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American Morning
FBI Now Investigating Major Wall Street Firms; Paulson Calls for Congress to Pass Bailout Plan; Sarah Palin's Undergoes Foreign Policy Crash Course; Residents Return to Galveston to Rebuild Their Lives; Banks Behave Badly
Aired September 24, 2008 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KIRAN CHETRY, CNN ANCHOR: Well, it is just coming up to 7:00 here on the East Coast. Some stories we're following for you this morning. Galveston, Texas residents finally allowed to go back home and many of them are finding out just how badly their homes and businesses were damaged by the hurricane two weeks ago. More than 600,000 people still have no power along the Texas Coast.
And more help from overseas to help the global financial markets and ease America's money crisis. The Federal Reserve says it made a deal with the central banks of Australia, Denmark, Norway and Sweden. The Fed will end up with $30 billion that's available to loan to banks here at home. This follows last week's deal with world banks worth $247 billion.
And Freddie Mac's new CEO will make a base salary of close to $1 million, but his final compensation package is still being worked out by the Fed. This comes after the government seized the company along with Fannie Mae earlier in the month. By the way, the former CEO, Richard Syron, was ousted as part of the takeover. He received nearly $20 million in compensation last year from the company.
Sources tell CNN the FBI is now investigating some major names in America's financial crisis. Our senior business correspondent Ali Velshi joins us now with more on what this investigation could mean and what they maybe will find in this situation.
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Yes. Good morning, Kiran. We are talking about companies we've been talking about for a long time -- Fannie Mae, Freddie Mac, Lehman Brothers and AIG. The sources tell us that the FBI has added these companies to its list of companies that are being investigated. That list is now 26 companies long. It includes Countrywide Financial.
Now, we do not know if there are specific allegations in this -- in these companies that are being investigated. What we do know is the FBI would be looking for a misrepresentation of information, whether that was to banks who were buying the loans or on the behalf of mortgage borrowers, or to stockholders. So that's what we're looking at right now. They're also 1,400 real estate lenders who the FBI says are under investigation, Kiran.
CHETRY: Ali Velshi for us looking at that today, and we'll find out more details perhaps as this investigation gets under way. Thanks. JOHN ROBERTS, CNN ANCHOR: As we've been talking about this morning, the nation's financial leaders return to Capitol Hill today for a second day of hearings, 2:30, this time before the House Financial Services Committee. They're finding out that the government's $700 billion Wall Street bailout proposal is a tough sell on both sides of the aisle. Here's CNN Mary Snow with that.
(BEGIN VIDEOTAPE)
MARY SNOW, CNN CORRESPONDENT (voice-over): It was the first public grilling since proposing what may be the largest government bailout ever.
HENRY PAULSON, TREASURY SECRETARY: I share the outrage that people have. It's embarrassing to look at this. I think it's embarrassing for the United States of America.
SNOW: Treasury Secretary Henry Paulson, the Wall Street veteran, and Ben Bernanke, the academic-turned-Federal Reserve chairman, urged Congress to act quickly on the $700 billion rescue plan. And explained why the Fed chairman summed it up this way.
BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: I do believe we need to act to stabilize the situation which is continuing to be very unpredictable and very worrisome.
ALAN BLINDER, FORMER FEDERAL RESERVE VICE CHAIRMAN: I think if you translate that from Fed speak to English, you're hearing deep concerns. I mean, Federal Reserve chairs are supposed to be islands of tranquility, exude confidence.
SNOW: Both men stress the need to keep credits markets functioning to keep banks working and businesses flowing. And if not --
BERNANKE: Jobs will be lost. The unemployment rate will rise. More houses will be foreclosed upon. GDP will contract.
SNOW: Banks need to keep lending to keep businesses running and keep people in their homes. One economist illustrates a worst case scenario for consumers if, say, credit markets deteriorate.
BLINDER: If those markets were in the kind of shape that the mortgage market is in now, and they're not, for sure they're not -- people would be getting notices from their banks, I'm sorry, you can't use your credit card anymore.
SNOW: With the sense of urgency came questions over the anger that taxpayers are getting socked with footing the bill.
PAULSON: 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.
SNOW: We asked an economist how much taxpayers will be on the hook. MICHAEL MUSSA, PETERSON INSTITUTE: It's impossible to say, give a precise figure. But if we had a severe recession, we're talking about losses in the economy in the hundreds of billions, if not trillions of dollars.
SNOW: Mary Snow, CNN, New York.
(END VIDEOTAPE)
CHETRY: And now, our business correspondent Christine Romans joins us now with a look at just how much we really could pay and why it's causing such a holdup on Capitol Hill. I think no one wants to give this blank check because they're not exactly sure what it's going to be used for.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: It's a lot. And it's a lot of money. It's a lot of money. And the treasury secretary and the Fed chairman are urgently, urgently pushing Congress to bail out Wall Street and avert a crisis they say for every American. But on Capitol Hill, they're pushing back.
(BEGIN VIDEOTAPE)
ROMANS (voice-over): It's so much money, it's hard to comprehend. A monster Wall Street bailout. Some $700 billion.
