime minister, Benjamin Netanyahu, who has much of the power. He'll also be meeting with President Obama in the weeks to come.
Suzanne Malveaux, CNN, the White House.
(END VIDEOTAPE)
HOLMES: I want to turn now back to the Taliban gains in Afghanistan and Pakistan. The major U.S. objective, stopping Taliban militants and their al Qaeda allies from launching attacks from Pakistan against U.S. and NATO forces in Afghanistan. Well, President Obama is sending some 17,000 more U.S. troops to Afghanistan to try to do just that. Another pressing concern here, the stability of the Pakistani government amid the fear that Pakistan's nuclear weapons could fall into the hands of the Taliban.
Let's turn now to more on this with Jim Walsh, an international security analyst at MIT, who has traveled extensively to the region.
And Jim, we appreciate having you here. It was something -- I'm paraphrasing here, but Secretary Clinton said something along the line, I don't understand why these people won't just go in here and take -- well, they just won't go in here and take care of these people, talking about the Pakistani government taking care of the Taliban in that northern region.
So, is it an issue where the government and the military won't or can't really handle the Taliban?
JIM WALSH, INTERNATIONAL SECURITY ANALYST, MIT: Well, it's a combination of factors, T.J.
Remember, in Pakistan right now, we do not have a strong government. We have a weak civilian government. It's a government that does not have control over its own territory.
They had launched an offensive against the Taliban. You'll remember the Taliban came within 60-something miles of Islamabad, the capital of Pakistan. But this isn't a situation where there's any real easy, simple choice.
If -- well, now that Pakistan has gone after the Taliban, they face a war on their own territory, in their own country. And then they also, of course, are concerned about India, on the other side of their border. And so this -- it's difficult. It's a weak state that's battling issues on two different sides.
HOLMES: Well, Jim, you talk about that war they're facing on their own territory. Is that a war that the Pakistani military and government could lose?
WALSH: You know, I don't think so. But the problem is -- the problem with the Taliban is they don't have to win in order to be successful.
In other words, they can simply cause enough problems that Pakistan continues to be unstable, continues to have violence, the government is undermined. The Taliban isn't going to take over Pakistan, one hopes, certainly not in the near term, that the military is a very, very big part of Pakistani society. But they can cause enough problems that the Pakistani government cannot win, and then that creates problems not only in Pakistan, but in Afghanistan as well.
HOLMES: Well, our Nic Robertson had an exclusive interview with one of -- a member, a spokesperson for the Taliban, saying really that there's not much room, it sounds like, they're going to give at least.
How much room is there for negotiating? Of course, so much of this balance is going to take place out there with guns on the battlefield, but how much of this really can be done somewhere in a meeting room with a terrorist group, a militant group?
WALSH: Well, T.J., this is the question that has been on the table now for over a year. You'll remember that the Pakistani government originally negotiated a cease-fire with the Taliban and people in the frontier areas and northwest provinces. That has since broken down.
I think the U.S. has floated it as an idea, but I think more likely what you would see us negotiate, if there was negotiation, it would happen in Afghanistan between the Taliban and the Karzai government. But no one is excited about that.
The Taliban government is universally condemned, and would cause problems for our cooperation with Iran or others in Afghanistan, if suddenly we were going to let the Taliban back in the door. So, it's not an easy or quick solution to this problem.
HOLMES: Yes. Yes, the U.S. wasn't a big fan of that deal before between the Pakistani government and the Taliban, which they essentially reneged on up there in the Swat Valley.
Jim Walsh, always good to have you. Appreciate your expertise. Thanks so much. Have a good one.
WALSH: Thank you. You, as well.
HOLMES: All right.
CNN's Wolf Blitzer going one-on-one with Pakistani President Zardari today in "THE SITUATION ROOM." Be sure to watch that interview. Again, that's coming your way, 6:00 p.m. Eastern Time, Wolf Blitzer, one-on-one with President Zardari.
Well, survival of the fittest, it holds for banks as well. Which banks are fit to help lead the U.S. out of recession? The Fed knows and the Curious Capitalist from "TIME" magazine has some educated guesses as well.
(COMMERCIAL BREAK)
HOLMES: Well, your bank may need more money. Not sure if it will be your money or not, however. The Fed believes it's better to find out now than wait for the next collapse and taxpayer bailout.
The government put 19 of the biggest banks under so-called stress tests, results of which will be made public on Thursday. Until then, here are the big questions.
One, which banks will need more money? They call it capital. To me and you, it's money.
Also, where will the banks need it -- the banks that do need it, where are they going to get it?
