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American Morning
FBI to Investigate Wall Street Firms; Henry Paulson to Urge Congress to Pass Bailout; North Korea Plans to Reactivate Nuclear Reactor; Protecting Your Money
Aired September 24, 2008 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
JOHN ROBERTS, CNN ANCHOR (voice-over): Checks.
HENRY PAULSON, TREASURY SECRETARY: You ask about the taxpayers being on the hook.
ROBERTS: And balances.
PAULSON: Guess what? They're already on the hook.
ROBERTS: The nation's financial leaders face a tough sell on the biggest bank bailout in history.
SEN. JIM BUNNING (R), KENTUCKY: This is a financial socialism and it's un-American.
ROBERTS: Plus, Joe Biden and that bridge to nowhere.
SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: I got also a bridge I have to sell you here.
ROBERTS: His connection to a pet project in Sarah Palin's home state on the "Most News in the Morning."
(END VIDEO CLIP)
KIRAN CHETRY, CNN ANCHOR: And good morning. Welcome to the show on this Wednesday, September 24th. I'm Kiran Chetry here in New York. Hey, John.
ROBERTS: Hey, good morning to you, Kiran. John Roberts today in Washington. All eyes will be on Capitol Hill again today as the treasury secretary and the Fed chairman testify, this time before the House Financial Services Committee about the $700 billion bailout program. It's all anybody is talking about down here.
We begin this morning with a criminal investigation into the crisis on Wall Street. The FBI looking into whether fraud led to the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and insurance giant, AIG, which was teetering on the brink of collapse there. The investigation focuses on whether company executives misled investors about the financial strength of their institutions. The FBI currently has 26 pending corporate fraud investigations involving subprime lenders. The embattled 26-year ban on offshore oil drilling coming to an end. After months of debate, House Democrats decided to allow that ban to expire next week. Republicans call the Democratic switch a big victory for Americans. That move could give drillers access to close to 18 billion barrels of oil off of the U.S. coastlines, though there are wildly divergent opinions over just how much oil would actually be brought to market.
And this morning, thousands of Hurricane Ike evacuees can return to what's left of their homes in hard-hit Galveston, Texas. Police will enforce a nightly curfew from 6:00 p.m. to 6:00 a.m. There is only limited medical, power, water and sewer system capabilities. City officials are asking for nearly $2.5 billion in emergency loans.
CHETRY: Back now to our top story, the FBI moving to the front lines of America's financial crisis. Agents are investigating Fannie Mae, Freddie Mac, Lehman Brothers and insurance giant, AIG, to see if fraud had anything to do with their finances tanking.
Meanwhile, one of the survivors on Wall Street, Goldman Sachs, getting a big vote of confidence. Warren Buffett investing $5 billion in the company. That news comes as Treasury Secretary Henry Paulson and Fed Chair Ben Bernanke returned to Capitol Hill for a second day of hearing. On Tuesday, Paulson told the Senate the $700 billion bailout is needed now with few strings attached.
(BEGIN VIDEO CLIP)
HENRY PAULSON, TREASURY SECRETARY: I am convinced that this bold approach will cost American families far less than the alternative, a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion.
(END VIDEO CLIP)
CHETRY: We're going to get more from Capitol Hill in just a minute. But we begin with the FBI's fraud investigation. Ali Velshi is here "Minding Your Business" this morning with more insight into all of this.
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: The fuzz is on the case. The FBI tells us they've added four companies to an ongoing fraud investigation. Those companies as you heard -- AIG, Lehman Brothers, Fannie Mae and Freddie Mac. Now, this is part of an investigation that now has 26 companies in it, including Countrywide Financial. The FBI says this is routine, that they'd be hard-pressed not to have investigated these companies while investigating the collapse of the mortgage industry.
We don't know specifically whether they have allegations pertaining to these four companies, but we do know that they are looking into whether there was misrepresentation on the mortgage end or the financial end. Both of which would be crimes. They are looking into both the companies and the executives who run those companies. The other thing is you mentioned this big investment of $5 billion that Warren Buffett has made into Goldman Sachs. As you may recall on Sunday night, the treasury granted -- the Federal Reserve granted Goldman Sachs and Morgan Stanley a charter to become banks which now allows them to buy out troubled banks which should be very profitable in the end. So all of a sudden Morgan Stanley and Goldman Sachs went from being troubled companies themselves a few days ago to companies that are now likely to acquire other failed banks that the FDIC has now. And that's a result of -- that's why they became a good investment for somebody like Warren Buffett.
CHETRY: And this is the other interesting thing. He gets some sort of preferred shares for life or something unbelievable?
(CROSSTALK)
VELSHI: Well, if you've got that kind of money, yes, it'll get you that.
CHETRY: When you have billions of dollars, right. That's how life works, I guess. But, you know, one of the things that everyone's been talking about, economists alike, as well as the treasury secretary, is this has to happen sooner rather than later for it to be effective.
VELSHI: Right.
CHETRY: Meanwhile, their hands are tied on Capitol Hill.
VELSHI: And just look -- well, yes, it doesn't look it's going to happen sooner. We've had one senator saying definitely not this week, maybe not within the week. But I have to remind people that the credit markets continue to tighten. When the credit markets tighten, it means companies can't borrow money.
We're not talking about money for acquisitions of other companies. We're talking about some public major companies that borrow money for operating expenses. Those operating expenses are the things that keep the lights on, they keep things that keep the salaries paid.
