Return to Transcripts main page

The Situation Room

AIG is Rescued By The Federal Government for $85 Billion; A Look At "The Express"

Aired September 17, 2008 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

UNIDENTIFIED MALE: Moments after the delivery, paramedics arrived on scene and took everyone to Mercy San Juan. Family members are all well, and considering Jaden a hero.
UNIDENTIFIED FEMALE: I am still in shock and it is a thrill to me.

UNIDENTIFIED FEMALE: I am really glad I got Chiron (ph) out in time.

(END VIDEOTAPE)

FREDERICKA WHITFIELD, CNN ANCHOR: Well, that is sweet. Forget about sibling rivalry in that family. Jaden and her new baby brother share a special bond as you can see. The next hour of the CNN NEWSROOM begins right now.

Uncle Sam to the rescue again, throwing an $85 billion life preserver to the nation's largest insurer, your tax dollars at work. Worried about all this drama on Wall Street? Suze Orman has some straight talk about what you should be doing with your money right now.

And the story of the first African-American Heisman trophy winner who never got to play pro football. The story is now a new film starring Dennis Quaid. He will join us to talk about it.

Hello, again. I'm Fredricka Whitfield in for Kyra Phillips live at the CNN headquarters here in Atlanta.

All right, AIG was sweating bullets for a while. The country's biggest insurer was on the brink of collapse, but once again, Washington has come to the rescue. The Federal Reserve Board will loan AIG up to 85 billion dollars. Uncle Sam gets a nearly 80 percent stake in the firm in return. The Feds say if they had let AIG go under, there would have been a serious ripple effect on world markets that are jittery enough right now as it is. AIG has more than one trillion dollars in assets and 74 million clients across the globe.

The AIG intervention follows a dramatic few days on Wall Street. We will check in with Susan Lisovicz at the New York Stock Exchange in a moment. But first, let's talk with senior correspondent Allen Chernoff. He's at the AIG. So, Allan, how important was this bailout to AIG?

ALLAN CHERNOFF, CNN BUSINESS CORRESPONDENT: Well, it was absolutely critical. Without it AIG would have declared bankruptcy. Now, that may not sound so bad, losing one company, but that is not the reason that the government did this. Mind you, the government didn't want to do this. They didn't want to put $85 billion of our taxpayer money on the line.

But they did it because the financial world is like a human pyramid, and AIG is one of those pillars. It was offering protection to financial institutions around the globe for their risky investments. Those investments went down. AIG was on the hook. it had to come up with the billions and billions of dollars.

Now, certainly, there is a tremendous amount of relief among the employees in the building behind me.

(BEGIN VIDEO CLIP)

CHERNOFF: It must have been stressful yesterday?

UNIDENTIFIED MALE: Yes, I guess so. It was a fairly tense day, but we are here. We are here to survive and it is still a tale of carrying on and doing some business.

UNIDENTIFIED FEMALE: I was sort of frightened, because right now, with the economy being what it is, everything so uncertain, I didn't know if today I was going to be able to walk in here. So I am glad to be that. I'm glad to be walking into my building.

(END VIDEO CLIP)

CHERNOFF: Well, it is a good thing for the employees here, but is it a good thing for our economy, for capitalism? This is not the way things are supposed to work. No question, we will be hearing lots of calls for tougher regulations of the financial markets.

WHITFIELD: Allan, what does this mean for the average person, the average taxpayer, who is helping to bail out AIG?

CHERNOFF: Well, it means that our government is out there raising money as we speak. The Treasury said today it is going to be issuing new treasury bills, and fortunately for the Treasury, there is lots of demand for those bills right now, because people are so worried about the stock market. So there is a rush into safety. Safety means treasury securities.

So there is lots of demand and that at least is a good thing for the Treasury, because they have to raise plenty of money to support AIG.

WHITFIELD: All right. Allan Chernoff, thank you so much. So why aren't big investors encouraged by this? Why is this not boosting the confidence, at least for today? Let's check in with Susan Lisovicz at the New York Stock Exchange? What's the answer? I know it's not simple.

SUSAN LISOVICZ, CNN BUSINESS CORRESPONDENT: Well, it is a continued loss of confidence. This situation -- the events that created this situation didn't happen overnight. What we saw in real estate and the credit markets was years in the making. And unfortunately, it's not going to go away overnight. I think what the street is telling us is that maybe it is not over yet, despite this historic intervention by the Federal Reserve.

