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American Morning
Mortgage Meltdown Sends Overseas Markets Tumbling; Presidential Candidates Talk About the Economy; Looking at Palin's Tax Record; Auto Industry Asking for Aid; How to Stop the Bleeding Economy?
Aired September 16, 2008 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
KIRAN CHETRY, CNN ANCHOR (voice-over): Meltdown. The bottom falls out on Wall Street. The real issues come out on the campaign trail.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: The most serious financial crisis since the Great Depression.
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: These are very, very difficult times.
CHETRY: Today, Senators John McCain and Joe Biden back-to-back live on how to get America running again on the "Most Politics in the Morning."
(END VIDEO CLIP)
CHETRY: And welcome. Glad you're with us on this Tuesday, September 16th. You know, a question we'll be asking both of the candidates, what is your plan to fix the mess we're in right now?
JOHN ROBERTS, CNN ANCHOR: Yes, and not clear that either one of them have a plan. You know, yesterday on the stump, they were talking about their overall economic plans but nothing specific about this.
It will be good to have an opportunity to talk to both of them this morning, so we hope that you stick around with us.
We begin this morning with the breaking news of the global fallout from the meltdown on Wall Street. Overseas markets in Europe and Asia sharply lower this morning. The global sell-off triggered by Lehman Brother's bankruptcy and the "for sale" of another financial fixture in the United States, Merrill Lynch. It sent the Dow into a freefall on Monday.
Today, the Fed could cut interest rates to stabilize the financial markets. They're meeting about it today.
This morning, more fallout as the gas refineries along the Gulf Coast remain closed. According to AAA, the national average for a gallon of regular now $3.85 a gallon. That's up more than a penny from yesterday.
And train operators in California could be banned from using cell phones. Federal investigators are trying to determine if the engineer of a commuter train was text-messaging before Friday's crash that killed 25 people. Investigators say the signals were working properly, and there were no obstructions that may have prevented him from seeing the red light.
CHETRY: And we have more now on our breaking news. Major overseas financial markets all taking a tumble. Hong Kong down, Japan down, London down -- all feeling the effects of Wall Street's worst single day since 9/11.
The Dow losing 504 points yesterday. And there is more concern ahead of the U.S. market opening today. Will the Dow take another nosedive or regain some stability?
Meantime, another major U.S. firm is on the endangered list. Insurance giant AIG has seen its credit rating downgraded significantly by Moody's, Standard and Poor's. The financial turmoil could trigger an interest rate cut when the Fed meets today.
Ali Velshi is "Minding Your Business." He's live at the New York Stock Exchange with a look ahead. And if you can tell us, what are some of the indicators today? Are we looking toward another 500-point plunge?
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Well, hopefully not, Kiran. There may be some good news in this one, and that is the Dow futures are actually positive right now, believe it or not, after the day that we had yesterday and the day -- the night we've had overnight in Asia.
Just to bring you up to speed with that 504-point drop on the Dow yesterday was the biggest single point decline since markets reopened after the attacks of 9/11. Since September 17th of 2001, the Dow was down 4.4 percent. The Nasdaq down 3.6 percent. The S&P 500 was down 4.7 percent.
The Dow is standing now where it was in about the summer of 2006. So it has lost all of those gains, including all of those highs set last October.
Overnight in Asia, Asian markets were closed Monday so they were feeling the full effect of all of the weekend's news overnight. And as you've said, we've seen major drops in Tokyo, closing down five percent, in Hong Kong down 5.4 percent, in Shanghai 7.8 percent, Australia down, Korea down, moving into Europe. But as I said, futures are a little higher today and it's all got to do with what the market thinks is going to happen with AIG, which is a much, much larger company than Lehman Brothers was, even though Lehman Brothers by assets would be the biggest bankruptcy in history.
Let me just tell you a little bit about AIG. Everybody has got some connection to this. You either have an investment in it or you have an insurance policy with it. It's the world's largest insurer, and it needs to come up with $75 billion very quickly. Its credit has been downgraded by Fitch, Moody's and S&P, and that means it could face bankruptcy. It's got a few days now to come up with this money. The fact that the markets are higher right now, Kiran, suggests to me that there is some faith that that might happen. As you mentioned, and I'll be bringing you more on this later, the Federal Reserve has its regular meeting today at 2:15. It should release some information and there are some people at least, not a lot, but some people thinking they might cut interest rates -- Kiran.
CHETRY: Ali, we'll check in with you throughout the morning, thank you.
And meanwhile, we want to put this in perspective in your "AM EXTRA" right now.
Lehman's filing is the biggest corporate bankruptcy on record. Lehman says it had $639 billion in assets. That's five times more than the telecommunications giant WorldCom. That was the second biggest company to go belly up. It had $126 billion in assets.
Enron takes the third spot. It had $81 billion in assets when it declared bankruptcy -- John.
ROBERTS: From Wall Street to Washington, this morning John McCain and Barack Obama are acutely aware that the troubled economy is by far the number one issue for voters, and they are battling over who is the better candidate to protect your financial future.
CNN's Jim Acosta is live in Golden, Colorado, this morning, a battleground state. Jim, what are we hearing today, and what are we expecting over the next few days here with both of these campaigns?