So I spoke to one private equity investor yesterday who said, look, we've never seen this. We don't know how long it can go on for. But there are some companies that if this goes on too long, they may not be able to make payroll.
CHETRY: And by too long, you're talking weeks?
VELSHI: Could be weeks, yes.
CHETRY: All right. Ali Velshi, thanks.
ROBERTS: The president's top money man, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke, will be back on Capitol Hill today in an attempt to convince skeptical House lawmakers to approve a $700 billion bailout plan. CNN's Brianna Keilar is live in Washington. And if the Senate hearings yesterday are any judge, it's going to be contentious today.
BRIANNA KEILAR, CNN CORRESPONDENT: Yes. This is going to be round two, John. Secretary Paulson, before a House committee this time, he's going to face even more tough critics after getting barraged with questions and concerns during yesterday's marathon Senate hearing.
(BEGIN VIDEOTAPE)
KEILAR (voice-over): Dire warnings from the two top money men in America if Congress doesn't come to Wall Street's rescue.
BEN BERNANKE, FED CHAIRMAN: I believe if the credit markets are not functioning, that jobs will be lost, the unemployment rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover in a normal healthy way no matter what other policies are taken.
KEILAR: Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson were on Capitol Hill selling their $700 billion bailout. But senators aren't ready to bite.
SEN. JIM BUNNING (R), KENTUCKY: This massive bailout is not a solution. It is a financial socialism, and it's un-American.
KEILAR: Two GOP members, including the banking committee's top Republican, condemned the plan.
SEN. RICHARD SHELBY (R), ALABAMA: How do you rationalize or justify bailing out banks and so forth that cause, are the root cause of a lot of this problem.
HENRY PAULSON, TREASURY SECRETARY: It may make you angry. It makes me angry when you ask about the taxpayers being on the hook -- guess what? They're already on the hook. They got put on the hook by the system we have. If this system is not stabilized, they're going to bear the costs.
KEILAR: The Democratic chairman of the committee worried about rushing a bill to the president.
SEN. CHRIS DODD (D), CONNECTICUT: The secretary and the administration need to know what they have sent to us is not acceptable. This is not going to work, and they're going to have to come back and work with us.
(END VIDEOTAPE)
KEILAR: Secretary Paulson wants Congress to pass a bill by the end of the week or postpone their planned October recess until they do. But Democrats -- they are not making any guarantees as to when there will be a vote. They want major changes to Paulson's proposal and they want the Bush administration, John, to get more Republicans on board. ROBERTS: And that -- I mean, there's no shortages of proposals flying around on Capitol Hill.
KEILAR: No. In fact, just yesterday, we saw two new House Republican proposals. I think later in the day, there was a new House Democrat proposal. But especially those Republican proposals, it just shows you that even in the president's party a total rejection of passing this Paulson proposal is a clean bill.
ROBERTS: Yes. And we'll see if they can get it done. Apparently, the financial markets overseas just waiting to see what we do.
Brianna Keilar, thanks for coming in this morning. Good to see you.
KEILAR: You bet.
ROBERTS: Kiran?
CHETRY: Well, on the campaign trail, the presidential candidates are pushing for improvements in this rescue plan. John McCain telling reporters at a news conference in Michigan that the proposed bailout needs more oversight and other protections for taxpayers who will foot the bill.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: There has to be greater accountability in the bill. I've suggested a bipartisan board to provide oversight to the rescue. That oversight for this rescue is absolutely essential. We won't solve a problem caused by poor oversight with a plan that has no oversight.
(END VIDEO CLIP)
CHETRY: Also, Barack Obama criticizing President Bush for insisting that Congress give the administration a "blank check" in his words, to fix the financial mess on Wall Street.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: The president's stubborn inflexibility is both unacceptable and disturbingly familiar. This is not the time for my way or the highway intransigence from anybody involved. This is not the time for fear. It's not the time for panic. It's the time for resolve and responsibility and reasonableness.
(END VIDEO CLIP)
CHETRY: Senator Obama says American taxpayers should be treated like investors if they're being asked to underwrite this Wall Street bailout.
ROBERTS: Iran's president unleashing a fiery attack against the United States. We will tell you what he is accusing Washington of this time and what he has to say about his country's nuclear ambitions.
And protecting your money. What happens if your bank goes belly up? The loophole that could cost you big-time.
You're watching the "Most News in the Morning." Coming up on nine minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: This just in to CNN this morning. North Korea said to be planning to reactivate its nuclear reactor at Yongbyon. CNN's Zain Verjee joins me live with more on this situation. This, of course, comes on the heels of what it appears to be growing rhetoric as they get angry that they've not been removed from some of these state sponsored lists of terrorists.
ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Right. Exactly. I mean, this, Kiran, is a really worrying development for the United States. North Korea is clearly taking a much harder line here. This is supposed to be a big foreign policy success for the United States, and it's in danger of falling apart.
As you rightly point out, the key issue here is that North Korea is saying hang on a minute. We took all these steps. We came clean. We gave you a declaration. We started dismantling this reactor, and you didn't take us off the state list of countries that are state sponsors of terrorism.
And the U.S. is saying, well, we're not just going to do it just like that. They want North Korea to come up and agree to a strict verification of what they're actually doing just to make sure they're doing what they say they're doing.