So we are seeing it play out in the financial sector. Once again, AIG shares are falling an additional 40 percent. Meanwhile, another financial giant, Morgan Stanley, tried to calm down investors. It released its quarterly earnings a day early to try to restore some calm here. Well, they were better than expected earnings, made a lot of money. Its shares are down 36 percent. So it's losing one-third of its value in one session.

We are seeing, you know, lots of other stocks like Citi, Goldman Sachs getting hammered as well. And it is playing out to big triple digit losses. Once again, check out the big board. With less than two hours to go in the session, the Dow Industrial is down nearly 300 points. Just to give you an idea of the scope of this sell off, there are roughly 3,200 stocks that trade here at the NYSE. There is less than 200 -- fewer than 200 stocks that are trading higher right now.

So there is 3,000 stocks that are selling off. This after, you know, the Dow fell 500 on Monday. AIG by the way is a Dow 30 stock.

There is another story. We talked about it in the last hour. Something that is considered very safe for money market funds, and this is something that a lot of folks are talking about, the Reserve Primary Fund marked its prices at less than a dollar yesterday, a move that some economists call unthinkable. These are considered safe havens and to see it less than one dollar is something that further I think rattles investors today, Fred.

WHITFIELD: Susan, you have to wonder how many times the Federal Reserve can do this? How much more can the average taxpayer be put in this position for this kind of bailout?

LISOVICZ: That is right. Well, money markets in particular have been considered very safe havens that Market Watch says like many companies would rather absorb the losses than break the buck. The dollar mark guarantees that basically you put a dollar in, you will at least get your money back.

So this particular money market fund was tied to Lehman Brothers. So maybe that is a unique -- hopefully a unique event. But one thing I wanted to tell you, you know, talking to a lot of -- I have been talking to a lot of people, and they say these may be historic times, but we have been through this kind of pain before. The worst thing you can do right now as an investor is just act purely on emotion. One money manager told me -- he said, there's an old adage in bear markets. It says don't just do something, stand there.

Smart investors know that these kinds of sell offs actually can be a time for opportunity. That is what Warren Buffett does. He looks for things that are cheap. May not be over, the selling, but if you own really good stock, you know, you should think about that, that, you know, you are going to get your money back over the long run. If you are a long-term investor, just inject a little calm.

WHITFIELD: Stand there. Be like the bull statue there on Wall Street, just be still.

LISOVICZ: Or the stress ball.

WHITFIELD: Or the stress ball. All right, Susan. We appreciate it. Thanks so much.

LISOVICZ: You're welcome.

WHITFIELD: So with Wall Street being the way it is, a lot of people have questions about the money. Here is one, "should I take my money out of the bank?" What do you think Suze Orman?

(BEGIN VIDEO CLIP)

SUZE ORMAN, CNN FINANCIAL ADVISER: If you take your money out of the bank and that money happens to be FDIC insured and you are worried about it, so you take it out and you stick it under your mattress or in a shoe box, here is the problem: if there is a fire in your house, your home insurance is not going to cover it for more than 200 dollars. My doorman yesterday, as I walked out of my building said, Suze, you have to help me. I took money out of the bank. I took it home. I was robbed last night and $17,000 is gone. What should I do? Should have left it in the bank.

(END VIDEO CLIP)

WHITFIELD: Ow. And you can take that advice to the bank. We will hear more from Suze Orman later on in the hour, and she will be talking about your 401(k), which we know a lot of people are very worried about that.

So who will the government bail out next? Detroit is now looking for some help from the Feds. We will have detail coming up later on in the hour.

And five days of misery along the Texas Gulf Coast, and there is a lot more ahead. Look at these gas lines in Houston. Gas lines right there four days after Hurricane Ike made land fall, and there is also grumbling from the Houston's mayor that FEMA is not moving in quickly enough to get the aid to the region. Homeland Security Secretary Michael Chertoff is likely to hear those complaints today face-to-face, as he visits the area for the second time since the storm struck.

There is also word today that the death toll from Ike has climbed now to at least 16 in Texas alone.

Well, a so-called look and leave program allowed Galveston residents who fled from Hurricane Ike to go back home to check out the damage, but the city's mayor put a stop to it only hours after it began. Why? When the island was opened up, traffic backed up for miles. And in parts of the Midwest, a wet stinky mess there and it is Hurricane Ike's fault as well. Rivers on the rise after as much as ten inches of rain fell in some areas. In hard-hit Indiana, the governor has declared two counties disaster areas. Ike's impact is also causing serious problems in Ohio, Illinois, Michigan and Kentucky. Hundreds of thousands of people in those states are still without power.

The aftermath of Ike, terrible flooding in the Midwest; a lot to talk about on the weather front.