JIM ACOSTA, CNN CORRESPONDENT: John, aides to Barack Obama say they plan on taking the fight to John McCain and they've returned to a key battlefront in this election, the economy.
(BEGIN VIDEOTAPE)
ACOSTA (voice-over): Barack Obama arrived in the western battleground of Colorado with a cowboy swagger and a new line of attack at his side, aimed squarely at the former lobbyist working on John McCain's campaign.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: If you think those lobbyists are working day and night for John McCain just to put themselves out of business, well, I've got a bridge to sell you up in Alaska.
ACOSTA: And following the turmoil on Wall Street, Obama zeroed in on a comment McCain made at a rally in Florida, where the Republican nominee told supporters the economy is still strong.
OBAMA: Senator McCain, you can't run away from your words, and you can't run away from your record. When it comes to this economy, you've stood firmly with George Bush and a failed economic theory, and what you're offering the American people is more of the same.
(BEGIN VIDEO CLIP) NARRATOR: Obama's one accomplishment.
(END VIDEO CLIP)
ACOSTA: Obama is coming off a tough week of absorbing another round of McCain's rosters (ph) of TV ads. Spots were labeled misleading by political analysts on the left and right. So the Illinois senator launched his own ad accusing McCain of peddling political sleaze.
(BEGIN VIDEO CLIP, OBAMA CAMPAIGN COMMERCIAL)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: I will not take the low road to the highest office in this land.
NARRATOR: What's happened to John McCain? He's running the sleaziest ads ever, truly vile.
(END VIDEO CLIP)
ACOSTA: Aides to Senator Obama say they are sharpening their message on McCain with running mate Joe Biden offering up a new nickname for the Republican nominee.
SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: Just as George Herbert Walker Bush was nicknamed Bush 41, and his son was nicknamed Bush 43, John McCain could easily become known as Bush 44.
ACOSTA: Obama's new offensive will likely please some Democrats who've been urging him to fight back. But the new tone is not without risk.
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: There is a risk about just being on the negative and not having something positive to joining up with it. The last two candidates who won elections based on economic conditions, Ronald Reagan and Bill Clinton, both campaigned against the records of their predecessor but very quickly wove into that, here's what I would do that would be different. And we're not hearing very much of that from Barack Obama. And I think that's an essential part of making an economic message work.
(END VIDEOTAPE)
ACOSTA: As for McCain's comment on the economy, the Arizona senator clarified a statement to say he was really talking about the American work force. But Barack Obama says he is not letting him off the hook. He is latching on to that comment to make the case that John McCain is out of touch on the economy -- John.
ROBERTS: Jim Acosta for us this morning in Golden, Colorado. Jim, thanks so much.
CHETRY: This morning, 49 days until the election and the race for the White House couldn't be any tighter. In our latest CNN poll of polls, Senators John McCain and Barack Obama are deadlocked in a dead heat, 45 percent each, 10 percent still unsure. And Republican presidential nominee Senator John McCain will join us live 7:20 this morning. At 7:30, we're going to speak to the Democratic VP nominee, Senator Joe Biden.
ROBERTS: Tax talk --
(BEGIN VIDEO CLIP)
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: Property taxes were way too high, so every year in office I cut rates for six years in a row.
(END VIDEO CLIP)
ROBERTS: Sarah Palin on cutting taxes. Jessica Yellin compares the rhetoric to the record.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP, "THE TONIGHT SHOW WITH JAY LENO")
JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": Sarah Palin went back to Alaska this weekend. Got a great reception when she landed at home, but there were some protests. Not everyone is happy to see her. Show that footage of her landing up in Alaska.
(END VIDEO CLIP)
ROBERTS: Welcome back to the "Most Politics in the Morning." Jay Leno's take on Sarah Palin's Alaska homecoming.
Today Palin and John McCain are together again on the trail at a rally in Ohio. Monday was Palin's first solo day out in the campaign where she touted her record as governor of Alaska.
We asked CNN Jessica Yellin to do a little fact check on that record, and she reports on what Governor Palin has done for her state on taxes.
JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Kiran, John, in these tough economic times, taxes have become a big part of the debate on the campaign trail. So we took a closer look at Governor Palin's record here in Alaska on that issue.
(BEGIN VIDEOTAPE)
YELLIN (voice-over): Governor Sarah Palin vows if she and John McCain are elected, they'll slash taxes.
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: We're going to bring tax relief to all Americans.
YELLIN: And she says her record in Alaska proves it. PALIN: I'm returning a chunk of that surplus straight back to the people because they can spend it better than government can spend it for them.
YELLIN: Alaska has no state sales tax, no state income tax, and no statewide property tax. So what taxes did Palin cut as governor?
LT. GOV. SEAN PARNELL (R), ALASKA: It started with her first year when she introduced a studded tire tax repeal, business license fee reductions. It's culminated this year in a gasoline tax suspension.
YELLIN: That's true. Eliminating that tire tax saves drivers $5 on each winter tire. The gas tax saves them eight cents a gallon for a year.
On the stump John McCain says Obama wants to raise taxes, and he singled out Obama's proposal to place a windfall profits tax on oil companies.
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: And he's convinced that the 1970s-style windfall profits tax is just what America needs.