CHETRY: You're right. What a 180 from the beginning of the summer...
VERJEE: Right.
CHETRY: ... when we all witnessed live on television...
VERJEE: Right.
CHETRY: ... the implosion of that cooling tower...
VERJEE: Exactly.
CHETRY: ... the big symbol of a movement toward hopefully some sort of reconciliation.
VERJEE: Exactly. And, you know, one thing that we don't know is whether this harder line is in any way related to Kim Jong-Il's health. There are reports that he had a stroke. So they're trying to figure that out.
CHETRY: All right. So, also a big day, of course, yesterday at the United Nations.
VERJEE: Yes.
CHETRY: The general assembly in town, and we're hearing from people like Iran's leader, Mahmoud Ahmadinejad.
VERJEE: Yes. I mean, he came out critical of the U.S., slammed the United Nations. But you know what the thing was? He wasn't as belligerent and as aggressive as he normally is. I mean, we didn't hear things like wipe Israel off the face of the earth.
The one thing to point out here is that the Iranian people don't like it when he's that belligerent, many of them don't back home. It's not just Senators Obama and McCain that are campaigning for presidential elections. Guess what? Ahmadinejad is, too. So he's playing back home where the economy is bad, you know, there's high unemployment. People are really frustrated with him, and he's playing it cool here.
One thing he said to Larry King, though, that was very interesting and much more conciliatory was, let's talk to the U.S. Here's what he said.
(BEGIN VIDEO CLIP, "LARRY KING LIVE")
PRES. MAHMOUD AHMADINEJAD, IRAN (through translator): We are interested in having the relations that are friendly and respectful. We prefer that and propose that. But it is for the American government to decide what choices one should make and whatever choice they make we will also, well, take measures and organize our efforts accordingly.
(END VIDEO CLIP)
VERJEE: He's saying that Iran's happy to talk if the U.S. is, Kiran. But the fact of the matter is he's facing an election and they're not going to take any major decision any time before then. And he's not the one that makes the decisions anyway. It's Ayatollah Khamenei who does. Meanwhile, while he's sitting here talking, you know, handing an olive branch here, the U.S. is trying to put more sanctions on Iran over its nuclear program.
CHETRY: And as you talked about, the last time he spoke, the U.S. delegation left...
VERJEE: Yes.
CHETRY: ... as he was giving his speech before the United Nations.
VERJEE: They did that again. They -- everybody left and a lowly note taker was left sitting on chair six, the lowest ranking chair.
CHETRY: Great. All right, Zain Verjee, as always, great to see you. Thanks for being with us.
VERJEE: Thank you.
ROBERTS: Fact or fiction? CNN's truth squad examines John McCain's remarks about victory in Iraq.
And this morning, growing questions about whether or not to bail out Wall Street. What will happen to your money, your savings, your job? CNN's Ali Velshi is answering your questions live on air.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
ROBERTS: Expect to hear more doom and gloom today on Capitol Hill when the president's top money men re-price their assessment of the economy for the House. CNN's Elaine Quijano tells us now that lawmakers were stunned when they first heard just how dire the situation was last week.
(BEGIN VIDEOTAPE)
ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT (voice-over): Last Thursday, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke head to an emergency meeting with congressional leaders. After the cameras leave, the country's top economic officials delivered news so dire it leaves veteran lawmakers speechless.
SEN. CHRIS DODD (D), CONNECTICUT: There was dead silence in the room for maybe five to 10 seconds.
QUIJANO: The news so bad, the next day Dodd refuses to reveal the secret to Wolf Blitzer. But congressional sources say Paulson had predicted the market could collapse within days. Paulson saying credit, the lifeblood keeping the U.S. economy pumping, had frozen. Bernanke warning of a deep recession.
DODD: The oxygen went out of the room. People were stunned by what they heard.
QUIJANO: When they emerged, the mood is somber. Congressional leaders signing on, putting politics aside dealing with a national crisis.
HENRY PAULSON, TREASURY SECRETARY: I think we saw the best of the United States of America and the speaker's office tonight.
QUIJANO: President Bush bluntly spells out his administration's assessment of what could happen without that help.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Massive job losses, devastated retirement accounts, and further erode housing values.
QUIJANO: But as the rescue plan emerges over the weekend, so do big questions and doubts. And Paulson and Bernanke are now forced to provide a glimpse into that secret meeting last Thursday.
DODD: Tell us again the reason why we have to act?
BEN BERNANKE, FED CHAIRMAN: The financial markets are in quite fragile condition, and I think absent a plan they will certainly get worse.
QUIJANO (on camera): Some of the fiercest opposition is coming from the president's fellow Republicans with one congressman comparing the pressure to act now to a pitch from a used car salesman. Still, the White House insists if Congress doesn't act this week, the consequences will be unthinkable.
Elaine Quijano, CNN, the White House.
(END VIDEOTAPE)
CHETRY: Hung out to dry.
(BEGIN VIDEO CLIP)
DEBBIE INGHAM, LOST SAVINGS: I had everything there.
(END VIDEO CLIP)
CHETRY: A woman who says she lost thousands when her bank went belly-up.
(BEGIN VIDEO CLIP)
DEBBIE INGHAM, LOST SAVINGS: I don't think anything's safe anymore.