Think of it this way -- that's $2,333 for every single person in America. At the first public hearing aimed at understanding and solving the crisis, pushback from all sides.
SEN. MIKE ENZI (R), WYOMING: The treasury and the Federal Reserve have asked us to cut them the biggest bailout check in history, and that money will be handed out to the same banks that put us in the mess to begin with.
ROMANS: From Republicans who want government out of business, and who detest a taxpayer bailout for Wall Street's bad behavior.
SEN. JIM BUNNING (R), KENTUCKY: This massive bailout is not a solution. It is a financial socialism and it's un-American.
ROMANS: To Democrats who want more homeowner protection. And like Senator John Tester who called for more time to deliberate what is the most important financial overhaul since the Great Depression.
SEN. JOE TESTER (D), MONTANA: Why do we have one week to determine $700 billion that has to be appropriated or this country's financial systems go down the pipes?
ROMANS: And on the House floor, a burst of outrage at the Bush administration.
REP. JIM MCDERMOTT (D), WASHINGTON: They used fear to go to war. They used fear to take away your civil rights and spy on you. And now, they're using fear of financial collapse and they are just trying to scare you into getting them to do whatever they want. ROMANS: The treasury secretary is urging quick and clean passage of the bailout. Without it, he says, this is what's at stake.
HENRY PAULSON, TREASURY SECRETARY: The American family's financial well being, the viability of businesses, both small and large, and the very health of our economy.
(END VIDEOTAPE)
ROMANS: There is no doubt this is a historic moment. It is the largest government involvement in the financial sector since the catastrophe of the Great Depression. The bailout could push our national debt to the highest level since the mid 1950s. That's when the United States was digging out from World War II.
Consider that, our mile markers here are the Great Depression and World War II -- two events that almost destroyed this country but ultimately reshaped it forever.
CHETRY: And so, there are some who were in the school of you have to let it crash for this to change.
ROMANS: Are you just pushing off the inevitable? Do you have to have some kind of violent reaction in what is essentially a free market and then you pick up the pieces after that? What if you're just pushing off the pain in the housing market by bailing out Wall Street? But you heard from the treasury secretary and the Fed chief. They say there's no alternative.
CHETRY: It really is scary. And we're going to continue to follow it this morning. In fact, a little bit later, we're going to be talking to Senator Richard Shelby who also feels that this is not the right move.
Christine, thanks.
ROMANS: All right.
ROBERTS: No question, it's issue number one and hundreds of questions are coming in this morning about what the bailout means for your money. Our Ali Velshi has been monitoring it all morning. He joins us now. What are you hearing, Ali?
VELSHI: We are getting a lot of questions, a lot of really excellent questions about your investments and about how this bailout can affect you. We're going to try and get through as many of them as possible. So head to CNN.com/am. E-mail us your question. You just post it on the blog there and I will answer as many as possible right at the half-hour.
CHETRY: Back in the saddle. Lance Armstrong live on his decision to get back into cycling and why it's about more than winning another race.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: Welcome back to the "Most News in the Morning." Sarah Palin's foreign policy crash course continues today with six more meetings. John McCain's VP pick will be meeting with President Mikheil Saakashvili of Georgia, as well as Ukraine's President Viktor Yushchenko. Also the prime minister of India, Manmohan Singh, as well as rock star Bono. She's also going to be talking to Iraqi President Jalal Talabani, as well as the new president of Pakistan, Asif Ali Zardari.
So for more on how Palin's first big day at the U.N. went, I'm joined by CNN's Ed Henry this morning.
Good to see you.
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Good to see you, Kiran. It's interesting.
CHETRY: So, how did it go?
HENRY: Well, it's her first time to sit down with a head of state. It also was yesterday the first time that she ever got an intelligence briefing as a vice presidential candidate. All of this from the McCain camp aimed at showing she's ready for prime time.
(BEGIN VIDEOTAPE)
HENRY (voice-over): Sarah Palin feels like she's acing her first big foreign policy test, especially after a sit-down with Henry Kissinger where she saw his tutelage on last month's crisis in Georgia.
HENRY KISSINGER, FORMER U.S. SECRETARY OF STATE: I'm going to give him a lot of credit for what he did in Georgia.
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: Yes, yes. Good.
HENRY: The carefully choreographed photo ops were largely a substance free zone, including the one-on-one with Afghan President Hamid Karzai. The only drama, Palin tapping her heart as she learned about the president's baby boy.
PALIN: What is his name?
HAMID KARZAI, AFGHAN PRESIDENT: Mirwais (ph). Mirwais (ph), which means, "The Light of the House."
PALIN: Oh, nice.
HENRY: Low risk for Palin. Yet the McCain campaign tried to make it easier, initially refusing to allow reporters to join cameras in the Karzai meeting. But the five U.S. television networks threatened not to use any of the video without the presence of a reporter who might ask Palin questions. So the McCain camp backed down and allowed a reporter in. PAUL BEGALA, DEMOCRATIC STRATEGIST: If your purpose is to show that Governor Palin can hold her own in a meeting with major international figures, then let her hold her own. Don't exclude the press, don't keep questions from being asked, don't coddle her.
