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Campbell Brown

Solving America's Financial Crisis

Aired September 18, 2008 - 20:00   ET

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

CAMPBELL BROWN, CNN ANCHOR: Hi there, everybody.
At this very moment, the most powerful people in Washington are in an emergency meeting on Capitol Hill to hammer out or try to hammer out a solution to the growing financial catastrophe looming over America. It looks like they're working on a huge fix for the crisis that is causing banks and investment companies to fall like dominoes.

Wall Street first caught whispers about this meeting today. And, as those rumors flew, the Dow industrials took off like a rocket. Look at this time lapse the last few hours of trading. The market closed up 410 points, making up nearly all of yesterday's huge loss.

Now, on Capitol Hill tonight, top leaders from both parties are getting a closed-door briefing from Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. The meeting in House Speaker Nancy Pelosi's office. It started about 45 minutes ago.

Here's what she said just before they closed the doors. Listen.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: Thank you all for joining us as we come together, understanding that we have a financial crisis in our country, that we are here to work together for solutions that resolve that crisis in a way that insulates taxpayers, consumers, Main Street from the crisis on Wall Street.

Thank you all very much.

(END VIDEO CLIP)

BROWN: Now, folks, it is not an understatement to say this could end up being one of the biggest stories of the year, and it could break at any minute. Stay with us here.

We have called in the smartest money people around. They're right here in the ELECTION CENTER tonight to help us sort through all of this. So is CNN senior business correspondent Ali Velshi.

We have also got both the presidential candidates on the trail. They have got their own ideas for fixing this mess. And Tom Foreman is here to put all of their plans to our no bias, no bull test.

So, first, what do we know about what could be as much as a $1 trillion fix?

Our CNN senior business correspondent, Ali Velshi, just off the phone right now with sources to bring us the very latest.

And Ali, what is going on?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Yes, you are right in saying you can't overstate how important a deal this is.

This is the biggest names in Washington, Ben Bernanke, Henry Paulson, congressional leaders from both sides, major players who we talk to all the time. And they are telling us that they're going to stay there until they hammer a deal. They may go home. It may take a few days, but they may work through the weekend.

Now, let me tell you a bit about what kind of deal we may be talking about. It might be something that we have seen after the savings and loan crisis, but I will just describe it to you in terms we might understand. It might be like one of those people who goes out to garage sales early on a Saturday morning and picks up things here that there you think might not be worth anything. They certainly aren't worth it to you, and you need the extra space, but they know what to do with it.

They take it. They clean it up. They don't have to sell it that day, but they sell it later and it's worth something. Well, that's what the government might end up doing. They might end up being that white van that drives around on Saturday mornings particularly early, takes the stuff that seems like junk, and sells them in fancy stores a little later on.

That's one model that might be considered. But what we know, Campbell, is that congressional leaders saying we can't have this piecemeal mess that we keep getting into, where every few days, we learn of a new crisis, and then it crescendos and then there's a bailout involved or a bankruptcy. We need a solution that deals with the whole picture.

BROWN: And what you're hearing is a lot like, if I make this comparison, the deal that was worked out to save the savings and loan industry when that crisis hit back in 1989, right?

VELSHI: We haven't -- we don't know what they are going to hammer out when they're in there, but that's the model we think they might be using and that's the model that others are reporting might be in the works.

The thing is there, after the savings and loan crisis, what happened is that the government scooped up a lot of the assets, in most cases, property, and it took them six years to unload it, but they finally did. In the process, it took all of that out of the system. It's like a good rain shower sweeping it all out and giving everybody a chance to start again.

But, Campbell, this could be a lot of money. We have already seen half-a-trillion dollars in obvious loans and bailouts. We could be talking about many, many multiples of that amount of money.

BROWN: Wow. OK. Ali, hang on. We're going to get back to you coming up in just a few minutes, but Wall Street's crisis very much playing out on the campaign trail.

And we do want to check in with the campaigns, an excuse frankly for both sides to rip into each other today.

Senior political correspondent Candy Crowley in Las Vegas following the Obama campaign. Ed Henry is watching McCain/Palin. They have been holding a rally in Wisconsin. Ed, though, is in Cedar Rapids, Iowa, where they were campaigning earlier today.

Ed, let me start with you. John McCain came out swinging today. He said, if he were president this week, heads would roll. Let's listen.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: The chairman of the SEC serves at the appointment of the president, and, in my view, has betrayed the public trust. If I were president today, I would fire him.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

BROWN: Now, Ed, the message there sounding pretty clear, which is, I'm not going to take you in the same direction as George Bush, isn't it?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Clearly. It shows that John McCain is getting nervous that Republicans are in power, at least at the White House, and they were on the Hill for, you know, as this was building for six years. And he's nervous that that's going to make him pay a political price if this economic crisis deepens.

Immediately, though, Democrats pointed out it's sort of unclear legally just whether or not the president can fire the SEC chairman. So, you go back and forth in this legalese. But the bottom line is that when John McCain starts talking about the SEC chairman, a lot of Americans don't even know that Christopher Cox is the SEC chairman, a lot of Americans don't even know that Christopher Cox is the SEC chairman. Why would they know that? It's sort of alphabet soup in Washington.

