Return to Transcripts main page
CNN Newsroom
Wall Street Reacts To JPMorgan Loss; Obama On His First Term "Mistake"; Cop Reassigned For First Lady Threat; Bill Clinton On 2012 Race; Tying Test Scores To Teacher Pay; Team USA's Griffin Sidelined; Daredevil Videotapes Daring Joyride; Courting The Undecided Voter; Starbucks Factory Breaks Ground; Florida Woman Rescued From Car; Opposition Wants Annan Out Of Syria; New Questions On Romney's Bain Exit; Furor Over Team USA Uniforms; Big Buzz for Frank Ocean; A Hidden Passage; Limbless Woman Regains Independence
Aired July 13, 2012 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
JEANNE MOOS, CNN NATIONAL CORRESPONDENT (voice-over): -- but seriously, folks, your chances are way better of hooking a Bud, hooking jaws and grabbing a brew sure beats being shark stew. Jeanne Moos, CNN, New York.
(END VIDEO CLIP)
CAROL COSTELLO, CNN ANCHOR: What's with the beer can? Next hour of CNN NEWSROOM starts right now.
And good morning to you. Happy Friday, the 13th. I'm Carol Costello. Thank you for joining us this morning.
Just ahead in the NEWSROOM, forget the days of Mexican drug cartels smuggling sacks through the sewer to get to the United States. American officials found one of the most sophisticated drug tunnels yet.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: There's absolutely no dirt in here, it is very clean, and there's light. There's electricity and there's a fan even.
(END VIDEO CLIP)
COSTELLO: If you're claustrophobic, beware. We are taking you inside this elaborate tunnel.
And why would anyone want to burn the U.S. Olympic uniforms? Maybe it's because the tags read made in China. Senator Harry Reid is leading the march to toss them in the trash and light a match. We're taking a closer look at the uniforms. We even have one set to look at.
And then a new Ohio law could cause some teachers part of their paycheck. That's right. Their pay will be determined by their students' test scores. You better believe this is causing an uproar.
But we begin this morning with Wall Street and its reaction this morning to news that JPMorgan Chase lost nearly $6 billion on a series of risky bets. That's considerably larger than the $2 billion initially reported.
Alison Kosik is at the New York Stock Exchange with more. Good morning.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Good morning to you, Carol. Investors seem to be OK with those numbers. Shares of JPMorgan Chase are up more than 3.5 percent.
What's been happening this morning, there's been a two- hour meeting with JPMorgan CEO Jamie Dimon and analysts and some reporters. No one really knew what the outcome of this meeting would be.
You know, everybody really wanted to know how big would this trading loss be from those risky trades that had been happening? Wall Street hates uncertainty. So a lot of traders were very uneasy going into the session today.
But because of the meeting, a lot of questions were answered and answered the way the market likes to see it, and that's a good thing. So the total that came out for those trading losses $5.8 billion.
It almost tripled what it was originally thought to be. Yes, it is eye popping. Plus CEO, Jamie Dimon, says those losses, guess what, they can get even bigger by another $1.7 billion.
But look at this, even with these trading losses, the bank still beat expectations. Today, reporting $5 billion profit in second quarter. You look at the whole year, so far this year, JPMorgan has taken in a total of $9.9 billion in profit.
As for the employee fallout, the bank says the chief investment office that's where the losses came from will no longer trade these complex derivatives.
Dimon is saying that the traders involved in the loss could give back as much as two years of their income and they no longer work at the bank, by the way.
Now JPMorgan does seem to be taking this whole matter very seriously. That's something Wall Street likes to see, you know, for one doing this very long form earnings announcement via conference call through this meeting.
So Jamie Dimon actually sat down with these analysts to explain things. Carol, he knows he has to help get the investor confidence back and let people know that the bank does have things under control.
You're seeing that confidence come back right there on the board with the share price. JPMorgan chase shares now up 4 percent -- Carol.
COSTELLO: Alison Kosik live at the New York Stock Exchange.
From Wall Street to Washington now and to President Obama who is opening up about some of the challenges he has faced in his first term. Specifically, the president says, passing his agenda ahead selling his vision.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: The mistake of my first couple of years was thinking this job was just about getting the policy right. And that's important.
But you know, the nature of this office is also to tell a story to the American people that gives them a sense of unity and purpose and optimism, especially during tough times.
(END VIDEO CLIP)
COSTELLO: If President Obama is re-elected, he says he plans to get out of Washington more and talk to Americans about working together on the country's future.
And a Washington, D.C. police officer who was a police escort for members of the Obama administration is now behind a desk. He has been reassigned.
"The Washington Post" reporting the motorcycle cop was overheard saying he would shoot Mrs. Obama with a gun. The newspaper reports there's no indication the first lady faced any real danger. The Secret Service is following up.