Also, how will the stock markets take it? Yesterday's rally was based in part on beliefs that most banks are relatively strong.
More now on the banks and the stress tests and the prospects for recovery from CNN's Mary Snow.
(BEGIN VIDEOTAPE) MARY SNOW, CNN CORRESPONDENT (voice-over): The Treasury came up with the idea of stress tests for the big banks to see if they could weather an even deeper recession. Wall Street is not expecting the 19 banks being tested to pass with flying colors. After weeks of number crunching, tense negotiations, and a few leaks, the expectation is some banks will need to raise more money.
ART HOGAN, JEFFRIES & COMPANY: We're going to find out there's some banks in the next six months that will go to the private sector and try to raise capital. If they can't, we're going to find out what banks are going to be the next recipients of TARP funds. And I think that's the mixed bag of news.
SNOW: Still, that mixed bag ends months of uncertainty about the financial health of the banks, that itself has brought angst.
MARK ZANDI, MOODYSECONOMY.COM: I think this will mark the beginning of the end of this very severe banking crisis. I don't think the crisis comes to an end, however, until these banks actually do raise the capital that they need, and then ultimately begin lending more freely again.
SNOW: The White House says it doesn't expect to provide more public funds.
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: The administration doesn't believe that we need to go to Congress right now looking for more money.
SNOW: But economist Nouriel Roubini, who is sometime called "Dr. Doom," and called the downturn before others, says the stress tests weren't stressful enough, that the unemployment numbers used in them were too optimistic.
NOURIEL ROUBINI, NYU STERN SCHOOL OF BUSINESS: And the risk is we keep alive zombie banks like Japan, and that might lead to a more protracted credit crunch and weakness of the economy.
SNOW (on camera): But even "Dr. Doom," who prefers to be called "Dr. Realistic" these days, sees some light at the end of the tunnel for the overall economy. He's forecasting a recovery for the next year, although he does expect it to be weak.
Mary Snow, CNN, New York.
(END VIDEOTAPE)
HOLMES: And if you're looking for a ray of hope in the economic gloom, I actually have two rays of hope for you.
The stock markets just had their best two months in almost 35 years, struggling a bit today. You see that at the bottom of your screen, down about 23 points. However, 34 percent gain since March. That ain't bad.
Also for the second month in a row, pending home sales are up. The housing meltdown started this whole recession. Many think that is where the recovery will need to start.
We'll know more when we get those stress results and the latest numbers come out from the labor front as well.
And as I just mentioned, the market -- going to give you a bigger picture if you couldn't see it at the bottom of your screen there. Ah, put it up on the full screen, big screen for you.
Twenty-five points down right now, but still, a 200-point gain yesterday. So still ahead for the week.
Well, if you ever thought about buying a Chrysler, now might be the time to do it. The company is rolling out a new incentive program today. It could mean big savings to qualified buyers.
The bankrupt automaker expects to lose $4.7 billion this year. Chrysler's pushing to unload $2 billion in assets so it can merge with Fiat as soon as possible and then start all over again.
Well, look what the housing crisis has come to in Victorville, California. What you're seeing here are brand new homes, some of them not even finished, being torn down before anybody ever moved into them.
You're hearing me right, folks. Brand new houses.
This was a development that was started before the housing market tanked. The median home price in the county, where this city is, went from $325,000 to $160,000. The bank that now owns these places claims it's far cheaper to tear the houses down than finish them and try to sell them right now.
Well, beaming down electricity, that's what a California company plans to do with a unique solar power plant. We'll find out all about it when we head live to New York for our "Energy Fix."
(COMMERCIAL BREAK)
HOLMES: All right. Get more now on the banks and stress.
Over the past year, stressed-out banks have been both cause and effect in the economic meltdown. And the Fed wants to get ahead of the curve now. Thus, the stress tests that are meant to tell us which banks we can stop worrying about and which ones we still need to be a little worried about.
Fed Chief Ben Bernanke on Capitol Hill today, making the case for a lack of stress all around.
(BEGIN VIDEO CLIP)
REP. CAROLYN MALONEY (D), JOINT ECONOMIC CHAIRWOMAN: Let me say, you have definitely not been boring during this -- during this crisis. You've been incredibly innovative, coming up with many other ideas of how to approach challenges.
So, what's next if we need it, the help?
BEN BERNANKE, CHAIRMAN, FEDERAL RESERVE: I look forward to a long period of boredom.
MALONEY: I think the country would like a little boredom, too.
BERNANKE: Yes, we all would.
