Return to Transcripts main page
LOU DOBBS TONIGHT
Showdown in Washington Over Largest Government Bailout in History; Media Attacks Palin Family
Aired September 22, 2008 - 19:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, HOST: Tonight a showdown in Washington over what will be the largest government bailout in history, world history. The White House and members of Congress locked in a power struggle tonight while middle class families are struggling to survive. And tonight, the executives who created this crisis stand to walk away with millions and millions of dollars in taxpayer-funded bonuses.
Also tonight -- the liberal media at it again with an offensive personal attack on Governor Sarah Palin and her family. Among my guests tonight, Bill Gross, who manages the world's largest bond fund. David Cay Johnston, author of "Free Lunch", and Robert Kuttner, author of "The Squandering of America" will be talking about the -- this incredible financial crisis.
And I'll be joined by three of the brightest political minds to discuss this presidential campaign. All of that, all of the news and much more with an independent perspective straight ahead tonight.
ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Monday, September 22nd. Live from New York, Lou Dobbs.
DOBBS: Good evening, everybody. The Bush administration and Congress tonight in a standoff over the federal government's $700 billion plan to bail out the financial industry. The plan now includes a bailout for foreign banks as well. And grant sweeping new powers to Treasury Secretary Henry Paulson.
Some members of Congress tonight are fighting to block the legislation. They argue this proposed solution would be worse than the crisis itself. We have extensive coverage tonight. And we begin with Kathleen Koch on Capitol Hill.
KATHLEEN KOCH, CNN WHITE HOUSE CORRESPONDENT (voice-over): After tough negotiations on the massive $700 billion rescue plan, chairman of the House Financial Services Committee Barney Frank says the administration is giving ground. Frank says it has agreed the government should get shares in the companies it helps rescue. The administration has also signed on to an emergency board to oversee the program and to devise a systematic approach to prevent foreclosures on the bad mortgages it buys.
REP. BARNEY FRANK (D), FINANCIAL SVCS. CMTE. CHMN.: If the federal government is going to step in here, we want it done in a way that's going to reduce foreclosures both to help individuals who are stressed and begin to turn this around.
SEN. CHRISTOPHER DODD (D), CONNECTICUT: We want to act, but we also want to act responsibly and carefully to make sure we do this correctly.
KOCH: No deal though yet on the measure popular with lawmakers that would require companies helped by the bailout to limit their executives bonuses and pay packages.
SEN. BARBARA MIKULSKI (D), MARYLAND: No golden parachutes. Let them feel the hard landing that my constituents faced when they were laid off from Bethlehem Steel. Let them feel the hard landing of knowing what it's like to have your mortgage foreclosed upon.
KOCH: Another sticking point, allowing judges to rewrite mortgages to lower the monthly payments of bankrupt homeowners. Despite the revamping, some fiscal conservatives are in all out revolt, urging their colleagues to reject the plan.
REP. MIKE PENCE (R), INDIANA: We should not move in haste. Many of us conservatives are concerned that the cure of a massive transfer of money from the Treasury to Wall Street could ultimately be worse than the disease that we're facing in our financial markets.
REP. CLIFF STEARNS (R), FLORIDA: I stressed to my colleagues today this is not a case of partisan politics. Our constituents' 401s are at risk. The nationalization of private asset is inherently un- American.
KOCH: Now top House Democratic leadership came out about 20 minutes ago and said they are closer to where they think they ought to be but they are not there yet. So while some optimists said there could be a vote on this rescue plan perhaps as soon as Wednesday night, Lou, now the smart money is looking at Friday.
DOBBS: Kathleen, the question that arises, obviously is how can these legislators be careful, be cautious and clear in this legislation if they are moving so quickly? It makes very little sense to suggest that they can do this on this $700 billion in quick order like this. That's a very demanding schedule.
KOCH: Lou, you are echoing the dismay that we're hearing from a lot of lawmakers up here on Capitol Hill who say you simply cannot rush a measure of this magnitude. That it would be simply -- it would be irresponsible for them as lawmakers to do that. So that's why they're saying, we understand this is a crisis. We understand this is important and it is needed quickly. But we want to not just get it done, we want to do it right.
DOBBS: Yeah, and that's made -- although to me at least all the more clearer given that it was only two weeks ago that Treasury Secretary Henry Paulson was saying that this was not a crisis at all. Kathleen, thank you very much. Kathleen Koch from Capitol Hill. Well, stock prices fell sharply today on new concerns about the lack of specifics in the government's bailout plan and its ban on short-selling in response to the financial crisis. The Dow Jones Industrials today dropped more than 370 points closing at 11,015. The S&P 500 dropped more than three percent. The Nasdaq lost more than four percent today.
Stocks falling as crude oil prices soared. Soaring more than $16 a barrel. That's the largest one-day jump in crude oil prices in history settling at $120 a barrel. The massive $700 billion government bailout plan should it be passed will add to this nation's already record national and trade debts. The proposal would increase the limit on the national debt from 10.6 trillion to $11.3 trillion. The national debt is already a staggering $9.5 trillion. The country has more than $6 trillion as well in trade debt and $53 trillion in unfunded liabilities including Medicare, Medicaid and Social Security.
Treasury Secretary Paulson said just last week that the country's financial system was fine, the comments came just days before the Bush administration announced the biggest government bailout in history. And as Lisa Sylvester now reports, American taxpayers are now paying for the failures of the so-called political and economic leadership in Washington.
LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Washington is in a tail spin. Let's go back a week ago, Treasury Secretary Henry Paulson says things are going to be just fine.
HENRY PAULSON, TREASURY SECRETARY: The American people can remain confident in the soundness and the resilience of our financial system.
SYLVESTER: Now Paulson is warning of dire straits.
PAULSON: The situation we had where markets are frozen and lending may not be available is one that won't be good for the American people.
SYLVESTER: The Treasury secretary wants Congress to approve billions to bail out banks. First it was $500 billion, now up to 700 billion. The original Treasury proposal called for rescuing just troubled mortgage assets. Now it includes all sorts of bad debt incurred by Wall Street. Actually no one is searching just how much it will cost taxpayers. And no one know exactly what taxpayers will get in return, if anything.
PETE SEPP, NATIONAL TAXPAYERS UNION: The fact that the Treasury keeps changing its story every other day certainly doesn't inspire confidence in taxpayers. And we're being told already well 700 billion is an educated guess.
SYLVESTER: And where are the nation's top leaders? Not talking much about the issue, letting their experts explain. President Bush has deferred to Treasury Secretary Paulson. The leader of the House, Speaker Nancy Pelosi and Senate Majority Leader Harry Reid are letting the financial and banking committee chairman take the lead.
DEAN BAKER, CTR. FOR ECON & POLICY RESEARCH: This is a huge egg on your face story. I mean the fact that we're sitting here you know talking about the collapse of the financial system, this is a disaster.
SYLVESTER: A lot of people are saying, Congress, the White House, the regulators and the Federal Reserve, they all should have seen this coming.
SYLVESTER: Now, we're not only staring at a financial crisis but a crisis in leadership. And the taxpayers are going to have to pay for it. Lou.
DOBBS: And this can be inspiring confidence anywhere on Capitol Hill. First of all, all of the chairmen and -- of the relevant committees on Capitol Hill in this Democratically-led Congress did a lousy job of oversight. It's clear given Treasury Secretary Paulson's record he didn't have a clue what was going on. And the American people are supposed to sit back and say, well, I feel good, Congress, the Bush administration are on top of it now? They didn't even know what was going on a week ago.
SYLVESTER: Yeah, they are now having to patch this up. But it is truly a disaster, trying to fix these messes and these mistakes that were made year after year after year because of lax regulation, Lou.
DOBBS: All right. Unbelievable. Thank you very much, Lisa Sylvester from Washington.
While Congress and the Bush administration battle over some kind of solution to this financial crisis, more fallout today on Wall Street. The Federal Reserve today granting permission for this country's last two independent investment banks to become traditional bank-holding companies effective immediately.
Goldman Sachs and Morgan Stanley ending an era, setting up commercial banks that will be able to take deposits. The change also means both banks will file under much stricter federal regulation. Morgan Stanley today also announcing it would sell up to 20 percent of the company to one of Japan's largest banks Mitsubishi UFJ Financial Group.
While foreign banks are buying up American assets, the federal government is bailing out foreign banks. The Treasury Department this weekend said foreign banks will be included in the government's proposed massive $700 billion bailout plan. Treasury Secretary Paulson saying that decision to bail out foreign banks as well as American banks is, quote, "a distinction without a difference to the American people". Oh, yeah? Louise Schiavone has our report.
(BEGIN VIDEOTAPE) LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): The plan to rescue the American financial sector now comes a clarification that the $700 billion life line will also go to institutions overseas.
PAULSON: If a financial institution has business operations in the United States, hires people in the United States, if they -- they are clogged with liquid assets, they have the same impact on the American people as any other institution.
SCHIAVONE: Notwithstanding how globalized the financial world is, some lawmakers are sure their constituents are not going to go for this.
REP. SCOTT GARRETT (R), NEW JERSEY: The American taxpayer wants to make sure that there is -- if this program goes through, that there is a delineation between U.S. companies and foreign companies and that the foreign companies are taken care of by themselves or by sovereign states and that the United States is not left basically on the hook for bailing out the entire global community.
SCHIAVONE: In London's "Daily Mail" today, this news, quote, "Royal Bank of Scotland, HSBC and Barclays is the most likely candidates to join the queue of banks shedding tainted investments. RBS alone could dump more than 5 billion pounds of stricken debt.:
And while the U.S. Treasury secretary says he is talking to Europe to seek some support for the efforts, the "Daily Mail" offers this advice to the prime minister. Quote, "Gordon Brown does not need and should not attempt to play the role of fairy godmother to the banks." Swiss based UBS is exposed for billions of dollars in the U.S. housing market.
Germany's Deutsche Bank has written down billions to the sub- prime crisis. No indication yet from Europe's financial leaders that they are willing to participate in this rescue.
ANDREW LAPERRIERE, INTERNATIONAL STRATEGY & INVESTMENT: If we really do need this fund and a lot of taxpayers are pretty skeptical that we do, do we really need to take taxpayer money and recapitalize foreign banks?
SCHIAVONE: Lou, it's just one more thing that a Congress up for re-election six weeks from now would have to explain to irate taxpayers and it's not clear, Lou, that members are ready to do that. Lou.