Former President Bill Clinton is weighing in on the current presidential race, speaking to NBC's "Today" show this morning. Clinton talked about the economy and why he says one party may be putting politics ahead of the nation's fiscal health.
(BEGIN VIDEO CLIP)
BILL CLINTON, FORMER U.S. PRESIDENT: I'm not sure both sides want the economy to get better. I know the president does, but I know what Senator McConnell said, his number one priority was winning the election.
UNIDENTIFIED FEMALE: It sounds like you're saying the Republicans are basically rooting for the economy to fail.
CLINTON: No, I didn't say that, Senator McConnell did. Senator McConnell said his number one goal was not to get the economy going again. It was to defeat the president.
(END VIDEO CLIP)
COSTELLO: Mr. Clinton added that President Obama's proposal to eliminate Bush tax cuts for wealthy Americans, while keeping them in place for the middle class is fair. He says the only way to cut the deficit is to cut both spending and boost revenue.
Let's talk about education now. Test scores have taken on a huge significance in our schools. Now Ohio is upping the ante even more by tying test scores into how much teachers get paid.
CNN news anchor Carl Azuz has been following this story for us. At face value, students do well, right? Teachers get paid more.
CARL AZUZ, CNN STUDENT NEWS ANCHOR: Yes, at face value. You know, really, it is controversial when the measure of how well students are doing is based on this test scores.
In Ohio, it used to be this that teachers would basically be evaluated. An observer would come in. Take a look at what the teacher was doing in the classroom and then rate the teacher either satisfactory or unsatisfactory based on how well the observer felt the teacher was doing.
Now teachers are going to be graded starting in the 2013 school year. Teachers are going to be graded on how well they're doing. Half of that grade is going to depend on how well students are performing.
Another aspect of this is that seniority is going to take a back seat to all of this. It doesn't matter how many years the teacher has been in the Ohio school system.
It really comes down to this, how well students are doing, and teachers having to be re-evaluated every single year -- Carol.
COSTELLO: So who is doing the grading of the teachers?
AZUZ: Well, that's going to be partly done by the observer. They will still be observed. But then state is going to take a look at what these test scores are.
How well students are doing, and factor that. It's basically going to come -- it's basically going to affect how much teachers are paid. It's going to affect who gets promoted and it's going to affect who ultimately gets fired. There's a lot of controversy in this.
COSTELLO: A lot of controversy because let's face it. Some schools are better than others, right? I would assume teachers are not so happy about this.
AZUZ: No. The teachers we've heard from and this is at CNN Schools of Thought blog, cnn.com/education. The teachers we've heard from are generally saying this is not a good idea.
We have a couple of comments for you. Take a listen to this. One teacher says, this is fine as long as athletes are ultimately paid based on how well the final score turns out. That dentist and doctor salaries are determined by how healthy their patients are.
We also have another teacher who said that she has taught in two different school systems. She's taught with different students and she had different results with the same teaching style.
She says, Hallerina is her name, this law would basically mean I would never go back to teach the students who did not perform as well. There are a lot of concerns among teachers that are in areas.
They might be urban areas. They might be rural areas. Students are concerned not just about how well they do on tests, but in some cases, they are concerned about where their next meal coming from.
If they're unable to focus on those tests, if they're unable to improve their test scores, you could have a situation where a teacher that they really need could ultimately be fired or not be promoted because of the fact that those scores aren't improving.
COSTELLO: Interesting story. So is this already in effect in Ohio or is it proposed?
AZUZ: This will take effect in the 2013, 2014 school year, and it's really dependent on the state budget. This is working with the state budget where they wanted stricter evaluations for teachers based on student performance and raise to top funds.
Ohio receives those from federal government. The federal government wants Ohio to make personnel decisions based on teacher performance.
COSTELLO: Carl Azuz, thanks so much.
AZUZ: Thank you, Carol.
COSTELLO: The African-American vote in the spotlight this week. Mitt Romney and Vice President Joe Biden, both are stating their case to NAACP, but what do voters think of all of this? Forget what the pundits are saying. We will talk to a voter next.
(COMMERCIAL BREAK)
COSTELLO: It's 11 minutes past the hour. Checking our top stories now. We know how big that trading loss is at JPMorgan Chase. This morning, the nation's largest bank reported the risky trades cost $5.8 billion. That's nearly triple its initial estimate, but the bank says it still managed to turn a profit.
More on that scathing report on Penn State's handling of the Jerry Sandusky scandal. The university's Board of Trustees meets today after being accused in the report of failing in its oversight duties. In the meantime, some are calling for removal of Joe Paterno's statue at the school.
In money news, Groupon stock keeps struggling. It's hovering at $8 right now after trading for as low as $7.25 earlier in the week. The online coupon company stock is nowhere near its initial public offering price of 20 bucks.