(END VIDEO CLIP)
HOLMES: Justin, were you bored watching this today?
Justin Fox joining me now.
The Curious Capitalist is his name, he's also known as, for "TIME" magazine.
Good to have you here. And you know what? It does make some sense. When we start to get a little bored, that means that all this exciting and often exciting stuff is bad news and whatnot to report. So, I guess we see the point we're trying to make there.
So, how close are we to that boredom they're talking about?
JUSTIN FOX, EDITOR-AT-LARGE, "TIME" MAGAZINE: I mean, real serious, letting Ben Bernanke go home at 5:00 every day boredom, I don't know that that's going to happen for several years. But definitely compared to what was going on last fall, yes, these are nicely boring times.
HOLMES: And you know, people were kind of harping on one thing, kind of jumped on one thing he said today, which was that, in fact, yes, it looks like we're going to be coming out of this recession and maybe a recovery at the end of the year. People jumped on that quote, but that's not the first time we've heard him say that.
FOX: Right. Bernanke has been saying that for a few months, and so have most economic forecasters, I would think. It's just no one really believed them. But now it's pretty clear from the behavior of the stock market and some of the signals we're getting out of the economic indicators that it isn't a crazy argument to make. There's a good chance we will be out of the actual shrinkage of the economy by the end of the year, which doesn't mean everything's going to be boring and coming up roses.
HOLMES: Yes.
So, what still do -- what are the issues that members of Congress still have with the Treasury, and also have with Ben Bernanke, possibly, that he's not doing maybe some of the things and they're not doing some of the things they would like? And Congress, in a lot of ways, is powerless here to tell Bernanke and the Treasury what to do with this money.
FOX: That's true. I mean, the Fed sort of operates at length arm's length distance from the political leadership. I don't know that their issue is so much with the Fed. I think everybody in Congress, it turned out to be very unpopular, big surprise, to give hundreds of millions -- billions of dollars to banks. And so, everybody in Congress hates that, even though probably the best thing we could do would be to give the banks a little bit more right now, just to shove them completely over the hump.
HOLMES: You say to give them more right now? A lot of Americans listening to you right now just cringed.
FOX: Right. Well, the issue is just that the losses being faced by our banking system are so huge -- and there's still a lot still to come -- that's what these stress tests were, to a certain extent, about trying to figure out what the likely losses are over the next year and a half. But there could be, beyond that, and a lot of people have criticized the stress tests for not really exploring the worst- case scenario at all.
So, the issue really is a lot of these banks are in sort of constrained situations. They're experiencing bigger loan losses on their old loans every day. They're making a little money on the new business that they're doing.
HOLMES: Yes.
FOX: But it's hard for them to do much -- to do a whole lot of new business simply because they had so much in the way of losses.
HOLMES: All right, Justin. I've got to let you go. Ten-second answer -- big deal or not a big deal, these stress tests?
A lot of people seem to think they know what's going to come out of these stress tests on Thursday anyway. So are we going to see -- how big of a day is Thursday?
FOX: Well, it started with them saying everybody was going to pass, and now we're finding out that yet 10 of them are going to need some help from teacher (ph) to pass. So, it's a big deal, but it's a moving target. It seems like every day the message we're getting out of it is different.
HOLMES: All right.
Justin Fox, the Curious Capitalist from "TIME" magazine.
Sir, we appreciate your time.
FOX: Thanks for having me.
HOLMES: Good to seeing you, and look forward to more boring times with you.
Thanks so much, buddy.
FOX: All right. HOLMES: Well, critics and supporters of a huge bridge project square off in Florida. Well, the bridge will be funded by your taxpayer dollars, the $128 million worth. But some are saying this thing is absolutely not needed.
(COMMERCIAL BREAK)
HOLMES: Well, your foreclosure and retirement questions. And our Gerri Willis is tackling them today at the Help Desk.
(BEGIN VIDEOTAPE)
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: We want to get you answers to your financial questions. Let's get straight to the Help Desk.
Lynnette Khalfani Cox is a personal finance author and Greg McBride is a senior financial analyst with Bank Rate.
All right, guys. Let's get to them.
Joanne asks, "I went through a foreclosure last year. I had two loans through Chase, a first and a second mortgage loan. After the foreclosure, I started receiving correspondence from a company trying to collect on my second mortgage."
"I thought when you foreclosed on a home you're no longer liable for the mortgage payment. Am I liable to pay the second mortgage which was apparently sold to another company for collection?"
Tricky question, Lynnette. There's a lot of focus on this issue this week, though.
