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President Obama Seeks Deadline on Credit Card Reform Bill; Obama Meets with Health Care Industry Leaders; U.S. Soldier Opens Fire on Comrades at Baghdad Base; Pope Advocates Palestinian State; Banks Worried about Credit Card Defaults; "Katrina Class" Graduates from College; Large Class of Baby Boomers' Children Faces Difficult Job Market; GM to Replace Half of Board; Study Ranks Plant-Based Electricity More Efficient Than Ethanol
Aired May 11, 2009 - 09:59 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HEIDI COLLINS, CNN ANCHOR: Checking stories happening right now. An Iranian American journalist sentenced in Tehran to eight years for spying is actually expected to be released at any moment. Roxana Saberi has denied the charges. And under appeal, her jail term has been reduced to two years of a suspended sentence.
Fire officials say it was probably a power tool being used to clear brush that caused a massive wildfire in Southern California. The fire started near a trail in Santa Barbara. Nearly 9,000 acres have burned and about 80 homes and other buildings were destroyed.
Well, you're going to have to pay more to mail a letter beginning today. The price of stamp is going up two cents to 44 cents a piece, now. The postal service blames rising production costs for the hike.
Your plastic in focus. President Obama has given lawmakers a deadline for credit card reform legislation today. Senators are working on a measure the president wants on his desk two weeks from now. Our personal finance editor Gerri Willis has details on the credit card bill of rights. But first let's hear from the president.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The abuses in our credit card industry have only multiplied in the midst of this recession. When Americans can least afford to bear an extra burden. It is past time for rules that are fair and transparent. And that's why I've called for a set of new principles to reform our credit card industry. Instead of an "anything goes" approach, we need strong and reliable protections for consumers.
Instead of fine print that hides the truth, we need credit card forms and statements that have plain language in plain sight. And we need to give people the tools they need to find a credit card that meets their needs.
(END VIDEO CLIP)
COLLINS: So, what exactly is in the credit card bill of rights for you? And our Gerri Willis is joining us now from New York to break it all down. So Gerri, are credit card companies already starting to change their tune on this?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, this is interesting, Heidi. A Web site called billshrink.com tracks credit card terms, and they've been analyzing just how many credit card companies are already in compliance with the credit card bill of rights. They've found that since the credit card bill of rights was first voted on in Congress last December, credit cards have been adopting some, some consumer friendly practices but they are ignoring practices that make them a lot of money.
For example, one of the most powerful acts of the bill includes protection from arbitrary rate hikes. But no issuers are in compliance with that yet. The credit card bill of rights also states that consumers should get fair allocation of payments to different balance rates. Often the bank charges you, Heidi, multiple interest rates for different portions of your debt.
Maybe you have a low introductory rate at first, and then it went up. And most banks apply your payment to the low interest items first so the higher interest part of your debt lasts longer. They make money off of you. No credit card companies have stopped doing this. Not yet anyway. That's according to billshrink.com. Heidi.
COLLINS: So what happens next, then? Are credit card companies adopting any of the new rules?
WILLIS: Well there is some good news here. Many banks are beginning to comply with less onerous rules including more notice before interest rate increases go into effect. And the right to set your own credit limit so you don't accidentally go over the limit and get hit with penalty fees.
For example, if your credit limit is $5,000, you can request to put in place a hard limit of $4,500. Now, your purchase may be even denied but you won't be hit with that $40 fee. And a few banks, some big, some small, have stopped with what they call double cycle billing. And even before the credit card bill of rights was voted on a number of big banks dropped universal default policies. So there is some movement in the right direction.
COLLINS: Yes. So quickly, what's the takeaway for consumers?
WILLIS: You've got to keep on track of any mail you get from your credit card issuer. It's likely that the big revenue makers for credit card companies like arbitrary rate hikes and lowest interest first policies will be the last to go. Often when credit card companies change their terms, you do have the ability to opt out of the changes, but that usually means you have to close the account.
And closing an account could hurt your credit score. But if you can't pay the balance in full and you can't do a balance transfer, you may want to consider opting out -- Heidi.
COLLINS: Yes, no question. All right. Our personal finance editor, Gerri Willis. Thank you, Gerri.
WILLIS: My pleasure.
COLLINS: Millions of Americans may not be able to pay off their credit card debt. That could mean tens of billions of dollars in losses for the banks. Now, a huge load on the already burdened banking industry. We'll have more on that coming up later this hour.
Meanwhile, talking about numbers. Whoa. Dow Jones industrial average is down about 125 points right there. We're about 35 minutes into the trading day. We'll keep our eye on top of that for you. Resting now at 8448.
And also, I want to get more information to you on the other top story affecting your bottom line. The future of health care in America. This morning we've mentioned President Obama meets with health care industry leaders. They're offering him $2 trillion in savings over 10 years, sort of down payment on the president's plan for universal health coverage.
So, we do have team coverage on this story. CNN's Suzanne Malveaux is at the White House on what this plan may do for you and for cutting the nation's budget deficit. And our Elizabeth Cohen is here to address the big question, is it really going to work? Let's go ahead and begin with Suzanne though. Suzanne, what exactly are we going to be hearing today?