In weather, a severe drought taking hold of the Midwest and sweeping across much of the country. In fact, drought conditions are now confirmed in nearly two-thirds of the lower 48 states. That's a big jump from last week when it was about 50 percent.
NBA star Blake Griffin will reportedly miss the summer Olympics because of a knee injury. His team, the Clippers, said he tore his left meniscus and will need arthroscopic surgery. The Hornets Anthony Davis will take his place on Team USA.
So if you ever wondered, this is what it is like to race down a highway at break neck speeds, reaching 186 miles per hour. But this motorcycle joy ride probably will not have a happy ending.
Police in Canada have identified the 25-year-old dare devil who videotaped himself and you know, that's kind of illegal. So police are now looking for him.
If Mitt Romney's Wednesday speech before the NAACP was a trip to unfriendly territory, Joe Biden's appearance was like a hero's welcome. The crowd loved him and what he had to say about President Obama.
(BEGIN VIDEO CLIP)
JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES OF AMERICA: He saved the nation's financial system, in doing so, he prevented worldwide depression. It wasn't a popular decision, but it was an essential decision, and he was right.
(END VIDEO CLIP)
COSTELLO: Mitt Romney's speech was met with some applause and boos over Obamacare and Romney's vow to repeal the law.
(BEGIN VIDEO CLIP)
MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I'm going to eliminate every nonessential expensive program I can find, that includes Obamacare. And I'm going to work to reform and save --
(END VIDEO CLIP)
COSTELLO: Romney said his intent was to show the crowd he wants to represent all Americans. We wanted to get away from the talking heads and talk to a voter about the fight for the African-American vote.
With us now, Nana Boone, she is a married, full-time working mom. She lives near Atlanta. Thanks so much for being with us.
NANA BOONE, UNDECIDED VOTER: Thank you for having me.
COSTELLO: OK, so have you decided who you're going to vote for? BOONE: I am not 100 percent decided yet, but I am leaning towards voting for Obama.
COSTELLO: But you're open to Romney?
BOONE: I am. I am. I think he brings to the table some good business sense, but I wonder if too much of that business sense is taking him away from having that human aspect that the voters really need.
COSTELLO: That Romney appeared before the NAACP Convention at all, did that resonate with you?
BOONE: I think it was a good choice for him to go, despite not necessarily being as popular, but I don't agree with all he shared with the group.
So when he talked about eliminating nonessential expenses, that's the business side. Then to say including Obamacare, it is also suggestive, of course, subjective.
So I think when he said that, then that took him again away from the human aspect. Everyone deserves health care.
COSTELLO: But was it the terminology he used, Obamacare, or was it the idea that you really like the health care law and you think it should stay in place?
BOONE: I think that I like the health care law. I think it should stay in place. I think that he is more focused on being anti- Obama and less focused on being pro-people. I think that's where he's losing a lot of the popularity with the people.
COSTELLO: OK, let's talk Joe Biden now because his speech went over big, right?
BOONE: It did. I think he did an amazing job. His speech was very poignant. It was to the point. It was factual, and it was very inspiring. So I think it really brought about more awareness about things Obama has done, and it wasn't anti-Romney.
You know, he didn't talk about what Romney is not going to bring to the table as much as he did talk about what Obama has done and has successfully accomplished during his first term.
COSTELLO: I know the two big issues for you, and these are big issues, because you and your husband, you're affluent, right? Your kids go to private schools because you're not so happy with public schools here in Georgia.
BOONE: Right.
COSTELLO: So you pay a lot for education. You're most worried about education for your kids, and of course, job stability.
BOONE: Absolutely. COSTELLO: Is either candidate really talking to those issues in a way that makes you say, yes, I'm going to vote for you, because you're going to solve those problems for me.
BOONE: Right. I am not necessarily feeling that, again, 100 percent from either of the candidates although you know, those are two very important things for me.
There are other things that are coming along with having job stability, for example, health care. So I think that's part of the reason why I'm really, really liking what Obama has to say.
As far as employment is concerned, I have seen the unemployment rate rise and fall under Obama's administration in that first term. And I just want to give him the opportunity I think to continue to do some of the things he promised to do for the American people.
COSTELLO: Some people say that because Mr. Obama decided not to speak to the NAACP Convention that he is taking the African-American vote for granted.
BOONE: I did hear that. I don't necessarily think that's the case. Joe Biden is a partner of Obama's, and he came and he represented him, and I thought he did an excellent job doing so.
I don't necessarily think Obama had to be there in person for his message to be still heard. I think it was heard loud and clear.
COSTELLO: And just a final thought about Mr. Romney. Do you think he won supporters by his speech at the NAACP and what he said after the speech?