LYNNETTE KHALFANI COX, PERSONAL FINANCE AUTHOR: Right. The short answer is, yes, you are still liable to pay that second mortgage. That obligation remains even though you went through foreclosure. The good news, as you just suggested, Gerri, is that the Obama administration is trying to bring lenders to the table to have them talk about writing off essentially for consumers those second loans where people have gone into foreclosure.
WILLIS: And only, though, if you're part of the MakingHomeAffordable.gov program. So you definitely want to check that out at MakingHomeAffordable.gov.
Let's get to that next question.
John asks, "I am almost 59 years old and would like to retire by 65, but my 401(k) dropped nearly 35 percent last year." Ouch. "I'm disappointed in my financial adviser. I thought he would move my portfolio toward a more conservative position when the market was looking shaky. My friends moved to more conservative funds and they're not even experts."
There seems to be a buy and hold philosophy with financial planners rather than reallocate based on market condition. Am I wrong?"
Greg, this is interesting. And lots of things going on in this question.
GREG MCBRIDE, SR. FINANCIAL ANALYST, BANKRATE.COM: Well, a 35 percent drop for somebody who is 59 years old, that is pretty steep. But let's be realistic, even if they had a more appropriate investment allocation, they were probably still looking at a 25 percent drop last year because there were so few places to hide.
So maybe revisit that investment allocation just to make sure it's appropriate for that time horizon and your risk tolerance. But this notion that you're going to reallocate to conservative investments as the market goes down, that's a recipe for buying high and selling low.
WILLIS: Amen to that.
MCBRIDE: And in fact, you really want to do the opposite of that.
WILLIS: You know, and another question here is, have you given your adviser the OK to move your investments around? It's possible that they're not even talking to each other. So it may pay here to actually have a conversation with your adviser and tell them how comfortable you are with risks.
KHALFANI COX: That's right.
WILLIS: All right, guys. The Help Desk is all about getting you answers. Send me an e-mail to gerri@cnn.com, or log on to cnn.com/helpdesk to see more of our financial solutions. And the help desk is everywhere. Make sure to check out the latest issue of "Money" magazine on newsstands now.
(END VIDEOTAPE)
HOLMES: All right. The president of the United States can rarely get a private moment. Cameras are following him around everywhere, including when he eats lunch.
(BEGIN VIDEO CLIP)
BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: OK. How you doing, man? What's your name?
UNIDENTIFIED MALE: Harris Walker (ph).
OBAMA: Good to see you.
Nice to see you -- Joe.
JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: I'll get a Swiss cheeseburger, jalapeno peppers.
And do you put ketchup on it or do we do that ourselves? OBAMA: I'm going to have just your basic cheddar cheeseburger, medium well.
UNIDENTIFIED MALE: How would you like those cooked?
OBAMA: Make them all medium, because I don't know how they'll want them. There you go. All right.
Thanks, guys. All right.
I got the peppers. It looks pretty good.
BIDEN: That's cheddar, right?
UNIDENTIFIED MALE: That's cheddar. That's Swiss with peppers.
(APPLAUSE)
(END VIDEO CLIP)
(COMMERCIAL BREAK)
HOLMES: Taliban militants making big gains in both Pakistan and neighboring Afghanistan, and raising serious concerns for the Obama administration. The president's point man in the region, Richard Holbrooke, spoke out on Capitol Hill today, saying Pakistan faces huge challenges and needs U.S. help in countering the Taliban. They spoke as fighting flared up in Pakistan's Taliban-controlled Swat Valley -- that's up in the north -- amid warnings that a half million civilians may flee that area.
President Obama sending some 17,000 more troops to Afghanistan, as part of their mission, to stop the Taliban from launching attacks from Pakistan into Afghanistan.
Swine flu update, here, for you, and some news possibly. Maybe not for some kids who were glad to get out of school, but no more flu days. U.S. health officials now urging school not to shut down over the swine flu. Confirmed cases of the so-called H1N1 virus are still on the rise, but it's mostly due to researchers plowing through a backlog of samples.
Again, those are suspected cases just now being confirmed. The virus turned out to be a lot less dangerous than it could have been. So, officials still urge anybody with flu-like symptoms to stay home from school or work for seven days.
Well, a novel approach to fighting the swine flu, but is Mexico's patron saint any match for the H1N1 virus? Our Karl Penhaul will explain. That's coming up a little later this hour.
Well, Florida's most expensive -- and one of the state's most controversial transportation projects -- just hit the stimulus jackpot; $128 million will be used to build a bridge that critics say is not needed and is not shovel ready. Here now CNN's Special Investigations Correspondent Abbie Boudreau. (BEGIN VIDEOTAPE)
See if you can see this picture. Hundreds debate bridge. I mean, this is back in 2003.
