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American Morning
Financial Crisis Fallout: President Bush Says Bailout is Essential; President Bush to Host a White House Summit to Discuss Financial Crisis' McCain Suspends Campaign; Insights on What's Needed to Fix the Crisis
Aired September 25, 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)
KIRAN CHETRY, CNN ANCHOR (voice-over): Dire warning.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Our entire economy is in danger.
CHETRY: President Bush asks the nation for $700 billion or else.
BUSH: Our country could experience a long and painful recession.
CHETRY: Today, both candidates head to the White House as John McCain puts his pursuit of the Oval Office on hold.
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: We are running out of time.
CHETRY: Your money and your vote on this AMERICAN MORNING.
(END VIDEO CLIP)
CHETRY: Welcome. Wow. A lot going on on this Thursday, September 25th. Fasten your seat belt this morning. Glad you're with us. We certainly have a lot to tell you about.
JOHN ROBERTS, CNN ANCHOR: So exciting you dropped your pen right off the bat there. We have a lot to tell you about this morning.
We begin with the bailout summit at the White House today. President Bush inviting John McCain, Barack Obama and congressional leaders to an afternoon meeting at the White House to discuss the Wall Street bailout. The president warning of a "long and painful recession if a rescue plan," as he calls it a bailout, is not approved. In a joint statement, Senators Obama and McCain say the president's plan is "flawed" but the effort to protect the economy must not fail.
The first presidential debate now less than 39 hours away and in limbo this morning after John McCain suspended his presidential campaign to focus on the economy. He has asked Barack Obama and the bipartisan commission on presidential debates to push back the event but so far Obama is not on board. And the commission says it is moving forward with tomorrow night's debate. And North Korea barring U.N. inspectors from its main nuclear reactor in Yongbyon. The International Atomic Energy Agency says Pyongyang intends to resume production of nuclear weapons grade plutonium there within a week. It is the latest sign that the country is on the verge of restarting its nuclear program.
And to the economic bailout in just a second. The first breaking news this morning and more fallout from this big financial crisis. Ali Velshi with the way that it's affecting the auto industry. Good morning.
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Yes. Well, the auto industry -- good morning -- has been troubled for some time. And what we're seeing now, there are a couple of indications that this money is drying up for businesses across the country.
We have two things that have happened in the last couple of days. One is the Caterpillar, which we all know is a secure, stable, large firm, a member of the Dow. Caterpillar went to raise some money a couple of days ago. They raised $1.3 billion, but they paid in two groups six and seven percent for it, and that is almost half of what -- double what they would have paid just about a week earlier.
General Motors, also, just a few days ago exhausted its entire credit line. They drew down the last amount of money in their credit line. They are still using that cash to operate. But this is the indication. When companies, particularly companies that are in tough financial shape are unable to go to the market and raise money, that means that they have to do something else. You know what that means, John and Kiran? If they have to do something else to pay their operating bills in the cases of major plants or manufacturing companies, that could mean shutdowns, that could mean your job.
As I want to remind people, while this affects the housing market and the auto loan market and the student market, those are things you do at an interim basis. You go to work every day. So while people are talking about this being a Wall Street bailout, understand that money is not available to many companies that need that money on a short term basis for operating reasons. So that is how we have to connect this to our lives.
We have to remember that judge this plan as you will and there are many valid criticisms of it, and hopefully there will be some changes that will satisfy most people. But this is affecting people. This could potentially affect people in their jobs.
The credit markets are frozen. This is not the stock market. When you look at the stock market, there's always a way for stocks to make money. There could be major catastrophe, and companies that deal in those catastrophes could do well on the stock market. Credit markets don't operate the same way. If there's no confidence that I can loan you money and you will pay me back, you're not getting the money.
ROBERTS: OK. Ali, thanks. Keep an eye on all of it for us this morning. CHETRY: So amid these dire warnings from the president on the need for a massive financial bailout, it appears that congressional leaders are getting closer to hammering out an agreement, a bill that they can all be happy with. In about four hours from now, House and Senate Democrats will be meeting with Republican lawmakers to draft a final bipartisan measure.
And later today, President Bush will host an extraordinary White House summit to discuss the financial crisis. With him, John McCain, Barack Obama, as well as other congressional leaders from both parties. In his prime time address last night, the president said our entire economy is in danger and that quick steps are needed to save it.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Over the past few weeks, many Americans have felt anxiety about their finances and their future. Understand their worry and their frustration. We're in the midst of a serious financial crisis. And the federal government is responding with decisive action.
(END VIDEO CLIP)
CHETRY: CNN's Elaine Quijano is live at the White House this morning with more for us on this summit that's going to be taking place.
Hi, Elaine.
ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Hello to you, Kiran. Well, one thing we'll be watching for when that summit takes place what's the seating arrangement going to be. It will be around 4:00 this afternoon in the Cabinet Room at the White House.