DOBBS: Louise, thank you very much. A great idea. What a brilliant, brilliant piece of economic leadership on the part of the economic team in this administration. Bailing out foreign banks. What will they think of next? Well, we'll wait until next week. Thank you very much, Louise Schiavone.
Up next here, could the Wall Street executives who created this crisis walk away with tens of millions of dollars in bonuses paid for with your money? Well guess what, you're not going to like the answer.
And what the presidential candidates are now saying about this economy, the financial crisis and what should happen. Does either of these presidential candidates have a plan that would work for American families? We'll find out. Stay with us. We'll be right back.
DOBBS: Well, Senator McCain and Senator Obama today were critical of the administration's bailout proposal, citing a lack of oversight. Each of the presidential candidates trying to convince voters that he is the one who can fix our financial crisis. And a new poll out today could be a source of concern for Senator McCain.
Dana Bash is with the McCain campaign in Media, Pennsylvania -- where else -- and Bill Schneider reports on the results of the latest poll. We begin with Dana Bash. Dana.
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Lou, one week ago, John McCain said the fundamentals of the economy are strong. Today, he said the country is in financial crisis. It's a political course correction in McCain's rhetoric on the issue his advisers know is the dominant one in this election.
BASH (voice-over): With twin goals of burnishing his former credentials and distancing himself from the unpopular president, John McCain announced great concern about giving Bush Treasury Secretary Henry Paulson control of a $700 billion bailout.
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: This arrangement makes me deeply uncomfortable. And when we're talking about trillion dollars of taxpayer money, "trust me" just isn't good enough.
BASH: Instead, McCain is proposing a bipartisan oversight board to supervise the rescue, suggesting three people for it, his former Republican rival and former businessman Mitt Romney, Obama supporter and Wall Street heavy weight Warren Buffett and Independent New York City mayor and billionaire businessman Michael Bloomberg.
MCCAIN: We won't solve a problem caused by poor oversight with a plan that has no oversight.
BASH: And the senator who spent much of his two decades in Congress pushing deregulation continued his election year migration towards more government control.
MCCAIN: We can't have taxpayers footing the bill for bloated golden parachutes.
BASH: Siding with Democrats and demanding a cap in compensation for CEOs the government rescues, no more than $400,000, what the president makes.
MCCAIN: The senior executives of any firm that's bailed out by the Treasury should not be making more money than the highest-paid government official.
BASH: And McCain's cry for accountability comes with an increasingly populous pitch.
MCCAIN: Weed me to put our country first and focus what's best for Main Street. It's the excess and greed...
MCCAIN: ... of Washington and Wall Street that got us in this situation to start with.
BASH (on camera): That kind of talk makes some of McCain's fellow Republicans unhappy. But advisers say that's fine with them. Because with the economy dominating, they insist there is just one overriding political objective right now. And it's a big challenge, that is, convincing angry and anxious voters in battleground states like this one that McCain gets it. Lou.
DOBBS: Dana Bash, thank you.
Senator Obama today blamed lobbyists and ethic of irresponsibility for the nation's financial crisis. Senator McCain as Dana Bash just reported coming out strongly for more oversight of the administration's bailout proposal. Working men and women all across this country are now concerned about our financial crisis and what it means to their jobs, to their homes, their families and that is affecting how they may vote. Bill Schneider has our report.
WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): Two weeks ago, the presidential race was tied. And now, Obama has opened up a five-point lead among all registered voters. And a four- point lead among those likely to vote. Two core McCain constituencies, men and seniors, have flipped from McCain to Obama. The financial crisis has a lot of men worried about their jobs. Obama promises...
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Five million new jobs that pay well and can't ever be outsourced.
SCHNEIDER: While McCain warns...
MCCAIN: A vote for Senator Obama will guarantee higher taxes, fewer jobs and an even bigger federal government.
SCHNEIDER: Seniors are mostly retired. They're worried about Social Security.
OBAMA: If my opponent had his way, millions of Americans would have had their Social Security tied with the stock market this week.
SCHNEIDER: McCain denies it.
MCCAIN: My friends, I will not privatize Social Security and it's not true when I'm accused of that.
SCHNEIDER: The financial crisis is having a powerful effect on the vote. Two-thirds of voters say the economy is not fundamentally sound. They're voting nearly two to one for Obama.
OBAMA: They have run this economy into the ground.
SCHNEIDER: Both Obama and McCain support government intervention in the financial markets. Both blame the Bush administration for not taking action.
MCCAIN: Two years ago, I called for reform of this corruption of Fannie Mae and Freddie Mac. Congress did nothing. The administration did nothing.
SCHNEIDER: But government intervention is an issue on which Democrats have more credibility, 62 percent of voters think the federal government should intervene in the crisis. And 62 percent of those who feel that way are voting for Obama.
SCHNEIDER: In the poll, voters blame Republicans more than Democrats by nearly two to one for the problems facing our financial institutions. Now, we are not seeing a surge of confidence in Democrats. Opinions of Barack Obama have really not changed. What we are seeing is a lot of angered Republicans, unfavorable opinion of John McCain has been going up. Lou.
DOBBS: Well first what about the rollback of Glass-Steagall, which made all of this possible? That was signed by Bill Clinton in 1999.
SCHNEIDER: I'm not sure a lot of voters know about that. It was, of course, because for, well a couple of decades, deregulation has been the buy word of both Democrats and...