It reminds you of a couple days ago, when John McCain was saying let's appoint a 9/11-style commission to deal with this mess, another Washington solution. He does better in terms of connecting with voters out here on the stump when he talks about issues like taxes.

For example, today, he really beat up on Joe Biden for saying it would be patriotic for wealthy Americans to accept paying higher taxes. McCain jumped all over that. That connects with voters out here who are worried about the economy.

Talking about Washington stuff, agencies, the SEC, et cetera, that makes him sound a little bit more like a creature of Washington, instead of somebody who is saying he could shake up Washington, Campbell.

BROWN: All right, Ed Henry for us.

And let me turn now to Candy.

Candy, Barack Obama spending a good part of the day trying to paint McCain as finger-to-the-wind flip-flopper. Let's listen to what he said.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: John McCain can't decide whether he's Barry Goldwater or Dennis Kucinich. He is not clear about what he thinks or what he believes. Well, I have a message for Senator McCain. You cannot just run away from the long- held views or your lifelong record.

(END VIDEO CLIP)

BROWN: And, Candy, a lot of people saying that frankly Obama's own vision on a lot of this stuff is pretty fuzzy and that he needs a clearer plan to deal with this mess.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, what Democrats have been complaining about for some time, even before this crisis, is that Obama has kind of failed to connect, they believe, to some people, working-class voters, because they can't quite articulate what he's for.

They say, look, you look at Ronald Reagan and it was all about increasing the defense budget, ridding corporations -- and getting rid of some of the red tape and regulation and making government smaller. They said, you know, there are so few people out there that can say here's what Barack Obama would do for me.

So, it's unclear, still, to some of these Democrats that that has been done, that people can actually articulate that. And they think that that's important in order for people to go into the voting booth and pull that lever to say he stands for this, this and this, the bullet points.

BROWN: And, Candy, we have been hearing that Obama is planning this big meeting tomorrow with his economic advisers. What's this about?

CROWLEY: Well, listen. Let's face it. Neither John McCain, nor Barack Obama can do a darn thing about this crisis right now. So, part of what's going on now on the campaign trail, you see John McCain saying he would get rid of the chairman of the SEC. And you see Barack Obama saying, I'm going to call my economic advisers together and discuss this and come up with a plan.

It is about taking charge. It's about being presidential. Who can best lead? So it's not just what's being said, but how these two men appear to people watching. Does he look like he could take control of this? And, so, Obama, you know, today said in his speech, I am going to meet with my economic advisers and we're going to put into plan some of the things that we have been talking about.

So, it is about not just the words, but about how they are taking control of this crisis.

BROWN: All right, Candy Crowley for us tonight, along with Ed Henry.

And I want to go back to something that Ed mentioned, one of the biggest headlines from the campaign trail today, John McCain saying that he would fire the head of the Securities and Exchange Commission. Is that a reality? Is that -- could it accomplish anything? Can the president actually do it?

We want to check in or get a kind of reality check from Ali Velshi on that, our one-man truth squad on this issue.

Ali, is that something that would help in any way or is he being made a scapegoat here?

VELSHI: I think John McCain was on to something when he discussed the fact that the regulatory system for the financial network, he calls it an alphabet soup. More than a dozen different agencies control a lot of things.

And the SEC, the Securities and Exchange Commission, which handles listed companies and stocks, has not been the world's most effective organization over the last years. But it seemed a little bit strange that they went right for firing the head of the place. Why not fix the SEC, come up with some suggestions as to how you're going to do it? I think it seemed a little unusual.

But the SEC -- the chairman does serve at the pleasure of the president, so it is entirely possible that if he became president, he could do that. Now, the White House did issue a statement, as you know, saying that the chairman of the Securities and Exchange Commission has the full faith of the president. And he is one of those people in that meeting in Washington tonight to discuss some sort of a plan to get us out of this financial mess -- Campbell.

BROWN: All right. Ali, stick around. We are not done with you yet. This is a huge story, as we said earlier, with the potential to affect all of us, our pocketbooks, our homes, our retirement savings.

So, coming up next, we have got a panel of top money experts to answer questions from you, from real people. What does everybody need to worry about most? We are going to focus on that.

Stay with us.

(COMMERCIAL BREAK)

BROWN: As stock prices whipsaw back and forth, and huge banks and investment firms drop like flies, peoples' jobs, their savings, retirement plans seem more fragile than ever.

So, take a deep breath, everybody. We have a top panel of financial experts to try to sort out what we really need to be worried about and how to avoid that panicky feeling of helplessness.

Diane Brady is a senior writer for "BusinessWeek" magazine. Art Hogan is chief market analyst for Jeffries and Company, a full-service investment bank. Lynnette Khalfani-Cox is a personal financial expert whose Web site, TheMoneyCoach.net, answers financial questions. And I don't know. Nobody knows who that guy on the end is, because he's only been living and breathing in this studio for the last week, Ali Velshi, our senior business correspondent.