HENRY: But Republicans say despite a mountain of media criticism, Palin is coming across as poised with the public.
KEVIN MADDEN, REPUBLICAN STRATEGIST: The enduring image that the McCain campaign wants left with voters is somebody who can close the stature gap, somebody who's going to stand there with world leaders and essentially fill in that void in her resume.
(END VIDEOTAPE)
HENRY: And those meetings today with the president of Iraq, president of Georgia, they'll actually be joint meetings with Senator John McCain so it gives Sarah Palin an opportunity to actually be with the running mate. So it's not just her solo, Kiran.
CHETRY: Yes. And what a varying group of people she gets to talk to. India's prime minister and Bono.
HENRY: Kind of throw him into the mix. You know, he works on our world poverty issues. So you deal with heads of state and a rock star.
CHETRY: How about that? All right. Ed, good to see you. Thanks.
HENRY: Thanks, Kiran.
ROBERTS: Coming up now on 14 minutes after the hour. The return to Galveston. Many Texans allowed home for the first time this morning. Some may have nothing left to come home to. Today, their fears that the economy could slow the recovery.
And, the closer. Michelle Obama has earned that reputation on the campaign trail. Whether she has the power to keep Clinton supporters on their side. That's another question on the "Most Politics in the Morning."
(COMMERCIAL BREAK)
CHETRY: And a quick reminder for you, our Ali Velshi is blogging this morning on issue number one. He wants to answer your questions that you have about this massive federal bailout.
If you have one or anything about what's been going on with the economy, e-mail us, CNN.com/am, and that's where you can find the link to e-mail your question. And Ali is going to be answering as many as possible right after the half-hour.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK) ROBERTS: Daybreak over in Norfolk, Virginia, for you this morning. Right now, it's partly cloudy, a high of 63 degrees. Today, it's going to be windy with a high of 72 and there is a bad weather system developing in the Carolinas expected to come up probably later on today, early tomorrow. So expect some rain either late today or in the overnight hours.
National news this Wednesday morning. Two pilots suspended by the FAA for sleeping during a landing can now work again. The FAA says they completed their suspensions two weeks ago. Hawaii's Go Airlines fired the two men for the incident that occurred back in February, but the FAA says it does not know if they were picked up by another carrier.
More than a week after Hurricane Ike, drivers across the southeast still cannot find gasoline in some places. One driver in Atlanta says one out of every five or six stations hasn't any to sell. Another SUV driver said he called ahead to ask a gas station if it had gas and if it did, could it hold some for him.
Hurricane Ike shut down or cut work at more than a dozen Gulf Coast refineries. That's what led to the shortage.
Some Galveston residents still have no gas, power, water or roofs, even windows as they finally come home after Hurricane Ike. These are new pictures just in to CNN. People being allowed to return just this morning.
And far away from Wall Street, hurricane victims in dire need are wondering if a bailout is headed their way. They say they need billions, too.
CNN's Ed Lavandera followed some residents back into town for the first time, and he joins us now with that -- Ed.
ED LAVANDERA, CNN CORRESPONDENT: John and Kiran, the massive government bailout in the aftermath of Hurricane Ike has left a lot of business owners here in Galveston worried that this double whammy could slow down the rebuilding.
(BEGIN VIDEOTAPE)
GERRY DEPINGRE, GALVESTON BUSINESS OWNER: This was really a beautiful shop. I mean, it's a great little store.
LAVANDERA (voice-over): Gerry Depingre's Galveston surf shop is wiped out and so is his surfer attitude. He's not sure his business of 24 years will survive.
DEPINGRE: But we're going to need some help. We have to have help, man. I mean, I can't do this on my own.
LAVANDERA: Depingre's surf shop sits in Galveston's historic tourist district known as "The Strand." It took on eight feet of floodwater. Tourism makes up about a third of this island's economy.
How long do you think you can go?
DEPINGRE: Without any income coming in?
LAVANDERA: Right.
DEPINGRE: I don't know. I really don't know, man.
LAVANDERA: Galveston officials say they're confident the island economy will rebound even if all the promised federal money doesn't come through.
JEFF SJOSTROM, GALVESTON ECONOMIC DEVELOPMENT PARTNERS: I think we have key financial partners, investors, developers and a willing business community that is going to come together and figure a way out of this.
LAVANDERA: But the storm also decimated key areas of Galveston's tax base, many of the pricey beach homes on Bolivar Peninsula and the Galveston beaches may not be rebuilt.
JARUE MANSFIELD, GALVESTON BUSINESS OWNER: This carpet was green and white.
LAVANDERA: And with banks struggling to survive, Jarue Mansfield worries she might not be able to pay off her business loan while she tries to rebuild her woman's shoe boutique. It all adds to the anxiety.
MANSFIELD: I'm feeling that right now, you know, not knowing what's going to happen. If we can recoup just enough to pay back, you know, our business loan, that would be fantastic right now.