YELLIN: Palin instituted exactly that kind of tax here giving some of the money back to Alaskans. Checks arrived last week, and it's made her popular. And what about this claim?
PALIN: Property taxes were way too high so every year in office I cut rates for six years in a row.
YELLIN: As mayor of the town of Wasilla, Palin did cut property taxes repeatedly, but she raised sales taxes to finance an ice skating and sports arena which is still in the red. She improved city infrastructure but left the city in debt. Partisans are divided on the question, is Palin a fiscal conservative?
BILL WIELECHOWSKI (D), ALASKA STATE SENATOR: I'd say Governor Palin is a fiscal conservative in the same vein as George Bush.
PARNELL: Well, actually, she's the fiscal hawk in the house.
(END VIDEOTAPE)
YELLIN: While we're talking taxes, Governor Palin is the only one of the four candidates who has not released her personal tax returns. The campaign says they will release them on their own time frame -- John, Kiran.
CHETRY: Underwater, remnants of Ike take their toll on the Midwest. Rob Marciano has the latest from the extreme weather center.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
ROBERTS: Fifteen and a half minutes after the hour. We're following breaking news this morning. A market meltdown overseas in the heels of the Dow's 500-point loss on Monday, all in response to the demise of Lehman Brothers and Merrill Lynch being sold to Bank of America and fears about what might be next.
The Dow begins the day below 11,000 for the first time since July. The Federal Reserve could give the struggling U.S. economy a small boost today if it chooses to raise interest rates at its scheduled meeting -- Kiran.
CHETRY: Well, this morning, scenes of utter devastation as Texas struggles to cope with the aftermath of Hurricane Ike. In parts of Galveston, the pushing winds and storm surge obliterated just about everything. Residents are being told to stay away from the city because it's unhealthy and unsafe.
Our Rob Marciano was there. He is now just back from Texas and joins us from the CNN weather center this morning. Hi, Rob.
ROB MARCIANO, AMS METEOROLOGIST: Hi, Kiran. You know, we're now beginning to learn the expanse of just how widespread the damage is. The access to some of the other parts of Galveston County and some of the outer lying islands now just being granted to the media, and the only way to get there by boat and some of the pictures coming in late yesterday and throughout the day today are certainly striking.
As a matter of fact, just driving out of Galveston yesterday our jaws dropped because we got through parts of the island that we couldn't get to during our stay. And this is some of the stuff we saw. On top of this, you saw huge boats all over the causeway that took hours and hours to move, just to get one lane open to get out of the island. As you mentioned, there's not a whole lot going into the island and choppers still flying as search and rescue continues.
All right. Good news, we don't have a whole lot going on in the Atlantic so that's good. We should be quiet for the next several days, but it has not been a quiet season. Already we've had 10 storms. The average for the entire year would be 11, so we're almost to that average. And in some measures, as far as how many days we've had hurricane activity, we're already beyond what a full season would average.
Quiet day today across the much of the U.S. That's good news. A cool air which helped force Ike out of the country in a hurry infiltrating much of the upper Midwest and the Great Lakes and the northeast, and that's the good news there. Just a couple of showers across parts of the Carolinas.
Later on in the program, in about half an hour, Kiran, we'll talk more about Ike's damage and show you some stunning before and after pictures, and that really is quite eye-opening. Talk about that in about 30 minutes.
CHETRY: It sure is. All right, Rob, thanks.
MARCIANO: OK.
ROBERTS: The $25 billion car loan. (BEGIN VIDEO CLIP)
RICHARD WAGONER, GENERAL MOTORS: It would be very helpful if that funding could be approved.
(END VIDEO CLIP)
ROBERTS: Automakers in battleground states try to get a jumpstart from the government.
(BEGIN VIDEO CLIP)
JOAN CLAYBROOK, PUBLIC CITIZEN: It's all politics all the time.
(END VIDEO CLIP)
ROBERTS: You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: This morning a giant milestone for a giant in the auto industry. General Motors, celebrating its 100th anniversary and looking toward the future as well.
GM will debut its highly anticipated Chevrolet Volt. This is a plug- in hybrid, and it debuts today. The volt, though, not expected to hit showroom floors until 2010 at the earliest.
And GM is not just celebrating today, it's also joining other U.S. lawmakers begging the Feds for a financial lifeline worth billions of dollars.
CNN's Kathleen Koch is taking a closer look at the big dollar request and what it may cost you.
KATHLEEN KOCH, CNN CORRESPONDENT: John and Kiran, Ford, Chrysler and General Motors are pushing for billions in federal loans so that they can retool to make more fuel-efficient vehicles. But some aren't so sure Congress and the U.S. taxpayers should come to the rescue.
(BEGIN VIDEOTAPE)
KOCH (voice-over): Detroit's (INAUDIBLE) gas prices are up. SUV and truck sales are slumping and at the same time it's facing staggering costs to build more fuel-efficient cars. So it's asking Congress for help, $25 billion worth.
RICHARD WAGONER, GENERAL MOTORS: General industry conditions and credit conditions have gotten so difficult it would be very helpful if that funding could be approved.
KOCH: Automakers argued Congress promised the loans last year when it mandated tougher gas mileage rules. It also knows it has election year politics on its side.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: And we're going to make sure those cars aren't built in Japan, aren't built in China or Korea, but are built right here in the United States of America.