(END VIDEO CLIP)
CHETRY: How you could also lose thousands as banks get bailed out.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
ROBERTS: Twenty-two minutes now after the hour. With investment firms failing, banks closing, there is a climate of concern about the security of your savings. And while officials keep assuring us that the money is safe at your bank if it's within FDIC limits, did you know there's a catch if your bank goes under?
Here's CNN's Chris Lawrence to explain.
CHRIS LAWRENCE, CNN CORRESPONDENT: John, Kiran, if you think insured by the FDIC means your money is safe even if the bank goes under, think about this. When just one Nevada bank failed, customers lost $20 million in deposits.
(BEGIN VIDEOTAPE)
LAWRENCE (voice-over): Debbie Ingham is out $20,000 after her bank went belly-up.
DEBBIE INGHAM, LOST SAVINGS: But it's OK to bail out these corporations that made bad business decisions? For billions of dollars?
LAWRENCE: Nevada's Silver State was the 11th bank to fail this year.
INGHAM: I was like, oh, my God, I have everything there.
LAWRENCE: Everything, minus that $20,000.
INGHAM: I don't even -- I barely make that in a year in my job. I mean that's how important that money is to me.
LAWRENCE: Debbie is a school bus aide. It has taken 27 years of marriage to save $120,000. When her husband had his identity stolen, she put their money in her name, divided into two accounts. When the bank failed, the FDIC added those accounts and chopped off everything over $100,000.
(on camera): Where do you put your money now?
INGHAM: The more I feel like taking the money out and putting it under the mattress. You know, I don't think anything's safe anymore.
LAWRENCE (voice-over): Financial planners say couples should open a joint account or keep individual accounts at several banks.
LEONARD GOODALL, CERTIFIED FINANCIAL PLANNER: You can go down the street and have another bank or a third bank. Each of those would be separate. If you had accounts on each of them up to $100,000, each of them would be guaranteed.
LAWNRENCE: The FDIC told Debbie she could get a percentage if Silver State's assets are sold.
INGHAM: And that's -- that's if. That's if they sell anything. When could take years.
LAWRENCE: Debbie's money is part of $20 million in uninsured deposits. It could have been worse. Customers withdrew a quarter of a billion dollars in the two months before Silver State failed.
(END VIDEOTAPE)
LAWRENCE: The bank did have somewhat famous ties. Senator John McCain's son serves on the board of directors for Silver State bank. He was part of the auditing committee that would oversee the books. But Andrew McCain resigned from that position for personal reasons just two months before the bank collapsed -- John, Kiran.
ROBERTS: Chris Lawrence reporting for us this morning. Chris, thanks so much.
And how does the current economic crisis affect you, your future, your job? CNN's senior business correspondent Ali Velshi answering your questions live in about 10 minutes' time. Just go to CNN.com/am to submit your question or ask Ali.
CHETRY: Separating fact from fiction.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Victory in Iraq is in sight.
(END VIDEO CLIP)
CHETRY: The truth squad takes up John McCain's assessment of the war in Iraq. And do the commanders on the ground agree with what he's saying?
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: Welcome back to the "Most News in the Morning." After trying to convince a skeptical Senate, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke return to Capitol Hill today. It will be a second round of literally trying to sell this bailout plan. They'll appear before the House Financial Services Committee. Paulson told senators yesterday that failing to act could trigger a severe recession. Lawmakers, though, making sure that it's known they're not interested in a rubber stamp.
(BEGIN VIDEO CLIP)
HENRY PAULSON, TREASURY SECRETARY: I feel great urgency and I believe it's got to be done this week.
SEN. CHRIS DODD (D), BANKING COMMITTEE CHAIRMAN: I understand speed is important, but I'm far more interested in whether or not we get this right. There is no second act to this.
(END VIDEO CLIP)
CHETRY: Joining us to talk about the bipartisan push back, Jeffrey Sachs. He's a world-renowned economist, a special adviser to the United Nations on global poverty issues as well. Thanks so much for being with us this morning.
So you really have a front seat to this and you're taking a look at everything that's been going on. What do you think needs to be included in any bailout package?
JEFFREY SACHS, SPECIAL UNITED NATIONS ADVISER: Well, Paulson clearly did not succeed yesterday. There's huge skepticism because they said give us a blank check, $700 billion. And Congress rightly said, what about the taxpayers, what about the homeowners, what is this plan exactly?
So, so far the government has not come up with a strategy. This is a little bit shocking. The banks need to be recapitalized. They've lost a lot of money, but the plan doesn't say how that would be done. Homeowners need some relief because there would be massive foreclosures unless there is a strategy. But the plan doesn't say how that would be done.
So, right now, we don't have a viable proposition. All we have is the government saying give us $700 billion. We're going to possibly bail out those same firms under investigation by the FBI. Something doesn't make sense right now.
CHETRY: Right. You know, there has been a lot of praise on Treasury Secretary Henry Paulson saying that he really helped orchestrate a lot of these bailouts that have really helped stabilize the markets. Why, then, if he's so smart and if the Fed chair is smart and they're able to look ahead and see what needs to be done, are they including things or leaving out things that are making this bill difficult to swallow? I guess you could say on Capitol Hill, the lack of oversight, saying that no one can question them about it, that judges won't be involved in figuring out bankruptcies?
SACHS: The bill itself was shocking. Three pages only for $700 billion. And one of the clauses was literally no questions asked.
CHETRY: Right.