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Heidi, sure, you know, last week we were dealing with this. Obviously the budget, the administration...
COLLINS: Some light reading.
MALVEAUX: Five pounds of light reading, actually, Heidi, when you think about it. But they were talking about reducing the budget. We're talking about half of one percent here. So obviously we were putting it to administration officials what does this really mean in terms of savings and looking at the budget deficit in the long term. And they constantly were saying, look at health care reform. That's the area where it's really going to make a difference.
So, this is really part two of that argument. You're going to hear the president come out. He's going to be meeting with industry leaders. And they're talking about not necessarily reducing health care costs but slowing down the increase. Because it is going to get more and more expensive. But they're talking about voluntarily trying to slow the increase of the cost by 1.5 percent over the course of 10 years.
Each year to do that, what does that mean for ordinary folks? They say by the fifth year it's enacted, a family of four could save about $2,500 a year when it comes to their health care costs. In the big picture here, the government says it could save $2 trillion in the course of the 10 years or so. So that is what they're saying.
President Obama as a candidate promised to deal with the budget deficit. He also promised to deal with the system of health care reform, trying to get more folks insured. And he is presenting this today as a way of saying, look, there are some within the health care industry themselves who are cooperating to try to save some dollars, to save some costs and to pass that down to consumers, Heidi.
COLLINS: So, why aren't some of these people who had opposed those reforms actually jumping on board now?
MALVEAUX: Yes, and that's one of the things that senior administration officials are saying is a game changer here. One of the things that they've been able to do is say, look, we believe members of Congress are actually going to do something about the health care system that is broken, that perhaps they will try to reform it by the end of the year. So get on board here.
It is better, actually, to go ahead and have a seat at the table, if you will, to make sure that this benefits your industry, whether it's a union or a hospital or doctors themselves. That is what some of these major groups have decided to do. They believe that it's beneficial. But it is still, Heidi, voluntary. This is not something the administration can necessarily force upon the industry. They say they're coming to the table willingly.
COLLINS: Right. All right. We'll be covering all of this very closely today. Suzanne Malveaux coming to us from the White House.
Quickly I have to get back to another story though. A U.S. soldier in Iraq opens fire on fellow troops, killing four and himself. I want to get directly to the Pentagon and our correspondent there, Chris Lawrence, for the very latest. Chris, what do we know?
CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Heidi, a senior defense official now confirms it was, indeed, an American soldier who opened fire on his fellow soldiers this afternoon, Baghdad time, about 2:00 in the afternoon there in Baghdad. It happened at Camp Liberty, which is a sprawling base. One of the main U.S. bases there, very close to the Baghdad Airport.
It is believed that he opened fire, again, on other troops. The defense official tells me that he killed four other American soldiers. He wounded at least three others and then killed himself -- Heidi.
COLLINS: Yes, Chris, because originally when we had just mentioned this story, we had very few details. And we have been able to confirm that it was coalition troops. But as you are saying, we need to clarify here that it is, indeed, all U.S. troops that were - that were involved, correct?
LAWRENCE: Yes. Again, it was all -- from what we know, at least as far as the soldiers who are now dead, the five who are now dead, the four who were shot and then the one who shot and killed himself, we know that they were all U.S. soldiers.
COLLINS: OK.
LAWRENCE: We believe that the other three who were wounded were also U.S. soldiers as well. Again, when you look at the time difference there in Baghdad, this just happened not too long ago. So, we expect to be getting more and more information throughout the morning.
COLLINS: Boy, awful story. Certainly a lot more to learn there. I know you'll be working your sources. And we also have our Cal Perry there, working on it as well. Sure do appreciate that. Chris Lawrence, coming to us live from the Pentagon. Thanks, Chris.
LAWRENCE: You're welcome.
COLLINS: A couple of states trying to regroup now after severe storms leave them overwhelmed from flooding and mud slides. Reynolds Wolf has been tracking the storms for us here in the CNN severe weather center. Hey there, Reynolds.
REYNOLDS WOLF, CNN METEOROLOGIST: Hey there, Heidi.
COLLINS: Some incredible pictures, yes.
WOLF: You're absolutely right. We've been showing everyone video of what's been happening in West Virginia. Just unbelievable flooding. We may see that way again today in parts of the Red River Valley. We're talking Oklahoma, Texas, maybe even Arkansas before the day is out. That plus your space shuttle launch weather. It's all moments away.
(COMMERCIAL BREAK)
COLLINS: Quickly I want to get over to Reynolds Wolf. A lot of severe weather to talk about. Lots of different areas dealing with it, too. National Guard out. Boy, we're talking about, what, Arkansas and several other places, right?
WOLF: Arkansas and West Virginia. You know, it's funny, Heidi, is you know, we've got all kinds of great ways to tell a story. One of the best ways is to show you the West Virginia video. This is compliments of WSAZ. You can see the mud. A lot of the water beginning to recede. But now the pickup, the damage is going to be the thing that people are going to sift through today. Just awful conditions there.
A lot of rain fell in a very rapid time. You have to remember that West Virginia, a very mountainous region. You have a lot of rocks in the soil. So the ground really can't absorb a lot of the moisture as it's falling. You have a lot of runoff. When you have the runoff you have widespread flooding. And that certainly is just the situation.