KOCH: Both Barack Obama and John McCain support the loans. Perhaps no surprise for the states it would benefit most, Michigan, Ohio, Indiana and Missouri, are critical battlegrounds.
JOAN CLAYBROOK, PUBLIC CITIZEN: It's all politics all the time. The presidential candidates, if they said don't do this bailout, they'd lose the election they think.
KOCH: Michigan lawmakers like Mike Rogers insist this is not another Bear Stearns nor like Fannie Mae and Freddie Mac.
REP. MIKE ROGERS (R), MICHIGAN: We're not giving them anything. They're going to have to pay it back.
KOCH: Still, it is a tough sell. The House Republican leader has doubts.
REP. JOHN BOEHNER (R), MINORITY LEADER: It looks like a bailout to me.
UNIDENTIFIED MALE: Walks like a duck, quacks like a duck, it's probably a duck.
KOCH: Even some lawmakers from automaking states fear taxpayers will again will be left holding the bag.
UNIDENTIFIED MALE: One more bailout to one more industry is not the way to put our fiscal house in order.
KOCH: The loans are expected to be made part of a must-pass spending bill to keep the government operating, which could be voted on as soon as this week.
(END VIDEOTAPE)
KOCH: And Congress could be hearing from Detroit again. As the economy and credit availability don't improve, automakers say they may need another $25 billion in loans -- John, Kiran.
ROBERTS: Crisis on Wall Street, a look at what all the financial turmoil means for your money and your investments.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP, "THE TONIGHT SHOW WITH JAY LENO")
JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": I've been watching cable all day trying to figure this out. Experts say we're going through with what's known as a lock, stock and barrel financial phase. You know what that is? How it works?
People locked out of their homes, their stock is worthless, and the oil companies have us over a barrel. That's how it works. Lock, stock. It's a three phase.
(END VIDEO CLIP)
ROBERTS: Jay Leno trying to offer a punch line to the current financial turmoil. All eyes are going to be on Wall Street as it limps into a trading day following a 500-point freefall. Initial indications are that despite the fact global stocks are down overnight that the Dow may actually be on the upswing. Let's hope so.
Our next guest is world-renowned economist Jeffrey Sachs. He is a special adviser to the United Nations' secretary general, also director of the Earth Institute at Columbia University.
Jeffrey, good to see you. So, you know, here we are 13 months into this crisis. The dominoes keep falling and people are wondering is there more ahead. What do you think?
JEFFREY SACHS, SPECIAL ADVISER TO U.N. SECRETARY GENERAL: There is more ahead. The U.S. economy is definitely going into a recession, and we're going to have a contraction towards the end of this year. There's more financial turmoil ahead. The bursting of this housing bubble, the bursting of the financial bubble is going to carry a lot of the economy with it, so there's -- there's more pain ahead.
ROBERTS: Who is to blame for all of this? People are pointing fingers all over. Some are pointing at Congress, others being pointed at the administration. Who do you think is to blame?
SACHS: I think the administration, number one, of course, asleep at the switch giving tax cuts, ignoring the economy during this whole eight years. The Fed did not do a good job.
During the Greenspan period they kept pumping up the economy, deregulating more and more, allowing this housing bubble to continue, to expand, allowing these firms to get way ahead of themselves. They were all getting big fees, big bonuses by putting out these credits that are now failing. And so, I think the Fed and the administration and this whole philosophy of deregulation that has been prevalent especially. Unfortunately, you know, the Republican philosophy, don't regulate, take your hands off, that created this bubble. Now, we're seeing the burst of the bubble.
ROBERTS: Of course, Jeffrey, you are famous for going into countries that have had terrible economic times, Bolivia, Poland, Russia, trying to turn those economies around. Your policies have been sometimes controversial.
Here in the United States where we see a falling dollar, we see the stock market going down, we see the collapse of these financials institutions, are you seeing any parallels, the things that you've seen around the world?
SACHS: This is our financial crisis. This is like Asia's financial crisis 10 years ago. It's going to take a while to clean up. The politicians that are promising like Senator McCain, we're just going to give tax cuts, everybody gets tax cuts in the face of huge budget deficits, these huge bailouts, it's completely unrealistic.
ROBERTS: What about Barack Obama? Does he have a plan?
SACHS: I think he is much closer. He's saying we need to regulate these financial markets. We need to get them under a lock and order.
ROBERTS: McCain is talking about more regulations as well.
SACHS: Well, McCain is not open. He's got a whole history of completely being on the other side, so he's reinvented himself in the last 24 hours.
ROBERTS: But you know, do either one of them really have a prescription for what's going on immediately?
SACHS: I think that right now this is a recession that's going to happen. I don't see anybody being able to stop that giant wave. The question is how we get out of it. And we have huge budget deficits. We need a new form of financial market regulation. If you just say tax cuts for the rich, deregulate and all the philosophy of the last few years, we dig deeper and deeper into a hole which we can't afford.
ROBERTS: So bring this down into the pocket of the average American out there, some people who have got money invested in a 401(k), people who might be in the stock market as well, looking forward to retirement or investment income, what do you tell them when you see the Dow dropping below 11,000 points, 504 points yesterday?
