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Explosion Rocks U.S. Embassy in Yemen; Fed Rescues AIG; Obama Responds to Crisis, Focuses on the Economy; Interview with Senator Chris Dodd; Interview with Gov. Bill Richardson

Aired September 17, 2008 - 07:00   ET


ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice-over): Senior McCain advisers insist Democrats are doing some wishful thinking.

CARLY FIORINA, MCCAIN ADVISER: I think it's pretty clear that the Democratic Party is in full-throated panic about the state of the race.

HENRY: But, even some conservatives see a risk if Palin overshadows McCain.

KEVIN MADDEN, REPUBLICAN STRATEGIST: Once it becomes a position where you're relying too much on your vice president, then you don't have that ability to really accentuate the top of the ticket.


HENRY: Now the McCain camp says they have nothing official to announce just yet, but there are signals that next week they may be sending Governor Palin to New York for the United Nations general assembly meetings. That will give her a chance to sit down with some world leaders, sort of boost her prestige on the international stage. It's a sign clearly that while the McCain camp says they're confident that she's helping the ticket, they also have some concerns about her experience, and they want to deal with them and try to put her out there in a different way -- Kiran.

KIRAN CHETRY, CNN ANCHOR: Ed Henry for us in Cleveland, Ohio, this morning. Very interesting. Thanks.

JOHN ROBERTS, CNN ANCHOR: It's a minute after the hour now. And breaking news this morning.

The U.S. embassy in Yemen, Sana'a, the capital there, under attack this morning. We understand that potentially a car bomb came up and was exploded at the outer perimeter, their security gate. Several more blasts following that, killing 10 police and civilians, and six attackers. One senior U.S. official says no U.S. embassy employees were killed.

An $85 billion loan from you to save the world's largest insurance company. The federal government has decided to bail out AIG in exchange for nearly 80 percent stake in the giant. With all the bad news on Wall Street, oil hit a seven month low. Crude fell more than $4 yesterday, settling at around $91 a barrel.

And back to our breaking news this morning. The U.S. embassy in Yemen attacked. State Department correspondent Zain Verjee is on the phone with us. She's got the latest information.

What are State Department officials telling you about the whole thing, Zain, because there's been a little bit of confusion as to whether or not the initial explosion was a car bomb, and what secondary explosions might have been caused by it?

VOICE OF ZAIN VERJEE, STATE DEPARTMENT CORRESPONDENT: Well, it's still unclear and everyone is trying to figure that out, John. What we're hearing is this. The senior State Department official had said to us that the embassy was first rocked by gunfire, then there was a main explosion and then secondary explosions. We're learning, too, that the attackers were disguised as Yemeni troops.

As you mentioned earlier, John, no Americans were killed or injured. The spokesman at the Yemeni embassy in Washington has a little more detail saying that two vehicles were actually filled with explosives and of the six terrorists killed, one of the attackers was found wearing a suicide vest. So they're still trying to put together the details of what happened -- John.

ROBERTS: You know, Zain, there were a series of attacks against that embassy in March and April of this year. It led to the evacuation of non-emergency personnel, dependents. They were allowed back in as of August 11th. Do we know how many of them had actually made their way back to Sana'a?

VERJEE: Well, quite a few had. I don't have the specific numbers. But essentially, there was a feeling by the U.S. that Yemen was beginning to crack down on counterterrorism efforts. The Yemeni officials have said to me that just last month they killed five al- Qaeda operatives, captured 30. And they're seeing this in some way the retaliation by al-Qaeda. So that may have been some incentive for the U.S. to say OK, Yemeni government is cooperating. They're cracking down on al-Qaeda. Let's let back in some more of our staff.

But U.S. officials, John, have told us that there was nothing in the intelligence traffic in Yemen that warned of any attack -- John.

ROBERTS: Right. Obviously, though, maybe they have to go back and reassess the situation there. Zain Verjee for us this morning.

Just a reminder, 16 people in total killed in that attack. Six Yemeni security guards, four civilians, including three Yemenis, one Indian national, and six attackers killed as well -- Kiran.

CHETRY: All right. Well, another major story we're following this morning and that's another Wall Street bailout. Up to $85 billion of your money may be used to save insurance giant AIG.

Ali Velshi is "Minding Your Business" right now. You said earlier that this may not be that bad for the taxpayer. Explain that.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Well, let me explain. It's $85 billion. It's a loan. That's a lot of money.

But first of all, the rate that the government is charging is something called libor, London Interbank Overnight Rate plus 8 1/2 percent. That means it's going to be an 11.31 percent loan that is very expensive. That's loan sharkish.

So as a result, the incentive is not there for AIG to hang on to this loan for a long time. They're going to want to pay the government back as much as -- as quickly as they can. And this is a disincentive to other companies in trouble to say oh, well, the government is going to bail me out.

Now, this is a bridge loan. It's a temporary loan and in exchange, the government gets collateral worth 80 percent of the company. So again, not a good incentive to default on this whole thing, which is why taxpayers might be better off with this deal than other deals.