If you come back to me for just a moment, something else I want to show is that we may see more flooding today. But not in parts of the Appalachians but rather the Central Plains making our way back to the Red River Valley, in that border right here, and then into parts of Arkansas into Texas, even into, say, Arkansas you may be dealing with a good chance of some flooding today.
The reason why is because you'll notice a lot of this moisture going over the same areas. Again, what happens is that ground can only absorb so much. And then when it's saturated, you have runoff with the additional rainfall. That can be a huge issue. Certainly something we're going to watch very carefully today.
Something else we're also going to watch is your weather out at Cape Canaveral. Take a look at our computer models. We're going to put this in motion for you. We're going to run the clock, too and you'll notice. Scattered showers mainly well to the north of the launch site. Expecting conditions to be just pristine. About a 90 percent chance of that launch occurring as we make our way through the afternoon. Right now launch time at 2:01.
Giving you a live shot that we have at this time. There it is. It's up. Ready to go. All things looking pretty good. And again, if you ever have the opportunity, go out there and see one of these firsthand.
COLLINS: Yes.
WOLF: It's a magnificent thing to witness. By all means make the drive over from say Orlando, maybe even driving south from Jacksonville or say up from West Palm. It is an amazing thing to watch.
COLLINS: I am dying to do that. Definitely going to take the kiddos and get that done.
WOLF: There you go.
COLLINS: Yes. All right. Very good. Reynolds, we sure do appreciate it.
WOLF: Absolutely.
COLLINS: A priest in love talks about celibacy, sacred vows, and the woman he desires.
(COMMERCIAL BREAK)
COLLINS: We'll give you a quick follow-up on a story that we brought you last week about a priest in love. Miami celebrity priest, Alberto Cutie, the internationally known radio host, was caught embracing a woman on a Miami beach. These pictures triggered a stream of controversy over celibacy in the Catholic Church. This morning, Cutie told CBS he is still deciding whether to leave the church and marry his love.
(BEGIN VIDEO CLIP)
REV. ALBERTO CUTIE, REMOVED FROM PARISH AFTER AFFAIR: The first thing is that I deeply apologize to the Catholic community, and especially to my bishop and to brother priests who are faithful and are committed to celibacy. And I take full responsibility for what I did, and I know it's wrong. This is not easy for anyone to have to deal with.
But certainly it's affected me, affected my family. Affected the entire church community. We are a spiritual family. And I know that it's affected many friends at all levels of the church. I'm deeply sorry for what's happened. I don't want to be the anti-celibacy priest. I think that's unfortunate. I think it's a debate that's going on in our society.
Now I've become kind of a poster boy for it. But I don't want to be that. I believe that celibacy is good and that it's a good commitment to god. In my case, it was something I struggled with for a long time. This is someone that I love. I mean I got to tell you, I entered the seminary 22 years ago. And in 22 years I've never had a sexual relationship with anyone. I committed myself fully to my vows.
I've never been sexually inappropriate with anyone. I've never had any type of scandal. This is the only person that I've had sexual contact with. I think celibacy is good. But I also believe that what many say is that maybe it should be optional. And that I do believe. I do believe that people should be given the option to marry or not to marry in order to serve god.
But the church, see, has traditions and practices that are part of wanting to do what is right. I think we all have ideals. And we have ways of living. And we want to do things right. But the truth is sometimes we fall short. And I fell short.
(END VIDEO CLIP)
COLLINS: As you might have noticed, Cutie was not wearing his priest collar this morning.
President Obama meeting this morning with health care industry leaders. They're offering him $2 trillion in savings over 10 years as a down payment on the president's plan for universal health coverage. So will this work? Are we on the way to true health care reform or is this just smoke and mirrors? Senior medical correspondent Elizabeth Cohen is here now. So Elizabeth, President Obama says he's going to save $2 trillion - I don't know how we'll measure that or how he know that's going to happen? Apparently, over 10 years. How exactly is this going to work?
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Right. It's such a huge number. It's hard to get your head around this. So let me get you two examples of ways that health care is wasteful, and there are many ways. These are just two examples.
For example, you go to a doctor, something's wrong. And he orders an MRI or maybe he could have ordered that X-ray which is much less expensive. Doctors get criticized for doing that all the time. Here's another way. You get tests done at one doctor. And then you go to see another doctor for the same problem and they run the same tests again because they can't find the results from the first doctor. That's another example of waste.
So, one of the things that they're going to try to do is try to get rid of this waste and offer incentives so that these things don't happen as much as they do now.
COLLINS: OK. What are some of the examples of those incentives? Because some work and some don't. COHEN: Right. Exactly.
COLLINS: What are some that don't?
COHEN: I'll give you an example. I'll give you an example. Diabetics. Doctors do not get paid much for preventative care for diabetics. They don't get paid much for making that sure Mr. Smith or Mrs. Jones stays on their insulin and sticks to their diet.
Doctors get paid a ton of money for fixing Mr. Smith and Mrs. Jones when something goes wrong because they didn't stay on their insulin for surgeries or amputations or whatever. Obviously, those incentives are messed up. The incentives, the financial incentives should be there to get diabetics to stay on their treatment regimen.