BOONE: Not necessarily. I don't. I think he knew that it was an unpopular thing to say, and he took a risk by doing it. But again, I still give credit for the fact that he came and he did present to the group anyway.
COSTELLO: Nana Boone, thank you so much. I hope you come back.
BOONE: I would love to. Thank you.
COSTELLO: And overseas move for a U.S. company, but this time jobs are returning to America. We'll tell you what's behind the "Made in the USA" movement in Georgia.
And a Florida woman is safe after spending three days in her car without food or water. Wait until you hear details of her ordeal and rescue.
(COMMERCIAL BREAK)
COSTELLO: We don't often hear about jobs moving to the United States from China, but this morning, that is the reality. Starbucks and the mayor of Augusta broke ground just last hour for a factory in Augusta. One hundred forty American workers will manufacturer instant coffee and ingredients to make frappacino among other things. With us now, Peter Gibbons, Starbucks Executive Vice President and the Augusta Mayor Deke Copenhaver. Welcome to both of you.
UNIDENTIFIED MALE: Good morning.
UNIDENTIFIED MALE: Thank you.
COSTELLO: Good morning. We're glad you're here. So Peter, Starbucks could build this factory overseas and hire cheaper workers in China. Why Augusta?
PETER GIBBONS, STARBUCKS EXECUTIVE VICE PRESIDENT: Well, you know, Augusta and Georgia is a great place to make things and build upon. American workers are among the most productive in the world, probably more in labor costs. For our business, end to end costs of running the supply chain, it is a great place to do it.
COSTELLO: That's terrific to hear. So Mayor Copenhaver, that must be music to your ears. Did you lobby hard for this factory?
MAYOR DEKE COPENHAVER (D), AUGUSTA, GEORGIA: We did. And to have Starbucks come into Augusta, but more importantly to be moving American jobs back from overseas. It's huge for the city. It's huge for the state, but it's great news for the country as well.
COSTELLO: How much competition did you have, Mayor?
COPENHAVER: Well, I will tell you, we had a lot of competition. They could have gone any place in the United States, but they chose Augusta. So we're happy to welcome them on as the newest community partner.
COSTELLO: Peter, Starbucks CEO Howard Schultz said today's increasing complex world requires companies to hold themselves to higher standards.
So why aren't more profitable companies willing to pay more to hire workers in the United States and to build their factories here?
GIBBONS: Well, you know, that's a great question. As you look at manufacturing capabilities, a lot of companies focus too much on labor costs. We like to look at the end to end cost of our supply chain.
I think we sometimes forget American workers are so productive, access to great technology, great infrastructure. You can get to market faster with more innovation doing it here in the United States. I think other companies can look at it, maybe look to do that here back home.
COSTELLO: Well, many companies as you know are concerned about the bottom line and profit, the bigger the profit, the better. So again, why this thought process at Starbucks? GIBBONS: Well, you know, we'll do very well with this plant. This is very end to end cost, total cost of getting product to market, not just about labor costs.
It is how to you make sure you can access the market, get to customers, and work with great communities like Augusta. H ere we can have a fantastic relationship with Augusta population, be part of the community, give something back.
In the long run, we are absolutely convinced it is better for us and better for the community.
COSTELLO: So Mayor, final question for you, Mr. Mayor. Are more U.S. factories considering building in Georgia, building in other parts of the United States, or can you count the number of companies on one hand?
COPENHAVER: No. We have another manufacturing facility that's being built here in Augusta, Rockwood, it's $100 million investment. Manufacturing is looking at Georgia. We are very fortunate to have a strong manufacturing basin Augusta, which helped bring in Starbucks due to the quality of our labor force.
But I believe that Starbucks really sets the tone through this announcement. So I look forward to working with them to bring more American jobs back from overseas.
COSTELLO: Well, congratulations to you both. Mayor Copenhaver and Peter Gibbons from Starbucks, thank you so much for joining us this morning.
A North Florida woman is safe today after spending three days in her car with no food or water. The 70-year-old Joyce Gembecky got lost after leaving her retirement home in Sanford, Florida.
She wanted to do some sightseeing, but her car ended up submerged in some three and a half feet of water in a small creek in Baker County.
There she remained until found by a patrol from the Florida Forest Service. Officers who rescued the woman say she could have gotten out of the car.
But she was afraid alligators could be in the swampy area. But again, she is safe and sound this morning.
The presidential campaigns accusing each other of lying. Well, maybe there's nothing new about that. What is new this time is the topic. Mitt Romney's exit date from Bain Capital. We'll tell you why this could make a difference beyond the campaign trail.
And burn the Team USA opening ceremony uniforms, that's what Senator Harry Reid wants to do. We'll tell you what's behind his gripe and what the team is saying.
(COMMERCIAL BREAK)
COSTELLO: It is about 30 minutes past the hour. Good morning. I'm Carol Costello. Checking our top stories.