ABBIE BOUDREAU, CNN CORRESPONDENT (voice over): In fact, the debate over the Indian Street Bridge between the communities of Palm City and Stewart in Martin County, Florida, hasn't died down for 20 years.
UNIDENTIFIED MALE: You could call it the damn bridge to no where!
BOUDREAU: In 2004, a D.C. watchdog group, Taxpayers For Common Sense, listed this bridge project as one of the most wasteful projects in the U.S. Odias Smith is suing the state to stop the bridge.
ODIAS SMITH, CRITIC OF BRIDGE: The president should know that this is a boondoggle and he's getting swindled.
BOUDREAU: The bridge Smith calls a boondoggle is expected to get $128 million in stimulus money, topping the list of projects in Florida. But critics, like County Commissioner Sara Herd, say there's one big problem.
(On camera): There's a bridge that already exists between these two communities, and so where will the new bridge be?
SARAH HEARD, MARTIN COUNTY COMMISSIONER: The new bridge will be just about a quarter of a mile south of here.
BOUDREAU: Only a quarter of a mile?
(Voice over): This is the bridge used now. Four lanes, more than 1,000 feet long.
(On camera): Is there something wrong with this bridge? Structurally?
MIKE MORTELL, METROPOLITAN PLANNING ORGANIZATION: Absolutely not. The bridge is in fine shape. It just simply doesn't have the capacity to move more cars over it.
BOUDREAU (voice over): Mike Mortell, the chairman of the committee planning the bridge, says there's too much traffic congestion during rush hour and a second bridge would fix the problem.
(On camera): We were told that the reason for the second bridge is because this bridge is so congested.
HEARD: Well, you can see how congested this bridge is. It's not.
BOUDREAU (voice over): We wanted to see what it looked like during rush hour. You can see the traffic was a bit congested leading up to the bridge at this intersection. (On camera): It's busy. And I'm interested to find out what it's like when we get to the bridge.
(voice over): But at 5:45, the height of rush hour, we had no problem driving across the bridge. Heard says not only is the new bridge a total waste of money, but the project should not have even qualified for stimulus dollars.
HEARD: I'm flabbergasted to tell you the truth, because my understanding of stimulus money was that it was supposed to be for shovel-ready projects that could be completed in three years. This is not shovel ready.
MORTELL: I think that she probably misinterpreted what shovel ready means. Shovel ready doesn't mean it's finished, it means it's ready to begin.
BOUDREAU: But Heard points out there are still a handful of homeowners like this woman ...
UNIDENTIFIED FEMALE: I'm still praying that it won't happen.
BOUDREAU: -- who refuse to give up their homes and properties to make way for the bridge. The county would have to declare eminent domain over the properties and that could take months, or even longer. Still, once that stimulus check arrives, this 20-year-long debate will be over.
(On camera): Does that debate even matter?
HEARD: No, it's been taken out of our hands then.
(END VIDEOTAPE)
BOUDREAU: Mike Mortell says the state already posted hiring notices hoping as many as 3,500 jobs will be created. He says the goal is to break ground in July.
HOLMES: OK, oh my goodness. That's the rush-hour video you showed there.
BOUDREAU: We weren't speeding by the way.
HOLMES: At all.
BOUDREAU: I know it kind of sounded ...
HOLMES: No, please, no, no, no. But to think that's rush hour on that bridge, and even the intersection you showed, that Peachtree any time of the day here in Atlanta.
BOUDREAU: Oh, yes.
HOLMES: How in the world did it get the green light in the first place? Who would have authorized this? BOUDREAU: We were told it was top priority. It was backed by the governor and it was passed by the Florida legislature. I mean, it did happen relatively quickly.
HOLMES: But the fight apparently is going to continue. A lot of people don't want to give up their homes and debate about if it should will be built.
BOUDREAU: Yes, these people are angry because they say, well, no longer does our voice even matter now. You know? The government came in, gave us all this money, and now it is out of our hands. And it looks like it just might be.
HOLMES: And $128 million, Abbie Boudreau, we always appreciate your stories. Interesting and it makes you sit up and pay attention. Thank you so much.
BOUDREAU: OK, thanks.
HOLMES: Well, has the nation actually turned a corner on the housing crisis? What about the credit crunch? We'll have more bailouts possibly? Well, today members of Congress asked the Fed Chief Ben Bernanke those questions and a whole lot more. Time to turn the tables now, and ask them.