Now on the president's speech last night, the president essentially trying to draw a financial doomsday picture saying that if Congress does not act quickly, it would be a disaster for the average American. The president saying that the entire country could fall into a long and painful recession.
Now in defending his bailout plan, the president called it a necessary step, saying that it was absolutely essential in extraordinary times, times in which he said the markets were not functioning normally. The president painting a dire picture, tried to personalize the issue for average Americans.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: More banks could fail including some in your community. The stock market would drop even more which would reduce the value of your retirement account. The value of your home could plummet.
(END VIDEO CLIP) QUIJANO: The bottom line is this is an attempt by President Bush to cut through the economic speak and to make the policy arguments relatable for average Americans trying to draw that connection between financial disaster on Wall Street having a direct effect for Americans on Main Street -- Kiran.
CHETRY: Elaine Quijano for us on the plan and this meeting that's going to be taking place a little later today. Can't wait for details on that. Thank you.
ROBERTS: So President Bush is bringing together congressional leaders and the two presidential candidates to talk about a solution to all this gridlock. It comes 24 hours after John McCain suspended his presidential campaign.
CNN's Suzanne Malveaux is at the site of what's supposed to be a debate on Friday night in Oxford, Mississippi. That debate now up in the air. What's the latest news on this, Suzanne? Is there any talk that maybe after this meeting today, the two candidates will get back on track to discuss the issues on Friday night?
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, you know, John, all indications are Barack Obama is going to show up here. They are not changing their plans at all. It is unclear what John McCain is going to do when this is all said and done. But Barack Obama is going to leave Florida at least for a bit, cut out some of his debate time, head to Washington where he's going to meet with the president, John McCain, as well as the congressional leadership.
This after President Bush asked him about 7:30 last night, picked up the phone and called him. We have since heard from Barack Obama's campaign after President Bush's address saying, look, they believe that this is a flawed unacceptable plan but they say at least President Bush is heading in the right direction.
We're looking at limited pay for the CEOs. We're looking at some protections for taxpayers, perhaps even greater stiffer regulations. So these are all encouraging signs. Heartening -- that is what Barack Obama is saying today -- John.
ROBERTS: Suzanne, a lot, of course, going on behind the scenes down there in Mississippi. And is there any talk behind-the-scenes that this is an even greater time that people want to hear about the economy as opposed to pushing it off until next week? Or are the people saying, yes, it's fine if we have this debate a few days later.
MALVEAUX: You know it's interesting because the latest you talk to people here, they've invested $5 million in this debate to happen tomorrow. So there is a lot of concern locally here what is going to happen. But there was a lot of high drama yesterday, you know.
Barack Obama reached out to John McCain saying they are going to put this joint statement together. McCain got back to him later saying that let's suspend the campaign, put off the debate.
Barack Obama really quite surprised by that. He said his staff was simply going to get back to him. Perhaps they would consider this. But then, McCain issued this public challenge. I want you to take a listen to how all this played out yesterday.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: It's time for both parties to come together to solve this problem. We must meet as Americans, not as Democrats or Republicans. And we must meet until this crisis is resolved. I'm directing my campaign to work with the Obama campaign and the commission on presidential debates to delay Friday night's debate until we have taken action to address this crisis.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: This is exactly the time when the American people need to hear from the person who, in approximately 40 days, will be responsible for dealing with this mess. It is going to be part of the president's job to deal with more than one thing at once.
(END VIDEO CLIP)
MALVEAUX: So, John, it really is a political gamble for both of these men. Both of them trying to get ahead of the issue and provide some sort of leadership what they believe is demonstrated leadership to the American people. But the bottom line is, we still do not know whether or not that debate is going to happen here tomorrow with both the candidates. An Obama spokesperson simply saying, well, he'll be here. He'll show up and perhaps it will be an empty seat. So we'll see how all of this unfolds later today, John.
ROBERTS: All right. Suzanne Malveaux for us in Mississippi keeping an eye on things. Will that debate go ahead or will it not go ahead? We'll keep on checking in with Suzanne throughout the day.
It's eight minutes, almost nine minutes now after the hour. This idea of suspending campaigns not going ahead with the debate, going to Washington, is there political risk for both candidates?
We'll check in with Ed Rollins. He knows a thing or two about running campaigns. He's got some thoughts on this whole idea.
And Congress says it's making progress on the economic bailout. But who is going to be footing the $700 billion bill?
Plus, Ali Velshi taking your money questions right now. Head to CNN.com/am. He'll have your answers coming up in about 30 minutes.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP, "THE DAILY SHOW WITH JON STEWART")
JON STEWART, HOST, "THE DAILY SHOW WITH JON STEWART": This is not a football game where one team goes into the two-minute drill and you're tired now. But it's one of those things where he's like -- time-out! You can't take a time-out!