(END VIDEOTAPE)
LAVANDERA: Historically, areas hard hit by hurricanes experience kind of an economic boom. Insurance and FEMA money pour in bringing jobs and that brings in newer private investment. But with tough economic times, private investment might be in short supply leaving Galveston on its own to figure out how to bail itself out of this mess. John and Kiran, back to you.
CHETRY: Cash call.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I alone sold almost a quarter of a billion dollars.
(END VIDEO CLIP)
CHETRY: Credit card companies pushing cash advances that you can't afford. Two former workers take us inside a high-pressure call center.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Every customer that calls in is a mark. It's a great big count.
(END VIDEO CLIP)
CHETRY: You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: Welcome back to the "Most News in the Morning." A shocking story about the way that banks preyed on customers. Two former Bank of America employees now sharing their experiences as sales people when they say their job was to convince people to take cash advances in some cases they couldn't afford.
Deb Feyerick joins me now with more about their story. Hi, Deb.
DEBORAH FEYERICK, CNN CORRESPONDENT: Hey there, Kiran.
Well, you know, Americans are $970 billion in debt. And the big question is, well, how did they get there? With those calls that you get from credit card companies offering money, sometimes $25,000, zero percent interest, well, it comes with strings attach. We spoke to two women. They tell us what's really going on.
(BEGIN VIDEOTAPE)
FEYERICK (voice-over): Think of the movie "Boiler Room."
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: You know, I didn't get to where I am today by losing my client's money.
(END VIDEO CLIP)
FEYERICK: But instead of stockbrokers, they are credit card account managers. And instead of pushing stocks, the product is cash.
UNIDENTIFIED FEMALE: I alone sold almost a quarter of a billion dollars.
FEYERICK: Kate Colombo (ph) in the blue coat spent four years as an account manager with credit card giant MBNA, which was bought by Bank of America in 2005. Kathy Ellingwood (ph) was there for a year and a half. She quit this summer.
Both work here at this customer call center in Belfast, Maine. They never worked together but their stories are similar.
UNIDENTIFIED FEMALE: Every customer that calls in is a mark. It's a great, big count.
FEYERICK: Kate and Kathy say customers would call in with a basic question about interest rates or fees. Once on the phone, they were instructed to entice customers to take cash advances, sometimes up to the max, whether they could afford it or not. UNIDENTIFIED FEMALE: I would say 90 percent of the time this is the response. People were pragmatic. They would say, I don't need $100,000.
UNIDENTIFIED FEMALE: Right. Right.
UNIDENTIFIED FEMALE: You know, and we would find a way to convince them that they did need the money.
FEYERICK: What is the trigger word?
UNIDENTIFIED FEMALE: I'm in financial difficulty. I can't make my payments.
UNIDENTIFIED FEMALE: Or I have a son I sent off to college or my car is not running.
FEYERICK: Colombo says that some people even asked about a $50,000 cash advance for a down payment on a house. That's illegal. But the women tell us they were trained to get around it, saying --
UNIDENTIFIED FEMALE: What I can do is I can deposit some money into your checking account. And once the funds are there, it's yours to do with as you please.
FEYERICK: Bank of America tells CNN "only customers in good standing and with good payment history are able to access cash up to the available credit line." Colombo and Ellingwood say they had customer payment histories on their computer screens and were told to sell hard to everyone. Then they would speed through intricate disclosure notices which included how a zero or low-interest rate could convert to as much as 28 percent if a payment was late, even a day.
UNIDENTIFIED FEMALE: There was this one old man, he was in his 90s, and he had all of this available credit. And I don't remember how much but a lot. Maybe $100,000 in credit. I've got my manager to my right screaming at me, "Colombo, you need to sell! You need to sell! You need to sell!"
FEYERICK: Bank of America calls its terms clear and transparent. But lending watchdog Jim Cavin (ph) says the hard-sell tactics which he's seen from various credit card companies border on predatory.
UNIDENTIFIED MALE: We haven't identified any illegal practices. What we've seen are practices that are highly unethical.
FEYERICK: The two women say their conversations were monitored, and the more they sold the bigger their salary.
UNIDENTIFIED FEMALE: And if you didn't do it, you have to yank off the phone.
UNIDENTIFIED FEMALE: You get reprimanded.
FEYERICK: Bank of America calls the allegations by the former employees incorrect and tells us, "Our call center associates are focused on serving customer financial needs and responding to questions about their accounts."
But performance reviews for Colombo, which she provided CNN, tell a slightly different story about the sell tactics. She is told by supervisors to be more aggressive, "You cannot sell what you don't offer." In another, "Understand the importance of selling at the highest possible rate and not offering or soliciting reductions to rates that are not necessary."
UNIDENTIFIED FEMALE: Everybody on that level knew what we were doing. We were being told to do what we did.
FEYERICK (on camera): Do you feel guilty?
UNIDENTIFIED FEMALE: Yes.
FEYERICK: About what you did?
UNIDENTIFIED FEMALE: Without question.
UNIDENTIFIED FEMALE: Absolutely.
UNIDENTIFIED FEMALE: Without question.
(END VIDEOTAPE)
FEYERICK: Now Bank of America refused to talk to us about the individual cases. We asked them about the women but they had nothing to say -- Kiran.