DOBBS: There you go.
SCHNEIDER: ... both Republicans and modern Democrats.
DOBBS: Why do you suppose we're not hearing that in the national media? That's amazing isn't it?
DOBBS: We hear a lot of reports about what the American people don't understand, but we don't see a lot of the national media trying to put forward an understanding that both of these parties are responsible in just about equal measure for the nonsense, the madness that is gripping our financial system. SCHNEIDER: Well, I think you just said it.
DOBBS: Indeed I did. Bill Schneider, thanks very much. Appreciate it.
DOBBS: Up next, the liberal bias in the mainstream national medial now front and center on late-night television. We'll have that report and will Wall Street CEOs be walking away with billions of dollars in bonuses while taxpayers foot the bill for their failures? Oh, yes, and while they struggle to pay their family's way? We'll have a special report here next.
DOBBS: Well, as Congress is preparing to bail out Wall Street, the executives who created this mess could well walk away with hundreds of millions of dollars in bonuses paid for -- paid for by you, the American taxpayer. Kitty Pilgrim has our report.
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Emergency bailout, pitched as a last-minute save for middle class Americans and to keep the financial system stable. But will that taxpayer money enable firms to continue to pay huge multimillion dollar salaries of Wall Street executives. Congressional Democrats are livid refusing to hand over a blank check to Wall Street without including language about inappropriate or excessive compensation.
REP. BARNEY FRANK (D), FINANCIAL SERVICES CMTE. CHMN.: The notion that while they're getting this help from the federal government. We can't tell them not to have golden parachutes. We can't tell them to pay millions of dollars to some of the very people who made the bad decisions as a retirement gift, is just unacceptable.
PILGRIM: Last year, the average pay of a CEO in an S&P 500 company was $10.5 million. And the now collapsing financial sector it averaged a $11.6 million. Lehman Brothers' Richard Fuld, according to "Forbes" magazine annual list of executive compensation earned $354 million over five years.
And the company has now set aside $2.5 billion to pay its executives, even though the company went bust and workers were forced to clear out their desks. Compensation plans provided incentives for executives to take risks with shareholder money to boost their compensation even further.
SARAH ANDERSON, INSTITUTE FOR POLICY STUDIES: If Congress leaves the current compensation system intact without making major changes, we're going to continue to have top financial executives really blinded by the lure of short-term rewards, no matter what the long- term risks are for their companies. And Congress is going to have a lot of angry taxpayers on their hands.
PILGRIM: Tax loopholes allowed many companies to give high salaries to their executives because they could write them off.
PILGRIM: The Federal Housing Authority has refused to pay the heads of Fannie Mae and Freddie Mac more than $20 million in severance packages. The head of AIG, Robert Willumstad has said he won't take his severance package of $22 million. But Secretary Paulson does not want any limits on executive compensation in the bailout plan saying that he wants to avoid punitive steps. Lou.
DOBBS: Well this Treasury secretary is the same buffoon who said a week ago there wasn't a problem, two weeks ago wasn't a problem, three weeks ago and really we don't care what he wants. He is nothing more than an empty suit parading around as the leader of this administration's economic team.
So Mr. Paulson, get over yourself. Either we straighten out the corruption and the excess on Wall Street and indeed in every aspect of this economy or we're going to have continuing, continuing crises, so get over your bad self, Henry Paulson.
You're hardly a genius and you're in no position to even utter a word as to what you would prefer. Shut up, get on with the job and listen to the people for a change. You have no -- absolutely no right to a view on this at all in my opinion. Thank you very much, Kitty. Kitty Pilgrim.
Well it's the subject of our poll tonight. As you might guess, Secretary Paulson I find to be an incompetent jerk. But we would like to get your opinion. Should Wall Street executives who oversaw the biggest market meltdown in American history be paid a dime of taxpayer-funded bonus money? Yes or no? Cast your votes at loudobbs.com. We'll have the results here later in the broadcast.
And yes, I said Henry Paulson, Treasury secretary, is absolutely an incompetent in a parading preening popinjay right now in the midst of crisis, not a lot of help.
Time now for some of your thoughts. Carl in Illinois said, "Dear Lou, my advice to our Congress on the $700 billion bailout is this. Move very slowly with your actions, read all the fine print. Remember whose money you're giving away. And don't forget that you can be voted out as quickly as you were voted in." If only it were so.
And Roger in Kentucky. "I suppose in the grand scheme of things it is right to bail out these companies. However, I hope and pray that the top levels of mismanagement pay back all those ridiculous bonuses that they've received and before any taxpayer dollars are injected!" Again, we can only hope.
Ed in Wisconsin, "Lou, just wondering, how many lobbyists do you think are drafting the legislation for the bailout?" Let me see, well more than you and I can count at least quickly. We'll have more of your thoughts here later in the broadcast.
Up next, the liberal national media crossing the line, a comedy skit attacking Governor Sarah Palin's family in the most obscene of terms. We'll have that report.
And American taxpayers footing the bill for Wall Street excess. Can our government actually fix this mess? I'll be talking about that with three of the leading experts in the country on this economy. They'll be with us next. Stay with us.
DOBBS: Well, joining me now, three of the country's pre-eminent financial experts. Bill Gross is the founder of Pimco. It is the world's largest bond fund. Bill, it's great to have you with us.