Those bad JPMorgan trades, the company today announced its risky trade lose $5.8 billion. That's nearly three times the original estimate. But the company still managed to turn a profit last quarter. This morning, its stock is up sharply in morning trading.
Reports today of the deadliest fighting in Syria since the anti-government uprising began 60 months ago. Nearly 300 people killed in one day.
Now opposition leaders are demanding former U.N. Chief Kofi Annan leave the country. Protesters say Annan's presence as an envoy is only serving to extend the power of the Assad regime.
Today, there is new buzz that it could be Condoleezza Rice. Unnamed sources are saying the former secretary of state is near the top of Governor Romney's list.
The stories all over the internet, but remember, Rice has repeatedly said she is not interested and CNN has no information about Rice being on Romney's list.
As a voter, you may wonder about the attacks surrounding Mitt Romney's exit date from Bain Capital. The Romney campaign says he had nothing to do with the firm's operations after February, 1999.
The Obama campaign has seized on a report though saying Romney actually left the company in 2001. That two year dispute may not only be one for the election, but also one for SEC investigators. Here is Jim Acosta.
(BEGIN VIDEOTAPE)
JIM ACOSTA, CNN POLITICAL CORRESPONDENT (voice-over): Mitt Romney has said repeatedly he left his private investment firm, Bain Capital, in 1999.
ROMNEY: I left that business in 1999 to help with Salt Lake City Olympics back on track.
ACOSTA: But this Bain Capital filing at the Security and Exchange Commission first reported by "Talking Points Memo" in the "Boston Globe" and obtained by CNN shows.
Romney is the CEO and president of the company in 2001, two years after the GOP contender says he left the firm. The Obama campaign pounced on the document as proof Romney has mislead the public about his business career.
STEPHANIE CUTTER, OBAMA CAMPAIGN MANAGER (via telephone): Either Mitt Romney through his own words and his own signature was misrepresenting his position at Bain to the SEC, which is a felony, or he was misrepresenting his position at Bain to the American people.
(END AUDIO CLIP)
ACOSTA: The Obama campaign says the SEC documents are crucial because they prove their attack ads are accurate, and claiming Romney was at Bain when the firm was advising companies on outsourcing.
UNIDENTIFIED MALE: Newly-published documents show Mitt Romney's firms were pioneers at helping companies outsource their manufacturing.
ACOSTA: In its own spot the Romney campaign insists the Obama ad is a lie, because the Republican candidate had left Bain before the outsourcing work began. Democrats say it's Romney who's lying, pointing to the Massachusetts Financial disclosure form from his time as Governor, showing he made more than $100,000 from Bain in 2001.
Roberta Karmel, an SEC Commissioner during the Carter administration says the government documents raise serious questions.
ROBERTA KARMEL, FORMER SEC COMMISSIONER: Either the statements in the SEC filings are untrue and as a former SEC Commissioner, I regard that as a serious problem, or they're true, but he wasn't really on the job.
ACOSTA: But in a statement to CNN, a Romney campaign official said "SEC regulations are complicated and do not square with common sense in this case. Although Governor Romney was not involved with Bain Capital after he left to head the winter Olympics in 1999, he was still listed on some technical filings. This is nothing more than a quirk in the law."
Steve Pagliuca a Bain Capital executive who is also a Democrat says "Romney's name remained on some government documents due to his sudden departure from the firm." Adding "Mitt Romney left Bain Capital in February, 1999 to run the Olympics and has had absolutely no involvement with the management or investment activities of the firm or with any of its portfolio companies since the day of his departure.
(on camera): CNN has obtained from a Democratic official a brand new document filed by Bain Capital to the Massachusetts Secretary of State's office in 2001. It shows Romney as the President of Bain Capital.
Jim Acosta, CNN, Houston.
(END VIDEO CLIP)
COSTELLO: Mitt Romney's already brimming campaign pockets gets a lot richer this morning thanks to Dick Cheney. There was a big fundraiser in the shadows of the Grand Teton at a country club near Mr. Cheney's home. Cheney sat near Romney as he spoke passionately about America's thirst for new leadership.
Cheney then took the microphone and told the crowd Romney is the candidate who could handle a crisis like 9/11. The event raised a whopping $4 million. The battleground state of Virginia has 13 electoral votes up for grabs in November, aiming to put those numbers in his column, President Obama will start a two day campaign swing through the state this afternoon. The latest poll of Virginia's registered voters show a close race. The Quinnipiac survey has the President with a 47 percent to 42 percent edge, but the percentage of undecided voters is bigger than his lead.
Ok. Have you seen the Olympic uniforms? Some people say they look, well, they look like, I don't know, like you should be playing croquet or something. They look European, not American.