(WEATHER REPORT)

WHITFIELD: You have seen it at the pump, gas prices going through the roof, particularly as Hurricane Ike took aim at Texas. Was there a reason for that? What has happened with gas prices during hurricanes in the past? We will find out here in THE NEWSROOM. A little comparing and contrast.

(COMMERCIAL BREAK)

WHITFIELD: All right. An unlikely hero nicknamed Express emerges during some tense times in the United States. The year was 1959. The civil rights struggle was in full gear and racial tensions were very high. Enter Ernie Davis, this young man a halfback for the Syracuse Orangemen, who encountered prejudice on and off of the field. That year he would lead the team to the Cotton Bowl Championship. And in 1961, he would be the first African-American to win the Heisman trophy, that picture right there.

A new movie based on his life chronicles his college days as a play maker and a barrier breaker.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Roger Pace, channel nine. They are calling this game the north against the south. In light of what is going on in this country, do you feel added pressure to represent change?

UNIDENTIFIED MALE: Well, we don't concern ourselves with politics. We are just here to play a great football game and take home a championship.

UNIDENTIFIED MALE: To be honest, Mr. Pace, when I am out on the field, I only think about winning a game, but that doesn't mean I don't know the color of my own skin.

(END VIDEO CLIP)

WHITFIELD: The movie is called "The Express" and Dennis Quaid stars as the Syracuse Coach Ben Shurzwalter (ph). Boy, I hope I said that right.

DENNIS QUAID, ACTOR: Yes, you got it right.

WHITFIELD: Whew, the pressure was on. Good to see you. What did it feel like to do this project and be a part of a project that really does put the microscope on one of the most tumultuous times of American history, but at the same time uses America's favorite sport to help tell the story and break barriers?

QUAID: Well, doing a sports movie, and I have done several of them, and in order to do it, it has to be a -- transcend the sport it is about. Otherwise, you could just turn on the TV and watch a game. There is a lot of drama in that. But the Ernie Davis story is such an uplifting story. It speaks to a lot of issues that still going on today, in particular race is what we are talking about. It is is a look back into what we were like back in 1959 as far as segregation, and racial issues were concerned.

It speaks to where we are today and also where we need to go from here.

WHITFIELD: What is the biggest challenge playing this kind of role, this coach who was really instrumental in keeping the team together? And you know, Ernie Davis was one who, when going to the Cotton Bowl, he faced this obstacle of we don't want you to play in Texas, and even the team saying, well, we are not sure if it is really right. So as an artist, how much pressure did you feel like to really get it right or to get a certain message across?

QUAID: Well, I tried to play a real person, Ben, who is Ernie's coach, a tough as nails, old-school type of, coach. He was in the military, in World War II and brought that military discipline to his teaching technique. But in today's terms, he was a man of his times. But in today's terms, you might label him a bigot. But if you do that, you have to label a large portion of America a bigot.

But, as I said, he was a man of his times. He was a ground breaker in bringing African-Americans to his -- recruiting them for his team. But not out of any sociological reason, only because of their ability. But I tried to approach him honestly, and there is some racial tension that does occur between him and Jim Brown.

WHITFIELD: Was that ever uncomfortable to play?

QUAID: Well, I had to just play it honestly is what I tried to do. The arc of Ernie's and Ben's relationship is that Ernie was an incredible person. He was a very graceful person. And he had God's grace in his life. He touched everyone he met, and changed everyone he met in a great way. He and Ben -- I think he changed Ben. They really became father and son towards the end of Ernie's career. Very close relationship.

WHITFIELD: So can we see a little bit of Coach Ben and you in this clip.

QUAID: Right.

(BEGIN VIDEO CLIP)

QUAID: This is not just a game anymore. We are fighting something else out there on that field right now. And I can see it just as clearly as you. And that is why winning this one means nothing if you lose yourselves. It belongs to you gentlemen. Don't you let anyone steal history away from you.

(END VIDEO CLIP)

WHITFIELD: It is an inspiring movie and also a tear-jerker.

QUAID: It really is. Usually when I watch a film that I am, I watch it very technically, but watching "The Express," it hits me in the heart and it hits me in the gut, in a place I don't have words for. It's really more about -- it's much more than about football. It's a story about grace, god's grace in your life and passing it on to other people.

WHITFIELD: Well, it is a dynamic movie and I can't wait to see it. I only got a chance to see some of the clips thanks to the fact that I was going to get a chance to interview you. "The Express" is the movie. Meanwhile, you are a Texan and your mom is in the Houston area. How did she do through Ike?