OK. Art, let me start with you.

There's lots of talk about the government creating this new agency, I guess, you could call it, similar to what was created after the savings and loan crisis. Whether that happens or not, how important is government intervention right now in trying to resolve this?

ART HOGAN, CHIEF MARKET ANALYST, JEFFRIES AND COMPANY: I think it's essential.

I think what we need to do is have time to sort of calm down and as you say take a breath. And without the government stepping in and giving us that time, setting up this clearinghouse to get a lot of this bad paper out of circulation and repackaged and put out to -- into proper hands, and people that know what it is, I think it's very difficult to think that this is going to plays out in an orderly fashion without government intervention.

(CROSSTALK)

BROWN: So, you believe they have to do what they're doing right now? Because a lot of the politicians are saying, I wouldn't be doing this. The taxpayers are going to pay the price.

That's rhetoric. For the most part, this is essential?

HOGAN: Well, it certainly is. We can go back in history and prove that it's rhetoric. If you went back to 1971 and said, Lockheed Martin, who much did that cost the taxpayers, it didn't. We made money. If you go back to the S&L crisis, we actually made money at the end of that. We rescued Chrysler. We made money at the end of that. So, it doesn't cost money unless we do a bad job at the orderly spinout of what we have in hand.

BROWN: And an important thing for people to think about, but it's such a long-term thing. I don't think that's necessarily on anyone's mind right now.

Diane, no doubt people a lot of people are panicking. We're all hearing about it. But you actually saw positive signs. What are they?

DIANE BRADY, SENIOR WRITER, "BUSINESSWEEK": Well, I think, for example, there are companies in the economy that are doing well. General Mills, for example, hit a 52-week high. Why? Because people are eating cereal. People still have to eat. So, I think there has to be some sanity. There are good investments out there. Everything is not tied to Wall Street.

BROWN: And, Ali, jobs, housing, investments, those are the three things that are essential to our economy, none of them doing well right now.

(CROSSTALK)

VELSHI: In the United States, yes. We have a different economy than most places, Campbell. We are much more dependent on the spending of individuals than other places.

You spend freely as an individual if you feel like that money is going to come to you somewhere. And it can come to you from three main places, your investments, stock markets -- and we know that is not doing well -- your salary -- but we know that we have lost 600,000 jobs this year, so your chances of getting a raise are a little slimmer -- or your big assets, like your house.

If any one of the things decides to turn around, Americans will feel a little richer, and they will start spending money. But, right now, they're not doing that, which means we have already started seeing forecasts for the Christmas shopping season as being particularly weak, because Americans are holding on until they think there's change.

BROWN: When you say this, tell me if I'm crazy, I feel like we need a psychologist on the panel.

(LAUGHTER)

BROWN: That this is all about a state of mind.

VELSHI: Right.

(CROSSTALK)

BROWN: Is it to a certain extent?

LYNNETTE KHALFANI-COX, THEMONEYCOACH.NET: Psychology is definitely driving a lot of what's going on in the markets, because you hear us all talking about a lack of confidence, about banks being not only less willing to lend to us, individuals, but even to each other. They don't have faith that they're going to loan to one bank and get repaid.

So, a lot of it, it's not just about supply and demand. It is not about pure economic forces. It is about market psychology and people's belief in what is or what could happen.

BROWN: We have got a lot of questions we're going to take from people when we come back from the break.

But before we go break, Lynnette, tell us, from a consumer point of view, what should they be focused on? What should consumers be thinking about right now? KHALFANI-COX: I think, in a time of crisis like this, the first thing people should do is a reality check and worry about the things that they can actually control.

Frankly, they can't control whether or not AIG fails, whether Fannie Mae or Freddie Mac gets taken over. They can control their own spending. They can control their cash reserves that they have. They can control their panic, to a certain extent, and not jump out of the markets and say, oh, I'm going to throw in the towel and that's it for me and Wall Street.

They can focus on things with their own basic banking, checking, savings account, things of that nature.

BROWN: Right.

KHALFANI-COX: So, those are the things, the nuts and bolts, to kind of focus on, and not so much get caught up in this daily volatility, which would have all of us on a roller coaster, frankly.

(CROSSTALK)

BROWN: OK. Hang on, guys. Stay with me. We have got a lot to talk about.

We have got e-mails from people all over the country today. And one thing we have heard over and over again is that they're scared, as Lynnette the pointed out, and they're angry. They're angry at Washington.

We're going to try to try to answer some of these specific questions that we're hearing from people and talk about what you should do. Stay with us.

(COMMERCIAL BREAK)

(JOINED IN PROGRESS)

REP. JOHN BOEHNER (R-OH), HOUSE MINORITY LEADER: Six weeks away from an election, it's clear that, on behalf of the American people, our job is to put our partisan differences aside and to work together to help solve this crisis, because this crisis...