But what's worse in Senator Harry Reid's mind, is where these uniforms were made. Yes, they were made in China. And Senator Reid says we should burn them because of that.
(BEGIN VIDEO CLIP)
SEN. HARRY REID (D), NEVADA: I am so upset. And I think the Olympic Committee should be ashamed of themselves, I think they should be embarrassed, I think they should take all the uniforms, put them in a big pile and burn them and start all over again.
(END VIDEO CLIP)
COSTELLO: Oh there you have it. So let's bring in Alina Cho she's been getting reaction from all sides of this controversy.
ALINA CHO, CNN CORRESPONDENT: Wow.
COSTELLO: Wow. What are they saying at Ralph Lauren?
CHO: Well, not much, Carol, as you might imagine. And I'll get to that in just a little bit. But first, let me tell you, you know the criticism has been a little about the beret right? But again, as you point out, what's most important is this, everything in the uniform, from the beret to the blazer to the shoes to the shirt that Ralph Lauren actually made for me when I recently saw them, here is my name on the back.
But if you look very closely at the tag here, you can see on the bottom very clearly made in China. Now all of the uniforms as I mentioned are made by American designer Ralph Lauren. They are for the opening and closing ceremonies.
And as I mentioned, recently, I had the opportunity to look at the Olympic gear with David Lauren. He's Ralph Lauren's son and the executive vice president of the company. He told me that they are focused on making Olympians look good.
(BEGIN VIDEO CLIP)
DAVID LAUREN, EXECUTIVE VICE PRESIDENT, POLO RALPH LAUREN: When you're meeting these athletes and they -- they're walking in their first Olympics, many of them have never worn a tie, never worn a jacket, they have never been on television before. Now we want the American team and the athletes to really look like ambassadors.
(END VIDEO CLIP)
CHO: All right. But as we just saw, the Chinese manufacturing has fueled a rare bipartisan backlash on Capitol Hill and just this morning, I spoke with designer, Nannette Lepore. Now she has long been a strong supporter of keeping manufacturing jobs right here in the United States, especially in New York's garment district; 85 percent if not more of her own label of clothing is produced right here.
And I asked her if 98 percent of all of the clothing that is brought into the U.S. is actually imported, is it really realistic to say that uniforms should be made in the USA?
(BEGIN VIDEO CLIP)
NANETTE LEPORE, FASHION DESIGNER: I have been manufacturing in New York City for 20 years. And we're working with factories that are working at half capacity. There are factories that are just dying for this kind of an opportunity. And not only is it realistic to do this one off thing for the Olympics, but these factories could then go on to continually manufacture.
(END VIDEO CLIP)
CHO: She says if she can do it, anybody can. You know the U.S. Olympic Committee released a statement earlier this week which says, quote, "Unlike most Olympic teams around the world, the U.S. Olympic team is privately-funded and we're grateful for the support of our sponsors. We are proud of our partnership with Ralph Lauren, an iconic American company and excited to watch America's finest athletes compete at the upcoming games in London."
Now Carol, you talked about Ralph Lauren and its response. No official statement. But when I reached out via e-mail to someone inside the company, pretty high up, this person said to me is this the story also focusing on the other Olympic sponsors who do not manufacture in the USA or just Ralph? And that person added that Ralph Lauren does not outfit the athletes in competing or podium wear. And the question posed to me was this. "So an athlete winning a medal, not wearing products in the USA is ok, seems one-sided."
So there you have it. That -- that is from Ralph Lauren. We should point out too that someone inside the USOC did speak to us not for attribution but did say that athletic wear just is not made in the United States. It is all made overseas, whether it's competing wear, podium wear, or as we just saw, opening or closing ceremonies here as well.
COSTELLO: I don't look at those opening ceremony uniforms and think athletic wear. Maybe it's just me. But --
CHO: Not exactly athletic wear, not exactly, good point, good point.
COSTELLO: Yes, well why the berets? A lot of people are wondering why berets.
CHO: You're asking me? I mean.
COSTELLO: That's American?
CHO: Well you know -- here, listen, David Lauren said to me that he -- he wanted the athletes to look regal, to look like ambassadors and perhaps that was the thinking. I do know that when they were looking at designing these products, they did go back and -- and look at the 1940s and so that may be why you see the somewhat throwback look that you have there.
COSTELLO: I just still like that western influence that most Ralph Lauren clothes have because that is quintessentially American.
CHO: You're right. You're right. And now, I'm guessing the next time around, the Olympic gear will be made in the USA. I am guessing it will be.
COSTELLO: Thank you, Alina.
CHO: You bet.
COSTELLO: The buzz is building for Frank Ocean, for the music and the mysterious man behind it. Why he's blazing a trail with his highly-anticipated debut CD.
And it's lonely at the top for Justin Bieber. But there's one entertainer under 30 who rakes in even more money than the Biebs. Can you guess who it is?