QUAID: She came through fine with Ike. She stayed with friends, long time friends. All she had was a tree in her driveway, no damage to the house and the power was out for about eight hours. So everything turned out well for her. But not so well for Galveston and surrounding areas. It is tough.

WHITFIELD: For a lot of people devastating hurricane. Dennis Quaid, good to see you. We appreciate it. The movie is "The Express," coming to a theater near you. You don't want to miss it.

Well, Hollywood certainly answers the call for help in this way; actor Matt Damon and hip hop artist and activist Wyclef Jean get together to help those devastated by Hurricanes in Haiti.

(COMMERCIAL BREAK)

WHITFIELD: All right. Talking tough in some battle ground states. John McCain and Barack Obama try to calm America's fears about the economy, as they campaign in some key states. McCain is on the trail today in Ohio and Michigan. After a stop in Colorado, Obama is campaigning in another toss-up state, Nevada. The election just 48 days away.

All right, fixing the nation's economic mess, both McCain and Obama say they are the man for the job. Here is what they are telling voters in the latest campaign stops.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: In January, I outlined a plan to help revive our faltering economy, which formed the basis for a bi-partisan stimulus package that passed the Congress. Senator McCain used the crisis as an excuse to push a so-called stimulus plan that offered another huge and permanent corporate tax cut, including four billion dollars for the oil big companies, but no immediate help for workers. This March, in the wake of the Bear Stearns bailout, I called for a new 21st century regulatory framework to restore accountability, transparency and trust in our financial markets. Just a few weeks earlier, Senator McCain made it clear where he stands. Quote, I am always for less regulation, unquote. And referred to himself as, quote, fundamentally a deregulator.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Senator Obama is not interested in the politics of hope. He is interested in his political future. That's why he is hurling insults and making up facts about his record. Today, he claimed the Congressional stimulus package was his idea. That is news to those of us in Congress who supported it. Senator Obama didn't even show up to vote.

He talks a tough game on the financial crisis, but the facts tell a different story. Senator Obama took more money from Fannie Mae and Freddie Mac than anyone but the chairman of the committee they answer to. And he put Fannie Mae's CEO, who helped to create this problem, in charge of finding his vice president.

(END VIDEO CLIP)

WHITFIELD: And they are not just talking economic issues on the campaign trail. It is what they are talking about in their latest ad campaigns as well.

OK. Picture this, Hillary Clinton and Sarah Palin at the same event and not on SNL? Well, it will not happen, at least not next week. Clinton was supposed to appear in New York City at a rally against the president of Iran, but the senator canceled when she was told that Palin had also been invited, saying that the event had become politicized.

So how do Barack Obama and John McCain fare in four key states? You will want to check out CNNpolitics.com for some new poll numbers.

Bankruptcies, bail outs, jittery markets, shake in confidence, Wall Street's rough road might have you wondering about your money. Here is a question that goes like this: "I'm 45 and I'm losing money in my 401(k). Our employee matches our contributions. Should I keep putting money in?" Well, that is a good one. The answer is straight ahead.

(COMMERCIAL BREAK)

WHITFIELD: All right. 30 minutes after the hour, here are some of the stories we're working on in the CNN NEWSROOM.

Stocks fell sharply on Wall Street this morning. Take a look at the DOW down 232 points. All this on the day of news that the government bailed out the faltering insurance giant AIG. The fed is propping it up with a two-year, $85 billion loan, getting in return an 80 percent stake in the firm.

Well, standing in line, just take a look at the pictures right there. Standing in line for hours for food and other emergency necessities, this is Texas. That's the fate for evacuees and survivors of hurricane Ike along the Gulf Coast. One official says as soon as distribution centers open their doors, they were overwhelmed by people in need.

At least 10 people were killed today in an attack on the American Embassy in Yemen. Officials say it was carried out by suspected Islamic insurgents. Six attackers were killed, no Americans hurt.

And here's more on the AIG bailout. Federal officials felt if they let the insurance giant collapse, global markets could suffer. Borrowing costs could rise and households would see less wealth. In other words, $85 billion might be a good deal compared to not bailing the company out at all. Well, Uncle Sam is AIG's knight in shining armor.

Bankrupt Lehman Brothers has a British bank. Barclay's plans to scoop up Lehman's North American Investment Banking and capital markets business for $250 million. It will pay another $1.5 million for Lehman's New York headquarters and a couple of data centers. Well, this is potentially good news for about 10,000 Lehman employees worried about their jobs. The deal must clear bankruptcy court first, however.