(END VIDEO CLIP)
CHETRY: Well, that's Jon Stewart on "The Daily Show" weighing in on John McCain's announcement that he is putting his campaign on hold to work on the Wall Street bailout plan. And he's calling on his competitor to do the same. Here's what McCain himself had to say about it.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: I'll suspend my campaign and return to Washington after speaking at the Clinton Global Initiative. I've spoken to Senator Obama and informed him of my decision. I've asked him to join me.
(END VIDEO CLIP)
CHETRY: Well, Barack Obama is not joining him. In fact, he rejected McCain's suggestion to postpone Friday night's debate. So what are the political implications for both?
Republican Strategist and CNN contributor Ed Rollins joins us now. You don't think this is a brilliant move on the part of John McCain?
ED ROLLINS, REPUBLICAN STRATEGIST: No, I don't. I think it's very high risk. You know, obviously, he has a right to go as the leader of the party to try and negotiate the Republican side of this thing. And a lot of Republicans are going to look to him for that.
But the other side of it, basically backing out of the debate, I think this is very much a part of the process. People are anticipating this debate. Foreign policy is his expertise. If he did well on the debate, he would have stopped some of this erosion that's going on these polls. And so, if people think he's doing this for political purposes it could hurt.
CHETRY: Well, Newt Gingrich, the former House speaker, said it was the greatest single act of responsibility ever taken by a presidential candidate.
ROLLINS: Since Newt Gingrich made some great thing years ago -- you know, the bottom line is, as I said, it's very high risk. It's now his game. It's not just Bush's game. It's now his proposal. There's a lot of Republicans both in Washington and across the country very unhappy with this, and he basically has to placate them and make sure that it becomes his proposal.
CHETRY: Well, Barney Frank, a Democrat, who's really been working with Treasury Secretary Paulson...
ROLLINS: Chairman of the Banking Committee.
CHETRY: ... yes, trying to hammer this out. He has a different take on this. This is what Barney Frank said. He said, "All of a sudden now that we're on the verge of making a deal, John McCain airdrops himself in to help us make a deal." So he's getting some criticism and there are others who are saying, is this just political posturing?
ROLLINS: Well, that's the question that will be answered by voters. And I think the key thing here is that he has to bring the Republicans to the table. If for some reason the Republicans are not there, or Barney Frank and the Democrats -- Senator Reid has already said he's also not welcome. The idea of bipartisanship may be at great risk.
CHETRY: The idea of bipartisanship is what made both of these candidates come to the point where they are now.
ROLLINS: Right.
CHETRY: I mean, both Barack Obama and John McCain seen as not being afraid to buck their party trend. Now they're going to be meeting with the president today at this summit. What is possibly going to be taking place?
ROLLINS: Well, my sense is all the president is doing is putting gravity on this. Both the speech last night introduced nothing new. He's just basically saying this is a very serious problem that we've been saying for two weeks. They're not going to negotiate it out in that meeting. It's going to be negotiated by Frank. It's going to be negotiated by the Senate leadership, and McCain may or may not be in those rooms but he certainly has the right to be.
CHETRY: All right. Ed Rollins, always great to see you. Thanks.
ROLLINS: My pleasure. Thank you very much.
ROBERTS: Maxed out.
(BEGIN VIDEO CLIP)
ADDISON WIGGIN, FILMMAKER AND AUTHOR: The government is spending beyond its means.
(END VIDEO CLIP)
ROBERTS: Christine Romans looks at where the bailout billions are coming from.
(BEGIN VIDEO CLIP)
REP. JIM SAXTON (R), NEW JERSEY: We have to go borrow it.
(END VIDEO CLIP)
ROBERTS: And how much you're chipping in to pay it back.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP, "THE TONIGHT SHOW WITH JAY LENO")
JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": Are you worried about this economic crisis? A little edgy about it?
AUDIENCE: Yes.
LENO: I should have known my bank was in trouble. I should have known.
UNIDENTIFIED MALE: Really.
HOST: And I'll tell you, I went to my bank, I'll tell you. I went in to cash a check. I said, will it be a seven-day hold on this? The guy said no, I'm not going to be around that long. See, I knew. I knew my bank.
(END VIDEO CLIP)
ROBERTS: Jay Leno channeling Rodney Dangerfield there. I got to tell you. I got to tell you.
They have a shot of the financial crisis. This morning, Congressional and economic leaders working through the sticky points of the $700 billion bailout. Where is Washington going to come up with the money, though, to pay for the staggering price tag? Ultimately, it will come from us but it's going to come from somewhere else.
First of all, Christine Romans here "Minding Your Business." Good morning to you.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Hi, good morning to you, guys.
ROBERTS: So follow the dollar here.