BILL GROSS, FOUNDER, PIMCO: Thank you, Lou.
DOBBS: David Cay Johnston, Pulitzer-Prize winning journalist, author of "Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense." What a timely subtitle. David, good to have you with us.
And Robert Kuttner, co-editor of the "American Prospect," author of the very timely book "The Squandering of America: How the Failure of our Politics Undermines Our Prosperity." Great to have you all here.
Let me begin, Bill, with you. Bill Gross, we are watching t- bills, if you buy a t-bill, you're paying for the privilege after the commission. We've got a man who didn't even recognize we had a financial crisis a week ago is walking around saying we got to have $700 billion tonight. Between you and me, just you and me, Bill, I don't believe this man knows what he's talking about. What do you think?
GROSS: Well, let me take the other side of that, Lou. I know you're not going to like this. But what's important I think is that the Treasury makes a profit or participates in the equity of these companies that they're rescuing.
For instance, AIG, last week, they've charged in terms of their lending facility, at least a 10 or 11 percent interest rate which is high compensation indeed. Secondly, in terms of this bailout program, $700 billion, it's really in my opinion, an investment program, because they'll be buying basically sub prime mortgages at 65 cents on the dollar yielding 10, 11 and 12 percent.
DOBBS: Wait a minute, you're a free market guy. You're a market guy. What happened to letting the governments work? Suddenly, the government is involved in determining price mechanisms? What happened here?
GROSS: The markets aren't working. We're in the midst of that.
DOBBS: So how can we assume that anything else is working, including price mechanisms? Valuations? Why in the world are we making these crazy assumptions here?
GROS: Lou, we have had too much leverage. We have asset deflation of significant proportions.
DOBBS: We know how we got here. We got here because people went nuts and were permitted to go nuts. I mean, how can we make these assumptions that any of these valuations approximate anything near reality when the mechanism itself is failing and there is no impulse whatsoever in what is an economy or markets or among investors to by these things?
GROSS: Well just hold on one second and then I'll finish my plea. In terms of markets, the auction process, the free market process will be utilized here in terms of the $7 billion. It's a reverse auction. It will be allowed to find its market price. The Treasury will buy it. It will assume a return of 10, 11 and 12 percent and then hopefully sell it later on in the marketplace as the market stabilizes.
ROBERT KUTTNER, AUTHOR: How you can assume a return of 11 and 12 percent when these loans were made to people with the full knowledge that they couldn't afford to pay them off? That the problem is, this whole crisis was created by crazy assumptions.
So this is no time for assumptions based on wild guesses. And I think if we're going to have this kind of a bailout, you know, there's a whole bunch of things that have to go with it. There has to be an equity stake in these companies like we had in the reconstruction finance corporation in the 1930s. There have to be limits on executive compensation. There have -- you know, during World War II there was something called the renegotiation board. If you were a war profiteer, the government could go back and audit the contract, get some of the taxpayer money back. We need a renegotiation provision for this.
DOBBS: You better set a time period, because I think a lot of folks are going to owe a lot of money over a 10-year period. David, your thoughts?
DAVID CAY JOHNSTON, AUTHOR: Well, you know, we're seeing the government here doing just what it did before the Iraq war. We have to have this action right now, you have to do it just the way we say and you have to trust us. They panicked the markets, that's without question. But I've been calling business people all across America today and asking, well, has your bank tightened up or said they won't renew your 90-day loan? No. Citibank today offered to loan me tens of thousands of dollars at 2.99 percent interest on my signature. There are ads on the Internet, including on AOL, which is the same company that's presenting this show.
DOBBS: And we love AOL, may I repeat we love AOL.
JOHNSTON: Well there are ads offering 1.9 percent mortgages, the very thing that got us into this. And the cost of this is an equivalent of a one-time 55 percent increase in your income tax bill. That's how much money we're talking about. DOBBS: Bill Gross, here's where we are. We're looking at a situation where we've got somebody trying to push this down. That person is - and you like Henry Paulson. I get the idea.
But this is a guy who hasn't been right on trade. He hasn't been right on the markets. He hasn't been right on regulation. And suddenly, we're supposed to turn over the keys to this economy without anyone being able to look through his windshield, check his map at all. I mean, what in the world, besides pure desperation would give anyone the leave of mind to give him that kind of power?
GROSS: Lou, let me give you the alternative. Last week, there was a run on this country's money market funds, $3 trillion of money market funds, tantamount to a run on the bank. To the extent that we allow that to happen then basically we allow the dollar to sink. We allow the economy to sink. We allow the housing market to sink. Those are the alternatives.
DOBBS: My question is this, Bill, so everybody knows, there are very few people in the markets I respect more than Bill Gross. Very small fellow. But I've got to say, what makes anybody think $700 billion thrown against this problem -- we had $150 billion run on money market funds last week.
Now, suddenly, the United States government is guaranteeing money market funds across this country, $3.5 trillion to $4 trillion. We have got to find some leadership. When we get through this, we're going to still have no leadership. We don't have the political leadership. We don't have the economic leadership. We don't have business leadership or market leadership. What in the world is the result here, Bill?
GROSS: Lou, you're not looking at this $700 billion in the right way. It's an investment.
DOBBS: I'm going accept your idea that it's an investment, all right? I accept that. What in the world has changed in terms of leadership and direction of these markets, the industry and this economy and this country?