COLLINS: Of course.
COHEN: Not to fix them later.
COLLINS: Right.
COHEN: But it's not the way it is right now.
COLLINS: Yes.
COHEN: So, big question as to whether they can fix - it's a huge system. It's just like taking a boat and turning it around. I mean this is a big...
COLLINS: Like a cruise ship.
COHEN: Right.
COLLINS: Yes. So how do the experts think he's actually going to do at that?
COHEN: Well, the folks I've been talking to pat him on the back. Even Republicans I've talked to...
COLLINS: Of course.
COHEN: ... pat him on the back for getting all these people in one room. That's hard to do to get all these different people, insurance companies, pharmaceutical industry in one room to agree to stop spending so much money. There's a lot of hope that it will work at all. I've heard a bit of skepticism, it's going to be really hard to make these changes.
They've been trying to make these changes for years now. Some people are making money the way it is now. And telling those people who are making money, hey, you've got to change your ways and not make so much money, that's not going to be easy.
COLLINS: That doesn't work?
COHEN: No, they don't like that so much. COLLINS: Yes.
COHEN: So, that's where really where the tough part comes in.
COLLINS: Yes, no kidding. All right. Our senior medical correspondent, Elizabeth Cohen. Thank you, Elizabeth. We'll be watching this all day long. Of course, right here on CNN.
Live coverage on President Obama's announcement on health care costs coming your way at 12:30 Eastern, 9:30 Pacific.
A third death now linked to swine flu in the United States. This one in Washington state. Health officials there say a man who already had heart problems died from what appears to be complications from the flu. The two other flu-related deaths happened in Texas. Federal officials confirm more than 2,500 cases of the swine flu in the United States.
Pope Benedict appearing to endorse a separate Palestinian state on his first official visit to Israel. Soon after he got off the plane, he also honored victims of the holocaust. A theme that our Paula Hancock says will stay with him throughout his visit.
(BEGIN VIDEOTAPE)
PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Pope Benedict XVI will be coming here on his first day to Israel, the Yad Vashem Holocaust memorial site in Jerusalem. He'll be following in the footsteps of his predecessor, Pope John Paul II, who came here back in 2000. And he'll be visiting this, the Hall of Remembrance. He'll be walking through these dramatic doors.
This site is considered the most sobering and poignant of this vast holocaust memorial complex. Inside, the remains of some holocaust victims are buried.
(voice-over): Pope Benedict will be laying a wreath on the tomb. He'll also be rekindling the eternal flame that burns here. Then he'll say a few words to dignitaries and some holocaust survivors assembled here.
(on camera): This trip is not without controversy. Pope Benedict will not be visiting this part of the memorial site, the holocaust museum where there's a picture and a text of Pope Pius XII, the pope at the time of the holocaust. In that text he is accused of inaction during the prosecution of Jews. At one point it says even when the murder of Jews reached the Vatican, the Pope did not protest either verbally or in writing.
Now the Vatican has consistently rejected this accusation of neutrality, saying there is historical evidence that Pope Pius did what he could to try and prevent the persecution of Jews. Discussions are still on going as to who's correct. Paula Hancock, CNN, at the Yad Vashem Holocaust Museum.
(END VIDEOTAPE) COLLINS: We are working on a breaking story out of Baghdad. A U.S. soldier killed four fellow troops before killing himself.
(COMMERCIAL BREAK)
COLLINS: We want to get back to the story that we've been telling you about. An American soldier in Iraq opens fire on his fellow troops, killing four of them before taking his own life. We understand three others were wounded during this incident that happened at Camp Liberty.
Want to go ahead and take a moment to bring in Major Jose Lopez. He is actually the senior press desk officer with multinational forces. Major Lopez, can you hear me OK?
MAJ. JOSE LOPEZ, SENIOR PRESS DESK OFFICER, MULTINATIONAL FORCES (via telephone): Yes, I can.
COLLINS: Tell us what you know.
LOPEZ: Well, the only thing we know at this time, ma'am, is five coalition force members were killed in the shooting at Camp Liberty in Baghdad today at approximately 2:00 p.m.
COLLINS: OK. That may confuse our viewers a little bit. Because we have been able to confirm here that they were not only coalition forces, but indeed these are U.S. troops that we're talking about. You cannot confirm that?
LOPEZ: At this time we cannot confirm that, ma'am. All (INAUDIBLE) of the incident is under investigation at this time. And as more information becomes available, we will release that to all media.
COLLINS: OK. We will continue to ask those questions, obviously. Major Lopez, thanks so much. Appreciate that.
Also, we have our Cal Perry who is standing by, live in Baghdad for us on this situation. Cal, I know that you were actually at Camp Liberty just a few days ago. What do you know at this point?
CAL PERRY, CNN CORRESPONDENT: Well, these are incredibly secure bases. And when we talk about these bases, we're talking about you have to go through a number of checkpoints to get on them. There are also a number of things the U.S. military implements via their weapons control. You go from red to green. They like to have their weapons cleared, clips out of the weapons while on base. Obviously, that didn't happen in this base.