AIG is the world's largest insurer. It insures home insurance, life insurance, travel insurance, things like that. It also insures businesses. So the bottom line is, it is an important business.

You know, we don't think about this, but the world doesn't function without insurance because without insurance, individuals and businesses wouldn't take risks. So other than the fact that Allan Chernoff is going to tell you about all the tentacles that this company has and why it's so important, it just happens to be a crucial business to the economy -- Kiran.

CHETRY: All right. Ali Velshi for us, thanks.

ROBERTS: Five minutes after the hour now. American International Group, AIG, has 75 million customers worldwide and more than 100,000 employees. An AIG bankruptcy could have cost a lot more down the line as well.

Allan Chernoff has got reaction this morning to the bailout. He's live from the financial district in New York City. So the federal government swoops in at the last moment here, Allan, and what's the reaction there from the AIG building?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well, you know, John, there's incredible relief not only here, really around the globe. Because think of the financial world as a human pyramid, AIG behind me, that's basically one of the pillars. If AIG had failed, it would have caused billions and billions of dollars in losses not only here, not only on Wall Street, at dozens of institutions around the globe.

It would have tightened credit. It would have been tougher to get loans, not only for individuals but for businesses. And there would have been incredible stress on the economy, as if we don't have a lot of stresses already.

So AIG got into huge trouble by writing these essentially insurance policies for other big investors, made very risky investments. They were all dependent upon AIG. The governor of New York State said this deal just had to happen. (BEGIN VIDEO CLIP)

GOV. DAVID PATERSON (D), NEW YORK: Through a reorganization and further action, jobs will be saved, businesses will be made stable, and certainly our financial recovery will be easier, if not sooner.


CHERNOFF: You know, what also is going to come soon, calls for more regulation. This is unprecedented federal intervention into the private sector. You better believe, in Congress, we are going to hear lots of talk of tightening financial regulation -- John.

ROBERTS: Allan Chernoff for us in downtown New York today. Allan, thanks so much for that.

CHETRY: Well, Allan couldn't have gotten us better into our next guest. That's Senator Chris Dodd. He is chairman of the Senate Banking Committee, and he's going to join us now to talk more about the situation.

Thanks for being with us, Senator Dodd. Great to see you this morning.


CHETRY: Why are we seeing, because a lot of people have been asking this, the selective bailouts? Meaning, we did it with Fannie and Freddie, we did not do it with Lehman Brothers, and we're doing it with AIG.

DODD: Yes, it's been a rough six months. You go back to March 16th is when the Bear Stearns bailout occurred and then, of course, here we are in September 16th, 17th, we're talking about AIG.

We're going to have hearings, in fact, beginning tomorrow on the subject matter. We have Secretary Paulson coming. I hope Ben Bernanke will be there tomorrow as well, to explain all of this. We have a lot of people obviously interested.

I have, you know, basically three questions. First of all, what is the taxpayer implications in all of this? Secondly, is this going to calm the markets over the long period? I know there's some positive response this morning, but we've seen that immediately after the last several of these actions. And thirdly, where is the coherent policy that will mean, as many of us asked yesterday when we met with Secretary Paulson and Ben Bernanke, is this the beginning of the end?

Now, we're getting to -- is this sort of the bottom of this, or are we going to have more of these examples coming forward? And the answer to that question really depends as Ben Bernanke has said over and over again, and I've said repeatedly over the last year and a half, you need to address the foreclosure issue.

Now, we've done that a bit with the housing bill in July but candidly, we need more aggressive action. Until you solve the housing crisis, we run the risk of coming back. Not with matters as large as AIG, but there could be other institutions that could fail. And that's really a great concern of mine. So, the housing issue still has to be addressed.

CHETRY: We've heard on the campaign trail people trading barbs about really who's to blame. A lot of people doing some finger pointing. In fact yesterday, you said that the administration has been on an eight-year coffee break.

What about Congress, though? What about you? You're in charge of the Senate Banking Committee and you do have oversight. So didn't everybody drop the ball?

DODD: No, not really. Not at all. And this was not a natural disaster now. You know, we became -- I became chair of the Banking Committee 17 months ago. I've had 55 hearings. The very first hearing in February of 2007, I was chairman for a week or two weeks, was, of course, to get into this issue and that's all we've done over the last year and a half on this matter.

But for eight years, in fact warnings came out of the Federal Reserve. The very first meeting we had with the staff of the Federal Reserve Bank, they warned us and told us that three years earlier they had raised concerns about where this foreclosure and where the housing issues were going.

So quite candidly, and I say this respectfully, but when you ended up sort of deregulating, no cops on the beat -- remember 14 years ago, the Congress passed legislation requiring the Federal Reserve to stop deceitful and fraudulent practices in the residential mortgage market. Didn't do anything.

Mike Oxley, to his great credit, Republican chairman of the Financial Services Committee, said just the other day, that when he tried along with Senator Sarbanes, myself, Barney Frank and others to reform the GSEs in 2005 -- and I'll use his language -- all he got from the administration was a one-finger salute.

CHETRY: No, I got --

DODD: That's the Republican chairman of the Financial Services Committee.