(COMMERCIAL BREAK)
HOLMES: This might sound like some science fiction here, but one California utility is eying solar power from space. Poppy Harlow is grounded right now. She's in New York, has our "Energy Fix."
This does, this sounds like some science fiction, but this, is a possibility?
POPPY HARLOW, CNN CORRESPONDENT: You know, it's a possibility, but it's a possibility with a lot of "buts" and "ifs" in it, really. We should put a caution sign up, because this is a theory. But what makes it so newsworthy, is that California's PG&E Energy, a big utility in that state, has signed a deal with a start-up company called Solaron that could produce the world's first space-based solar plant.
Here's how it works. The goal is that you would send something that looks like that into space, into orbit, by 2016. One of the questions that came from a colleague of our here at CNN, and it's a good one. How would the energy reach California? Here's how that sunlight would be transmitted. Basically like radio waves, through radio waves to a power plant that would be based in Fresno, California, converted there into electricity.
Good in theory, but very preliminary. Application really was just filed a few weeks ago, T.J., has to be approved by California regulators.
Here are some of the pros and then I'll tell you some of the cons. Of course, in space you can have these massive solar panels because there's plenty of space. And space pun very much intended there. And also the sun is always shining. You don't have to worry about what to do at night or on a cloudy day. The idea has actually been studied by NASA, but the Pentagon, but there are a lot of skeptics out there.
One big question is cost. We talked to Boeing's Earth and space experts, they said a major challenge is the cost. It could be about $1 billion just to get a few of these satellites up into space, T.J.
HOLMES: OK, you threw out - I was waiting on the numbers to come out.
HARLOW: Yeah.
HOLMES: But if you throw those numbers out, I mean, does it just make this a bit unrealistic? This just can't happen? It's going to cost too much isn't it?
HARLOW: You know, if it's interesting, when you look at the blog on Fortune.com, we're going to pull up for you about this, all of the bloggers have a lot of questions. Could the cost be prohibitive? The financial terms haven't been disclosed, but PG&E says, listen, it's not going to pay a penny until power actually comes to Fresno, California, from space.
What we did is we checked out the GreenWombatBlog on CNNmoney.com, in our Fortune section, I want to read you two of the comments.
Matt from New York wrote in, and Matt wrote in, this is "a classic scam. Raise money to pay fat salaries with absolutely no hope of ever producing real goods and services. Then fold in a year or two."
Matt doesn't like it. But Marty in New York, here is what -- actually, that's from Marty, sorry about that.
Nathan in Oregon wrote, "Try explaining the Internet to someone in 1922." Went on to say, "We can find new solutions or we can sit back and pooh-pooh any new idea."
I don't know, T.J., a lot of opinions. Someone else said we would need a weapons defense program because a missile could shut these down. So, who knows?
HOLMES: There are all kinds of problems. But you had our attention there at least.
HARLOW: Good.
HOLMES: And we'll keep up with this and see if this ever happens. Poppy Harlow, always good to see you. Thank you very much.
HARLOW: You're welcome. HOLMES: We'll turn to some weather now; a big chunk of this country dealing with some stormy stuff. Chad Myers still tracking this stuff. And I was talking to you about this earlier. Get used to it, it's springtime, it's summertime, son, it's going to be here for awhile.
CHAD MYERS, CNN METEOROLOGIST: Yeah, you know, we get to those summer doldrums we're all going to say, well, how come there's nothing going on? Well, there's something going on today so enjoy it, if you like things going on.
(WEATHER FORECAST)
HOLMES: Drivers along a stretch of Texas highway say they were targeted and their property taken. And they say the culprits? The cops.
(COMMERCIAL BREAK)
HOLMES: Well, dozens of tips have come in, but so far they haven't led police to three-year-old Bryant Rodriguez. Armed robbers, police say, burst into his house Sunday in San Bernardino, California. They robbed the home. They tied up all five kids who were inside, along with their mother, and left with the three-year-old Bryant. Investigators say there's been no ransom demand. They don't know of any motive. The boy's mother said the kidnappers threatened to take him to Mexico and kill. The border is two hours away. Law enforcement officials say home invasions and kidnappings are on the rise in U.S. communities near the border. It's been worse in Phoenix; 368 abductions there last year. The Maricopa County DA has established a task force to deal with the problem there.
They say they were victims of highway robbers and the robbers were cops. Drivers along a stretch of Texas highway say they were targeted and their property taken. CNN National Correspondent Gary Tuchman has been looking in to this story for us.