I wish I could say this is the first time we've seen an incident like this. But we have seen U.S. soldiers in the past turn their weapons on other U.S. soldiers. In fact, just within the past year there was an incident in which a U.S. soldier was getting a bad performance review, he sort of opened up fire on a tent killing other U.S. soldiers. It was interesting listening to the major, the spokesman on Camp Liberty. He's under certain restrictions. He has to list this as coalition members. But in the press release you can sort of tell. It says we're withholding the names, pending release by the Department of Defense. The "Department of Defense" obviously would indicate that these are, in fact, U.S. soldiers, and we have that from a senior official at the Department of Defense.
So, again, we kind of knew that there was something going on when we got this press release because it didn't talk about indirect fire, mortar fire or rocket fire. And the fact that it happened within a U.S. base, which is so secure, would sort of lend itself to something like this being the outcome -- Heidi.
COLLINS: OK. Very good, and Cal, thank you so much for clearing that up. Because I'm looking at that same press release that you are. So, I just want to repeat quickly exactly what you said and remind us of what that is. We are talking about a U.S. troop member apparently shooting and killing four other U.S. soldiers. We are not clear, at least that's my understanding, of what nationality the three injured are. Correct?
PERRY: Well, that's correct. But, again, the fact that they are withholding the names pending next of kin notification. In other words, they're going to tell the family members first...
COLLINS: Of course...
PERRY: ... who these guys are, and because it says "Department of Defense," we can kind of infer that these were U.S. soldiers. We don't know the three wounded. At least we haven't heard on our end whether the three wounded were U.S. soldiers or whether there were other coalition members. There are other troops out on Camp Liberty that are not American soldiers. There are Georgian soldiers, I think, for example as well.
COLLINS: Yes. Very well understood. Quickly before we let you go, I just want to -- you know, we talk about security here. But this was, you know, something that happened inside, and potentially, from what we are understanding, people that have every right to be there on base.
PERRY: Well, yes. I mean, these U.S. soldiers, we're talking about thousands of U.S. soldiers on this base. This is a huge complex. Camp Liberty is connected to a variety of other bases all out by the airport. These are U.S. soldiers.
I mean, when you're on this base, when you walk around this base, you see these U.S. soldiers, thousands of them walking to the PX, walking to the DFAC, the place where they go and have their meals, the chow hall, if you like. And you see them walking around all the time.
Now, again, when they're on base, the rules and regulations for these soldiers are, their weapons are to be unarmed, they're supposed to have their clips out of their weapons. That's sort of standard operating procedure on these bases. Clearly in this case, that did not happen. We still don't know the details as to exactly why this U.S. soldier turned his weapon on other U.S. soldiers. We're going to have to wait and hear, obviously, from the Pentagon on those details.
COLLINS: Yes, of course. And we should mention, too, this did not happen very long ago. So, obviously, a lot of questions to be asking, and we will learn much more. Cal Perry, thanks so much. Sure do appreciate it. Live out of Baghdad this morning.
Happening right now, Secretary of State Hillary Clinton talking to middle school and high school students and teachers gathered at a model United Nations conference. Here's a look now at that event in Washington. The program encourages students to participate in activities that help them understand the U.N. system and learn about other cultures and traditions.
More stress for the banks after results from the stress tests came out last week. We're now looking at concerns the banking industry could be hit hard by consumers defaulting on credit card debt.
CNN's Christine Romans joining us now from New York with this story. Good morning to you, Christine.
CHRISTINE ROMANS, CNN BUSINESS REPORTER: Good morning, Heidi.
COLLINS: So, how hard do these credit card defaults actually hit the banks?
ROMANS: Well, this is one of the reasons the banks were told they have to have more capital to cushion against future losses. Are you stressed about your credit card bills? Well, the banks are stressed about your credit card bills. That's because they're potentially facing billions of dollars in losses.
The Fed in that stress test process last week found maybe $82 billion of potential losses for the big banks through 2010 because of credit card trouble. Think of this. These are the banks that Americans own a big chunk of. And the credit cards that we also own are a potential threat, along with commercial real estate and other consumer loans, of going bad over the next year.
Heidi, as more and more people are losing their jobs and the unemployment rate rises, we know it's going to be more and more difficult for people to pay those credit card bills. And in fact, a lot of economists are looking at potentially millions of people simply stopping paying their credit card bills, being late, allowing the bills to pile up, a lot of debt that people are not going to be able to pay back here in the near term -- Heidi.
COLLINS: Yes. So, I understand you have a new segment for us that we need to talk about, "Romans's Numeral." What's that?
ROMANS: Interesting little play on words. "Roman's Numeral." OK, every day, I'm going to bring you a number that's sort of driving the business story, driving the money story of the day. And today's number, Heidi, drumroll, please, is 59. And it has to do with this credit card story. Fifty-nine percent of people pay the credit card bill last when finances are tight. And that feeds into this whole issue about the banks and the next shoe to drop for the banks. All the money that they've had to raise to cushion against these future drops.
And also, don't forget the Fed and president and Congress are really putting the screws to some of these credit card issuers, want them to end some pretty egregious behavior in the eyes of many. So, you're going to be hearing a lot about credit cards this week.
And the president wants to sign legislation ending some of the quote, unquote, "bad behavior" of the credit card companies, you know, just like jacking up your interest rate, all of a sudden, even retroactively. Cutting your credit limit. All that kind of stuff. You're going to be hearing a lot more about that.