CHETRY: And I do want to ask you about the situation, about deregulation...

DODD: Right.

CHETRY: ... because now everyone's in favor of more regulations. But there was a time when people were in favor of deregulating. In fact, in 1999, you voted like much of the Senate did, in favor of deregulating banks under the Clinton administration. So isn't it --

DODD: That was not the issue. That was not the issue. What you've done here is when you opened up the discount window, then you change investment banks and commercial banks. But originally, that was not the problem. That's where that changed over recent times responding to this crisis.

Look, we can spend the next hour and a half or two hours talking about that. I have strong feelings about where this crowd was. And you can go back and history is replete with the warnings that were coming out during the 14 years of Republican control and eight years of Republican administration. Now, it's their watch.

Now in a sense, what do we do from here? Hysteria doesn't get us anywhere. Taxpayer concerns, whether or not we're going to have a coherent policy, whether or not the markets are going to calm, where we go from here. I think this probably makes sense, but I want to hear more as my colleagues do.

CHETRY: All right. You know, and the other question, the broader question is, as you said, you held 55 hearings. There's been a lot of talk.

DODD: Right.

CHETRY: Many people seem to sound the warning bell, and we're still in this mess. So what does it say fundamentally about how our government works for us?

DODD: Well, clearly, we need restructuring of the financial services, regulate it. Some of it dates back to the Depression Era. We live in a global economy, and it's got to reflect that if we're going to move forward on all of this.

But you need to have cops on the beat. When you sit there and don't have the cops on the beat to watch this, when you have the promoting of these adjustable rate mortgages, predatory lending going on, 20 percent of the loans were subprime mortgages. The "Wall Street Journal" pointed out that 65 percent of the people that were pushed into subprime mortgages qualified for conventional mortgages.

CHETRY: Right.

DODD: I come back and tell you, the basic point we need to address is the foreclosure crisis. I've been a "Johnny One Note" on this for 17 months, trying to recognize the importance of that and getting to the bottom of it, and that still is the case today. Ben Bernanke understands that.

CHETRY: Right.

DODD: I need to make sure that other people do as well.

CHETRY: Got you. Well, thanks for joining us to talk about it. Senator Chris Dodd...

DODD: Thank you.

CHETRY: ... chair of the Senate Banking Committee, thanks.

DODD: Thank you. ROBERTS: Wall Street is in crisis. No question about that. And Barack Obama is weighing in on issue number one, the economy. The presidential candidate offers his plan to clean up the mortgage mess.

You're watching the "Most News in the Morning."


ROBERTS: Fifteen and a half minutes after the hour. Welcome back to the "Most News in the Morning."

The mortgage crisis taking down many of Wall Street's biggest names, and Barack Obama says he is the one to fix it.

Our Suzanne Malveaux is live for us this morning in Nevada with the Obama campaign. Good morning to you, Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Hey, good morning, John. Well, following Barack Obama in the last 12 months in the campaign, he has really put himself forward as the anti-war candidate. But he has had an economic plan. It is not one that people have necessarily paid a lot of attention to, at least not the specifics. But the Obama campaign is certainly hoping that people are doing that now.

They believe he can reach out to the middle class, the working class voters. Barack Obama essentially saying that this economic crisis is an indictment on the Bush administration. He is calling for additional regulation. He's also calling for oversight of these financial institutions.

And, John, the big challenge for him is to try to reach those voters. He has not been able to capture and say look, this matters to you. Your 401(k)s, your mortgage, your gas prices, that I have the kind of plan that will ultimately make your life better. Take a listen.


SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: What is really going to make the biggest difference on Wall Street right now is not only increased transparency but also strengthening of the housing market. I think that involves providing more assistance to both borrowers and lenders to get a fixed mortgage that the homeowner can pay.


MALVEAUX: So, John, he is directly talking to voters and the Obama campaign is actually releasing a new ad today. It's a national ad. It's also going to go out to those battleground, key battleground states, and essentially he is saying, here's how I see the economic crisis. The problem here is how I want to fix it.

And one of the lines in his ad is he says, I want to you read my economic plan. So he's actually inviting voters to come in, take a look at the details, the specifics. They think if they can reach voters that way, if they're paying attention to this, which all signs indicate that he will win their support -- John.

ROBERTS: Nevada, a very small state in terms of the number of electoral votes that it has. It was a hard-fought caucus battle between Barack Obama and Hillary Clinton, and a very important state for him, nonetheless, here in this election campaign.

MALVEAUX: Well, you know, it's amazing because they really believe that this red state could turn blue. We saw that President Bush got it in 2000, 2004. But if you look at 2004, Kerry lost it by just two percentage points. It was very, very close.

And what you're seeing in Nevada is really kind of its influx of new residents. You've got Mexican immigrants. You've got retirees, all these folks here. They believe that they've got a pretty good shot at Nevada, but they're going to keep working on it hard -- John.

ROBERTS: All right. A lot of those little prizes, New Hampshire, Nevada, ones that don't have that many electoral votes but still incredibly important in this election. Everything counts.