CHETRY: Did you guys try to do a little bit more digging as well about what the terms of some of these cash advances were?
FEYERICK: That's exactly right. We even asked them to provide the disclosure notice, and they wouldn't do that. We asked them, do all call centers train account managers in the same way because there are call centers across the United States? They did not respond to that or any of our direct questions. Simply providing a statement.
CHETRY: Very interesting. Good piece there, Deb. Thank you.
ROBERTS: It's coming up on the half-hour. And here are this morning's top stories.
Breaking right now, the United Nations warning North Korea is making good on a threat to restart a key nuclear reactor. The International Atomic Energy Agency says the communist nation plans to refuel its reactor at Yongbyon within a week. North Korea stopped work to disable that reactor last month. Pyongyang is protesting what it says is Washington's slow walking the process to remove North Korea from the list of countries that sponsor terrorism.
The nation's financial leaders bracing for another grilling today on Capitol Hill. They are going to try to sell the $700 billion Wall Street bailout to the House Financial Services Committee, 2:30 this afternoon. Of course, we'll have full coverage of that hearing today on CNN and CNN.com.
Six and a half million kids on Medicaid have rotting teeth. That's in a new report from the Government Accountability Office. It warns that children covered on the public health insurance program run a higher risk of dental diseases. Only about a third of the 20 million children covered by Medicaid had any dental care at all in the past year.
And broadcast television becoming much more gay-friendly. A new study out this week says there are 16 gay and bisexual regular characters in prime time series, including the character of Cali Torres on ABC's "Gray's Anatomy." That's more than double the total from last season.
CHETRY: Well "Issue number one" is the economy. Hundreds of questions are coming in about what this bailout, this potential bailout, means for you and your money. Ali Velshi is back with more of your e-mails.
VELSHI: Kiran, fantastic e-mails we're getting from people, really smart questions. One of them, David from Miami says "since there are very many types of derivatives and no one knows their market value, how can an auction take place and won't the Treasury be comparing apples and oranges sight unseen?"
Now, derivatives are ways to invest in something without buying the actual thing. So for instance, if this phone is the actual asset, selling you the right to use it for a month would be a derivative. Something that has value but you don't actually get the asset. Well, that's a very good question, David.
The banks as you know have had such trouble evaluating these assets. Usually these mortgages that are resold and putting a value on it, that remains a major question. How is it the treasury knows how much to pay for these things and how much they'll be worth in the end? So David, to your question it is going to be very difficult to put a value on these assets. And that's part of why Congress is so troubled why this deal.
Jesse in Santa Rosa, California, says "I have heard the number $2,000 for every man, woman and child will be needed to cover the $700 billion bill. Of course not everyone has that kind of money laying around. Who foots the bill for this for those who can't pony up and what if I refuse to pay it, which I will?" Well, here's what happened. That money gets issued in bonds, it gets raised by the Treasury. This is what some people call printing money. And as a result of that, it becomes part of the national debt.
Now your share of the national debt is either paid through reduction in the services that you get, reduction in government spending, or an increase in your tax or in the case of this election, possibly not the reduction in tax, the cut in tax that you were expecting. So bottom line is you're not ever going to be able to identify that particular $2000 and not pay it. And as much as one can understand your sentiment, it is illegal not to pay your federal tax. But it is going to show up on your tax bill somewhere. Kiran. CHETRY: Ali, a lot of questions out there. I know you can't get to all of them but you are looking over them this morning, and we're going to try to get as many as we can. Thanks, Ali.
ROBERTS: A $600 billion spending bill to keep the government running. It is expected to hit the House floor for a vote today. The struggling U.S. auto industry is in line for a bailout. A little bit smaller than the other one that they're talking about. The bill includes a $25 billion loan guarantee package for General Motors, Ford and Chrysler, more than $5 billion to help low-income Americans pay their heating bills, $2 billion for student loans and about $23 billion in emergency hurricane aid.
The battle over your money continues on Capitol Hill today. We are going to talk with one senator who wants to put the $700 billion on an installment plan. Senator Chuck Schumer joins us just ahead.
And the Obama campaign calls her the closer. But can Michelle Obama stop women from switching sides? A look at her role on the campaign trail on the most politics in the morning.
(COMMERCIAL BREAK)
CHETRY: Well, the countdown is on. Just 42 days left until America chooses its next president. There's been a lot of talk about Governor Sarah Palin swaying some former Hillary Clinton supporters before they go into the voting booth. The wild card in the race though for women may be Michelle Obama. CNN's Jason Carroll joins us now with more on this. She's going around on her own and she's drumming up support for her husband as well.
JASON CARROLL, CNN CORRESPONDENT: She's been doing for quite a while. The campaign says Michelle Obama is just one part of their larger effort to reach out to those undecided female voters. One part. But, an important part.
(BEGIN VIDEOTAPE)
MICHELLE OBAMA, WIFE OF SEN. BARACK OBAMA: We won't stop fighting until women are paid fairly.
CARROLL (voice-over): She's known in the Obama campaign as "The Closer." Michelle Obama earned that title for her ability to sway undecided primary voters.