(BEGIN VIDEOTAPE)
GARY TUCHMAN, CNN NATIONAL CORRESPONDENT (voice over): Many of the people pulled over on Highway 59 tell us they are guilty of one thing and one thing only -- driving while black or Latino.
DAVID GUILLORY, CLASS ACTION ATTORNEY: They're disproportionately going after racial minorities.
TUCHMAN: So, are the allegations true? After our repeated calls were not returned, we found the people you just heard about, the cop who has made most of these arrests.
(On camera): Hey, officer?
UNIDENTIFIED MALE: Yes.
TUCHMAN: My name's Gary Tuchman with CNN. I want to know if you recognize this guy? We're doing a story about this guy, Roderick Daniels? He was pulled over here by you a year and a half ago and you took his money and his jewelry. Do you recognize him?
(voice over): The district attorney, we located her at a fundraiser.
(On camera): Miss Russell, do you have any comments about these allegations regarding the forfeiture accounts? Miss Russell?
(Voice over): Both the DA and the cop were very surprised to see us.
(END VIDEOTAPE)
HOLMES: Well, you can see Gary Tuchman's full report on CNN's "Anderson Cooper 360". That is tonight, 10:00 Eastern, again, only right here on CNN.
Let's turn now to team Sanchez. Working on the next hour of the NEWSROOM.
Rick, good to have you back. I tried to fill your shoes yesterday, and as everybody knows, those are tough shoes to fill.
RICK SANCHEZ, CNN ANCHOR, CNN NEWSROOM: That's very kind of you to say that. But I'm sure you did a great job, because people Twitter me, you know, and they give me a full report on everything you do and say.
HOLMES: Uh-oh, that ain't good.
SANCHEZ: Got you nervous there, don't?
HOLMES: Yeah, a little bit.
SANCHEZ: T.J., here's a couple things we want to talk about today. First of all the pirates. I know, after a while it gets to be a little bit of an old story, but every once in a while it gets refreshed because when you hear the guys from the crew of the Maersk Alabama actually testify about what happened that day, when they were under attack by pirates. And that will be happening right about on our watch at 3 o'clock. So that's interesting enough.
And, speaking of pirates, we've got some fabulous video of actual pirate attack as it's happening. And as we are apt to do during this hour, we're going to let the viewers see it unedited. So they can see the attack, the skiff, hear the shots being fired, and see what actually going on, on the bridge as some of the crew starts running around trying to figure out how they're going to be able to avoid this attack. We'll tell you more about that.
We're also extremely interested today on what is going on in Texas. There's a lot of talk that Kay Bailey Hutchison might be running against Governor Rick Perry for the governorship.
HOLMES: Yes.
SANCHEZ: Perry seems to be doing this dance, with folks, with things like secession. It is kind of weird. So, you wonder what's going to happen in that party? Whether it will be split down the middle between like the Charlie Crist crowd, and the Sarah Palin/Joe The Plumber crowd.
But more importantly, just as their governor is talking about secession. Get this, just as he's talking about secession. We don't need the United States. We can do it alone. We can go it alone. It comes out in a report that Texas has taken more federal aid for disasters, and has asked for, more than any other state in the union.
HOLMES: So, are they going to give that back if they secede from the union?
SANCHEZ: Put that in your Funk & Wagnall, I don't know.
(LAUGHTER)
HOLMES: All right, Rick.
SANCHEZ: It's political fodder and you know we love that here on NEWSROOM.
HOLMES: Well, we're looking forward to it. Good to have you back, my man. We'll see you in just a few minutes.
SANCHEZ: All right, T.J.
HOLMES: Well, the banks they aren't the only ones under stress these days. Stressed-out banks means stressed-out folks across the country. Fed Chief Ben Bernanke briefed Congress today on the so- called stress tests aimed at heading off future bank collapses and speeding the recovery.
GOP Senator Sam Brownback, ranking member of the Joint Economic Committee joins me now live from the capitol.
Senator, I know you were sitting in there listening to Mr. Bernanke. He said some things that sounded encouraging, including that he expects the recovery to begin at the end of this year. There's some good things you can point to in the housing market. It looks like a recovery might be on the way. Did you like what you heard from him today?
SEN. SAM BROWNBACK, (R) JOINT ECONOMIC CMTE.: Well, it's a glimmer of good news and we haven't heard a lot of that for some period of time. It's been over a year since we've heard the Fed chairman really talk much in the way of a positive note. So, I was quite encouraged, even though he was pointing out some real problem areas still.