BROWN: You are looking right now at a live picture from Capitol Hill. That is House Minority Leader John Boehner speaking now. He's just come out of a meeting -- you can see Henry Paulson there, along with Speaker Pelosi -- to talk about this crisis. We just heard Senate Majority Leader Harry Reid say a moment ago that they're waiting for a plan to be presented to them by the treasury secretary, by the chairman of the Federal Reserve, so that they can have some input as well to try to sort this out.

We are going to continue to follow this. We will have more details as we get them. Of course, Mitch McConnell there speaking to the microphones. Again, this meeting just breaking up, a crisis meeting, frankly, on Capitol Hill, as they sort try to through how to handle this, what to do.

I want to go quickly now to Ali Velshi.

Ali, what do you think of...

(CROSSTALK)

VELSHI: That gathering, that picture you are looking at, Ben Bernanke on the left, Henry Paulson, Nancy Pelosi, John Boehner, Mitch McConnell, Senator Chris Dodd, that is a gathering that you don't typically see.

This is a very important meeting with some of the most important people in Washington, who are gathering to say, we can't go through this on a piecemeal basis. It is too shattering to Wall Street and it's too shattering to individuals.

And there's a reason. They're getting that everybody's scared. So, they are meeting to try and solve this problem.

BROWN: All right. Let's listen to Paulson for a moment.

(JOINED IN PROGRESS)

HENRY PAULSON, U.S. TREASURY SECRETARY: This country is able to come together and do things quickly when it needs to be done for the good of the American people.

And what we are working on now is an approach to deal with the systemic risk and the stresses in our capital markets. And we have talked about a -- a comprehensive approach that will require legislation to deal with illiquid assets on financial institutions in the United States on their balance sheet.

And, as we have said for some time, the root cause of the stress in the capital markets is the real estate correction and what's going on in terms of the price declines in real estate. So, again, we are coming together to work for an expeditious solution, which is aimed right at the heart of this problem, which is illiquid assets on financial institutions' balance sheets.

Thank you.

PELOSI: Thank you, Mr. Secretary.

BROWN: Again, the treasury secretary speaking about that meeting, the Federal Reserve chairman stepping up to the microphone.

The bottom line: They have met with congressional leaders to go through a proposal, some sort of plan for how to deal with the crisis. You heard one member of Congress say, this is unprecedented, this might, a very serious moment.

We are going to have more details for you throughout the hour.

We're going to take a quick break. We will also be back with our panel of experts to talk about how you can deal with what's happening right now.

Stay with us.

(COMMERCIAL BREAK)

BROWN: We just want to bring you up to speed on what's just happened, breaking news, a big meeting on Capitol Hill, members of the Bush administration, the treasury secretary, the chairman of the Federal Reserve meeting with top lawmakers to try to work out some sort of solution to this crisis.

House Speaker Nancy Pelosi saying that they're waiting now for some detail from the Bush administration. She said time is of the essence. And they're hoping to get some kind of plan from the administration very quickly.

I want to bring back our panel now. We have got Diane Brady, Art Hogan, Lynnette Khalfani-Cox, and Ali Velshi with me.

And let me just get your reaction quickly to what just happened.

Art, what did you think?

HOGAN: I think two things.

I think the fact that they are meeting at 8:30 at night, time is of the essence. We have seen how fast things unwind. We saw that today in the stock market. I think the other piece of this that is extremely important is, you have bipartisan support of whatever is happening. There's nobody in Capitol Hill that wants to go home to their constituents and say, oh, I was the one that got in the way of fixing this problem.

BROWN: Yes. It was striking that they weren't playing political games right there. You saw everybody on the same page.

BRADY: But it's a delicate dance, because Pelosi has said heads will roll. So, it's an election season. On the one hand, they want to fix the problem, but they also want to position themselves to basically say that it was the other guy's fault.

BROWN: Right.

KHALFANI-COX: I think what we just saw was, Paulson telegraph that we're about to see the mother of all bailouts here. He used words like systemic and comprehensive. He said, we have got to get right to the heart of the problem, the housing situation, and the fact that all these banks have this bad debt on their books.

We are talking about 2.5 million foreclosures this year alone. Whatever the solution is, it is going to be a big one.

BROWN: Mother of all bailouts?

VELSHI: At the least, we're talking about a trillion dollars, and it will probably be more than that. But I must say, as we know, Americans are worried. I think they would rather see that deal trying to be hammered out than they would be hearing about people firing the chairman of the SEC. This is work being done. You can blame who you want. Heads can roll if they want.

But the bottom line is, some deal will come out of this. Henry Paulson has proved one thing. He can make a deal.

BROWN: All right, to this point, this is -- we went out and talked to a lot of people today about how freaked out they are about what is happening. And this is before this happened, before we were talking about a trillion dollars.

Listen to what Randy Touto (ph) had to say. He's pretty mad about the government being behind all this, Wall Street, and then the taxpayers having to clean it up. Let's listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Why they're bailing out this big multimillion-dollar corporations, and putting the burden on the taxpayer -- as a taxpayer, it makes me angry. And I just want to find out when that's going to stop.