ROMANS: Yes. A whole lot of dollars. The economic plans for both the candidates now completely overshadowed really by the crisis and the banking system. And instead of energy independence, health care, taxes, the next president has to first stabilize the financial system, and then pay the bill for a monster bailout of Wall Street.
(BEGIN VIDEOTAPE)
ROMANS (voice-over): Just where is $700 billion going to come from? Where it always does.
REP. JIM SAXTON (R), NEW JERSEY: The treasury doesn't have $700 billion in the big old safe. We have to go borrow it.
ROMANS: The piggy bank is already empty and the government is borrowing to the limit. To pay for this bailout, Treasury Secretary Henry Paulson wants Congress to raise the debt ceiling to a staggering $11.3 trillion. Talk about living beyond your means. Filmmaker and author of "I.O.U.S.A.," Addison Wiggin.
ADDISON WIGGIN, FILMMAKER AND AUTHOR: That money just gets tacked on to the bill that we're passing on to future generations.
ROMANS: The government is spending so much more than it takes in, that Wiggin calculates the national debt grows $1,093 every minute. The bill for everything the government has promised but hasn't yet paid for, like Social Security and Medicare, nears $53 trillion. And by the year 2010, your share will reach $38,000.
WIGGIN: The government is running -- is spending beyond its means to a level that, you know, private citizens could never even imagine and even Wall Street banks wouldn't dream of.
ROMANS: And that's before the proposed $700 billion Wall Street rescue. That's got Congress wringing its hands over the enormous taxpayer-funded bailout and the candidates fine tuning their messages. Many economists say big tax cuts and new health care programs get less likely by the minute. Ballooning deficits are more likely. It's still unclear how much this would really cost.
BEN BERNANKE, CHAIRMAN, FEDERAL RESERVE: I recognize that this is always due to the $700 billion program but, again, the fiscal cost of it is going to be much, much less than that.
ROMANS: Because the government hopes to someday sell the toxic securities it buys from the banks.
(END VIDEOTAPE)
ROMANS: It's not the cost. It's the cost of not doing something rather that has so many people spooked here. The Fed chairman says that that cost could be much, much higher. And then so it goes. The more we borrow, the more we owe. The more we pay in interest to our creditors, interest rates can go higher and that lays on the economy.
But we're looking at -- we're looking at a day in the future, not too far away, when we pay more on interest...
ROBERTS: Yes.
ROMANS: ... to our foreign bankers than we do in education, in wars, in defense. I mean, at some point it becomes a national security issue as well.
ROBERTS: And in just the time that half your piece ran and you've been talking, we've added $1,600,000 to the debt.
ROMANS: It's real money. It's real money. And as this --
CHETRY: I think that's the problem. I don't think that it feels like that to the average person.
ROMANS: Right. That's right.
CHETRY: Because we can't fathom that amount of money. And when someone says to you, you better do this or it's going to get much worse, a lot of people are wondering how could it.
ROMANS: We keep pushing -- you know, we keep pushing it off, you know, I mean, so our children and grandchildren have to pay for it. I mean, is that -- how fair is that to say your tax rebate, your tax rebates from earlier this year, you know, don't worry about that for right now. We're going to tack on the bill that some day we'll get to it.
ROBERTS: That's going up $1 million a minute.
ROMANS: Yes.
Oh, well, good morning.
CHETRY: Christine, as always, thank you.
ROMANS: I'm so sorry.
CHETRY: Well, the bailout plan had a lot of us wondering how our money and investments could also be affected and we're trying to help. We've set up a blog where you can send your questions straight to our Ali Velshi. And Ali has been getting a lot of good stuff. In fact, a record number of e-mails yesterday when you first started doing this. What's up?
VELSHI: They ground to a halt after Christine's beautiful news right now. There's nobody watching TV anymore. But I have a few questions from some of you.
One of them that I got from James in Virginia, if this is past, this meaning the bill, the rescue plan, how would it affect our 2008 tax returns? Would we get more, less or anything back from the government at all?
Well, James, here's the good news. It's not going to do anything to your 2008 tax returns. Your 2008 taxes will stay the same. 2009 is a different story.
Barack Obama's plan calls for tax cuts for the middle class and tax increases if you make over a quarter of a million dollars. McCain calls for tax cuts for everybody. What that means is under both of those cases, the tax revenues are going to go down. Expenses are going to go up and in 2009, you may not get those tax cuts that you're planning on.
I'm still waiting to hear from the candidates. Send your questions in to me at CNN.com/am. You can ask us a question and we will answer it as soon as we can right here on AMERICAN MORNING.
Stay with us. We're coming right back.
ROBERTS: Debating the debate.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: This is exactly the time when the American people need to hear.
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Delay Friday night's debate.