SACHS: Well, a lot of people got hit yesterday and a lot of pension funds got hit. They were exposed to Lehman, and they are exposed to the stock market.
People have to be very cautious right now. Of course, that's easy advice late in the day after people had borrowed heavily against housing values, and now they're in the red.
(CROSSTALK)
ROBERTS: But do you hang --
But do you hang tight?
SACHS: Well, you have to start saving, start building up, and be cautious in terms of the kinds of investments that are being taken.
ROBERTS: Jeffrey Sachs, it's always great to see you. Thanks for coming in.
SACHS: Thanks a lot.
ROBERTS: Appreciate it.
SACHS: Thank you.
ROBERTS: Kiran?
CHETRY: It's just about 30 minutes past the hour now. We get a check on our top stories.
The McCain campaign says it's unlikely Sarah Palin will speak with a special prosecutor looking into the firing of her public safety commissioner, insisting the investigation remains "tainted." The campaign released e-mails that says proofs Palin dismissed her public safety officer over a budget disagreement and not because he refused to fire her ex-brother-in-law.
Muslims around the world are turning against al-Qaeda. That's a stunning assessment from U.S. counterterrorism officials. They say the terror network is "imploding" because more Muslims are being killed by car and suicide bombs and Westerners, especially in Iraq.
Al-Qaeda still remains the most dangerous threat to the U.S. But right now, there's growing concern for terrorist organizations like Hezbollah and Hamas.
Also this morning, there's a new top U.S. commander in Iraq. General David Petraeus handing over control to Lieutenant-General Ray Odierno at a ceremony in Baghdad. Petraeus saw a significant decline in violence during his 20-month term. He now takes over a head of U.S. Central Command, overseeing U.S. forces in the Middle East as well as Central Asia.
Back now to breaking news on the American financial crisis. The Federal Reserve will meet today and interest rate cut could be in the cards following the worst day on Wall Street since the days after 9/11. A 504-point drop after the fall of Lehman Brothers and to the buyout of Merrill Lynch, and now AIG, the nation's biggest insurer, is fighting for survival this morning. Three major credit agencies dropped the company's credit rating.
Meantime, computer giant Hewlett-Packard says it will cut nearly 25,000 jobs over the next three years after acquiring electronic data systems. Ali Velshi is "Minding Your Business." He's live at the New York Stock Exchange.
And, you know, just to take a look at just how enormous these financial problems have been. On any other day, Hewlett-Packard's job cut news alone would be the headline in the business world.
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: There are about ten different stories, each of one would have sustained an entire day of news today. As you mentioned, after that entire litany of things that have gone wrong, believe it or not, Dow futures are actually flat right now and that is pretty amazing.
There are basically three things that going on, that are probably moving markets right now despite the fact that we had a very, very rough overnight session on Asian markets.
One, as you mentioned, AIG, the nation's largest insurer, squarely in the sights of traders, after three major credit rating agencies downgraded their debt, making it harder for them to raise the $75 billion that they just have a few days to raise. Number two, Washington Mutual, one of the largest lenders in the country, has been downgraded by its credit rating agency to junk. That's going to make that bank -- make it more difficult for that bank to raise money.
But the counterforce on all of this is the fact that oil is now down to about $93 a barrel. And some people are thinking that's generally positive. At 2:15 Eastern today, the Federal Reserve is going to meet to have its normal scheduled discussion on interest rates and there are some people discussing the fact that they might cut rates.
Let's take a look at the investment banks. There were five major ones on Wall Street. Bear Stearns was the first to disappear. We all remember that. Then Lehman Brothers is gone and Merrill Lynch sold to Bank of America. That now leaves Morgan Stanley and Goldman Sachs. Just to point out, by the way, Lehman Brothers is a 158-year-old company. Lehman and Goldman Sachs used to do business together back in the day.
Now the turmoil that we're looking at, how does it affect you? You should know that your bank deposits in most cases up to $100,000 are insured. Now that means that you need one bank per account. Sometimes can you have more than $100,000 in a bank if it's a joint account, things like that. You can check that out at fdic.gov.
Individual brokerage accounts. When you have a brokerage account with one of these investment houses, that money cannot be used for their operations, that has to be invested. Those accounts are also insured up to $500,000 if they're in stocks, bonds and futures and up to $100,000 in cash. So, you need not be all that worried about that right now. I'd be conscious of it, but not all that worried about it.
Kiran?
CHETRY: All right. Ali Velshi for us following all of this, this morning. Thanks.
John?
JOHN ROBERTS, CNN ANCHOR: And the doom and gloom on Wall Street was the headline on the campaign trail with both Barack Obama and John McCain emphasizing the need for change, but McCain found himself on the defensive after echoing one of President Bush's talking points.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Our economy, I think, still, the fundamentals of our economy are strong but these are very, very difficult time. And I promise you we will never put America in this position again. We will clean up Wall Street. We will reform government.
(APPLAUSE)
(END VIDEO CLIP) ROBERTS: In Florida, McCain later explained himself but Obama was quick to pounce calling McCain's economic positions just more of the same.