Suzanne Malveaux for us in Nevada this morning. Suzanne, thanks.

Eighteen minutes now after the hour.

Broken schools.


UNIDENTIFIED FEMALE: The parent who went to a U.S. congressman and made a complaint about a homework assignment.


ROBERTS: Bullies in the classroom. Parents who skip the PTA and take matters into their own hands.


UNIDENTIFIED FEMALE: The parent was a professional boxer and came to school looking for me.


ROBERTS: You're watching the "Most News in the Morning."


CHETRY: Welcome back to the "Most News in the Morning." Twenty-one minutes past 7:00 here on the East Coast.

We are watching the weather for you. At least, Reynolds Wolf is at the CNN weather center in Atlanta. And the good news is, it's relatively quiet.

REYNOLDS WOLF, AMS METEOROLOGIST: You know, I think we've earned it. Haven't we? CHETRY: Yes.

WOLF: I mean, you think about the rough weather we've had in parts of the country, especially in parts of Texas. It is about time we earned a break, and today is going to be that day.

That isn't to say that we're without some thunderstorms because we do have some. But thankfully, they're right off the coast, off the outer banks and off of Charleston this time, even up Savannah receiving a few thunder boomers. But at this time, nothing severe.

I'll show you something that's just extraordinary today. Some of the temperatures you're going to see in terms of daytime highs. I mean, for example, in Atlanta, take a look at this.

In September, we're going to have a high of 79 degrees if this doesn't sound like as too spectacular. But any time you're into September in Atlanta, you're able to stay into the 70s, that is a good thing.

Eighty degrees is the high for D.C., 73 in Boston, 80 in Denver, 93 in Vegas, and 59 in San Francisco. Thankfully no major delays expected out there due to weather today. You should have an easy time getting to the airport and going to your point of destination.

Let's send it back to you in New York. There you go.

CHETRY: Thank you. Wow, a beautiful day.

WOLF: Easy for me to say.

CHETRY: All right. Reynolds, thanks.

WOLF: Exactly.

CHETRY: Bailing out Wall Street. Mitt Romney and Bill Richardson on how their party's candidates would fix the economy.

You're watching the "Most News in the Morning."


CHETRY: Well, John McCain and the Republicans are fighting back against charges that the senator is out of touch on the economy, and they're taking aim at Barack Obama suggesting that his economic plan would hurt U.S. jobs. So what do the Democrats have to say this morning?

Well, I'm joined by Obama supporter, New Mexico Governor Bill Richardson. He joins us live in Santa Fe. Thanks for being with us this morning.

GOV. BILL RICHARDSON (D), NEW MEXICO: Thank you. Nice to be with you.

CHETRY: Well, this morning we're seeing the government bailout of insurance giant AIG. Both candidates are talking about support for increasing regulation over this industry. What specific changes, in your opinion, would have prevented this?

RICHARDSON: Well, what Senator Obama is saying is that we have to have a new strong economic policy in this country. One, end the war, use those funds for domestic needs, energy independence that creates thousands of new jobs, tight regulation on some of these institutions.

You know, Senator McCain was chairman of the Commerce Committee and he's supposed to regulate these industries. And we have to prevent these foreclosures, these mortgage issues. And we also have to give a tax cut to 85 percent of America's working families. This is what Senator Obama wants to do.

But here we have Senator McCain being the deregulator at a time when a lot of these entities needed tighter regulation, tighter oversight, to prevent predatory lending, to prevent so many mortgage deficiencies in our economy, and also to take a look at these giants that are today falling apart. I don't see how Senator McCain who keeps saying that the fundamentals of our economy are still strong when you've got high unemployment, job losses, foreclosures, an economy probably in worse shape than the Great Depression try to take a pass on that.

CHETRY: In fairness, he did say he was speaking about the American worker when he said fundamentals. That's what he told us yesterday on our show. But I do want to ask you about one thing we've heard from both sides and this is the issue of transparency.

There are financial analysts and even our own guys here in the business team say, you know, Lehman Brothers, for example, their own company didn't know where these rebundled mortgages were being stuffed in portfolios. Is it really realistic to expect the federal government to be able to -- be able to look inside the books of each and every one of these investment banks, mortgage companies, and really get to the heart of what the problem is?

RICHARDSON: Well, yes. You have to have tighter regulation. You have to have tighter oversight. And this is where the committees of Congress are supposed to do. They're supposed to make sure that these abuses don't take place. And it's obvious when it came to so many of these mortgages, it was total deregulation that has caused a lack of oversight and you've got millions of Americans losing their homes.

This doesn't mean you're in the offices of the Lehman Brothers, but it does mean that the commerce hold oversight hearings, have legislation that deals with some of these huge oversights. So the answer is yes. We do need more transparency but for that to happen, you need more regulation and you need more oversight. And that is the job of Congress. And Senator McCain has been chairman of the Commerce Committee and we're saying, where has he been these last 26 years.