SACHS: They're scrambling. They're kind of making it up as they go along, and they have not come up with answers that are satisfying on the basic questions. Will the plan work? How much does it cost the taxpayers? Why is this not simply a bailout of those who don't deserve a bailout?
Those are the big questions. That's what Congress was rightly asking. That's what the treasury and the Fed have not answered.
CHETRY: Can they answer it? They don't know if it's going to work.
SACHS: Well, it's not just that. They have to give a reason why it might, but they don't have content yet. So I think it's premature to say $700 billion for something without content.
CHETRY: Right.
SACHS: That's the big problem. The taxpayers are saying, what is going on? Wall Street was taking tens of billions of dollars of bonuses every year. Now, there's investigations about wrongdoing.
Also, the private market is solving some of this. Warren Buffett put in $5 billion into Goldman Sachs last night. Japanese banks are buying assets.
So, the private sector is adjusting. The government doesn't have a plan. Congress is saying, why are the taxpayers being brought in with this huge sum but without any clear strategy?
CHETRY: All right. And we'll see if they can answer those questions. I want to ask you quickly, what type of trickle-down effect this has? As we said, you are the liaison for the Global Poverty Initiative. What happens when an industrialized superpower like the U.S. is going through this type of crisis? What is the effect in world poverty?
SACHS: This is the week that the United Nations is considering the millennium development goals to fight poverty, hunger and disease. But when President Bush came to the United Nations yesterday, he didn't even mention them. So this is the biggest effect, it just diverts attention.
There are nearly 10 million children who will die this year of their poverty, and the world promised to do something about it. But again, attention is being diverted away. It doesn't make sense because the cause of solving the problems of the extreme poor are a tiny, tiny, tiny fraction of what this bailout is about. But because of the crisis, we don't see the poor, we don't see the dying, we're not giving help. President Bush didn't even mention them.
CHETRY: All right. A lot of issues that need to be tackled for sure. Jeffrey Sachs, thanks so much for joining us this morning.
SACHS: Great to be with you. Thank you.
ROBERTS: 31-1/2 minutes past the hour now. A check on some of our top stories for you this morning. The FBI investigating four financial firms at the heart of the crisis on Wall Street. The Feds are looking into possible fraud at Fannie Mae, Freddie Mac, Lehman Brothers and insurance giant AIG that may have caused their finances to tank. The investigation focuses on whether company executives misled investors about the financial strength of their institutions.
A deadly train crash in Los Angeles triggers congressional action. House and Senate negotiators approving a railroad safety reform bill that requires new technology to prevent crashes and limits the number of hours that engineers can work. 25 people were killed earlier this month when an L.A. commuter train collided with a freight train.
And the United Nations warning North Korea is making good on a threat to restart its nuclear program. The International Atomic Energy Agency says the communist nation plans to refuel its reactor at Yongbyon within a week. North Korea stopped disabling that reactor last month to protest not being removed from Washington's list of countries that sponsor terrorism.
CHETRY: And back to our top story now -- the White House's top economic team heading back to Capitol Hill this morning to press Congress to pass the biggest bailout plan in history. And it comes as the companies that pushed Wall Street to the brink are now under investigation by the FBI for possible mortgage fraud.
Meantime on the campaign trail, both Barack Obama and John McCain have outlined what they think the $700 billion rescue plan should look like. CNN's Ed Henry joins me now with more on this.
Hi, Ed.
ED HENRY, CNN CORRESPONDENT: Well, good morning, Kiran. You know, since we talk all the time about where the candidates have sharp differences on various policies. In this case, it's really remarkable how similar they are approaching the financial crisis. Neither one wants to get locked down on a specific plan right now. They realize the $700 billion bailout is still a moving target on Capitol Hill.
So what they've just laid out are basically principles. And those principles are not that far off. They're both -- Barack Obama and John McCain saying that taxpayers have to get recouped on some of this money in the end. They're also saying there needs to be some accountability. Some sort of oversight to make sure that this money is spent properly. And both candidates are beating up on Wall Street. Take a listen to how they're both approaching it.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: There's been some talk that some CEOs may refuse to cooperate with this plan if they have to forego multi-million dollar salaries. I cannot imagine a position that's more selfish and more greedy at a time of national crisis.
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: The senior leaders of any firm that is bailed out should not be making more than the highest paid government official.
(END VIDEO CLIP)
HENRY: Now neither one wants to come out and basically flat-out oppose this deal because they realize that could have consequences and make the crisis worse. Neither wants to come out and flat-out support it just yet. This is basically President Bush's bailout plan, Kiran, and neither wants to be that closely tied to the White House right now.
CHETRY: The other interesting thing is they're both senators. Do they need to get off the campaign trail and try to get back to work with some of their colleagues on hammering out what would be the best bailout plan?
HENRY: Normally, you'd think that they would. But neither really wants to be tied to Washington right now because it's so unpopular to be talking about Washington. So neither wants to rush off the trail and go to Washington. And also, some people are saying this bailout could come before the Senate on Friday. What's Friday? The first presidential debate down in Mississippi. Unlikely either is going to leave Mississippi to go to Washington.
CHETRY: The timing -- you're right. It's sort of convergence of all of this happening at once.
HENRY: All together.
CHETRY: Yes. Ed Henry, great to see you. Thanks. HENRY: Thanks, Kiran.