(END VIDEO CLIP)

BROWN: Well, what we just found out is, it is not going to stop.

KHALFANI-COX: Not any time soon.

BROWN: What on earth do you say to people like Randy?

VELSHI: Art made the point a little earlier -- sorry, Lynnette -- Art made the point a little earlier that the bailouts, the organized bailouts that we have seen historically have actually not ended up costing the taxpayer. Immediately, they feel like they're costing it. And when you talk about a trillion dollars, it feels like it's coming out of our pocket.

But, if it's done the right way, we could end up making money on it.

(CROSSTALK)

BROWN: Everybody agree with that?

HOGAN: We're backstopping AIG while they have time to sell off assets. They're going to be able to sell off assets in that company that's a whole lot more than the money we have put up to backstop the company.

The same thing is going to be true when we have time to take this entire pile of bad debt, put it in a box, reshape it, repackage it, put it back out, and know what we have.

BROWN: There's a lot of educating, though, that has to take place. It's pretty clear nobody gets that. I certainly wouldn't have thought of it that way.

BRADY: Well, the companies didn't get it themselves. That's the issue. So, I think that they're trying to contain the risk. They have to do it. And the real anger will come when the taxes are raised and people pay.

LYNETTE KHALFANI-COX, THEMONEYCOACH.NET: One of the educational efforts I think that needs to be made to the average person in the public is that when there's financial contingent like this, you are your brother's keeper, whether you like it or not. People say, oh, I'm not one of these people who take out a subprime mortgage. I didn't take a no doc loan. Why should I be penalized because my neighbor's house is in foreclosure, et cetera?

BROWN: Right.

KHALFANI-COX: The fact is, if your neighbor's house is in foreclosure, your property values are declining in value already. So you are being impacted whether or not you like it.

BROWN: Let me get to this, because this is we've heard. Everybody's worried about their 401(k), their retirement plans. And this is one of our viewers who wrote in and said, "I heard on CNN this morning that people didn't need to worry about their retirement accounts because we have 20 or so years to wait until we need them. Well, what about babyboomers? I'm a babyboomer. I'm 57. I don't have 20 years to wait. What do I do?"

She's right. We keep hearing you guys -- God love you -- telling people don't panic, don't sell. But what if you're in her position?

KHALFANI-COX: I think you have to get defensive. No question about it. You can't have 70 percent of your 80 percent of your portfolio in equities not in a volatile period like this where the market last -- you know, from last year's high in October 2007 is off 20, 25 percent or so. You need to be strategic. You need to be conservative. Hoard a little more cash if you're 60, 65 plus. You don't want to be that heavily invested in equities.

This person has a very legitimate concern. Time is not in this person's favor.

BRADY: And let's not forget the market went up a huge amount today and basically almost recovered the losses yesterday. So, you know, this is a plan to help solve what's going on and I think people should sit back and watch for a while and not panic.

BROWN: All right. We have to end it there. But, many, many thanks. A great panel. Appreciate it, guys.

Coming up next, the presidential candidates' plans to fix this mess. Both pretty vague. We're going to try to sort through what they're actually talking about, and then put them to our "No Bias, No Bull" test. Stay with us.

(COMMERCIAL BREAK) BROWN: Today, Barack Obama and John McCain are getting more specific about what they will do to clean up the country's financial mess but do their plans actually add up to anything? We brought Tom Foreman up to the ELECTION CENTER to put it all in the "No Bias, No Bull" test -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: Well, Campbell, let's start with McCain's and what he's had to say about getting out of this mess. First, he wants to fire the head of the SEC, the Securities and Exchange Commission. This is the chief federal watchdog for the investment industry. The president can do that, but obviously, you would have to find a better person for the job and, by the way, the current commissioner says he's quitting when George Bush leaves office anyway, so we're not sure what the effect would be there.

Second, McCain wants to set up a mortgage and financial trust, institutions trust. He suggests this would be a pool of money to help prevent financial companies from reaching this point of meltdown where they need a big ticket bailout. The money would also, importantly, help consumers restructure loans so that they don't lose their homes. What's missing on all of this? Well, the price tag.

And thirdly, he wants to empanel a top level commission to figure out how to streamline and strengthen the federal agencies that are supposed to protect the economy. There's been a lot of talk about the need for this and it could work, but it would take time. Just because a committee figures out what ought to be done doesn't mean it will happen.

You can think about the 9/11 commission, Campbell. As you know the old saying, a committee is a cul-de-sac into which ideas are lured and quietly strangled. So those are some of McCain's proposals right now.

BROWN: All right, Tom. So Barack Obama has been tossing out lots of proposals in his speeches this week. We counted 11 of them on Tuesday. And yet, another version today. What's up with him?

FOREMAN: Well, let's look at some of Obama's top proposals in the same way. First, he wants to enact a homeowner and financial support act. This appears to be very similar to the trust fund that McCain is talking about. Money to prevent catastrophic failures in the financial industry, stabilize things a bit and to keep people in their homes. Same question. What is this really going to cost? Who's going to pay for it, and can we afford it?