(END VIDEO CLIP)
ROBERTS: The first faceoff in limbo. The latest on the presidential debate live from Mississippi.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The government's top economic experts warn that without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold.
(END VIDEO CLIP)
ROBERTS: President Bush echoing the urgency of his top economic team offering dire warnings if an agreement on the $700 billion bailout plan is not reached.
Robert Dugger is a partner of a global hedge fund and back in the 1990s, he helped craft the S&L bailout as the policy director for the American Bankers Association. He's in Washington this morning.
Mr. Dugger, what did you think of the president's language last night about how the markets could slip into a panic here? Many people are skeptical about this whole thing because they're thinking back to the Iraq War and wondering if this is the president who's crying wolf here.
ROBERT DUGGER, PARTNER AT A GLOBAL HEDGE FUND: I don't think you can say the president isn't crying Wolf. The fact of the matter is that markets have been reacting very, very significantly over the last several weeks in response to concerns about the economic situation. The legislation that Congress is now considering addresses a critically important near-term problem. It would, if enacted, would begin to open up these credit markets that are vital for our economy to continue to function.
ROBERTS: Is it strange for a president to be talking about a potential panic in the markets, though? Isn't the president supposed to say, look it, you know, things can be dealt with. We just need a plan here. I mean, for him to talk about panic is unusual.
DUGGER: Honesty is refreshing. It really is. We do have a situation that certainly in the near term is very, very serious. The president also pointed out that the problems we've got were ones that accumulated over many, many years. That's going to be a real challenge of the next president is dealing with these imbalances that you, people on your -- there at CNN discussed just a few moments ago. ROBERTS: Right. You wrote an article in which you laid down a set of five principles that you think need to guide this bailout plan. One of those was to give taxpayers an equity stake. It looks as though that is going to be part of this bailout plan.
DUGGER: Yes.
ROBERTS: But there's also a section from the original Paulson bailout plan which was released on Friday that is going to quote to you. It says, "Decisions by the secretary pursuant to the authority of this act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."
A lot of people took that to be almost ruling by fiat and they want to make sure that there's some oversight here. They're talking about putting it in the hands of the General Accountability Office. Would that be good enough? I mean, would everything be looked at after it happens? Is there any way to review every transaction that the treasury makes prior to it actually occurring?
DUGGER: We're in a negotiation process. That was the original position offered by treasury. We can see very clearly from draft legislation that's been provided by the House and Senate that there's an intense discussion going on. We're creating literally a new financing mechanism in the United States. And I'm quite confident this morning that there'll be adequate oversight and judicial review of the treasury's actions in the coming year.
ROBERTS: Again, you were a partner in a hedge fund. We don't want to say which one. But lawmakers and taxpayers are pointing fingers at people like you saying, hey, you're part of the problem. You're part of what created this. Hedge funds do not appear, at this moment in time, to be part of this bailout. But can you understand the outrage among taxpayers about what's going on?
DUGGER: Oh, there's no question about it. The outrage is universal. A member of Congress told me last night that the mail coming in to his office is 40-1 against this bill. And the reason it's coming in so heavily one sided is because taxpayers feel that this bill is going to take care of those or help out or bailout those who created the problem.
My own perception of this is that's not what's going to happen at all. When Wall Street sees this bill, it will perceive that, without a doubt, a pound of flesh is being taken and equity is being achieved through this legislation.
ROBERTS: All right. Robert Dugger for us this morning from Washington. Robert, it's good to talk to you. Thanks for coming in today.
DUGGER: You're welcome. Good to be here.
CHETRY: Well, we're right at the half-hour now. Some of the top stories this morning. The financial crisis, the subject of a bailout summit at the White House today. President Bush inviting both John McCain and Barack Obama as well as congressional leaders from both parties to a meeting this afternoon.
In his speech last night, the president said the country faces a long and painful recession if Congress failed to act on this massive bailout plan. Opening arguments start today in the government's corruption case against Republican Senator Ted Stevens of Alaska. The senator is accused of concealing $25,000 worth of gifts and renovations to his home from an oil company. Stevens who is up for re-election in Alaska has pleaded not guilty. He's also been excused from appearing at the trial if he needs to vote on the urgent Senate financial bailout legislation.
Well, the Carolinas bracing for some dangerous weather. There's a large storm that could strengthen into a tropical storm and it's expected to batter the region with drenching rains and near tropical storm force winds for the next couple of days. CNN's Rob Marciano is tracking the storm. He'll have an update for us coming up in the next hour.
Well, it's a little premature for the men who would be president, but both candidates, John McCain and Barack Obama will be at the White House today. They were invited by President Bush in an effort to resolve the current financial crisis. CNN's Candy Crowley is following the political fallout for us this morning.
CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Good morning, Kiran and John. Big meeting at the White House today. Barack Obama, President Bush, congressional leaders and John McCain who requested the session. The meeting came after a day of high drama which began when John McCain told reporters the economic crisis is historic and too important for his campaign to continue.
(BEGIN VIDEOTAPE)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: It has become clear that no consensus has developed to support the administration's proposal. I do not believe that the plan on the table will pass as it currently stands and we are running out of time. Tomorrow morning, I'll suspend my campaign and return to Washington.
CROWLEY (voice-over): McCain's actions come at a precarious time for both the economy and his campaign. The Wall Street bailout is teetering in Congress on the edge between yes and no. And McCain's campaign is losing ground in the polls after days of fumbles as both candidates try to show leadership on the country's dire financial straits. In a take charge serious mode, McCain also called on Obama to join him in suspending political ads and to agree to a change in the political schedule.
MCCAIN: I'm directing my campaign to work with the Obama campaign and the commission on presidential debates to delay Friday night's debate until we have taken action to address this crisis. CROWLEY: Prior to the president's call, Obama startled by McCain's TV appearance put together a quick news conference to say yes to bipartisanship and no to the rest, including a delay of the debate.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: It is going to be part of the president's job to deal with more than one thing at once.
CROWLEY: In a presidential campaign that at its course about leadership, Obama aides quickly let it be known that it was their candidate who called McCain first early Wednesday morning. McCain called back mid-afternoon and Obama suggested a joint statement about the financial crisis and McCain agreed.
(END VIDEOTAPE)
The statement materialized late Wednesday and it was weak, basically saying that the Bush plan is flawed and the meltdown is real. Something both Obama and McCain have said on the trail for days. It lacked even the barest of specifics they have been talking about. Bipartisanship only goes so far.
Kiran and John?
ROBERTS: Candy Crowley reporting for us this morning. It's 33 minutes after the hour. Beware the "Truth Squad." This morning we are fact checking comments by Joe Biden and John McCain on the hunt for Osama Bin Laden. And Ali Velshi logged on this morning in taking your questions about the economy right now, cnn.com/am. We'll have your answers coming up for you. You're watching the "Most News in the Morning."
(BEGIN VIDEOTAPE)
MILES O'BRIEN, CNN CHIEF TECHNOLOGY AND ENVIRONMENT CORRESPONDENT (voice-over): San Francisco's Luscious Garage is no ordinary car repair shop. You won't find oily spills on the floor; you will find solar panels on the roof. It's a place where already green hybrid cars like the Toyota Prius turn even greener.
CAROLYN COQUILLETTE, OWNER, LUSCIOUS GARAGE: The regular Prius is a gasoline-dependent car. It doesn't get energy from anywhere but the gas tank. What this allows me to do is to get energy through 110 outlet so this is like my electric gas tank.
O'BRIEN: Owner Carolyn Coquillette still works on engines, tires and breaks, but these days more customers want plug-in conversions for the option of driving an all-electric vehicle.
COQUILLETTE: I get about three or four calls, emails a day, people asking about this particular conversion.
O'BRIEN: The cost is about $7500 dollars to add and to upgrade the batteries in currently available gas-electric hybrids. But the range for an all-electric journey is still pretty limited, about 25 miles to a charge. But call it a California mind set, it's empowering. COQUILLETTE: Gas isn't required to move this car anymore. It gives you the flexibility to not have to bring gas if you don't want to, and that's very liberating.
O'BRIEN: So, who are the converting clients --
COQUILLETTE: There are some people who are die hard environmentalist, but there are some customers who come in and they just want to burn less gas.
O'BRIEN: Miles O'Brien, CNN, San Francisco.
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UNIDENTIFIED MALE: Don't look now but there's something funny going on over there at the bank, George. I've never really seen one but that's got all the earmarks to be in the run. Hey, lady, if you've got any money in the bank, you better hurry.
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ROBERTS: Well, thank goodness, it's not that bad, yet, anyways. The scene from the 1946 classic, "It's a Wonderful Life." Many of you at home feeling that same sense of panic over the current financial crisis. What to do about it. So this morning, Ali Velshi is "Minding Your Business" and answering lots of questions that you, the viewers, have been writing in to us this morning.
What you got, Ali?
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: We have a ton of excellent questions. Please keep them coming in at cnn.com/am. We are going to try to answer them. We can't get them all in TV. We're going to put some of those answers on the blog.
Louise from West Bend, Wisconsin says "When the government puts into the system the $7 trillion, will our dollar be worth a dollar or lose value like the depression?"
Now, we've seen numbers of $700 billion, and some people have said a $1 trillion dollars. It is definitely not $7 trillion dollars. I just want to be clear on that. $700 billion is what the government is saying. And yes, Louis, you are right. You can't just add money. We don't have a surplus. We don't have a positive balance. So if you need to come up with $700 billion, you have to print money as it were.