(BEGIN VIDEO CLIP)
MCCAIN: From Washington to Wall Street, the top of our economy is broken. We're going to put an end to the abuses in Washington and on Wall Street that have resulted in the crisis that we are seeing unfold today. Enough is enough.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Senator McCain, you can't run away from your words and you can't run away from your record. When it comes to this economy, you've stood firmly with George Bush in a failed economic theory and what you're offering the American people is more of the same.
(END VIDEO CLIP)
ROBERTS: And today on the trail, McCain teams up again with Sarah Palin in Ohio while Obama spends his second day in the battleground state of Colorado. And don't miss Senator John McCain live on AMERICAN MORNING coming up at about 45 minutes' time. We'll also be speaking to Senator Joe Biden immediately following at 7:30 Eastern.
CHETRY: Crisis on Wall Street. A look at what the financial turmoil means for your money and your investment. You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: Welcome back to the "Most Politics in the Morning." Today, we're starting a new segment, sorting fact from fiction because you hear a lot out there on the campaign trail. Sometimes statements or ads by the candidates can be misleading, taken out of context. Other times they are just plain wrong. Alina Cho is here with an "A.M. Reality Check" for us.
ALINA CHO, CNN CORRESPONDENT: No, never happens.
CHETRY: That's politics, right, Alina?
CHO: It is. That is politics. It's something we're going to try to do every day. Kiran, good morning. And we are going to begin today with the vice presidential candidates, and how about this. A look at Republican Sarah Palin's first solo day out on the campaign trail. She talked about her record as governor of Alaska and once again, she addressed what many have called the symbol of pork barrel spending, the so-called "Bridge to Nowhere." Take a listen.
(BEGIN VIDEO CLIP)
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: And that infamous "bridge to nowhere," I did tell Congress thanks but no thanks. If we wanted a bridge up there, we were going to build it ourselves.
(END VIDEO CLIP)
CHO: Now we have a lot of reality checkers at CNN, and here's what we found. Public records show that Palin actually supported the plan when she was running for governor, then she rejected it after she was elected and the project became famous for government waste. But Alaska, get this, still got the federal money for the bridge and used it for other transportation projects.
Now, we want to move on to the Democrats. Senator Joe Biden on the economy in St. Clair Shores, Michigan yesterday and he used one example to show the Republicans are, in his view, out of touch with the middle class.
(BEGIN VIDEO CLIP)
SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: There's a Republican county chairman right here in your state, in Michigan, that said they're keeping a list of foreclosed homes, suggesting that anyone who lost their home with foreclosure should also lose their right to vote. Ladies and gentlemen --
(END VIDEO CLIP)
CHO: Believe it? Well, here's the reality check. "The Michigan Messenger," that's a liberal leaning online newspaper reported last week that Republican officials in Macomb County, that's close to Detroit, were planning on using a list of foreclosed homes to try to disqualify people from voting.
Party chairman James Carabelli reportedly told the paper, quote, "We will have a list of foreclosed homes and will make sure people aren't voting from those addresses." Carabelli has since denied this saying, quote, "The story is not true. I never said those things, and I demand a retraction." But "The Michigan Messenger" is standing by the story and the quote, Kiran, based on the reporter's notes.
But as you well know this is something we're going to be doing every day. Sometimes the candidates say some pretty outrageous things on the campaign trail, sometimes it's too good to be true, sometimes not.
CHETRY: Well, we like it. Thanks a lot, Alina.
CHO: You bet.
ROBERTS: Back-to-back, John McCain followed by Joe Biden, the live event of the morning right here at 7:20. You're watching the "Most News in the Morning."
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ROBERTS: New images for you today showing the grim extent of Hurricane Ike's wrath. Entire neighborhoods in Galveston, Texas, wiped out. The city says its resources are, quote, "stretched to the max," and it could be a month before electricity is restored. And thousands of people have no clean drinking water. CHETRY: It's just devastating to see those pictures in the newspapers today of people literally just sleeping in their cars, their babies sleeping in the car seats because they can't return home.
ROBERTS: Yes. I mean, we see this all the time in these big hurricanes. People, you know, told to evacuate and they don't.
CHETRY: Exactly. And Rob Marciano returned from the region. He joined us this morning from the CNN weather center.
You, yourself, said as you were living the Galveston area, you had a chance to survey even more the damage and it was really shocking to you as well.
ROB MARCIANO, CNN METEOROLOGIST: Yes. I mean, it's just tough to get around there to get pictures of it. And then you speak about evacuation the last couple of days, they have been busting people out of there until this day behind because it's going to take so long for the industry of infrastructure to get a rebuilt.
There was a media blackout with helicopters as well so aerial shots were tough to come by. But finally some shots had been released. And check out some of this. Before and after pictures of a community called Gilchrest, which is just east of Galveston and the Bolivar Peninsula. There's a before, a Google Earth and there's an after.
Note there's like one or two homes that stand. This is a Google Earth satellite picture, and when you throw in some aerial pictures, complete destruction with the exception of maybe one or two homes. That's to me is just amazing. This is an area not protected by a sea wall. It's on the other side of the inlet to Galveston Bay. It's a seaside community, pretty much at sea level. Obviously a 12 to 15- foot surge is all you need right there on the water to create that complete destruction. Unbelievable pictures there. Actually, some of the pictures now on the ground coming up.