Second, he wants a $50 billion emergency economic stimulus plan. He's talking about money for one million jobs for rebuilding infrastructure, schools, and helping local governments avoid budget cuts. This would obviously be targeted spending as opposed to the scattershot of this summer's economic stimulus plan, but that plan was also three times as big as what Obama is proposing here. So you can draw your own conclusions about the bang he might get for these bucks.

And third, he wants to change the bankruptcy laws to make it easier for people who go bankrupt to at least keep their homes. Interesting to see how this would fare politically. In 2005, a few years ago, bankruptcy laws were rewritten to make it tougher, not easier for people to hold on to their assets after they go broke -- Campbell.

BROWN: All right. Well, don't go away, Tom. We're not done with you yet. Today both candidates were talking about the government's huge $85 bailout of insurance giant AIG. And I wanted to play what both of them said. Let's first start with John McCain.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: My opponent sees an economic crisis as a political opportunity instead of a time to lead. Senator Obama isn't change. He's part of the problem in Washington.

(APPLAUSE)

When AIG was bailed out I didn't like it, but I understood it needed to be done to protect hardworking Americans with insurance policies and annuities. Senator Obama didn't take a position. On the biggest issue of the day, he didn't know what to think. He may not realize it but you don't get to vote present as president of the United States.

(END VIDEO CLIP)

BROWN: So give us your take on what he said. His position on this.

FOREMAN: Well, Campbell, the simple truth is he's jumping on Obama here because Obama did not come out and emphatically say right up front I think the bailout is a good idea or I think it's a bad idea. Now, McCain didn't do that either. They were both being very cagey about what they had to say. And in fact, McCain's biggest problem here is not what he said since the bailout but what he's done for more than 20 years. Generally, he has opposed more regulation, he's opposed intervention in the markets. And the Democrats are beating him up with this by saying, look, you're not the typical guy to fix it now because you never wanted to fix it so much in the past.

BROWN: And then, Tom, this afternoon in New Mexico, Barack Obama answered some of John McCain's allegations when he brought up the AIG bailout. Here's what he said.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: On Monday, he said the economy was fundamentally sound and he was fundamentally wrong. On -- on Tuesday, he said the government should stand aside and allow one of the nation's largest insurers, AIG, to collapse. I mean, he said this in three different interviews, despite the possibility that it would put millions of Americans at risk. But by Wednesday, he said he had changed his mind.

And today, he accused me of not supporting what the treasury and the Federal Reserve Bank did with AIG despite no evidence whatsoever that that's what I had said.

(END VIDEO CLIP)

BROWN: So what about Obama on this?

FOREMAN: Well, the simple truth is he's getting some free shots here because McCain's got this history that he has to deal with. On the other hand, what Obama did not mention was his own vice presidential candidate, Joe Biden, the day before said he was against the deal. Now, he doesn't bring that up at this point.

The simple truth is, Campbell, right now there are some well- meaning people who would like to help out in Washington. This is a little bit like a pop-fly in little league. Everyone wants to get close and say I tried to catch it...

BROWN: But they don't want actually.

FOREMAN: ... but if it falls, they want to point to the other guy and say, you were closer, it's your fault.

BROWN: Perfect analogy. All right.

Tom Foreman for us -- Tom, thanks. Appreciate it.

Well, with the Wall Street -- with Wall Street in crisis, the American economy looking a lot more like a house of cards. We just showed you what the candidates are proposing.

We want to bring in now our political panel to talk about all of this. "New York Observer" columnist Steve Kornacki with me, along with Gloria Borger, CNN senior political analyst, and Republican strategist Kevin Madden joining us as well. Welcome guys.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Hi.

BROWN: So Steve, as you saw there, McCain came out swinging today. He's talking about firing the SEC commissioner. That would be his plan if he were president, creating this new agency to monitor banks, preempt these kinds of problems. Earlier this week, he proposed a 9/11 commission to do an investigation. Is there anything really substantive in all of this?

STEVE KORNACKI, "NEW YORK OBSERVER": I have never seen in any election at any level in American politics where the masses have suddenly gotten riled up over somebody's proposal to create a commission. That is like the function "8" key on the press release for how to deal with a crisis. So we'll create a commission to do it. So he gets no traction there.

Firing the SEC commissioner, this is textbook. This is how you separate yourself from -- how do you separate yourself in 2006 from George W. Bush and the Iraq war? You call for Donald Rumsfeld's resignation. How do you separate yourself from George W. Bush in 2008 in the economy? You call for the SEC commissioner's resignation. That's a pretty transparent attempt there. The real problem that John McCain is dealing with here isn't about the specific proposals that he's offering or the specific proposals that Barack Obama is offering. The real problem is that generically voters always favor the Democrats over the Republicans on economic questions. When times are tough, when the Republicans are in power, when they've been in power for eight years, that gets compounded. This incident on Wall Street, this crisis on Wall Street just crystallizes to many people...

BROWN: Right.