Commercial markets, we still don't have our exports going back, anyway, the direction that we want to. Still, he had a few positive signs particularly on the housing market. And, of course, the stock market's been bouncing up. So, it's a -- from what we've been hearing over the last year, it was a good report relative to that. HOLMES: Well, sir, do you sometimes there on Capitol Hill feel powerless in this whole thing? Because they can ask for your advice, rather, the Ben Bernanke, and also the Treasury Department, but they don't necessarily need your consent to do some of the things they want to do with the banks and with these hundreds of millions and billions of taxpayer dollars. So, do you feel a bit powerless at times?
BROWNBACK: Well, on the Fed, with monetary policy, they are supposed to be independent. And so you want them that way, because you don't want politicians setting monetary policy. But on Treasury, they have to come to the Congress for money. And that's where I think, we, as Congress, haven't done a good enough job in setting the parameters and also on oversight. And this has been a huge amount of money that has moved out very rapidly. And I think we haven't done our sufficient role in the oversight. I think we got to do a lot better on that.
HOLMES: Well, do you like -- I know some of the money that was already doled out, that was the criticism, there weren't enough checks and balances. And you really did have to just sit back and watch what they did with some of the other money. So, in moving forward, are you prepared to give the Treasury more money? Some that -- some people say might be needed after we see some of the stress tests?
BROWNBACK: I'm not.
HOLMES: Yeah.
BROWNBACK: Not at this point in time. You know, we've put $700 billion into the banking system last year. And then, you know, we still have difficulty. And I've got a lot of constituents out there saying, you know, what about my bailout money? It seems like I'm shoveling all of it towards these banks, and what are you -- what are you showing towards me?
I'm not ready to do that at this point. I would be ready to do things like cut -- or make interest deductible on new car purchases for this next year, or something like a cash-for-clunkers type of program, where the consumer themselves sees some real benefit out of what the Congress is doing.
HOLMES: Are we starting to -- and, again, nobody's suggesting at all we're out of the woods - but with some of the positive signs, even little glimmers of hope anybody would take right now - do you feel optimistic in that maybe we are starting -- we've at least bottomed out and are our way back up? And if you do feel that way, do you think that the Treasury, Tim Geithner, and Bernanke, right now, are deserving some of the credit? And I guess why not continue just to listen to them if you think we're going in the right direction?
BROWNBACK: Well, I am not certain, but I am glad to hear the positive news. The bigger concern that I have at this point in time is that you not put too much money out there to the point that you can't pay the money back. And you build yourself a much bigger problem that are we creating a government bubble, that replaces the housing bubble? And then it ends up bursting. So, I think there's a real calibration. That was one of the things I was asking Bernanke about today is, how do you start to unwind some of this? If we're pulling out and you don't want to get big, inflationary pressures and you also don't want to just raid the treasury for generations to come. How do we start unwinding that? He was talking about some of the signals he'll watch. That's a very early discussion obviously.
HOLMES: Do you believe as well, I mean, certainly many believe that the housing market and bubble bursting started this whole decline, do you think the key in the comeback will be in the housing market, as well?
BROWNBACK: I think that's one of the keys. But I also think that gas prices last summer were a big part of what burst the whole bubble. You put $4 gasoline out there and it drains everybody's pocket. And I'm -- I'm concerned that you look out into the future, that you really got to watch energy prices and for its impact on draining the consumers' pocketbooks.
HOLMES: All right, Senator Brownback, ranking member of the Joint Economic Committee.
Sir, we appreciate you stepping out and giving us a few minutes today. Thank you very much. You have a good one.
BROWNBACK: Happy to do it.
HOLMES: Well, Hollywood saying good-bye to one of its funniest character actors.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
SHIMON PERES, ISRAELI PRESIDENT: Friendship, I was profoundly touched by the words he said. And (INAUDIBLE) by the position of the Israeli government put forward to the president and (INAUDIBLE) And the officials and the position of the Israeli government we look forward with the president and the prime minister. And I think, then, the conditions will be much clearer. For me it's clear. Thank you very much.
QUESTION: Mr. President, what's your position about Mr. Obama with regard to your position to the two-state solution? And are you committed to them? And in regard to Iran, should Iran be dealt with first before any talk about the resolution with the peace process?
PERES: I don't want to say anything on that other question. I just want to let you know. The first part, the other question you said, Mr. Netanyahu has repeated (INAUDIBLE) of the previous government - The previously government accepted the (INAUDIBLE). In the (INAUDIBLE) you'll find the (INAUDIBLE) the two-state solution. Then he said, he's ready to start the negotiation right away. Then he said he doesn't intend - he said, he didn't intend to govern the Palestinian people.