CHETRY: You know, we just talked to Chris Dodd about it as well, and he's the chairman of the Banking Committee. And he said he held 55 hearings, that he felt he was a "Johnny One Note," as he put it, about the subprime crisis. How much can you really do in the walls of Congress, Barack Obama, a senator as well?

RICHARDSON: Well, you can do a lot, Kiran. This is what the Congress is supposed to do. And for years under the Republicans and when Senator McCain was chairman of the Commerce Committee, he prided himself on saying, I am a deregulator. I am going to take government off your backs. Well, look what's happened.

We've not had the proper oversight of these agencies. We've not enforced a lot of the legislation that had been passed, the Sarbanes- Oxley legislation on a lot of these investment entities. And so, you say the job of government is to make sure you don't have these abuses and these oversights.

KIRAN CHETRY, CNN, ANCHOR: I want to ask you about executive experience, of course you're a governor of New Mexico, you had to deal with balancing budgets, had to deal with issues like this. Of course, in the White House it is a much larger scale. Both sides of either tickets are saying that the other one lacks experience. Are you fully confident that Barack Obama would be able to handle these types of economic questions with the experience of being a state senator and a senator?

RICHARDSON: Absolutely. Look at what he's proposing that we do about the economy. I mentioned energy independence. I mentioned a tax cut for working families. I mentioned more oversight on Wall Street, cracking down on lobbyists. You know, he has concrete policies. What Obama has is judgment. What Obama has is values. What Obama has is the ability to bring Republicans and Democrats together as he has in the Senate.

This is what you need. You need bipartisanship and then on the national security side is there anybody more experienced in America than Joe Biden who is chairman of the senate foreign relations committee? All his life, over 30 years dealing with national security and foreign policy. Dealing with issues like energy independence, nuclear proliferation, terrorism. I mean, you can compare the two tickets in terms of valuable experience to assume the presidency and the vice presidency.

CHETRY: Governor Bill Richardson I want to thank you for joining us this morning, governor of New Mexico as well as Obama support. Time to hear the other side. John.

JOHN ROBERTS, CNN, ANCHOR: Yes, absolutely. 32 minutes after the hour. John McCain supporter, former Massachusetts Governor Mitt Romney joins us from West Newton, Massachusetts. Governor, good to see you. With your vast experience in the business world here and in financial markets in particular what's the first advice you would give Senator John McCain about handling the current crisis?

MITT ROMNEY, FMR. GOVERNOR OF MASSACHUSETTS: Well, first of all the Federal Reserve has taken the appropriate action to make sure that institutions which could, if they failed hurt a lot of people that they don't fail. Secondly you're going to have to make sure we don't add new government spending programs and we don't raise taxes.

The worse thing you can do with economy in trouble is raise taxes. And I really would call on Barack Obama to say, you know what? It's not the time to raise taxes, it is instead a time to smooth the market out, to try and rekindle the growth of our economy, lower taxes, and get ourselves from sending $700 billion a year to foreign countries for oil. Let's keep that money here, let's drill in America, something Barack Obama opposes. He's wrong on that one.

ROBERTS: Let me come back, Governor, to the point you just made about the bailout of AIG. John McCain said the Fed should not be bailing out these financial institutions.

ROMNEY: Well, what he said is they shouldn't be bailing out institutions by, if you will, giving more money to the shareholders and the management. But he does believe that when the Federal Reserve and the Treasury have evaluated a particular enterprise and concluded that its failure is going to hurt more people in this country than the bailout would cost, why then, of course, the right course is to help those enterprises stay alive and they carried out that analysis.

They said, you know what, AIG failing would hurt more taxpayers than it's going to cost us than if we help them get on their feet. And of course, the nice thing about this particular program is that the Federal Reserve now is an 80 percent owner of AIG. So we just don't put the money in and take the downside, if you will. We're now going to be, if you will, the owner of this enterprise and make sure that we get the upside as well when this thing turn around.

ROBERTS: Governor, during the primary campaign you were always stressing the importance of business experience as a pre requisite to become president of the United States. Let me remind viewers of something that you said in the first of February of this year back in Denver regarding Senator John McCain.


ROMNEY: He has a number of things that are great strengths of his but he happened to say that the economy was not his strong suit. Well, at a time like this, in a country like this, I think it's important to have a president for whom the economy is his strong suit.


ROBERTS: Governor Romney, things have gotten worse with the economy since then. And the question is based on what you said back there in February, is John McCain the right person for the job at this time in America's economic history?

ROMNEY: Well, I was trying to convince people that I was the right guy for the job and that just didn't work, as you know. In the current setting there's no question that John McCain has by far the most economic experience of any of the people that are either in the presidential or the vice presidential contest.

ROBERTS: How so?

ROMNEY: He's the guy -

ROBERTS: What's the economic experience that he has?

ROMNEY: Well, he's been in the Senate for 25 years and has been through recessions, through upsides, down sides.

ROBERTS: Joe Biden has been there for 36 years.