But also remember that as the economy and the unemployment rate continues to get worse, or the unemployment rate at least gets worse, it's going to be more and more pressure on the banks that you and I own about those credit card defaults.
COLLINS: Yes, that's right. We do own them, don't we?
ROMANS: Yes, we sure -- we still do, Heidi.
COLLINS: Yes. "Roman's Numeral," I love it.
ROMANS: Yes. So, if you've got any...
COLLINS: All right. We will see a lot more.
ROMANS: ... if you've got any clever numbers for me, shoot them my way.
COLLINS: OK. I will.
ROMANS: Great.
COLLINS: Very good. Christine Romans, thank you.
A couple of states recovering from severe storms over the weekend. Southern coalfields in West Virginia is a muddy mess -- look at those pictures -- from flooding, obviously. The National Guard now helping residents to recover. Those floodwaters also destroyed 300 buildings, knocked out power and caused some mudslides.
Kentucky also dealing with flooding and mudslides there. Several roads are closed or blocked. Thousands of people still without drinking water or electricity.
Fire officials say it was probably a power tool being used to clear the brush that caused a massive wildfire in southern California. The fire started near a trail in Santa Barbara. And investigators are now looking for the person who might have been clearing the brush. Nearly 9,000 acres have burned, and about 80 homes and other buildings were destroyed. Firefighters hope to have the blaze fully contained by Wednesday.
Reynolds Wolf joining us now from the severe weather center. Yes, they're still trying to knock that thing down.
WOLF: Absolutely. You know, Heidi, a couple problems that you're going to have in that part of the world, from the Sierra Madre Mountains and into the coastal range, you could be dealing with very dry conditions as we get into the next couple days, especially into Wednesday and Thursday.
Very low humidity, temperatures also going up. So, we have a little bit of a heating spell, and the dry air with the warm temperatures is going to cause a lot of that moisture out there, at least a lot of the foliage, to continue to dry out more. We're talking the chaparral, we're talking about those California oaks and of course, those grasses. So, certainly some rough times out there in that Mediterranean-style climate. That's the dry stuff.
(WEATHER REPORT)
COLLINS: The Class of 2009 graduating in New Orleans is no ordinary class. They are being called "the Katrina class," the students who started college days before Hurricane Katrina slammed ashore. Reporter Maya Rodriguez from our affiliate WWL shows us why this select group of students walked away with more than just a diploma.
(BEGIN VIDEOTAPE)
MAYA RODRIGUEZ, WWL-TV CORRESPONDENT: The pomp and circumstance may seem typical of any graduation. Yet these graduates are anything but.
UNIDENTIFIED FEMALE: We came back and we did what we had to do.
UNIDENTIFIED FEMALE: It was definitely trying times.
RODRIGUEZ: The times were the days surrounding Hurricane Katrina. This marks some of the first graduation ceremonies of the so-called Katrina class, the students who started college in New Orleans just days before Hurricane Katrina slammed ashore.
GOV. BOBBY JINDAL (R), LOUISIANA: I certainly would be remiss if I didn't note that this is a class of students who are nothing if not determined.
RODRIGUEZ: Determined because the storm temporarily shut down all of their campuses and severely damaged others. At Dillard University, floodwaters swamped their Gentilly campus.
UNIDENTIFIED FEMALE: Two weeks we had (INAUDIBLE) before Hurricane Katrina.
RODRIGUEZ: Alcina Walters (ph) evacuated to Shreveport, then Austin, Texas, and eventually San Antonio. She temporarily enrolled at the University of Texas in San Antonio before returning to Dillard months later. During the storm, her dorm room flooded and then burned down in a fire. She lost everything. Despite that, she emerged as the top graduate of Dillard's Class of 2009. But, she says, she shares her success with her fellow graduates.
ALCINA WALTERS (ph), DILLARD UNIVERSITY GRADUATE: We all did an amazing job together.
RODRIGUEZ: It's a story repeated across town at Xavier University's ceremony, where students reflected on how the storm damaged their campus and disrupted their education.
KRISTIN GONZALES, XAVIER UNIVERSITY GRADUATE: It's definitely hard to live in a hotel room for quite a long time. So, it's definitely not the most ideal living situation, for sure.
KAYLAN DENNIS, XAVIER UNIVERSITY GRADUATE: It affected us very much. Out of school for six months. Didn't know where some of our family members were, either. So, that was very hard. But we got through it.
RODRIGUEZ: And now they share a connection across campuses here, bound together by a natural disaster at the start and ending with a new beginning.
(END VIDEOTAPE)
COLLINS: Tulane University will hold its graduation ceremony this weekend at the Superdome.
Well, the U.S. has seen tough times before. But is this really the worst time ever to graduate from college? We'll talk about it with a student and writer about what the mood on campus is.
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COLLINS: All this month we're talking about the Class of 2009. Today, our focus is on college graduates and their job prospects. In the 1930s, it was "good luck finding a job, even if you have a college degree." And even earlier this decade, grads had to deal with the busrt of the dot-com bubble.