All right, the AIG bailout. Well, it doesn't seem to be inspiring confidence on Wall Street. You took a look at the numbers earlier, the DOW down over 200 points. Well, let's take a look right now, if we can. All right. It's 248, there at the bottom part of the screen at the New York Stock Exchange, the DOW down. Stocks have been in a freefall most of the day since news hit.

So, maybe not all is doom and gloom on Wall Street. While some firms are foundering, experts say that opportunity does knock for businesses and possibly for you.

Here now is CNN's Tom Foreman.

(BEGIN VIDEOTAPE)

TOM FOREMAN, CNN CORRESPONDENT (voice-over): What do Paramount Pictures, the nation's railroads, Macy's, Campbell Soups, Hertz cars, Continental Airlines, IBM and Halliburton have in common? All have grown with the help of Lehman Brothers. So, consumers of all kinds could be dramatically affected by the firm's collapse and the shaking financial markets, right? Well, maybe.

Tim Hanson is with the investment advice company The Motley Fool.

TIM HANSON, THE MOTLEY FOOL: Those of us who are long-term thinkers think of now as a very optimistic time to be an investment. It's a great time to buy stocks. But there are other investors out there, momentum players, for example, who are extremely pessimistic.

FOREMAN: On the pessimistic side, the problems plaguing the financial markets right now could certainly hurt if your savings or retirement plan is heavily invested in stocks. Wall Street goes down, so does your bottom line. If consumers get scared and tighter with their wallet, businesses across the nation could delay plans for growth, hiring and product development, further hurting the struggling job market. Then home loans which are already harder to come by, could be even tougher to get. That could hurt construction businesses, landscapers and retailers who sell building supplies and home furnishings. And on, and on, and on it goes.

(on camera): Or, on the optimistic side, maybe nothing will happen to consumers. Financial analysts point out that every time the market plunges, some companies see opportunity to step in and grab the business that others have lost.

(voice-over): So, the advice from some analysts right now: keep watching for financial ripples that might head your way. But try not to worry too much.

Tom Foreman, CNN, Washington.

(END VIDEOTAPE)

WHITFIELD: All right. We know you have lots of questions, so here's a pretty good question about what to do with your money right now. Here it is:

"I'm 45 and I'm losing money in my 401(k) and my employee matches my contributions. Should I still keep putting money in it?"

That was the caller's question to Suze Orman, and here now is her answer.

(BEGIN VIDEO CLIP)

ORMAN: Here's the thing. At 45, you're not going to need this money for at least 10 or 20 years. If you just keep doing this every single month, assuming that you are investing --

UNIDENTIFIED FEMALE: I have current debt.

ORMAN: But they're still matching your contributions. They are still for every dollar that you put in, they're still giving you possibly 50 cent on the dollar. That's an automatic 50 percent return on your money, even if the markets go down, isn't that correct? Where are you going to get that?

(END VIDEO CLIP)

WHITFIELD: Point blank. All right. Well, you can follow the crisis on Wall Street. The buyout, the bailouts, falling oil prices, rising gas prices, all of it on CNNmoney.com. And get the day's market news and the numbers, as well. Plus, expert analysis just like a visit from Suze Orman, like that.

All right. In the crosshairs of destruction. A small town takes a big hit from, what else, Ike. We'll have a live report from one of the Texas coastline's top attractions, now a scene of devastation. (COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

JACQUI JERAS, CNN METEOROLOGIST (voice-over): It's estimated that up to 40 percent of what'S found in landfills is building waste material. Things like wood that'S slow to decay. But, researchers at Stanford University say they're developing a renewable material that decays faster and could be an alternative to plastics and wood.

PROF. SARAH BILLINGTON, STANFORD UNIVERSITY: The goal is not to use natural resources that can't be easily replenished. So we're not chopping down trees.

JERAS: This artificial wood is made by stacking two different materials. A polymer, or plastic extracted from bacteria. And a natural fabric-like hemp. They are layered to the desired thickness, hot pressed and cut. The result researchers say, is a durable renewable building material that is not made from petroleum.

PROF. CRAIG CRIDDLE, STANFORD UNIVERSITY: There's real reasons to get rid of petrochemical plastics if we can and to find a biodegradable substitute.

JERAS: And in a landfill, it can produce more methane gas as energy that could eventually be used to make more of the artificial wood. But research is still under way to see whether it's a viable building material.

CRIDDLE: We can align environmental interests and economic interests so that people can make money and do well for the environment. Then we really have something exciting.

JERAS: Jacqui Jeras, CNN.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

WHITFIELD: Well, it could be a week before we get a final tally of the damage from Ike. But, even conservative estimates say that it will be in the billions. Attractions like the marina and the boardwalk in Kemah, Texas, near Galveston, took a huge hit from the storm.