GROSS: Lou, the markets have frozen up. The credit markets which are basically the foundation of equity markets and the foundation of wealth creation in this country and globally, you know, basically have frozen up. That was typified by the run on the money market fund. Something had to be done.
KUTTNER: Yeah, but not this something. What Bill Gross is saying and what Hank Paulson is saying, it's my way or the highway. And there are a lot of other ways of doing this. You can cap executive compensation. You can have a control board, not just ordering what Paulson does after the fact, but reviewing what he proposes to do before they grant him the authority to do it. The last thing in the world we need is a financial czar who comes out of this culture that gave us this culture.
DOBBS: We don't need a financial czar at all in my opinion in this culture or another. Go ahead. I'm sorry, David.
JOHNSTON: Lou, can we have transparency in this thing? This is unreviewable decisions or the Democrats or talking about arbitrary and capricious would be reviewable. We ought to have control exposure and let's keep in mind, Goldman Sachs and Morgan Stanley want in on this deal. That ought to tell you something about the pricing and the arrangement of this deal, because they're experts on pricing. They want in on it. It can't be that bad a deal for them. It must be pretty good.
DOBBS: I think that's absolutely right. The few folks I talked to on Wall Street here in the last day or so, they think there's a lot of money to be made here. I don't like the sound of that right now under these circumstances. Bill, how about capping executive compensation for firms receiving federal guarantees or bailouts? What do you think?
GROSS: I think the way to go is really equitization in terms of the government's stake. You want the government to be able to participate in these deals. They've done that with AIG. I think they're going in the right direction.
DOBBS: All right. And just to be clear, go ahead quickly, then we've got to wrap.
JOHNSTON: AIG has got about $20 billion in offshore profits. Why as a condition of our bailing them out aren't they required to bring that money home and pay taxes on it?
DOBBS: Anybody want to answer that?
KUTTNER: The deal is unraveling. The point is, the people are rising up against this deal and Congress is getting the message and Paulson is not going to get his way.
DOBBS: It's time to cut through the nonsense. The same savants and masters of the universe who created this mess are now saying how it should be resolved. That's upside down. And it's not the way it should be done. Let's see what happens. That's just one fellow's opinion. Bill Gross, hate to argue with you so much.
GROSS: That's OK, thank you, Lou.
DOBBS: David - keeps America strong, freedom of expression. David Cay Johnston, thanks as always, good to see you. And Bob, thank you very much.
Up next, the financial crisis, the number one issue on the campaign trail. What are these candidates thinking? We'll tell you. We'll be talking about that with our distinguished political panel. But first, what appears to be a blatant liberal bias on the set of "Saturday Night Live." We'll have that report next. Stay with us.
DOBBS: "Saturday Night Live" attracting big ratings this season principally by poking fun at the presidential candidates but raising serious questions about fairness and bias. Some former cast members involved on the show are openly supporting Barack Obama. The show has been accused of being extremely harsh to the Republican candidates. Casey Wian has our report.
CASEY WIAN, CNN CORRESPONDENT (voice-over): Former "Saturday Night Live" cast member Tina Fey's dead-on impersonation of Sarah Palin is now part of T.V. and Internet history.
TINA FEY, ACTRESS: I can see Russia from my house.
WIAN: But backstage at Sunday's Emmy Awards ceremony, Fey hinted she's no fan of the Republican vice presidential candidate.
FEY: I want to be done playing this lady November 5th. So if anybody can help me be done playing this lady November 5th, that would be good for me.
WIAN: Another "SNL" alum, Minnesota Democratic Senate candidate Al Franken spoke with the show's executive producer Lorne Michaels about an idea that led to a skit poking fun at Senator John McCain, an actor plays McCain supposedly recording campaign ads.
BILL HADER, ACTOR: Obama supports tax cuts for pedophiles.
DARRELL HAMMOND, ACTOR: Does he?
KRISTEN WIIG, ACTRSS: Well, there's no way to identify all pedophiles. Percentages are if you cut taxes, it's going to benefit at least a couple of them.
HAMMOND: I'm John McCain, I approve this message.
AL FRANKEN, AUTHOR: We say, I'm Al Franken and I approve this message. I took that really seriously and I said to Lorne, it must be very hard for John McCain to do that considering how misleading these ads are.
WIAN: Some conservatives are outraged by another skit, actually ridiculing "The New York Times" that references incest in the Palin family. They accused "Saturday Night Live" of bias against the Republican candidates. A "Saturday Night Live" spokesman would not comment for this report. But an examination of transcripts for the 2007 and '08 seasons indicates the show is a nearly equal opportunity tormenter. "SNL" has aired eight skits mocking McCain or Palin.
FRED ARMISEN, ACTOR: Oh, look. I think there's a lot of truth in what Hillary says, I really do.
WIAN: Obama has been the subject of seven parodies, including one in February ridiculing CNN for alleged pro-Obama bias.
WIIG: Like nearly everyone in the news media, the three of us are totally in the tank for Senator Obama. WIAN: "Saturday Night Live's" most frequent political target, Senator Hillary Clinton. She's been lampooned 10 times in the past year.
AMY POEHLER, ACTRESS: I invite the media to grow a pair. And if you can't, I will lend you mine.