All right. All quiet, that's good. And it will be quiet for quite some time. Kind of comfortably cool across much of the nation. 71 in Chicago today. 73 degrees in New York. It will be 76 degrees as far as south as Atlanta. So that's certainly interesting. And as far as what's going on in the Atlantic, all quiet as well. With a disturbance down here, but we don't expect much to develop here. Knock on wood for the next several days.
Kiran, pretty amazing pictures there when you look at the before and after. You really get a sense of the power of what Ike did.
CHETRY: Absolutely. All right. Thanks a lot, Rob.
MARCIANO: You got it.
ROBERTS: Explosive evidence, the O.J. trial starts with a bang.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We were just robbed at gunpoint by O.J. Simpson. (END VIDEO CLIP)
ROBERTS: Sunny Hostin dissects, day one. You're watching the "Most News in the Morning."
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ROBERTS: It's day two of O.J. Simpson's trial in Las Vegas on kidnapping and robbery charges. Jurors heard opening statements on Monday. Simpson's attorney said he was trying to take back memorabilia items that were stolen from him. He called the confrontation in a Las Vegas hotel room, quote, "Recovery, not a robbery." Meantime, the prosecutor played an audio tape in which O.J. said he had to be at his intimidating best. Listen.
(BEGIN VIDEO CLIP)
O.J. SIMPSON: Tonight, I'm gonna show up with a bunch of the boys and take the (EXPLETIVE) back. They can't do nothing about it.
(END VIDEO CLIP)
ROBERTS: AMERICAN MORNING's legal analyst Sunny Hostin joins us now to talk more about these opening days of the Simpson trial, and what kind of impact did that tape have on the jury?
SUNNY HOSTIN, CNN LEGAL ANALYST: You know, it had to have really an incredible impact. I listened to it. We know that there are nine women on the jury - three men, John. And it was filled with expletives. He's saying all sorts of things like you just heard.
I'm going to go. I'm going to take my stuff back, when he gets into the room, John, he says things like you better stand the "F" up, nobody better get out of here, things like that.
The prosecution in particular going over the tape says things like you're going to hear two faces of O.J., which one is the one that you're going to believe. The one of the defendant sitting here in the courtroom looking the way O.J. usually looks pretty well, put together, calm demeanor, or the O.J. on the tape.
I think it was a bombshell. It was explosive. And the prosecution started right out of the box with that, which is exactly what I would have done had I been trying the case.
ROBERTS: Well, let's listen to a little bit more of it.
HOSTIN: OK.
(BEGIN VIDEO CLIP)
SIMPSON: Uh, I'm going to be all over the T.V. and I'm trying to figure out what story to tell.
(END VIDEO CLIP) ROBERTS: So, what about a statement like that? I'm going to be all over the T.V., I need to figure out what story to tell. What kind of impact with that?
HOSTIN: It's a prosecutor's dream. I mean, the jury is going to think not only did he do this, he thought about how he was going to portray it to the media and to us, the jury, to the public. Again, I mean, this was a prosecutor's dream. This sort of tape. O.J., all over the place shouting demands, being threatening, being angry. Very different from the O.J. that you're seeing here on the screen as a concerned sort of calm, conservative person.
ROBERTS: So, that's how the prosecution is approaching the case. What about the defense?
HOSTIN: The defense I have to say as well was just masterful. You know, what the defense said was this is not about a robbery. This was about recovery. O.J. Simpson did go there but not to steal anything, to get his own things back and then the defense will also say he went back to get pictures of his deceased mother, things that were taken from his mother while she was still alive.
And so, he played sort of the sympathy card, but it was -- it was pretty good, and then in terms of the tape, because they had to sort of distance themselves from the tape, John, the defense attorney said, again, this is not about what happened many, many years ago. This is about what happened now. And if you listen to the tape, ladies and gentleman, what the tape says is O.J. only tells them take what is mine.
ROBERTS: Right.
HOSTIN: So, they're both trying to frame it in very different ways.
ROBERTS: But would a jury now logically think well if this was a recovery effort, why wouldn't he have gone to the police to say, I know that this is going on, can you help me out here?
HOSTIN: I can't imagine that the jury is not thinking that. That's exactly what I thought. I mean, if this is the deal, then why not get law enforcement involved. I would have to say this is going to be a difficult case for O.J. I would say score one for the prosecution yesterday.
ROBERTS: All right. Day two, today. We'll see what that holds. Sunny Hostin, it's good to see you.
HOSTIN: Thanks.
ROBERTS: Thanks so much. It's coming up now at 52 minutes after the hour.
CHETRY: Inheriting a money problem.
(BEGIN VIDEO CLIP)
MCCAIN: Our economy is at risk today.
OBAMA: We are going to have a lot of rebuilding to do.
(END VIDEO CLIP)
CHETRY: Senators John McCain and Joe Biden push their plan to save the economy live on the "Most Politics in the Morning."
(COMMERCIAL BREAK)
ROBERTS: Back-to-back. John McCain, followed by Joe Biden. The live event of the morning right here at 7:20. You're watching the "Most News in the Morning."
News across the nation this morning on this Tuesday morning after a horrific train wreck in Los Angeles. California may ban engineers from using cell phones. The state's Top Rail Safety Regulator says he will seek the emergency order. 25 people died, dozens were seriously hurt when the commuter train ran a stop signal hitting a freight train head-on. Investigators are looking into whether the engineer who died in the crash was text-messaging at the time.