OBAMA: Because see, the truth is, ladies, women get it done.
CARROLL: The question now - can she help win over undecided working women who may hold the ticket to victory in this incredibly close election?
UNIDENTIFIED FEMALE: I believe she's a very effective surrogate because she's so authentic in her own life on all of the challenges that we working moms face.
CARROLL: Michelle Obama so far has hit key states like Virginia, Wisconsin, and North Carolina. Today she visits Allentown, Pennsylvania, a working-class town where she and Senator Biden's wife, Jill, will hold a round table discussion with military spouses. Michelle Obama has been hosting such round tables for the past several months. Campaign says the focus is on women and the economy.
UNIDENTIFIED FEMALE: I think it's important to remember that Michelle Obama's role here is not to run against Sarah Palin, that her role is to reach out to women voters to remind voters of what her husband brings to them, to the population of women voters.
CARROLL: There's no doubt Governor Palin has energized the Republican base, but a recent CBS-"New York Times" poll suggests she has not help the GOP attract those undecided women.
Meantime, like Palin, Michelle Obama packs in the crowds at rallies.
OBAMA: You know, there are just a few weeks left before election day.
CARROLL: The campaign even sent this video from Michelle Obama inviting voters to host or attend a debate watching party for this Friday's presidential debate.
DONNA BRAZILE, CNN CONTRIBUTOR: Michelle Obama has done just about everything she has been called upon to do. She has introduced her husband to the country. She has helped raise money and she is more than enthusiastic about introducing him to the people who don't know him.
(END VIDEOTAPE)
CARROLL: And last night the campaign sent a statement saying, "as a working mom, wife, daughter, and sister, Michelle is in a unique position to connect with what is happening in the daily lives of women. These are issues that are personal, not political, to her, and she'll continue to talk with women about them throughout the remaining weeks of the campaign." So look for more Michelle Obama as the election draws to a close.
CHETRY: She's a great asset for the campaign, no doubt. And she packs in the crowds as much as Sarah Palin does.
CARROLL: She certainly does.
CHETRY: And you know, in the few seconds that we talked, it is now 41 days to election day! It's going fast, Jason!
CARROLL: (inaudible)
CHETRY: Thanks for being with us.
Well the first presidential debate is this Friday. Join the best political team on TV live at 9:00 p.m. Eastern for the debate. Debate night in America live from Mississippi. Don't miss it on Friday.
(BEGIN VIDEOTAPE)
CHETRY (voice-over): Back in the saddle. Lance Armstrong live on his decision to get back into cycling and why it is about more than winning another race. You're watching the most news in the morning.
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ROBERTS: They don't even have a bill yet on Capitol Hill but they're certainly trying to work on one. Welcome back. We're here with the most news in the morning. The battle over the $700 billion bailout continues today on capitol hill. My next guest is going to be right in the middle of the debate because he wants major changes to the plan. Chairman of the joint economic committee, Senator Chuck Schumer joins me now live from Capitol Hill.
Senator, it was quite a hearing you had before the banking committee.
SEN. CHUCK SCHUMER, CHAIR, JOING ECONOMIC CMTE.: Yes.
ROBERTS: I mean, it got so bad you were even quoting Greek mythology. You want some changes to the plan that Henry Paulson is proposing. What do you want? What needs to be done?
SCHUMER: Well, in three areas. First let me say, John, I think we realize - I do - just about everyone, with the exception of a few outliers at the extremes of either party. No, we have to act as does Senator Obama and Senator McCain both have said so. Having said that, the plan is basically a blank check. And we're focusing on three areas. First and foremost, putting the taxpayers first. The average taxpayer is really on the hook having done nothing wrong, so I propose two things. One is to do this in trenches. Let's do if they need $50 billion a month, then let's do three months, then come back and look at it and see how it's working.
ROBERTS: OK. Let me stop you there because the Secretary of the Treasury says that would be a grave mistake.
SCHUMER: Right. He didn't really outline why it was a grave mistake. That's one of the questions that I hope to ask Chairman Bernanke today. I mean again, we are - this is brand-new and we're throwing out ideas. This one has a lot of appeal right now. And so we'll have to see at further length why they object, is it inconvenience? Is it they'd rather have it this way? Or is it something deeper and more fundamental?
The second thing we've proposed is -
ROBERTS: You're also, go ahead, yes. I was just about to ask you -
SCHUMER: Yes, the second thing we proposed is some kind of FDIC for all financial services companies. They would pay a fee, which - every month. And that would go into helping pay for this plan. It clearly wouldn't pay for all of it, but some of it. The taxpayers would feel a lot better if the financial services industry, which is at the maelstrom here of the core of the problem paid some of it and they didn't have to pay all of it. So that's the taxpayer side.
ROBERTS: OK. And what about this idea that Barney Frank on the House side is looking at this as the Chairman of the Financial Services Committee floated yesterday, this idea that the Treasury Department would work to minimize foreclosures on paper that it holds. Is that a good idea?