ROBERTS: With the economy facing unprecedented challenges, there are lots of questions about your money and your retirement. This morning, our Ali Velshi answering your questions.
And David Blaine is at it again, turning his world upside down with a new stunt. Our Jeanne Moos got to hang out with him. You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": Strippers in New York City are hurting because all these bankruptcies -- you know, on Wall Street mean fewer customers and smaller tips. Now what is this country coming to when young women with no education and fake boobs can no longer make ends meet. You know what I'm saying. We have to help these women. I suggest a bailout.
(END VIDEO CLIP)
CHETRY: Welcome back to the "Most News in the Morning." We're "Minding Your Business" and answering your questions, possibly even answering Jay Leno's question, what is this world coming to when the strippers might need a bailout? Well, you can ask cnn.com/am anything you want of Ali Velshi and he joins me now with more answers?
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: With good fortune, we didn't actually get that question in our e-mail but we're getting a lot of them. They're posting to the blog. I want to run through some of these as quickly as possible.
Eric from Connecticut says, "Here's two questions for you. Doesn't the size of the bailout guarantee big cuts to social security benefits? Isn't this bailout trying to save the retirement plans of the rich at the price of sacrificing retirement plans of the poor?"
Here's the thing. When you look at these two candidates' plans and how much they're going to cost, they are going to increase the cost of the national debt. That was before this bailout came out. Now with this bailout, we are looking at big jumps in the size of the national debt, a bigger jump under John McCain because of the tax cuts that he wants for everybody, a smaller jump under Barack Obama. But that definitely cuts into programs, and so for social security, it could be one of those programs that it cuts into.
I've got one from Steve in Quincy, Mass. He says, "How does this bailout help the middle-of-the-road Joe with a stable, manageable mortgage and car loans? How will it affect us if the bailout doesn't happen?"
First question, Steve. If the bailout happens and you have a manageable loan and a car loan, it will not affect you, particularly if your loan is a fixed rate. Now, if this bailout doesn't go through, here's the problem. There are many companies that depend on getting loans in order to survive and pay their daily operations. That may stop happening. And that means there are some companies that may not be able to make payroll. That may result in greater job layoffs.
I want to answer another question from Kevin in Santa Clara, California. "When officials are talking about the government buying problem mortgage investments, will the government be paying full price? Is it possible if they pay pennies on the dollar, that in the long run, the expense of the bailout could be minimal?"
Well, that's what the Treasury is hoping for. They will not be paying full price for these bad loans. They'll buy them at some sort of a discount, hold on to them, sort of repackage them, sell them hopefully at a profit. There are estimates that the taxpayer could profit from this. Worst case scenario is that we may lose some money but we are not likely to lose the full exposure. Let's say it's $700 billion. Keep your questions coming in. I'll keep answering them.
Kiran?
CHETRY: Sounds good, Ali. Thank you.
ROBERTS: John McCain says that victory in Iraq is finally within sight. The CNN "Truth Squad" and its fearless leader, Alina Cho, standing by with a fact check on that.
Back in the saddle. Lance Armstrong live on his decision to get back into cycling, and why it's not just about the bike. You're watching the "Most News in the Morning."
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ROBERTS: Sun just coming up now over Capitol Hill. It's 58 degrees and partly cloudy but that Capitol dome today is going to be more like Mount Etna. A lot of white-hot rhetoric will be flying around on the House side, that all important hearing today on the $700 billion bailout. Henry Paulson and Ben Bernanke, the Fed chairman, testifying before the Financial Services Committee. We'll have all the news on that for you this morning.
Welcome back to the "Most News in the Morning." 16 minutes now to the top of the hour. And we are checking in right now with the "Truth Squad," keeping the campaigns honest, running traps on statements and ads, and sorting fact from fiction for you. Alina Cho looking into the war in Iraq and immigration today.
Good morning, Alina.
ALINA CHO, CNN GENERAL ASSIGNMENT CORRESPONDENT: Hey, there, John, good morning to you. We are starting this morning with John McCain's assessment of the war in Iraq. Now, there's no doubt that by now you've heard him talk about his early support of the so-called surge and the progress it helped bring to Iraq. But McCain often takes that statement one step further. Take a listen to what he said on Sunday at a meeting of the National Guard Association. (BEGIN VIDEO CLIP)
MCCAIN: Because of the sacrifices and perseverance of all the troops, active duty guard and reserve, victory in Iraq is in sight, my friends. Thanks to you and thank God.
(APPLAUSE)
(END VIDEO CLIP)
CHO: Well, it sounds like a bold statement. Victory in Iraq is finally in sight. Is it fair to say that? Well, we turned to the men running the war and what they're saying. First here's Defense Secretary Robert Gates testifying yesterday in front of the Senate Armed Services Committee. Take a listen.
(BEGIN VIDEO CLIP)
ROBERT GATES, DEFENSE SECRETARY: Our military commanders do not yet believe our gains are necessarily enduring and they believe that there are still many challenges and potential for reversals in the future.
(END VIDEO CLIP)
CHO: All right. Well, Gates also said that he sees the U.S. being involved in Iraq for years to come. Albeit in quote, "changing and increasingly limited ways." Now next, we hear from the former top commander in Iraq, General David Petraeus. In a letter he sent to troops just last week, Petraeus said, quote, "Our tasks in Iraq are far from complete and hard work and tough fights lie ahead."