ROMNEY: Well, Joe Biden has been concentrating on foreign policy, by the way he's been wrong on foreign policy for about 30 years. But John McCain has been concentrating on the commerce committee, for instance and that has given him the kind of experience that allowed him to work with President Reagan, President Ford, President Clinton and so forth and fashion economic policy that frankly has allowed America to outgrow our European competitors, to create many tens of millions of jobs when they have it.

And it's that kind of policy that's or experience that's allowed him to say you know what? Don't raise tax now, keep taxes down. Make sure that we trade with our countries and do what we have to do to become energy independent. Don't do what Barack Obama is saying, which is not allowing drilling offshore, not building a nuclear power plant. That's why John McCain has a plan to actually get this economy going again.

ROBERTS: Governor, as you know, yesterday McCain's senior adviser Carly Fiorina said none of these candidates has the experience to run a major corporation like Hewlett Packard. You always again whether you're trying to sell yourself or not, touted the importance of business experience, the importance of actually being a hands on manager as an important prerequisite to become president of the United States because you know how to manage budgets. So I mean, you talk about John McCain's business experience, and Carly Fiorina says he doesn't have the experience to run a corporation.

ROMNEY: Well she said that - no one running for office have the experience to run a corporation. I think she's just misinformed in that regard. I'd be happy to hire John McCain and Sarah Palin to run a business that I'm an investor in. But I can also tell you that when you compare John McCain with Barack Obama, it's a pretty, pretty clear comparison that John McCain has experience that's been, a lot of developed judgment that you need in a time like this.

And Barack Obama who has been a community organizer and then a state senator, who's been a U.S. senator for three years, two, of which, years he's been running for president he just done have any relevant experience to help our economy in such a critical time and that's why I think you're finding that John McCain is surging in public support, bigger and bigger crowds because they realize you got to have a person who has been there, who has been, you know, at the helm when the seas are rough. And that's exactly where he's been over these last 25 years.

ROBERTS: Governor Mitt Romney for us this morning from West Newton, Massachusetts. Governor, it's always good to catch up with you. Thanks for being with us.

ROMNEY: Good to be with you, guys. Thanks.

CHETRY: Once again we want to check in with our Ali Velshi who was listening to what both of the candidates had to say and or the candidate's supporters had to say and will tell us a little bit more about what they were talking about and whether they hit some of those notes correctly. Hey there, Ali.

ALI VELSHI, CNN, SENIOR BUSINESS CORRESPONDENT: And fundamentally, Kiran, is your money safe? We know AIG lives to fight another day but what else could happen? Can the administration fix this? I'll tell you more about this when we come back on AMERICAN MORNING.


CHETRY: Ali Velshi joins us now with more on the AIG bailout and exactly what it means to us this morning, whether we're in a home loan, whether we're looking at our 401ks and saying what should we do?

VELSHI: Yes. This is a company with a lot of reach. Allan Chernoff has been telling you about it. Probably for most people it doesn't matter at this point because they got this loan from the government although it's a very expensive loan, coming to about 11.31 percent on $85 billion. You do the math on that one but AIG is not Lehman Brothers, it's not Bear Stearns. This is a company with far greater reach and how it impacts you is quite varied.

First of all, it's the biggest insurance company in the world, the biggest insurance company in the United States. It has home insurance, auto insurance, travel insurance, life insurance. It also insures businesses and many of their lines. So it insures banks but it also insures those mortgage backed securities. And it insures major airlines. It also leases planes. It has 900 aircraft. It insures Hollywood movies against bad things that can happen to stop that movie or the movie failing.

In one of the movies that Angelina Jolie was fully insured against anything that could happen to her. It insures offshore oil platforms when those hurricanes comes. So it allows businesses to take risks that they otherwise would not take if there were not insurance available. That's why it's so important. The other thing it does is it is something that you invest in. It's a major company. It's in the S&P 500. It's in the Dow 30 when we calculate the Dow being down 405 points, like it was on Monday, AIG is one of the companies, one of the 30 companies used in that calculation. And that means that you are probably invested in it in your 401k and your mutual fund.

Now again, this news is past but you are probably invested in a lot of these other companies. For those of you that like to revisit your 401ks, do it now and see where you are in terms of one financial company holdings. Because a lot of people say this might be the bottom for financial companies but more people say it's probably not.

ROBERTS: Didn't they say that a few months ago?

VELSHI: Yes. I think you know, we're probably most of the way through this but there's nobody who says that we're done.

ROBERTS: From your lips to god's ears.

VELSHI: And oil is going 60 bucks. ROBERTS: It maybe headed that way. Thanks, Ali.

42 minutes after the hour. You're watching "the most news in the morning."


ROBERTS (voice-over): Broken schools.

CINDY NORTH, TEACHER: The parent who went to a U.S. congressman and made a complaint about a homework assignment.

ROBERTS: Bullies in the classroom. Parents who skip the PTA and take matters into their own hands.

NORTH: The parent was a professional boxer and came to school looking for me.

ROBERTS: You're watching "the most news in the morning."


ROBERTS: Welcome back to "the most news in the morning." And time now for our continuing series on broken schools. Every parent, of course, wants their child to excel in the classroom. But many teachers say that some parents are going too far. CNN's medical correspondent Elizabeth Cohen joins us now to explain. What are you hearing from teachers, Elizabeth?