Our Susan Roesgen is there.

SUSAN ROESGEN, CNN CORRESPONDENT: You know, Fredricka, this is a huge amusement park with lots of things, normally like the games, you know, where you throw the little balls in the cups and you win these stuffed animals. We have found dozens of these about a half a mile away. That was from the storm surge, a 17-foot wall of water and the wind out here from hurricane Ike.

Now, this amusement park, and you can look here at the ferris wheel where the cars were left dangling upside down, draws about three million tourists to this area a year. The town itself, is only 2300 people. But this amusement park employs 2,000 people, draws 3 million visitors. It is a huge economic engine for the entire coastal area here around Kemah and Galveston. About 45 miles away from downtown Houston.

I talked to the owner of this amusement park today, the Kemah Boardwalk and he said that actually you know, the terrible stock market drop this week. But hurricane Ike he said, was worse. And yet even so, they plan to come back.

(BEGIN VIDEO CLIP)

TILLMAN FERTITTA, KEMAH BOARDWALK OWNER: We always knew it was a risk when you build on the coast. But this has been just a great asset for this company. And it's been a great asset for the whole city of Houston, the city of Galveston. Like I said, it's the No. 1 tourist attraction in this area. It's just something we'll rebuild. And like I said, next March, it's going to be up and going and do better than ever.

(END VIDEOTAPE)

ROESGEN: Of course, the big season is between Memorial Day and Labor Day, Fredricka. That's the good thing. They don't usually don't have that many crowds here. But they are open 363 days a year. So they had the guys out working and fixing things up almost, right after the storm went through. They really need to get the area back, both for the economics region and also for their own business -- Fredricka.

WHITFIELD: But, does it seem like a very long kind of haul before they're up and running again? Are we talking like, maybe prepared by next summer?

ROESGEN: Well, you know, he wants to do it in a month, month and a half. I think that's probably optimistic. But again, they definitely want to get it going by spring break, when they get all of the spring breakers down here. They're going to try.

WHITFIELD: All right. We wish them the best. Susan Roesgen, thanks so much there in Kemah, Texas.

All right. Well, it's 45 minutes outside of Houston. That's what Susan was telling us. So, let's talk about someone who knows Houston very well, who's had a pretty good eye's view of the damage there, right in their own backyard.

I'm talking about the Reverend Joel Osteen. Well, he has a massive ministry there called the Lakewood Church, right there in Houston. And he has actually opened the doors to help out the evacuees. And he's also gotten a pretty good view of the devastation there in his own backyard of Houston. He joins us on the phone now, Joel Osteen, with us now.

And so, what have you seen? Give me an idea of what your view has been of the damage in your town of Houston? VOICE OF REV. JOEL OSTEEN, LAKEWOOD CHURCH: You know, Fredricka, it's been really bad, you know, just being without power that long and just so many trees down and especially our friends to the south in Galveston, it is just really devastating. But I am out today just visiting the different pod sites they call them, the Points Of Distribution, and one thing I love is that -- just the people's spirits are high.

You know, they are hurting underneath, but, sometimes, this just brings out the best in people and people are wanting to help other people, and that is what I am seeing today.

WHITFIELD: There have been so many different efforts to kind of open doors to help out a lot of folks who have been left homeless, give them a temporary shelter. What have you and your church perhaps done, or perhaps some of your parishioners -- what are you aware of people doing?

OSTEEN: Well, we see people bringing in people that don't have power into a house that does have power. We are trying to coordinate a lot of that. And also, we are encouraging the people that attend our services to get out to volunteer the best that they can.

We realize some people -- gas is very short here, so it is hard to get around town. But we are just encouraging people to help one another. It really takes your mind off of your own needs.

WHITFIELD: And that is one of the major obstacles. We saw those gas lines, even the long lines for the distribution centers where there is food being offered, emergency supplies. But for the folks who cannot get to those centers, perhaps your ministry -- or how are other ministries trying to get to people who are in great need who simply cannot make their way around Texas right now?

OSTEEN: You are right. It is just what you said, many people cannot get out. Yesterday, we were working with the group that went into -- more of the first responder type that actually takes the ice and the water and the food into the people. And so, you know what? We just have to believe that, you know, that -- I know that God will give us the strength to get to all of the people that need it. But it is really devastating when you can't get around and you are so used to power, and just, you know, really changes things.

WHITFIELD: Does it even take you aback to see these long lines of people, whether it is for gas or food?

OSTEEN: Well, it does, especially in the year (ph) that we live in today. But I know that our government, our city leaders, are doing everything they can do, but it does. It is amazing to look down the road and realize it is going to take you four or five hours to get gas, if it doesn't even run -- hopefully it won't run out.