SCHUMER: It is a good idea. That goes to the second part of this which we call housing. It's T-H-O. Those are the things we have to get done. Taxpayer, Housing, Oversight. The housing part - Chairman Bernanke himself, John, has said that unless we find the floor to housing crisis, the financial markets will ultimately not calm. So what Chairman Frank is trying to do, what some of us who proposed the bankruptcy provisions on our side are trying to do is help hasten the finding of that floor which will make the whole financial part of this less expensive and more effective.
ROBERTS: Right. let's talk about your history in all of this, senator. The Center for Responsive Politics points out that in the past five years you've taken $1.3 almost $1.4 million in contributions from the securities and investment industry. Critics say that you've also championed deregulation of the financial industry as a way to try to maintain New York's preeminence as the financial capital of the world. How can you be an honest broker in all of this when you look back at that history?
SCHUMER: Well, if you look at my history, I've always been for tough regulation but smart regulation. When regulations make no sense and hurt our competitive position without protecting the taxpayer or the investor. Of course I'm against them. But I was the first to propose one of the very first to propose regulations on mortgage brokers. I was one of the very first to propose a new regulator, strong and tough, with complete authority.
I was one of the first to propose regulating credit default swaps. So where there is a need for tough regulation, we, I have stood for it. When the regulations don't make much sense, you're against them. And that's what you should do. That's the appropriate way to be.
ROBERTS: And can you guarantee taxpayers that the $700 billion or at least part of it is not going to end up in the pockets of people who contributed to your campaign?
SCHUMER: Well, I mean, you know, there is no guarantee, but that's not the point here. The point is to save the country and save the financial system and I think, you know, to be honest with you, if you said that anyone who contributed to any senator or congressman's financial campaign shouldn't be involved in this, you wouldn't get anywhere.
We certainly have to change the system by which we finance campaigns. But right now we have to be focused, John, on getting the problem done and I know that there are outliers who are always going to snipe for a whole lot of different reasons. Our focus is avoiding the financial calamity and doing this in the smart, right way that protects taxpayers, homeowners, and gets real oversight.
ROBERTS: And we should point out, too, Senator Schumer, you said off camera you think you can get it done by the weekend. So looking forward -
SCHUMER: I do. I believe we can if we work hard and the good thing is, Secretary Paulson, even though he didn't get such a great reception, his - he's been open to changes and to discussion which is very positive. We haven't had that from the administration before.
ROBERTS: Senator Charles Schumer of New York, good to talk to you. Thanks for coming on with us this morning. Appreciate it.
SCHUMER: Thank you, John. Thank you.
ROBERTS: Well, how do you get to the spot where Governor Palin's controversial bridge to nowhere was to be built? We'll take you to the road to nowhere. It leads right up to it. Yes, there really is a road to nowhere and there it is. Governor Palin approved its construction and we found it.
And after all he's been through, superstar Lance Armstrong is here to tell us why he's coming out of retirement and getting back on the bike to race again.
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ROBERTS: 10 minutes now to the top of the hour. Welcome back to AMERICAN MORNING and time to check in again with the truth squad. Alina Cho looking at some big issues today.
Last hour, we look at John McCain's statements about the war in Iraq. This hour the other side of the political fence and immigration. Good morning, Alina.
ALINA CHO, CNN, CORRESPONDENT: Hey, good morning again, John. Always taking a look at both sides and this hour, we are taking a closer look at an ad from the Obama campaign. It ran on Spanish radio stations and it took some pretty tough shot at John McCain's stance on immigration. In one line the ad said, "John McCain abandoned us on immigration reform rather than confront the leaders of the Republican party."
So is that really true? Well, to get the full picture you really have to go back to 2005. McCain then teamed up with Democratic Senator Ted Kennedy in a push for major immigration reform. The bill included a path to citizenship for illegal immigrants. Now that bill never made it to a vote but McCain's support was enough to anger some conservatives. Now fast forward to January of this year. McCain, now a candidate for president, and taking part in a primary debate. He was asked if he would support the very same bill if it came to a vote now. Take a listen to his answer.
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SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: No, I would not, because we know what the situation is today. The people want the borders secured first.
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CHO: Now on his web site, McCain now calls border security his first priority on the issue of immigration. He says other measures like a temporary worker program and increasing the number of available green cards, well he says those can be dealt with after the borders are secure. So the verdict from the truth squad - always pause for the sound effect. We are calling this one, John, mixed.
McCain has backed off his support of sweeping immigration reform. He is focusing now as you heard on border security. But to be fair he has also continued to support immigration initiatives, including reuniting families and expediting cases involving children. So, John, like so many other of our truth squad reports, this one, not black or white, this one a little murky but now we have a name for it - it is mixed and my guess we'll be using that a lot.
ROBERTS: And correct me if I'm wrong but mixed has the same sound effect as doubtful?
CHO: Misleading.
ROBERTS: Misleading. All right.
CHO: That's right.
ROBERTS: So that's the sound effect for categories under the letter M. Alina, thanks so much.
CHO: You bet.
ROBERTS: It's 52 and a half minutes after the hour.
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ROBERTS (voice-over): Dead end jobs.
UNIDENTIFIED MALE: It curved around and it just stopped.