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: John, what I'm hearing from teachers is about these helicopter parents. They are called that because they hover over their children and they're making a lot of teachers miserable.


COHEN (voice-over): Cindy Norris had dedicated her life to teaching young minds. But rather than finding grateful parents, she says more and more of them are actually blaming teachers for their kids' poor grades. Some parents take it to extremes.

CINDY NORTH, TEACHER: The one that stands out is a parent who went to a U.S. congressman and made a complaint about a homework assignment that I gave.

COHEN: These helicopter parents as they are known sometimes try to bully teachers into changing grades and forgiving late homework.

NORTH: A lot of them feel that they have to be involved in every aspect of their child's life in order to make sure that their child turns out the way that they think that he or she should.

COHEN: North was even forced to get a restraining order against one parent.

NORTH: The parent was a professional boxer and came to school looking for me.

COHEN: North is far from alone. Teachers from across the country have similar complaints. So what's going on? Hara Estroff Marano, author of "A Nation of Wimps" says being too involved can turn a child into a woos and she says without coping skills kids can become depressed and worst.

HARA ESTROFF MARANO, AUTHOR, "A NATION OF WIMPS": We're talking about panic attacks, we're talking about self mutilation.

COHEN: Psychologists say if parents get too involved in every facet of life kids won't learn to be independent.

NORTH: They are learning that I don't have to do my best because somebody will always save me.


COHEN: Now the teachers we talked to made it clear that most parents are not like this, but the ones that are are making some teacher want to leave the profession. John.

ROBERTS: Wow, I never realized it was that serious. Elizabeth Cohen for us this morning. Elizabeth, thanks so much. It's 47 1/2 minutes now after the hour.


ROBERTS (voice-over): Ground war. Democrats flood the battlefield in Indiana, hoping to turn a solidly red state blue.

UNIDENTIFIED MALE: They have a fight here.

ROBERTS: You're watching "the most news in the morning.


CHETRY: Well giants leap for mankind don't really burn many calories. And getting exercise is actually a real problem on the final frontier. That's why NASA spent millions to simulate jogging at zero gravity by turning a treadmill sideways. We're "Paging Dr. Gupta," Sanjay is live for us in Atlanta this morning. And you had a chance to do this and run on this thing. What was it like?

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: It was really incredible. It was a lot harder in some ways than I thought it was going to be at least in the beginning. But pretty remarkable as well. You got to exercise when you're out in space. A lot of people don't think about that with all the other demands on astronauts. The exercise has got to be comfortable. It's got to not affect the spacecraft and it is essentially to prevent bone loss which is a real problem down the road. Take a look at what we found.


GUPTA (voice-over): It orbits the earth at a speed of 17,500 miles an hour. Hovering 240 miles above the earth's surface. The International Space Station is home to astronauts who live, work, and exercise in zero gravity, which poses health risks which increase every day.

DR. PETER CAVANAGH, UNIV. OF WASHINGTON SEATTLE: Bone loss in space is an extremely significant problem. Astronauts lose about ten times more bone every month than a person, and of course, a woman, on earth loses.

GUPTA: That happens even after the astronauts are given 2 1/2 hours a day for exercise and setup. So, researchers are trying to cut the risk through running, vertically.

24 pulleys are holding me up here. This is quite a contraption, sort of trying to simulate weightlessness. Now comes the true test, though, what is it really going to feel like when I start to walk vertically? How much does a system like this cost? All told in the low millions.

I feel good, you know, I feel like each step is like I could bounce. And jump with each step.

Researchers say bone loss occurs because astronauts are not getting enough load-bearing exercise in space. Bungee cords can help, but it's extremely uncomfortable.

CAVANAGH: It's as though you have another person of your body weight on your back and then we ask you to get on the treadmill and run.

GUPTA: And now you really got to really work to just even walk.


GUPTA: I'm feeling my entire body weight pushing against this treadmill. Every last pound.

CAVANAGH: We feel that bones need this constant mechanical stimulation to stay healthy.

GUPTA: That was easier than I thought it was going to be for sure.

But of course, that's only after 20 minutes. It will be tougher task for the months or even years it will take to get to the moon, Mars, and beyond.


GUPTA: I got to tell you, it was a really amazing experience. One thing they taught me as well was that our bone mass, our bone loss begins around the age of 20. A little bit of a depressing thought. So it's very hard if you go out in space for many days on end to ever get back on that curve again. It starts to spiral. So this exercise, this load-bearing exercise, so important in space and here on earth as well. Kiran.

CHETRY: So, was that harder to run like that or just normally on a treadmill in terms of how it felt?

GUPTA: You know, I think it was one of those things if I did it over and over again for days on end, I'd probably get used to it. But this idea of running while you are flat on your back, being suspended by harnesses looks pretty challenging. You're out in space, you keep floating away from the treadmill. So they got these pulleys that are sort of pulling you back on to the treadmill and it just takes a lot of getting used to.