But it is -- it is. One thing I can say, though, is that it is getting better each day. So it is really hit Friday night, Saturday, and I can see even today where I am, at least we are starting to cleanup. And I just left the TSU, Texas Southern University, where there are so many good-hearted people just helping others. So, I am encouraged by it.

WHITFIELD: All right. Reverend Joel Osteen, thanks so much and keep us posted on what Lakewood Church is able to do to help meet the needs of so many people who have been left homeless and are in desperate need of so much.

Reverend Joel Osteen joining us by phone from Houston there, leader of the nondenominational megachurch known as Lakewood. Thanks so much.

All right. Speaking of gas, well gas topped $5 a gallon in parts of the U.S. after Hurricane Ike swept ashore in Texas. So, is that normal after most hurricanes? It almost seems like the new phenomenon.

Josh Levs has been doing some digging. I kind of knew the answer to that, be we wanted you to kind of verify it for us. I don't remember this after Hugo, after Andrew --

JOSH LEVS, CNN CORRESPONDENT: Consider it verified. It was not like this. It was not like -- you saw what was going on this weekend, when people literally saw prices rise, like they were at the gas station when someone came out and added 50, 60 even 80 cents per gallon.

It is not normal. This does not usually happen.

So, throughout the weekend, as this was going on and really getting to (INAUDIBLE), I spoke with some analysts, and I was like, what is going on here? Because, we know it is not usually like this.

Let me show you a graphic here, because all of the people I talked to kept pointing to a series of major reasons, four major reasons, that they say really contributed to this. First of all, it is true that the refineries were shutdown in Texas. That reduces the supply which will hike the price somewhat.

But then they also said panic at the pump. And we know this because people were going to the gas stations at midnight, 1:00 in the morning, and filling their SUVs because they were afraid that either they wouldn't have gas later in the week, or that it would be even more crazy expensive.

So we saw it disappear. Some gas stations had to shutdown.

WHITFIELD: Yes, I'm wondering if that panic at pump and the retailers respond is really all in one. Some of those retailers were panicking, too.

LEVS: Yes, some retailers were panicking. Absolutely. To some extent they are passing along the price. And I will also mention that there were theses delayed effects from Gustav, which made the gas price already go up even before the Ike came along. So that was part of it.

WHITFIELD: So what about the reports of gouging? How do you justify those price increases? Or, how do you label that gouging?

LEVS: You know what? The entire region, especially the southeast -- the Gulf Coast area, but through the southeast, and other parts of the country -- say, yes, it's true, there has been gouging.

How do you know? I asked an analyst. Here is his answer.

(BEGIN VIDEO CLIP)

KEVIN KERR, EDITOR, GLOBAL COMMODITIES ALERT: Since Katrina, there are pretty stringent laws in place. The government is taking a very close look at this, and local governments really well. Really the way you can look at it is look around at the other gas stations in the area. Are the prices comparable, or is this a specific station? That would be a good gauge of what's going on.

(END VIDEO CLIP)

LEVS: Something that you need to watch out for. That is, if you think you are might be gouged, look at other stations in the area. If they are charging a lot less, that is one key. So that's something to watch out for too, Fred.

WHITFIELD: All right. I like to think half glass full on just about everything in life.

LEVS: OK. OK.

WHITFIELD: So is there a silver lining here?

LEVS: There could be a silver lining. There could be. One analyst told me this, and you've got to kind of follow the logic, but here it is really simply -- basically, right now, because the refineries are shutdown, there is less oil being demanded, right? So if you have less oil in demand, then the oil price goes down and that could translate to lighter prices at the pump at some point. It is possible, we can't be sure, but it is possible.

WHITFIELD: And just when we were so hopefully and enjoying the price of barrel -- the price of oil per barrel going down a little bit right before Ike, and then --

LEVS: Boom it gets us. Yes, it was crazy I know.

WHITFIELD: I know. All right. Thanks a lot, Josh. Appreciate it.

LEVS: Thanks, Fred.

WHITFIELD:: Appreciate the digging.

All right. So who will the government bail out next? Detroit? The city is looking for some help from the Feds. We'll have details next.

(COMMERCIAL BREAK) WHITFIELD: All right. One red light run, 25 lives lost. Investigators share new details on that tragic California train collision.

(COMMERCIAL BREAK)

WHITFIELD: All right. First Bear Stearns and Fannie Mae, Freddy Mac, now AIG? Is the auto industry next? That's right, American automakers are asking Uncle Sam for help.