KORNACKI: ... what eight years of Republican rule has meant. You really -- it's very tough to overcome that.

BROWN: Kevin, let me go to you. And in all fairness, we're going to get to Obama in a minute because I think they are being equally vague about how to deal with a lot of this. Both Obama and Biden.

But you have to admit, Kevin, that Republicans are in a tight spot here because it has been John McCain's mantra and many Republicans' mantra for years, keep limiting government, staying out of the financial sector, staying away from regulations. And then this crisis comes along and you have to change your position. It's a very delicate dance they're doing. It's a tough time to be a Republican, isn't it?

KEVIN MADDEN, REPUBLICAN STRATEGIST: Well, look, I don't have to admit anything. So -- but --

BROWN: And you won't. You won't.

BORGER: You do.

BROWN: You're too good. But come on.

(CROSSTALK)

MADDEN: But I will --

BROWN: But give us a reality. How should he be handling it given that if -- that it is going to be a flip flop almost no matter what you do?

MADDEN: And that's the -- and that's the point I'm about to make is that I don't think that very many Americans in this time of crisis, or when people have a lot of anxiety about the direction of the economy, they're not going to really apply an ideological litmus test to any action that John McCain or Barack Obama take.

I mean, right now, there are Republicans who are saying, hey, the government's got to do something. There are Democrat voters out there saying, why is the government getting involved? And really, what this comes down to is a lot with the point that Steve made which is that, you know, voters aren't running to the Internet right now to look at these proposals and compare them side by side to decide who they vote. Instead, they're going to vote for whoever exudes the smart and confident body posture, who says the smart and confident things about the direction they want to take the economy. Again, it's not about economic plans right now. It's about economic attributes that the candidates exude.

BROWN: Go ahead, Gloria.

BORGER: You know, I don't think it's ideological but I do think that the natural instinct is to blame the people who have been in charge for the last eight years.

BROWN: Which is easier to do if you're Obama than in it if you're John McCain.

BORGER: Absolutely. And that is, of course, McCain's exquisite dilemma. So when he comes out with his plan tomorrow, and he may well find himself reacting to the Paulson/Bernanke plan for legislation on the Hill, we don't really know yet whether we're going to hear about it, he has got -- he has got to not only separate himself from George W. Bush, but he also has to project a reassurance and a confidence.

You know, these guys who spent the last week skirmishing, and we all understand that this is an election year and that's exactly what we expect them to do. But at a certain point, the American public wants their problems solved and they want to look at the politician who projects the most confidence about the way to solve the issue.

BROWN: Right. OK, guys. Stand by. We're going to talk about Obama when we come back. Chew over his economic plan, take a look at whether his message is getting through to voters or not.

And then a little bit later on, Sarah Palin's husband tonight, big news refusing to answer questions in the Alaska trooper investigation. Authorities are probing whether Palin abused her office to get her former brother-in-law fired.

We'll have that story for you in the ELECTION CENTER. Stay with us.

(COMMERCIAL BREAK)

BROWN: We turn now to Barack Obama's economic plan. He certainly is under a lot of pressure to come up with a clear vision for getting the American economy out of this hole.

This afternoon, Obama was burning up the phone lines talking to Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, former Treasury Secretary Larry Summers, former Fed Chairman Paul Volcker. We have a list. Who else? New York Mayor Michael Bloomberg. Trying to get advice about what is going on on Wall Street. This is the campaign's way of telling us that he is on top of the economy.

Back now to talk about that, we got Steve Kornacki again, Gloria Borger and Kevin Madden. It's been two days and Barack Obama and Joe Biden have yet to take a clear position on whether they support the government's $85 billion bailout of insurance giant AIG. I want you all to listen to what Joe Biden said on "Good Morning America."

(BEGIN VIDEO CLIP, ABC "GOOD AMERICAN AMERICA")

KATE SNOW, CO-ANCHOR, GOOD MORNING AMERICA: On Tuesday, you said that AIG should not be bailed out by the federal government. Do you still feel that way? Do you feel it was the wrong move for the Fed to jump in?

SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: It's hard to second guess. I haven't spoken to the secretary. I mean, there's no good answer because it was spot policies of the last eight years that put us in. And so, it's hard to judge that right from my spot right here.

(END VIDEO CLIP)

BROWN: Kevin, why haven't these guys been able to come out and say whether they think this bailout was the right decision or not? I mean, if they get elected, they're going to have to make these major decisions. Take a position.

MADDEN: Yes. Look, it's a real big problem and if I were working on the campaign right now, I mean, there'll probably be a sense of panic that they have to be more defined about where they're going to take the economy and what they would do. Voters sense hesitation and they don't reward it. Voters sense equivocation and they don't reward it.

So it's -- you know, I think over the next couple of days that's their challenge to come out with very specific proposals and to show a little bit more like Gloria talked about before -- confidence, leadership in a time of crisis because right now, voters are so anxious that they have too see somebody take action. Whoever shows that they have the most confidence, that they're the person who's going to take the flashlight and lead voters and the economy out of this darkness over the next 48 days, that's who's going to win this election.