The government has to issue bonds and get that money and that, the effect of that is to lower the value of the U.S. dollar which makes it more expensive for us to buy all those imported goods that we do buy. So you are likely to see a drop in the value of the dollar if this deal goes through. In Winston-Salem, I've got a question here. "If the mortgage company who holds my mortgage goes out of business, what happens to my home?"
If your mortgage company goes out of business, your mortgage is still safe. In fact, in most cases, a mortgage company, because of mortgage is a money making thing, generally speaking to a bank. The mortgage part of that business, the good mortgages get bought by another bank. So nothing will happen to you or your home at the moment now.
All of this is having an effect on the price of your home or the ability of someone to buy your home because they can't get credit easily. But your home and your mortgage are not affected by the fact that your mortgage company may go out of business. If you hear that your bank or mortgage company is going out of business, your obligation is to continue to pay your mortgage unless you get in writing that that situation is changed. Sometimes, your bank sells your mortgage to someone else. Then you follow those instructions.
But when you hear your company is in trouble, that doesn't give you the option of not paying your mortgage. So please continue to do that because if you don't pay your mortgage, it will affect your credit rating and that will affect your money -- your ability to raise money, to borrow money at a good interest rate.
Keep those questions coming in. We have lots of them. In fact, I just want to tell you one more. Somebody wrote in and said, "It's a good thing that the poor people are being listened to. I hope the government reads your blog."
I hope they read it, too. Back to you, John.
ROBERTS: And I should point out, too, Ali, that in just the time it took you to answer those last two questions, we added $1,500,000 to the national debt.
VELSHI: That's absolutely right.
ROBERTS: We're going to be doing that all morning, too.
41 minutes after the hour. You're watching the "Most News in the Morning."
CHETRY: Hunting Bin Laden.
(BEGIN VIDEO CLIP)
SEN. JOE BIDEN (D), VICE PRESIDENTIAL CANDIDATE: John McCain said we'd be bombing our ally.
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CHETRY: Did McCain say it would be irresponsible to go after al Qaeda inside Pakistan? The "Truth Squad" checks the facts. You're watching the "Most News in the Morning." (COMMERCIAL BREAK)
CHETRY: Welcome back to the "Most News in the Morning." We're checking in with the "Truth Squad." It's part of our efforts to keep the campaign honest as we sort fact from fiction. And our Alina Cho has been checking in the statements. Today, it's from Joe Biden, after the vice presidential candidate attacked John McCain for attacking Barack Obama. This is why we need a "Truth Squad" to keep all of this straight.
Hi, Alina.
ALINA CHO, CNN CORRESPONDENT: Yes, a lot of he said, he said. We see that a lot on the campaign trail, Kiran, as you know. Good morning and good morning, everybody. And we do begin with some pretty dramatic words from Joe Biden about the hunt for Osama bin Laden. Listen to what he said yesterday in Cincinnati.
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BIDEN: Barack Obama said if we have actionable intelligence in Pakistan, I will take out bin Laden and I will take out al Qaeda and John McCain characterized that as being irresponsible and said we'd be bombing our ally.
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CHO: All right. So, what's the reality? Let's take a look at what Obama actually said. This is from a foreign policy speech he gave last year. Take a listen.
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OBAMA: If we have actionable intelligence about high-value terrorist targets and President Musharraf will not act, we will.
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CHO: All right. So, you just heard it. Biden did get his running mate's line right. Now, let's take a look at what McCain actually said. This, from a speech back in February in Columbus, Ohio. Take a listen.
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MCCAIN: We will risk the confused leadership of an inexperienced candidate who once suggested bombing our ally, Pakistan.
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CHO: And, for good measure, McCain also called Obama "naive." So, the verdict on this one -- pretty cut and dry. True. That's right, ding-ding, from the "Truth Squad." Biden accurately summed it up when he said Obama did say there was accurate intelligence in Pakistan, if there was, he would go after bin Laden. McCain took that and said Obama suggested he'd bomb Pakistan which is, of course, a U.S. ally. And as always, we are keeping an eye on both sides.
Coming up in our 8:00 hour, John McCain has been accusing the Obama campaign of getting economic advice from the former CEOs of bankrupt mortgage giant Fannie Mae, Kiran. Is it true? There are two men he's talking about in particular. We're going to take a close look at that and we'll have the answer in the 8:00 hour.
CHETRY: All right. We look forward to it. Alina, thanks.
CHO: You bet.
ROBERTS: Bright lights, big city. Sarah Palin's crash course in the fine art of the photo op. Jeanne Moos takes us behind the scenes.
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UNIDENTIFIED MALE: Thank you very much. Pack up the (INAUDIBLE). Thank you.
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ROBERTS: You're watching the "Most News in the Morning."