WIAN: Lou, "Saturday Night Live," of course, has a long history of political humor and political candidates including Senators Obama and McCain are frequent guests. Usually trying to show voters they have a sense of humor. Lou?
DOBBS: That's terrific Leaving Hillary Clinton out of it, how many spoofs of Obama versus McCain? How many spoofs of Biden versus Palin?
WIAN: There were no mentions of Biden.
WIAN: Zero mentions of Biden.
DOBBS: Balanced so far. And how about Obama versus McCain?
WIAN: There were seven of Obama, five of McCain and three of Palin.
WIAN: So if you take McCain and Palin together, it's eight to seven.
DOBBS: Eight to seven. I see where we do that. OK, thank you very much. And by the way, did anybody suggest that there was a incest in Obama's family or Biden's?
WIAN: No, no one did, Lou.
WIAN: I got to say that that skit was poking fun at "The New York Times."
DOBBS: By suggesting incest in Palin's family? Is that right?
WIAN: Well, they used that issue to show how determined "The New York Times" reporter was in the skit to go after Senator Palin and find dirt on her.
DOBBS: Excellent. All right, thanks for clearing that up. Thank you very much, Casey Wian.
And a reminder to vote in our poll tonight. Should Wall Street executives who oversaw the biggest market meltdown in American history be paid a dime of taxpayer funded bonus money yes, or no. Cast your vote at LouDobbs.com. We'll have the results in just a few minutes.
Up at the top of the hour, "THE ELECTION CENTER" with Campbell Brown. Campbell, tell us all about it.
CAMPBELL BROWN, CNN ANCHOR: Thanks, Lou. At the top of the hour, we are going to have all the latest on the Wall Street bailout or lack of one. Congressional leaders are just getting an update on these top negotiations, where they're going. We'll also look tonight at this sense of urgency we're hearing that has to be done immediately. We'll talk what happens if isn't done quickly and what that may mean for you.
We're also looking ahead to Sarah Palin's big trip to the U.N. this week to rub elbows with world leaders. We'll tell you all about that, all coming up in just a few minutes, Lou.
DOBBS: Look forward to it. Thank you, Campbell.
A reminder to join me on the radio Monday through Friday for the "Lou Dobbs Show." Among my guests tomorrow, Kathleen Day from the Center for Responsible Lending, Gordon Chang, author of "The Coming Collapse of China." Go to LouDobbsradio.com to get your local listings for the "Lou Dobbs Show" on the radio.
Up next, Barack Obama, critical of the proposed bailout on Wall Street, but he has yet to say what he would do to solve the country's financial crisis. And John McCain has a new populist message on the campaign trail. I'll be joined by three of the country's best political analysts here next. Stay with us.
DOBBS: Joining me now, three of the best political minds in the country. Republican strategist, CNN contributor Ed Rollins, CNN contributor, Pulitzer-Prize winning columnist, "New York Daily News" Michael Goodwin, CNN contributor, Democratic National Committeeman Robert Zimmerman. Good to have you with us, gentlemen.
Let me start with these polls. Your candidate opening up a lead here.
ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: It is clearly a shift in momentum and as Ed pointed out in his column, clearly you're facing a situation where the movement is there because the focus is now on government activism. The focus is now on Democratic messages about economic recovery. The issue's going to be, though, how these debates address the momentum and whether Obama can use the first debate to build his momentum.
DOBBS: Stories today that Obama is trying to dampen expectation. What's going on?
ZIMMERMAN: Let me tell you something. Both sides are going to try to dampen expectations.
DOBBS: Wait a minute. The Obama campaign is all over Sarah Palin as unworthy of being in office, going to higher office, even running in the United States for any office. And now, he's trying to lower expectations for the campaign? The suggestion that John McCain is the oldest man in the history of the world to ever think about political office. I mean, how can you -- how can he lower expectations?
ZIMMERMAN: Look, Lou. There's no question, the first debate can always be a game changer. The debate process is very critical. It was certainly in '04.
DOBBS: I have a clue for him. He shouldn't sigh a lot.
ZIMMERMAN: Let me tell you. We are all sighing now. Al Gore was ahead of his time.
DOBBS: Michael, I mean, this race is getting crazy. You have a situation in which to his credit, I think, McCain came out with a plan at least a response to the crisis. And Obama says he doesn't want to because he doesn't want to appear partisan. That is great.
MICHAEL GOODWIN, CNN CONTRIBUTOR: Yeah, yeah. Maybe the pure, the, you know, the post-partisan Obama is coming back. That would be nice. Look, I think the Wall Street thing is so big and so complicated and so fraught with political problems that neither one of them really wants to wade in a way that can come back and bite them and I think they're both kind of feeling their way. Neither one on solid ground with what they're saying or doing.
DOBBS: I think in this crisis, to paraphrase John F. Kennedy, we are all bit.
ED ROLLINS, REPUBLICAN STRATEGIST: The critical thing here is that Congress should not adjourn. Every time the Congress goes home or they rush before Christmas or before an election, they pass bad legislation, including legislation in 2000 that created much of the problem that's there.
There's only about 30 races that count. Those people can go home and go fight for their lives. The rest of them are all going to get re-elected with 65 percent of the vote. They need to stay here, make sure that this bill is a good bill that has long-term standing and protection of the taxpayers.
DOBBS: Not to sound too skeptical, name one good bill that this Congress has passed. Name one intelligent decision made economically by this economic team in this administration.