BORGER: You know, Campbell, I think they're going to hold their noses and support the AIG bailout. But what Hank Paulson was saying earlier this evening that you showed on the air was he was talking about legislation.

So now we're going to have, imagine this, an election year. Congress isn't going home. They're going to be there. They're going to have to vote on some kind of legislation.

Will John McCain side with lots of conservative Republicans who don't want any part of this? Will he go along with Paulson? I mean, what will Obama do if Democrats balk? So, we have a whole other drama that's going to play itself out in Washington right now.

MADDEN: We may have a fourth Republican -- we may have a fourth Republican debate in the well of the Senate before this is over.

BROWN: Oh, how good would that be? BORGER: Right.

BROWN: But let me get back and, Steve, take this. Because you know, Kevin mentioned the Obama campaign not getting into specifics and they have to a certain degree, reforming bankruptcy laws. You know, he's pitching another economic stimulus package. But there is a sense that there's not been a real big vision sort of articulated, and they've got this big meeting they've announced tomorrow with his economic team. Is that what they're trying to come up with?

KORNACKI: Well, they're certainly vulnerable on the question of not taking the position on AIG, and they need to do that. They need to come up with something. And you can't have the Republicans reminding you of the voting present thing because that's a good weapon for the Republicans.

But if you really want to look at the political reality of this, fair or not, right or wrong, there is more of a burden on John McCain on this than there is on Barack Obama for a political standpoint, because it is a Republican administration and the Republican Party that is seen to voters as having gotten us into this mess.

So Barack Obama can stand up there, and he's getting very good at this, he's getting very good at showing anger at the Republicans for getting us into this mess, showing anger at John McCain saying he led the Commerce Committee. He said he had oversight. Where did he take us? You know, instinctively, that sounds right to people.

BROWN: And the burden is less on him to actually come up with specifics.

All right. We're going to see what will happen here. Steve, Gloria and Kevin, thanks to all of you.

Stay with us. A lot more ahead. We'll be back right after a quick break.

(COMMERCIAL BREAK)

LARRY KING, HOST, "LARRY KING LIVE": Good evening. I'm Larry King. We have late-breaking news tonight. Washington's moneymen and women have met on the economic crisis. Have they solved it? We'll have the latest.

The market was up today. Does it mean the economy is all better? How can you survive this wild ride? Suze Orman is in the house. Start dialing in.

Campaign fact or fiction? But who's telling the truth? Hard to know these days. We're going to try to sort it all out.

And Campbell Brown will come back right after the break.

(COMMERCIAL BREAK)

BROWN: Just a little bit ago, the McCain campaign announced that Governor Sarah Palin's husband won't answer questions from state lawmakers investigating her firing of Alaska's public safety commissioner. And CNN's Randi Kaye is in Anchorage tonight to explain Todd Palin's connection to all of this.

And, Randi, start by giving us a quick overview of the back story here. Why was Todd Palin going to be subpoenaed and what do investigators think his role might have been in firing this public safety commissioner, Walt Monegan?

RANDI KAYE, CNN CORRESPONDENT: This, Campbell, goes back to an investigation by the state legislature. They hired a prosecutor to try and figure out whether or not the governor and Todd Palin or possibly both of them had anything to do with pressuring the state's top cop and trying to get him to fire one of the state troopers named Mike Wooten, who happens to be the governor's ex-brother-in-law.

She said that this trooper had threatened her family. He was going through a bitter divorce from her sister. And, of course, this Trooper Wooten denies this took place but was there any pressure? Did Todd Palin or Sarah Palin pressure the top cop who was then fired for not firing Mike Wooten? At least that's what he says -- Campbell.

BROWN: Saying that he won't --

Randi, why now is Todd Palin saying that he won't testify if he is subpoenaed?

KAYE: Right now, the campaign says that they have real concerns about the partisan nature of this investigation. They say that there's a conflict of interest. That the prosecutor's wife actually once worked with the investigator's spouse so they're calling it a tainted investigation.

They say it's a political circus because, of course, the results are supposed to come out just days before Election Day. So they're looking very closely at this Alaska law, Campbell, which says that no ethics violation proceedings can take place against a candidate running for office. And what they're saying is that Todd Palin is covered by that law because he's being asked to take part in an inquiry that is regarding a candidate running for office.

But we have looked at that law and it is very specific. It specifically states that it is in relation to the candidate that is running for office. So what the campaign seems to be trying to do is stretch that here to cover Todd Palin. Whether or not that will work, it's unclear at this point.

BROWN: Well, I know. And how do they sort that out, I guess?

KAYE: Well, in the case of a state employee, they would send it over to the Senate but they're not back in session until January. So this would take place after Election Day but because Todd Palin is not a state employee, it's unclear what they're going to do.

BROWN: All right. Randi Kaye watching everything for us. Randi, appreciate the update. That is it everybody from the ELECTION CENTER tonight. Thanks for watching. We'll see you tomorrow night.

"LARRY KING LIVE" starts right now.