Here now is CNN's Kathleen Koch.

(BEGIN VIDEOTAPE)

KATHLEEN KOCH, CNN CORRESPONDENT: Detroit is hurting. Gas prices are up, SUV and truck sales are slumping, and at the same time, it is facing staggering costs to build more fuel-efficient cars. So it is asking Congress for help, $25 billion worth.

RICHARD WAGONER, GENERAL MOTORS: General industry conditions and credit conditions have gotten so difficult that it would be very helpful if that funding could be approved.

KOCH: Automakers are argue that Congress promised the loans last year when it mandated tougher gas mileage rules. Detroit also knows it has election year politics on its side.

OBAMA: And we're going to make sure those cars are not 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, four of the states that would benefit most, Michigan, Ohio, Indiana and Missouri, are critical battlegrounds.

JOAN CLAYBROOK, PUBLIC CITIZEN: It is all politics all the time. The presidential candidates, if they said, don't do this bailout, they would 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.

UNIDENTIFIED MALE: 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.

UNIDENTIFIED MALE: It looks like a bail out to me.

REP. MIKE PENCE (R), INDIANA: Walks like a duck, quacks like a duck, it is probably a duck.

KOCH: Even some lawmakers from automaking states fear taxpayers will again be left holding the bag.

PENCE: 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.

(on camera): And Congress could be hearing from Detroit again. If the economy and credit availability don't improve, automakers say they may need another $25 billion in loans.

Kathleen Koch, CNN, Capitol Hill.

(END VIDEOTAPE)

WHITFIELD: And on this day of economic jitters, let's listen in now to candidate Barack Obama in Elko, Nevada, talking about the economic picture.

(JOINED IN PROGRESS)

OBAMA: ... for John McCain. It has been really interesting to watch him respond to this economic noose. His first reaction to this crisis on Monday was to stand up and repeat the line that he has said over and over and over again throughout the campaign -- I quote -- "the fundamentals of our economy are strong."

Now, his campaign must have realized that probably this was not the smartest thing to say on the day of a financial meltdown, so they sent him back a few hours later to clean up his remarks. But, it sounds like he got a little carried away, because yesterday John McCain actually said that if he is president, he will take on -- and I quote -- "the ole' boy's network in Washington." I am not making this up. This is somebody who has been in Congress for 26 years, who put seven of the most powerful Washington lobbyists in charge of his campaign, and now he tells us that he is the one who is going to take on the ole' boy's network -- the ole' boy's network. In the McCain campaign, that is called a staff meeting. Come on.

(APPLAUSE)

Then John McCain went on to say how -- John McCain went on to say how angry he was at that greedy corporate interest on Wall Street. He is so angry that he wants to punish them with $200 billion worth of tax cuts for them. And if they are not careful, he will give them even more tax cuts for shipping our jobs overseas. I mean, who is -- who is he getting these lines from? The lobbyists who are running his campaign? Maybe it is Phil Graham (ph). Some of you know Phil Graham, the man who was the architect of some of the deregulation in Washington that helped cause the mess on Wall Street, who, by the way, also happens to be the architect of John McCain's economic plan and one of his chief advisers.

You remember Phil Graham, he's the guy who said that we were just going through a mental recession, and who called the United States of America a nation of whiners. All right. But we are not through, because -- we are not through, because yesterday, John McCain's big solution to the crisis we are facing is -- get ready for this -- a commission -- a commission. That is Washington speak for we will get back to you later.

Now, folks, we don't need a commission to figure out what happened. We know what happened -- too many in Washington and on Wall Street were not minding the store. CEOs got greedy and lobbyists got their way, politicians sat on their hands until it was too late. We don't need a commission to tell us how we got into the mess, we need a president who will lead us out of this mess. And that is the kind of president I intend to be.

(APPLAUSE)

So, while John McCain is not offering real solutions, he cannot talk enough about how greedy Wall Street is and how he's going take on the ole' boy's network in Washington. Now, at this rate, by the end of the week, John McCain and Phil Graham, they are going to be talking about how they are going to grab those seven lobbyists, they're going to plan to storm the Treasury Department with torches and pitch forks. Come on.

This all pretense -- that somehow he's going to take on these folks when he hasn't taken them on for the last 26 years.

WHITFIELD: All right. Barack Obama there in Elko, Nevada, talking about his economic picture if elected president there and casting a few blows at his Republican contender, John McCain, also on the campaign trail talking about the economic picture for this country.

I'm Fredricka Whitfield in Atlanta. Rick Sanchez is in New York.

The next hour of the NEWSROOM starts right now.