ROBERTS: Beyond the bridge to nowhere lies the road to nowhere.
UNIDENTIFIED FEMALE: Three miles long at $8 million per mile.
ROBERTS: And you paid for it.
Plus, back in the saddle. Lance Armstrong live on the day he makes his comeback official. You're watching the most news in the morning.
(COMMERCIAL BREAK) CHETRY: Welcome back to AMERICAN MORNING. He's a seven-time Tour de France champion. A cycling record that may never be broken. Lance Armstrong did all that after beating testicular cancer. And there's word this morning that Armstrong will return to competitive cycling with Team Astana. That reunites him with the man who guided him to those seven Tour de France victories. And Lance Armstrong joins me now this morning. Good morning. Great to have you with us. Thanks for being here.
So a lot of excitement around the fact that you are returning to cycling. And are you going to race in the Tour de France?
LANCE ARMSTRONG, SEVEN-TIME TOUR DE FRANCE CHAMPION: That's the plan. Certainly that's the marquee event in cycling. That's the one that draws the most attention and the most eyeballs and with the campaign to take Live Strong global, obviously you want to do the most high-profile event and reach out to the places that need the message the most. So France being one, Australia being another, South America, South Africa, Asia, a lot of places where the global epidemic of cancer is still so prevalent.
CHETRY: A bit of your personal history, you were diagnosed and given what a 40 percent chance of survival when you were in your mid- 20s and for you this has become a passion perhaps greater than cycling. Is that the reason you're returning to the sport?
ARMSTRONG: It's the first reason. You know, I guess if I looked at it from an athletic standpoint. I don't really need to win an eight tour. I mean, seven tours for me was a dream and six broke the record. So eight doesn't really mean much. We had success in the state of Texas with Live Strong. We had success in the United States and I think in partnership with other people in making it part of the national dialogue. And now it's time to take this message around the world and erase some of the stigma that exists with cancer and increase funding not just in the United States but all over the world.
CHETRY: You're right, you can't go anywhere and not see someone wearing your bracelet. That's led to what $70 million?
ARMSTRONG: Right.
CHETRY: Just the bracelets alone.
ARMSTRONG: Right. Yes.
CHETRY: And why did that message seem to resonate with so many people?
ARMSTRONG: It's very simple, it resonates because the disease affects everybody. Not that everybody has been diagnosed themselves but everybody has a family member or a neighbor or, you know, a classmate that dealt with this disease. So it is literally 100 percent pervasive. So, everybody understands that everybody wants to ultimately see this disease go away in our lifetime.
CHETRY: Absolutely. You know, getting back to cycling. One of your former teammates Robbie Ventura was talking about how difficult it is. He said "the hardest part will be to go back to the mental discipline of training, eating, sleeping, with 110 percent commitment and snapping your brain back to the mode of being perfect all the time is difficult." Is it the mental part that's actually harder than the physical part?
ARMSTRONG: The mind has already snapped back. Mentally I feel 25 again. I feel more motivated and more inspired than I've ever been, to get back on the bike and train hard and to make all the sacrifices that it requires to be competitive. Physically at 37, I'll be almost 38 when I start the tour next summer. That's slightly different but ultimately I believe that the mind powers the body and once the mind says we're going to do it, or we want to do it, then the body will follow.
CHETRY: And on a practical level what is that type of training like? What do you do every day?
ARMSTRONG: Well, it goes in phases. Right now I'm spending about half my time in the gym and half my time on the bike. Come January all of the gym work will go away and really for the rest of the season you just all you do is train on the bike and obviously focus on other things. Focus on stretching. Focus on the technology of cycling. Focus on diet. Focus on the team and strategy and all the other elements.
CHETRY: Yes. It's an individual but a team sport when you watch it in action, it's amazing.
ARMSTRONG: Absolutely.
CHETRY: I want to ask you about presidential politics right now. I know that you've actually met and talked with and I saw you touring actually with John McCain and he's a cancer survivor himself. What does the president need to be aware of? What type of action would you like to see happen when either one of these men makes it to the White House as it relates to cancer research?
ARMSTRONG: Right. Well, there's a lot of things that the future president needs to do. You have to - I think the president needs to focus on the continuum of the disease, all the way from prevention to end of life. We need more funding at the federal level both at the National Cancer Institute and the National Institutes of Health. Both candidates have pledged to increase funding. Barack Obama has pledged to double funding at the NCI.
I think we should do more in terms of regulating and controlling tobacco abuse in this country especially when it comes to the youth of America. Our kids. A lot of steps here. But I think you have both candidates that are engaged. One is a survivor himself, the other Barack Obama, having lost his mother to this disease. They will enter the White House with this as a priority, I think.
CHETRY: And you are doing everything you can to get the word out as well. Great talking to you, Lance Armstrong.
ARMSTRONG: Thank you.
CHETRY: Thanks for being with us this morning.
ARMSTRONG: Thank you.
CHETRY: John.
ROBERTS: I can imagine, 38 years old riding the tour, was it Lucky Lambeau was the oldest tour winner. He was either 36 or 37. But back in 1922. So that will be quite an accomplishment if he manages to do that.