(COMMERCIAL BREAK)
COSTELLO: Frank Ocean's album "Channel Orange" is getting a lot of buzz. It is number one on iTunes. But you won't find it at Target. The retailer says it's because it was released early on iTunes and not because of Ocean's revelations that some songs were inspired by a gay relationship.
"SHOWBIZ TONIGHT" host, A.J. Hammer is in New York with more on -- I mean his record sales are exploding.
A.J. HAMMER, HLN HOST: Yes, this is incredible, Carol. And Frank Ocean was really an unknown artist just a few days ago. But now yes, he is one of the hottest acts in music, and it really is an extraordinary story. And he had some very famous friends helping him along the way.
Take a look.
(BEGIN VIDEOTAPE)
(MUSIC)
HAMMER: Monday, Frank Ocean made his television debut, singing about his unrequited love for a man on "Late Night with Jimmy Fallon". On Tuesday, he became a worldwide star, hitting number one on iTunes in ten countries, including the United States and the United Kingdom with his first full-length album, "Channel Orange".
Just who is Frank Ocean and how did he seemingly achieve overnight success?
AMANDA SEALES, HOST, MTV'S "HIP HOP POV": This is definitely not an overnight success. Frank has been working a very long time. And he has definitely put in the work to have this album be not just about the controversy but really about the actual content.
HAMMER: Frank Ocean is the stage name for Christopher Brooke, born 24 years ago in New Orleans.
He has been a member of the hip-hop collective, "Odd Future" and has written songs for Beyonce, Justin Beiber, Kanye West, and Jay-Z. Multiple (inaudible) tapped Ocean as a rising star. But he didn't start generating main stream buzz until he confessed to having romantic feelings for a man on his Tumblr page. The date was July 4th, Independence Day.
LORI WILLIAMS: When you have the courage to be honest, I think you can really hear it.
MARQUES HOUSTON, FAN: Been a big fan of Frank Ocean before the whole situation, and I still am.
JAIME DOW: There's good and bad in everything. However, I will say this. Three days ago, I didn't know who he was. You know what I mean? But now all my friends -- you know what I mean -- are telling me his album is really good.
HAMMER: It was a bold move, especially because hip-hop and R&B communities have been slow to embrace same sex relationships. But support rolled in from famous friends. Beyonce even penned a poem in his honor.
SEALES: I will be the first to say that in our community we do have a very big problem with homophobia. And especially within the music realm, this is like hush-hush, like no one is gay.
HAMMER: Insiders tell CNN Ocean is a humble and intensely private man, who's opted to do little press and prefers to let the music speak for itself.
(MUSIC)
HAMMER: So we look for clues about Frank Ocean in performances like this one on Fallon and watch the charts as his debut album explodes in wider release early next week.
(END VIDEOTAPE)
HAMMER: Carol, it really cannot be overstated what a brave thing this was to do in the hip-hop and R&B communities, but, you know, change has to start somewhere. Hopefully, Frank Ocean is paving the way.
COSTELLO: Yes. You know what really matters is he's got a great voice. I mean what I heard was fantastic.
HAMMER: Yes. And his identity really should be about the music and about the content of the album, not just about everything else that's swirling around it. I think that's what's going to get him initial notice here, but wow, what a talent.
COSTELLO: A.J., thanks so much. Want information on everything breaking in the entertainment world? A.J.'s got it tonight on "SHOWBIZ TONIGHT" at 11:00 Eastern on HLN.
Aerosmith front man Steven Tyler says he's leaving his mistress, a.k.a., American Idol, after two seasons. Tyler says "Idol" was over the top fun but he says it's time to bring back rock and roll. And he isn't kidding. Aerosmith's 15th studio album, "Music from Another Dimension" is due out in November.
Tyler confirms his exit in a statement saying quote, "After some long, hard thoughts, I've decided it's time for me to let go of my mistress "American Idol" before she boils my rabbit," end quote.
Entertainment is a young woman's world. Forbes just released its list of highest paid celebrities under 30, and women dominate the top five. Taylor Swift tops the list, raking in $57 million from May of 2011 to May of this year. Not only are her albums blockbusters, her concerts make big money, too.
Other female singers like Rihanna and Katy Perry also made the top five. The only guy in the top five -- 18-year-old Justin Bieber. He nipped at Taylor Swift's heels earning $55 million to land at number 2.
It was a secret passage from Mexico right into Arizona. Now, our cameras give you a unique look inside what's being called the most sophisticated tunnel ever found.
(COMMERCIAL BREAK)
COSTELLO: 49 minutes past the hour. Checking our top stories now.
This morning, we learn JPMorgan Chase lost a total of $5.8 billion from bad trades. The bank CEO originally said the number was closer to $2 billion. The trades rocked the financial world and JPMorgan Chase has lost about 15 percent of its value since those trades were announced.