Drama on day one of the O.J. Simpson trial in Las Vegas. A main prosecution witness becomes ill on the stand. The man who is an alleged victim in the case has had a history of heart attacks. He pointed to his chest during testimony and indicated that he didn't feel well. Paramedics checked him out, but the witness did not go to the hospital. Simpson is charged with kidnapping and robbing sports memorabilia dealers at gunpoint In Las Vegas. He has pleaded not guilty.
CHETRY: Well, the new I-35W Bridge in Minneapolis will open at 5:00 a.m. Thursday. The construction is all done a little more than a year after the bridge collapsed into the Mississippi River killing 13 people. The bridge was fast-tracked because commuters depended on it for more than 140,000 trips a day. It's promised to be sturdier, has new sensors, as well as safety features that were not on the old bridge.
Well, there it is, $6 a gallon. She's pointing to the sign there. Well, it's not far-fetched these days. This one is just a fake. An Indiana gas station ran out of fuel and posted the price to scare people away. Sure they thought that was hilarious. Some voters though said they really thought it really was the price.
ROBERTS: You know, these days, not surprising. After what happened with the hurricane.
John McCain's family stepping into the spotlight race. First McCain and his kids appeared on the cover of "People" magazine. Now, his daughter, Meagan, sat down with our Larry King.
(BEGIN VIDEO CLIP)
LARRY KING, HOST, LARRY KING LIVE: Good morning, Kiran and John. Meghan McCain was on the show last night. She had a lot to say about politics in general, and her dad in particular, and the Palins. And here's what she said about mother and daughter.
(BEGIN VIDEO CLIP)
KING: You blogged in support of Bristol Palin.
MEGHAN MCCAIN, SEN. JOHN MCCAIN'S DAUGHTER: I did. Yes.
KING: Who is with child as we know. What made you speak out on like that?
M. MCCAIN: I think I have grown up in politics forever, and my father has been kind of pretty public. He ran for president when I was 14 so I know what it feels like to sort of children become, you know, points of criticism or used as an example. And she's 17, and she grew up in a small town in Alaska, and I just think people should support her and the media should lay off a little. She's very young, and she's just trying to live her life, and I don't think she should be an example of what to do or what not to do. I just think she should, you know, be Governor Palin's daughter.
KING: Someone, I think it was quoted. Did you say that you were obsessed with Governor Palin?
M. MCCAIN: Yes, yes.
KING: What do you mean?
M. MCCAIN: What I love about Governor Palin is for so long women are told you can only -- you can do everything but you have to do it at different times. You can have a career, but then you can't have kids. Then she has five kids. And now, she is the vice presidential nominee, it's just -- I love that she's doing it all at once. And she's such a role model for me because I love strong women. I'm a strong woman. And I just love examples like that she has all.
(END VIDEO CLIP)
KING: Meghan has got a daily blog, and is out on the campaign trail. So you'll be seeing and reading a lot more about her.
Kiran?
John?
ROBERTS: Larry King for us this morning, and Larry, thanks. Now to your Tuesday morning "Political Ticker." Sarah Palin will not cooperate with the investigation into the firing of Alaska's public safety commissioner. According to the McCain campaign the investigation is, quote, "tainted."
The campaign says Obama supporters are using the probe for political reasons. Not everyone was laughing at Tina Fey's Sarah Palin impression on "Saturday Night Live" over the weekend.
Carly Fiorina, a top aide to John McCain says the portrayal was sexist. Fiorina says it dismissed Palin as lacking substance. Palin, however, said she thought it was funny.
CHETRY: Colin Powell is still not backing a presidential candidate, at least not publicly. The former secretary of state told an audience at George Washington University that having an African-American president, quote, "would be electrifying." But he says that he's going to vote for the candidate who would be best for the country. He also said he wants the focus to be on the issues not on, quote, "lipstick on a pig stuff."
The Obama campaign is going after religious voters with some bumper stickers. The new line of faith merchandise will include buttons, signs and bumper stickers with phrases like, "Believers for Barack" and "Catholics for Obama." And items for people of other faiths are also on the way.
Well, for more up-to-the-minute political news, just head to cnn.com/ticker.
ROBERTS: It's coming up now on a minute before the hour, and here are these morning's top stories from Wall Street to Capitol Hill.
Major worries about a free falling economy today. Treasury secretary Henry Paulson will testify on Capitol Hill the day after the Dow suffered its worst drop since the day it opened after 9/11.
Fears of a slowing economy did not stop oil from falling below the symbolic $100 a barrel mark. Oil futures are lower again this morning after plunging more than $5 in trading yesterday. The crude is down about $50 from the record it set back in July.
And despite the recent plunge in oil prices, United Airlines is boosting its second bag fee to $50. The new fee will take effect on tickets purchased today for any flight that occurs after November the 10th. Just in time, you got it, for the busy holiday travel season.
CHETRY: Pack light, (INAUDIBLE) black pants wear them all weekend. Well, we are watching for very big stories this morning that will no doubt hate your wallet. Down futures down around 50 points after stocks had the worst day since the 9/11 attacks.