No one using the word victory just yet as John McCain is. Next up the current commander in Iraq, General Ray Odierno also speaking last week. Take a listen.
(BEGIN VIDEO CLIP)
GEN. RAYMOND ODIERNO, COMMANDER, MULTINATIONAL FORCE-IRAQ: We are in a fragile state now. What I want to do is build it to a more stable, stable state. And I think we're in the process of doing it, it just takes some time and it is slow.
(END VIDEO CLIP)
CHO: Not necessarily enduring tough fights ahead, fragile state? Those are the things you just heard. We might be hearing talk of progress but the top commanders also temper that by saying this war is far from over and victory far from certain. So, to the "Truth Squad" verdict -- a new one this morning -- this one -- in dispute.
McCain says he sees victory in sight, but top U.S. commanders are being much more careful in choosing their words saying progress, but still a ways to go. And of course, as always, we are taking a look at both sides. In the next hour, John, we're going to be looking at an Obama ad that's been playing on Spanish radio stations. The ad says that John McCain abandoned us on immigration. Is it true? We're going to have the answer in the next hour.
John, back to you.
ROBERTS: Of course, John McCain insisting that he does want comprehensive immigration reform but there is a need to secure the border first. So, it would be interesting to hear what you've got to say.
CHO: That's right. We're going to have a new "Truth Squad" verdict in the next hour, too, John. So, stay tuned for that.
ROBERTS: Looking forward to that.
CHO: All right.
ROBERTS: Important work you're doing for us. Alina, thanks so much.
47 minutes after the hour. You're watching the "Most News in the Morning."
CHETRY: Suspended animation.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: This guy is crazy!
(END VIDEO CLIP)
CHETRY: Upside down and usually five stories up. Jeanne Moos hangs out with David Blaine.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I need to make a living somehow.
(END VIDEO CLIP)
CHETRY: You're watching the "Most News in the Morning."
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CHETRY: Welcome back. Well, imagine hanging upside down for 2- 1/2 days. CNN's Jeanne Moos has the ups and downs of David Blaine's newest illusion.
(BEGIN VIDEOTAPE)
JEANNE MOOS, CNN NATIONAL NEWS CORRESPONDENT (voice-over): David Blaine has survived water, ice, burial, and now -- hanging around upside down?
(on camera): This is your view of the world now.
(voice-over): OK, it may not look like much, but you try hanging upside down for 2-1/2 days. VOICE OF UNIDENTIFIED MALE: Five stories high.
MOOS: Actually, it was usually closer to five feet. To pass the time dangling above Central Park, Blaine poses with fans. He signs autographs. Is he reading a newspaper?
UNIDENTIFIED FEMALE: When I saw him reading the paper -- I said this guy is crazy.
MOOS: Actually, that was just a photo-op for the paper he was holding. Blaine is constantly giving interviews upside down. Kelly Ripa had the most unusual one.
KELLY RIPA, TALK SHOW HOST: How are you? Hello.
MOOS: When they threw it back to Regis in the studio --
UNIDENTIFIED MALE: Incidentally, David, check me out. This is a piece of cake. What's the problem?
MOOS: The problem say doctors could be stroke or blindness.
(on camera): Your eyes are definitely bloodshot.
DAVID BLAINE, MAGICIAN AND ENDURANCE ARTIST: I think they are a little nasty.
MOOS (voice-over): So, don't try this at home like a Pittsburgh radio D.J. known as Bubba did.
UNIDENTIFIED MALE: Are you an illusionist or a magician?
UNIDENTIFIED MALE: Bubba, I'm an idiot.
MOOS: Within minutes Bubba turned red, felt dizzy and soon couldn't take it anymore.
UNIDENTIFIED FEMALE: He's done. He's out.
UNIDENTIFIED MALE: He's out. How long did he last?
MOOS: A mere 16 minutes. Now imagine 2-1/2 days. So Blaine does get to be upright for bathroom breaks, to attend to his catheter. He stopped eating solids ten days ago to eliminate elimination. There he hangs night and day, still sharp enough to try and steal my watch as he held my arm to stay steady.
(on camera): You've undone my watch. You're trying to steal it, aren't you?
BLAINE: I need to make a living somehow.
MOOS: Yes.
(voice-over): He does crunches to lift his head upright and moves his legs around to help the circulation. Houdini sometimes worked upside down but he was trying to get out of a straight jacket as fast as possible. Watching a guy dangled for hours? Not quite so riveting. At least we can ask him size of questions.
UNIDENTIFIED FEMALE: How's it hanging?
UNIDENTIFIED MALE: How's it hanging?
MOOS (on camera): How they hanging? No, no, no, that's not right.
(LAUGHTER)
MOOS: No, no, I didn't mean they, I meant -- no, no.
BLAINE: Let's hear Dave (ph).
MOOS (voice-over): It's Jeanne Moos, CNN, New York.
(END VIDEOTAPE)
ROBERTS: Wiped out.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We have to have (INAUDIBLE).
(END VIDEO CLIP)
ROBERTS: Two weeks after Ike, residents return to Galveston and wait for their bailout.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I can't do this on my own.
(END VIDEO CLIP)
ROBERTS: And, loan sharks.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I alone sold almost a quarter of a million dollars.
(END VIDEO CLIP)
ROBERTS: Preying on people who can't afford the cost of money.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Every customer that calls to me is marked.