In Washington, a police officer who served as a motorcycle escort for the White House is on desk duty after allegedly making threatening comments about the first lady. According to the "Washington Post", the officer was overheard saying he would shoot Michelle Obama, and he even showed a picture of the firearm he would use to another police officer. The Secret Service is now looking into it. Here's a story that may nudge you to change your password. More than 450,000 Yahoo accounts were hacked this week, user names and passwords posted online. And get this, the hack is not limited to Yahoo users; some Gmail, AOL and Microsoft Live accounts were also compromised.
If you're a Yahoo user and want to see if your account was part of the hack, just go to the Web site we have up on the screen for you and plug in your e-mail.
Take a look at this. A crash caught on traffic cameras in New Jersey. You see those headlights coming, the driver blows through a red light, he doesn't stop, the car hits another car. It is just unbelievable. And then spins in the area. You see that, takes out a light pole.
The driver as you might have expected was charged with DUI. He is ok though this morning.
Trying to quit smoking, you may want to think about a gym membership, too. A new European study has determined smokers who quit gained 8 to 11 pounds in the first year, that's more than originally thought. Researchers say the average gain in the first month alone is two and a half pounds.
And men hoping to stop hair loss may be in danger of losing something more important. In April, the FDA added sexual side effects to Propecia -- a hair loss drug. A new study from the "Journal of Sexual Medicine" says the effects which can include decreased sex drive can last even long after men stop taking propecia.
It is a hidden tunnel, helping including smugglers bring their illegal products into the United States from Mexico. Now, we get a firsthand look at this amazing tunnel.
(COMMERCIAL BREAK)
COSTELLO: Stopping the drug war, that's a hard thing, thanks to hundreds of small tunnels hand-dug under the U.S./ Mexico border. Our cameras take you in one passage way that is being called the most sophisticated ever found. Here is CNN's Casey Wian.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (on camera): This is the way agents discovered this tunnel a few days ago, under this giant container of water. Over here, you can still see 55 gallon drums that contain the dirt that was dug out of this tunnel, stretching 240 yards across the U.S./Mexico border.
DOUGLAS COLMAN, DEA SPECIAL AGENT IN CHARGE: This is the most sophisticated one I've ever seen in Arizona.
WIAN: What makes it that?
COLMAN: Because of the way it is designed. Most of the tunnels we have seen (ph) in Arizona -- those are just digging through dirt to get into the sewer system, using the sewer system and then punching out again. This one, I mean when you look down that hole, you're going to see, it is completely 4 by 6 all the way, plywood all the way around it, rebar in there, reinforced.
WIAN (voice-over): The tunnel is so narrow and so deep, CNN photo journalist John Torregoey (ph) and his camera needed to descend separately.
UNIDENTIFIED MALE: Clear the shaft.
UNIDENTIFIED MALE: Clear the shaft.
WIAN: Each with the help of a harness.
UNIDENTIFIED MALE: It gets even smaller.
UNIDENTIFIED MALE: It gets a little smaller towards Mexico. We actually have to crawl if you were to go a whole lot further.
UNIDENTIFIED MALE: There's no dirt in here, it is very clean, and there's light, there's electricity, and there's a fan even.
WIAN: U.S. authorities have found 156 cross border tunnels since the early 1990s. Lately, they have become more sophisticated as drug detection technology above ground improves.
(on camera): Agents had this area under surveillance since January. The way the tunnel was discovered, Arizona public safety officers pulled over a pickup truck on the highway north of here, discovered 39 pounds of methamphetamine. After interviewing the occupants of the truck, they linked it to this facility and they now have three suspects in custody.
Casey Wian, CNN, San Luis, Arizona.
(END VIDEOTAPE)
COSTELLO: Wow.
Drinking from a bottle of water probably doesn't seem like a big deal to you. But one woman, she broke down in tears, how she is regaining independence.
(COMMERCIAL BREAK)
COSTELLO: And now a story out of Oklahoma City. A mother who lost both her arms and her legs to a bad infection is now regaining her independence. Dana Howard had her limbs amputated less than a year ago. Watch (ph) as she uses a prosthetic hand to drink water for the first time.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Squeeze it a little tighter. Ok, good.
UNIDENTIFIED FEMALE: Oh. Yay.
DANA HOWARD, AMPUTEE: Oh, thank you, God.
UNIDENTIFIED MALE: That's good crying. Let her go.
(END VIDEO CLIP)
COSTELLO: Doctors say she still has a lot of recovering to do. Her family is hoping donations will help them buy a special van to help her get around.
That does it for me. Thank you so much for joining me today. I'm Carol Costello.
"CNN NEWSROOM" continues right now with Kyra Phillips.