So, is this really the worst year ever to graduate from college? It's a question Zach Bissonette is asking in an article for "The Daily Beast." He's also a sophomore a UMass who is joining us now live from Boston.
So, Zach, is it really the worst year to graduate from college?
ZACH BISSONETTE, SOPHOMORE, UNIVERSITY OF MASSACHUSETTS: It's definitely up there. Whether it's the worst, you know, certainly there have been times where there's been higher unemployment. But this is also -- this is the height of the echo boom generation. And this is one of the largest graduating classes that we'll ever have in college. And the latest data we've seen is that employers are going to hire 22 percent fewer college grads this year.
COLLINS: Really?
BISSONETTE: So, it's a tough time.
COLLINS: Yes. That's a double-digit big number, especially if you're somebody who's trying to get into...
BISSONETTE: It's is. It's a big number.
COLLINS: ... into the job market.
So, listen. I want to show some of what you wrote in this article quickly on the screen. You talk about how college has changed, and actually how it's stayed the same, too. So, listen: "As I write this on a Saturday, my dorm room is vibrating with techno music from next door, and the maintenance people will have steady work hauling out beer cans on Monday morning."
So, that part stayed the same.
"College is still a good time, but the job market is making life miserable for students once they face the realities of a post- graduation world."
So, when do they actually face that reality? Is it senior year or is it actually much earlier now in trying to plan for this?
BISSONETTE: Well, I think that sophomores and juniors are still -- you know, colleges are isolated little communities where you're isolated from the job market for now. I think seniors, a lot of them are, you know, frankly freaking out.
You know, they're graduating with the largest student debt load in history, you know, the greatest debt load that anyone 21 years old has ever had in history. So, I think older students are definitely freaking out. Younger ones, I think, are trying to adapt a little bit. But a lot of kids that I know are hoping it will turn around in a year.
COLLINS: Well, you're a sophomore. Are you making plans or changing the way that you were thinking about going into the work world, meaning are you studying things that you didn't really think you were going to be studying?
BISSONETTE: You know, people ask me that about whether kids should change their focus...
COLLINS: Yes.
BISSONETTE: ... and their majors, and that kind of thing. And I think that one of the biggest mistakes that people can make right now, I think, is to make long-term adaptations to a short-term problem.
So, the economy is really bad right now, and eventually it'll turn around. And I would rather see someone stay with what they're passionate about and struggle to get a job for a couple of years and then be fine, rather than dramatically change the course of their career and, you know, switch into a major that doesn't really interest them to try to get a job. It doesn't make any sense. I'd rather see kids persevere through it and...
COLLINS: Yes, absolutely.
BISSONETTE: ... just stay with what they're passionate about.
COLLINS: Two quick things for you about competition, because when you talk about competition, you're usually thinking about other college grads. But now that's changed a bit. I mean, you're dealing with people who are coming back into the work force. They have a whole lot of experience. They're older.
You write this: "Layoffs have flooded the job market with grizzled veterans more motivated than your average 22-year-old with nothing but a beer and Bisquick habit to support."
BISSONETTE: Yes, I mean, exactly. And the other -- you know, with people's 401(k)s down as much as they are right now, a lot of people who are in the work force who might have thought about retiring have changed their minds. And they aren't clearing out to make room for young people, so it's a really tough time to graduate from college and enter the...
COLLINS: Well, they've got to eat, too, right?
BISSONETTE: Yes.
COLLINS: All right. Well, Zach Bissonette, we sure do appreciate your time today, keeping our eye on the Class of 2009.
BISSONETTE: Thanks so much.
COLLINS: Thank you.
BISSONETTE: Take care.
COLLINS: Another shakeup is in the works at General Motors now. In March, the government ousted former CEO Rick Wagoner, as you remember. And now, some board members could be heading for the exit as well. Susan Lisovicz on the floor of the New York Stock Exchange with details on this. Hi there, Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Heidi. Well, $14.5 billion in government loans comes with strings attached. We saw that with the ouster of Rick Wagoner, as you mentioned. We saw it with the appointment of interim Chairman Kent Kresa.
And now, according to "The Wall Street Journal," the government is flexing its muscle even more. GM apparently hiring an executive research firm to replace six of the 12 board members, that UAW and the government will have roles in picking those seats, Heidi, because they're both going to -- they both own big stakes in the company.
COLLINS: Yes. GM held a conference call, in fact, this morning. Anything new coming out of that?
LISOVICZ: Lots of things happening. Some surprising, some not so surprising. I guess not so surprising, more salary job cuts, more plant closures, dealers will hear of consolidation plans this week.
COLLINS: Yes.
LISOVICZ: GM says that it's in talks with two parties on the sale of its Hummer. And unfortunately for a lot of car lovers, the Saturn brand is fading into the sunset, yes. The GTO and the Firebird and...
COLLINS: Oh.
LISOVICZ: Yes. It's not bringing it back. That will be closed down. A lot of people very sad about that.
COLLINS: Yes, so, what does it all mean? The bankruptcy deadline, as we know, just a few weeks away now. You think they're going to go into Chapter 11?
LISOVICZ: Well, the market's been telling us for some time, Heidi, that it does not expect GM to be able to handle this outside of bankruptcy court, if you look at what the stock's been doing.