(END VIDEO CLIP)
ROBERTS: The ex-customer reps who say a credit card company juiced the public. (COMMERCIAL BREAK)
ROBERTS: Another picture of the Capitol building this morning which is going to be the scene of a lot of interesting comments. This afternoon 2:30, the House Financial Services Committee hears from Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson. Day two of hearings on Capitol Hill on the $700 billion bailout.
Welcome back. We're here with the "Most News in the Morning." That bailout plan dominating discussion on the campaign trail as well. Both candidates want to repay the American people who will foot the bill.
(BEGIN VIDEO CLIP)
OBAMA: We should institute a financial stability fee on the entire financial services industry to repay any losses to the American people.
MCCAIN: There must be a path for taxpayers to recover the money that's put in to this fund. The taxpayers' dollars.
(END VIDEO CLIP)
ROBERTS: Joining me now to talk about the impact of the bailout on the presidential race is Tara Walsh. She is the deputy editorial page editor at the "Washington Times," also a CNN political contributor. And "Washington Post" reporter and CNN contributor, Dana Milbank.
Good morning to both of you.
TARA WALL, CNN POLITICAL CONTRIBUTOR: Good morning.
DANA MILBANK, CNN POLITICAL CONTRIBUTOR: Good morning.
ROBERTS: So what impact, Dana, is this having on the campaign trail? And let me preface the question by saying that the "Washington Post," your esteemed organization has got a new poll out along with ABC News that has Barack Obama now nine points out in the front, 52 percent to 43 percent.
MILBANK: Yes. There are signs that John McCain's problems are ballooning like one of those exploding mortgage rates right at this moment. That is an astonishing poll. Not only is Obama ahead by nine points, above 50 percent in the poll, 14 percent of the country thinks we're heading in the right direction. Those are presumably people who did not turned on their television or read a newspaper in a while. And it's impossible for anybody, including John McCain who's been a magician so far, to withstand that sort of series of bad news.
ROBERTS: You know, Tara, the best the times the poll is a snapshot of a moving picture. It was a good week for John McCain a couple of weeks ago. Obviously, a bad week for him now. But he has now gone from being a deregulator, self-proclaim deregulator, now to wanting new regulation. Can he change his spots? Can he change 180 degrees just like that? And what's the impact on conservatives if he were to either vote for this bailout plan or not vote for it?
WALL: Well, I think, you know, when the American taxpayer looks at the fact that this is in one fell swoop with about 30 seconds with the signing of a pen, we will have signed over more than we spent in Iraq in six years. That's untenable to conservatives, not just conservatives but the American public.
And quite frankly, I think that, you know, with that in consideration John McCain should have stuck with his maverick gut position in the first place when he said that this was untenable, essentially what he said when he opposed it and said we don't need a bailout. Sticking with that position probably would have been a smart thing. Republicans are going to pay for this politically, and that will include John McCain. That is including John McCain.
ROBERTS: When I say not vote for -- I mean, not vote at all. There are a lot of conservatives who want to see him take a position on this and vote against it.
WALL: That's right. Well, our paper is calling today. Our editorial page is saying no bailout and calling for him to support a no bailout plan.
MILBANK: And John McCain really has that chance right now. I mean, all signs are that if he shows up and votes no on this, the Democrats will join him and this thing will go down. Now, that may lead to him becoming the next Herbert Hoover and this becoming the John McCain depression.
WALL: Well, he is the maverick.
MILBANK: But he can -- right, this is a chance for him to take a stand. It's as if he is the president here. He gets to decide whether this bailout goes through.
ROBERTS: I mean, in the end, is the bailout going to go through. As you said, nobody wants to be the Herbert Hoover of this generation. Nobody wants to be left holding that bag of potentially helping to take the United States into severe recession.
(CROSSTALK)
MILBANK: It's hard to imagine that they wouldn't let to get through. But every day you see more and more people piling on.
(CROSSTALK)
WALL: And it's disturbing that Democrats are piling on as well on top of the pork barrel spending. Some of the things that are not even a part of the original package. I don't know. And now you're starting to see some Republicans take a stand against. This gentleman had some very good comments. I think, you know, that conservatives to deal with.
(CROSSTALK)
ROBERTS: (INAUDIBLE) as well.
WALL: Yes. Yesterday --
(CROSSTALK)
ROBERTS: Well, they felt like they woke up in Paris.
(CROSSTALK)
WALL: Absolutely. So, I think it is going to be a hard task.
ROBERTS: And what about Cheney? Cheney went up to The Hill with Josh Bolton and other people from the administration in toe to talk to the caucus. It was described in Politico as a bloodbath.
MILBANK: There was all sign, it was a real disaster there. So they sent Josh Bolton, formerly of Goldman Sachs up there. Now they're going to try again by sending Secretary Paulson, also of Goldman Sachs, up there to talk to these House conservatives and they are not happy at all.
ROBERTS: Goldman Sachs seemed to be the one bank that people have some faith in. Warren Buffett invested $5 million in it last night. So, we'll see.
WALL: Well, he's the only one -- anyone seems to have faith in right now.
MILBANK: He's the only one who has any money.
ROBERTS: And why isn't he saying anything yet. Tara Wall, Dana Milbank, good to see you. Thanks so much.
WALL: Thank you.
ROBERTS: Kiran.