ROLLINS: I can't, but I can tell you this. There's never been as much money at stake, taxpayer money at stake as there is.
DOBBS: Oh, believe me, I understand what's at stake. I'm just asking where in the world does the leadership -- what is the basis for the trust and the confidence of the American people in that leadership?
ZIMMERMAN: I can name a few good things this Congress has done but I'm not going to dwell on that right now for fear of talking points. The important point is I'm hoping in this Congress you can have a bipartisan consensus bill that the Paulson proposal is a disgrace. We fought a revolution to fight proposals like that -- to give an individual almost a -- literally a trillion dollars without any check and balance to it?
DOBBS: Who's going to explain this to George W. Bush? I mean, for crying out loud.
ZIMMERMAN: It's two and a half pages, he should be able to get through it.
DOBBS: Well, if he were to read it, he would be doing better than 95 percent of the legislature.
ROLLINS: George Bush is gone in four months and this Congress, new Congress in four months. I care about my daughter who's 13-years- old. I care about my old age which I'm fastly approaching, and I think there's great risk in this and I want to make sure that the taxpayers...
DOBBS: Ed, let's put this in some perspective. We are talking about raising to almost $11.5 trillion the national debt ceiling. We have a $6.5 trillion trade debt. We have $53 trillion unfunded liabilities. Another way of looking at it it's a lousy $700 billion. What the heck is that to the overall mess? Your kids, our kids and this country and their kids are in deep trouble because this generation has been absolutely irresponsible.
And another bailout for these turkeys on Wall Street, are you kidding me? These masters of the universe have proven themselves to be nothing more than facilitators for their own greed rather than anything -- anything of lasting value. These are -- in the parlance, ganefs, and we need to deal with them as such. We're going to be back with our panel here In just one moment.
DOBBS: Tonight's poll results, 99 percent of you say you don't believe Wall Street executives oversaw the biggest market meltdown in American history be paid a dime of taxpayer funded bonus money. I like that spread.
Let me ask you another question. Do you think as Secretary Paulson, I will use as much respect as I can, should be bailing out with U.S. taxpayer money foreign banks?
ZIMMERMAN: I think it is an absurdity. I think obviously we have to have a bailout package in place. That I recognize, but the idea of secretary -- this proposal he's put forward is absolutely an abuse of power and authority.
GOODWIN: Look. Most of these banks are international banks. They may be headquartered in some place, but their money is every place. DOBBS: We are talking about our money. We are talking about the American taxpayer who's every place because that's where this administration has sent our military. It is - I mean, what's the answer?
GOODWIN: Well, look. This is a huge bet that Paulson is making and that Congress is eventually going to have to --
DOBBS: But why doesn't he bet our money instead of ours?
GOODWIN: But wait a minute, Lou. Because everybody in America's being hurt by this now. The notion that it's just Wall Street, and that we can penalize Wall Street -- if we can find some way to penalize those guys, great. But if we don't do something, as Bill Gross said, we're going to penalize the whole country and the whole globe, so we've got to sort of make a choice and we've got to make it pretty soon.
ROLLINS: I don't know how the mightiest economy in the world all of the sudden in two weeks goes through this chaos. The depression was a long lead-up and I think to a certain extent, I keep coming back to let's not rush to -- promise something to make sure it stays stable. But the idea that you're going to commit in one week a third of the federal budget is outrageous.
DOBBS: Why doesn't one of these two presidential candidates stand up and say something emphatic? I mean, McCain's come close to saying he's opposed to this bailout and means it. Obama has come close to saying, well, I'll wait and see. He really has taken no position at all. Why doesn't one of them do something?
GOODWIN: Because it's dangerous politically.
DOBBS: Well, we wouldn't the little dollies to do something that requires a backbone.
ZIMMERMAN: Obviously we know it's dangerous politically. But the issue, too, right now is you need a bipartisan consensus in Congress to take this bill on. The bigger concern I've got is no one's called for a criminal investigation into these banks, into these practices and I believe there should be some criminal liability here that should be addressed.
ROLLINS: The person who stands up and says I'm not going to be able to implement, I can't be talking about my tax cuts, I can't be talking about my new programs, my new billions I'm going to spend until I get there and see what this mess. The first person that can do that will basically show some courage.
DOBBS: By the way, I agree with you. And you know what both of these campaigns have said? No matter the trillion dollar bailout, we will be still be able to go on with our programs.
ROLLINS: That's total BS. DOBBS: Folks, make sure everybody heard it here first. There won't be any tax cuts. Believe me. This is a change in the world as we know it, this country.
GOODWIN: All the discretionary spending is gone for years.
DOBBS: And there will be a reduction in entitlements, period. Now whichever of these two candidates has the guts to say it first, I'll vote for.
ZIMMERMAN: That's why I admire Joe Biden for advocating patriotism of paying taxes.
DOBBS: Unbelievable. We are going to put you in a corner somewhere.
ROLLINS: I figured that was coming.
ROLLINS: A patriotic young man, could have joined the army.
DOBBS: Ed Rollins, Michael Goodwin, thank you for letting me finish. Thanks for being with us tonight. Please join us tomorrow. For all of us, thank you for watching. Good night from New York. "THE ELECTION CENTER" with Campbell Brown begins right now. Campbell?