Looking at the Q and A with Fritz Henderson after the conference call, this is a quote: "Given the objectives, it is probable that we would need to accomplish our goals within bankruptcy." So, yes. I mean, there's -- it's a very complicated situation. For one, bondholders don't like the terms of the deal. They'll have a much smaller stake in the company compared to UAW and the government.
COLLINS: Yes.
LISOVICZ: And so -- and it's not much time to work it all out. Meanwhile, GM shares are trading at $1.50. They're down about 7 percent, $1.50 a share for the biggest car company in the U.S., and we're seeing a broad decline as well after many weeks of gains -- Heidi.
COLLINS: All right. Well, Susan, we sure do appreciate that. And we will keep our eye on the numbers, down triple digits, unfortunately, right now. Thank you, Susan. We'll check back later on.
Meanwhile, he's out of office, but he's still got a lot to say. Former Vice President Dick Cheney talking about the Republican Party and who is really in it, coming up.
(COMMERCIAL BREAK)
COLLINS: We are inviting you to take a closer look inside the NEWSROOM. You can join us on our new blog page. It's pretty cool. We'll tell you inside the stories we're covering. We'll tell you more about them and ask you to weigh in with your opinions, too. You can find us at CNN.com/newsroom. So, you can just go ahead and log in and check all of that out. We do want to hear from you, too.
Ethanol has come under fire for raising food prices. Now there are questions about whether burning it in our cars even makes sense. CNNmoney.com's Poppy Harlow has our "Energy Fix" now this morning. Hi there, Poppy. It's a good question. Does it makes sense?
POPPY HARLOW, CNNMONEY.COM: You know what, it's very interesting. What we're talking about are the results of this new study coming out in a journal called "Science." But it's been such a rough year for the ethanol industry. Some big ethanol companies filing for bankruptcy, VeraSun among them.
But what this study that came out last week finds is that running our cars on electricity made from plants could be significantly more efficient than using those plants to make ethanol. We want to show you the results of the finding. Take a look here. We can pull this full so you can see what we're talking about.
But it's a big difference here. An acre of switchgrass could power a small SUV for 15,000 miles if it was converted into electricity and burned, but only 8,000 miles if it was turned into ethanol. That's a major, major difference. That's because electric vehicles are much more efficient.
Now, the study also finds that bioelectricity has about half of the carbon footprint of biofuels like ethanol. So, Heidi, this would be a cleaner alternative alternative. That's key here as well.
Ethanol producers, of course, they take issue with this. We spoke to someone at Pacific Ethanol. That's a big ethanol company out in California. They said, listen, the results of this study are interesting, but it's really theoretical. They said it has little meaning in the real world right now, Heidi, because we're producing billions and billions of gallons of ethanol. We're not putting out many electric cars, at least not yet -- Heidi.
COLLINS: So, how committed is the Obama administration to it all, the ethanol?
HARLOW: You know, it's interesting because they are committed. Just last week, the administration put $786 million in stimulus funds to be used for these biofuel projects. That includes ethanol.
Some argue ethanol actually, though, creates more carbon emissions because you've got to push forests out to plant more crops like corn. The EPA says it's looking into this. But it's interesting how many ethanol supporters are out there. We spoke with General Wesley Clark, who's putting his name behind ethanol right now. He says, listen, the environmental benefits are pretty clear. Take a quick listen to him.
(BEGIN VIDEO CLIP)
GEN. WESLEY CLARK, CHAIRMAN, GROWTH ENERGY: It's about 50 percent less carbon-intensive than a gallon of gasoline. And that's not counting the indirect effects of reliance on imported oil for America's energy.
(END VIDEO CLIP)
HARLOW: All right. A big remaining criticism of ethanol, though, it drives up food prices. Congress says last year alone, ethanol production was responsible for about 10 to 15 percent of the increase in our corn and other food prices. But the defenders of ethanol blame speculation, Heidi, including Wesley Clark. They blame the traders on Wall Street for the rise in those corn prices.
COLLINS: All right. Poppy Harlow with our "Energy Fix." Thank you, Poppy.
HARLOW: Sure.
COLLINS: Pay more or ride less. Gas prices are up again for the 13th straight day now. The AAA reporting the average price for a gallon of regular up more than a penny overnight to $2.23. Expect that number to rise even more, though. Summer blends designed to protect the ozone will pump it up.
You'll have to pay more to mail a letter beginning today. The price of stamps is going up two cents to 44 cents apiece. The Postal Service blames rising production costs for the hike.
We'll get you the very latest now, some new information coming into us about the soldiers killed in Baghdad. We'll be back in just a moment.
(COMMERCIAL BREAK)
COLLINS: Some new information to the story we've been telling you about here, and we are working very hard to get even more for you. But we understand that a U.S. soldier in Baghdad opened fire on his comrades there, killing five American soldier. What is unclear still at this point now, and this is the new information, the Pentagon telling us that it is not clear whether the shooter is amongst the dead. We are following the story closely and have crews on the ground there to do just that.
I'm Heidi Collins. Continue watching CNN NEWSROOM for more on that, and also the future of health care in this country as President Obama meets with health care leaders coming up a little bit later on.
CNN NEWSROOM continues right now with Tony Harris.