CHETRY: Wow. That's fascinating. All right. Sanjay, thanks.

GUPTA: Thanks.


ROBERTS: reality check -

SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: Create jobs, keep people in their homes and increase regulatory oversight of the very people that John has refused to regulate.

ROBERTS: We look at the facts in Joe Biden's attack on John McCain.

Plus, grave robbers.

UNIDENTIFIED MALE: It hits to the heart of the families.

ROBERTS: The so-called city of souls try to restore the eternal thief.


ROBERTS: Five minutes now to the top of the hour. With less than seven weeks to go until the election, the latest CNN opinion research corporation poll finds eight percent of voters still undecided. Joining me now to explain how voters make up their mind is Drew Westen. He's the author of "The Political Brain, the role of emotion into deciding the fate of the nation."

Drew, it's good to see you. Just sort of set the premise for us here. Do people make decisions on who to vote for based on policy or how they feel about the particular candidate?

DREW WESTEN, AUTHOR "THE POLITICAL BRAIN": All the things get factored in the policy weighs on people's gut and they make gut-level judgment about people and what they stand for.

ROBERTS: Right. So where does emotion come in to it?

WESTEN: The judgments really guide the people in the polling place are pretty much pure emotional. It's first, most I importantly, how do they feel about the party and their principles. And secondly how do they feel about that candidate.

ROBERTS: You know, historically, you have said, and other people have said as well, that republicans are very good at playing to the emotional heart of voters. It's like they'll reach out, they'll touch your heart. Democrats will give you a ten-point plan. John McCain and Sarah Palin seem to be very effective with that. Not only during the convention in St. Paul but also in the week and a half following it.

WESTEN: Yes. They really have been on stride this last - this last week and a half. McCain is not as strong as - strong as it as either Palin or Obama on the stump, but he does really well in those town hall meetings where he makes a more direct connection.

ROBERTS: Of course, this week all attention turn to the economy, the sort of thing that wakes you up in a cold sweat in the middle of the night. I mean really playing to emotions here and a lot of people worried about their future. Let's listen to a couple of examples of Barack Obama and John McCain on the stump talking about it. And then we'll get you to dissect it and get you to tell us who is better in appealing to the emotional heart of the voters.


SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Our economy, I think, still, the fundamentals of our economy are strong.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: The cost of everything, from gas to groceries, to health care, has gone up. While the dream of a college education for our kids and a secure and dignified retirement for our seniors feels like it's slowly slipping away.


ROBERTS: In talking about the economy here, Drew, which candidate has the more appealing message to the amygdala, which is the part of the brain that governs emotion?

WESTEN: Well, this was - this was McCain at his worst and Obama at his best, you know. The idea that the fundamentals of the economy are strong after yesterday's news, you know, was just so jarring to most people. It didn't make any sense, versus in this case Obama was - was I think yesterday was probably the best speech he's delivered on the stump other than his convention address and his race address.

It's the first time that he's actually gone after McCain in that kind of high-minded way that he's comfortable with that he went after him by saying, look, you can't be against even common sense regulations anymore and that's what you stand for. That was really him at his best.

ROBERTS: So, score one on the emotional front for Barack Obama in response to the economy. But let's turn it back a couple of weeks to the Saddleback forum where Rick Warren was asking the candidates about abortion. Let's listen to their responses.


SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Whether you're looking at it from a theological perspective or a scientific perspective, answering that question with specificity, you know, is - is above my pay grade.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: At the moment of conception.


ROBERTS: and it's the candidates there asked about when does life begin. Who won on the emotional scale on that exchange?

WESTEN: Well, that was exact opposite. That was John McCain did what the Republicans usually do, which is take us straight to the point and straight to their values and they state them upfront. And not everybody agrees with McCain but what he did was he just said exactly what he believed. Obama's comment was he was trying to get at, I think, at something important which was simply to say, which frankly would have been much more effective, look, I don't profess to know what's in the mind of god, but what I can tell is this, I don't like the idea of government telling a man or woman when they should or shouldn't have their kids. But that's not what he says. The pay grade comment sounds like it's the language of Caesar when he was supposed to be speaking in the language of the sacred.

ROBERTS: Right. So I guess, whoever wins on November 4th is the one who can most appeal to the emotional center of voters between now and November the 4th, huh?

WESTEN: I'm afraid I just lost you, John.

ROBERTS: All right. No problem. We'll get emotional with you a little bit later on. Drew Westen for us this morning, author of "The Political Brain." Good to be with you this morning. Thanks.

CHETRY: And breaking news this morning, armed terrorists launching an attack outside of the U.S. embassy in Sana'a, Yemen. At least 16 people killed including six attackers. The senior U.S. state official says that no U.S. employees were killed. The initial blast was followed by several more. The official says it's unclear if it was a car bomb or perhaps a rocket-propelled grenade. There are reports of a claim of responsibility from a group called Islamic Jihad in Yemen.

Defense Secretary Robert Gates this morning offering, "personal regret" to Afghanistan over recent air strikes that killed civilians. Gates' comments came during a meeting with Afghan President Hamid Karzai.