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UNIDENTIFIED FEMALE: My name is Jennifer Robinson. I'm a partner with the law firm of Miller & Martin at Nashville, Tennessee and I'm on the road about 100 days a year.
The two travel tips that I always use are always carry on your own bag and always check in online before you get to the airport. This way, you avoid all the lines and you always know that your bag is going to arrive there with you.
My one fashion must that you will always find packed in my suitcase is a pair of black pants that go with anything. I have one strategy for combating jet lag that I always follow. I stay on the time zone of my home, which is in Nashville.
I am really fortunate in that my husband is a "stay-at-home" father and he takes great care of our children. I also call them at least once a day. I always pick them up a toy before I make it home so that they'll know I was thinking of them on the road.
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ROBERTS: Ten minutes now to the top of the hour. It has been Sarah Palin's diplomatic debut, a whirlwind trip to New York to begin building relationships with world leaders. It was meant to burnish her foreign policy credentials. But has it? Jeanne Moos deconstructs the photo op.
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JEANNE MOOS, CNN NATIONAL NEWS CORRESPONDENT (voice-over): Welcome to the photo op follies...
UNIDENTIFIED MALE: Please step all the way over.
MOOS: ...where handlers whisper urgent orders to the press pool. The pool gets to stay for a whopping 30 seconds or so getting pictures then gets shown the door. Sarah Palin...
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: It's so nice to meet you.
UNIDENTIFIED MALE: It's so nice to meet you.
MOOS: ...raced around to half a dozen of these in two days.
CRAIG FERGUSON, THE LATE LATE SHOW WITH CRAIG FERGUSON: It's kind of like she's speed dating the world leaders. (INAUDIBLE), I am Pakistan, I like nuclear weapons, long walks on the beach and you.
MOOS: Comedian Craig Ferguson was prophetic. Pakistan's leader did act almost like it was a date, telling Palin how gorgeous she is.
UNIDENTIFIED MALE: You are even more gorgeous in life.
MOOS: Gushing over her popularity.
UNIDENTIFIED MALE: Now I know why the whole of America is crazy about you.
MOOS: When a photog (ph) asked for another hand shake, threatening a hug.
UNIDENTIFIED MALE: If he's insisting, I might hug.
MOOS: But the press and Governor Palin aren't so lovey-dovey amid complaints that Palin is dodging questions. Which brings us to the most frequently heard phrase in a photo op.
UNIDENTIFIED MALE: Thank you very much. Pack up the (INAUDIBLE), thank you.
MOOS: It's not gratitude, it's attitude. Commonly used to drown out pesky questions.
UNIDENTIFIED FEMALE REPORTER: Governor, what have you learned from your meeting?
(CROSSTALK)
UNIDENTIFIED FEMALE: Thank you, pool. Thank you so much pool, we're going to head out.
UNIDENTIFIED MALE: Thank you, guys, please. Thank you. Thanks a lot. Thank you very much. OK, guys. Everybody keeps moving.
MOOS (on camera): In the world of photo op, thank you doesn't always mean thank you. It means shut up and get out. UNIDENTIFIED MALE: Thank you, guys. Thank you very much.
UNIDENTIFIED MALE: Thank you.
UNIDENTIFIED MALE: Thanks, guys.
MOOS (voice-over): The press gets thanked all the way out the door.
UNIDENTIFIED MALE: Thank you. Please turn around. Thank you.
UNIDENTIFIED FEMALE: Great. Thank you.
MOOS: And when they finally did get a question answered, it wasn't much to be thankful for.
UNIDENTIFIED MALE REPORTER: Governor, how has your day gone so far?
PALIN: It's going great. These meetings are very informative and helpful.
MOOS: One thing the media can't say is that their job is thankless.
UNIDENTIFIED FEMALE: All right, guys, thank you.
UNIDENTIFIED MALE: Thank you, guys, too.
UNIDENTIFIED MALE: Thank you.
UNIDENTIFIED FEMALE: Thank you.
UNIDENTIFIED MALE: Everybody, please, thanks.
UNIDENTIFIED FEMALE: Thanks, guys.
MOOS: At photo ops the definition of thanks is --
PALIN: Thanks but no thanks.
MOOS: Jeanne Moos, CNN, New York.
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CHETRY: Campaign on hold.
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MCCAIN: We are running out of time.
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CHETRY: John McCain says delay the debate, Barack Obama says bring it on.
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OBAMA: This is exactly the time when the American people need to hear it.
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CHETRY: Whether it's a leverage move or leadership. Plus, crisis management.
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UNIDENTIFIED MALE: The only thing we have to fear is fear itself.
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CHETRY: From fireside chats to fire in the sky.
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UNIDENTIFIED MALE: They slipped the surly bonds of earth to touch the face of God.
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CHETRY: Who has what it takes to be the next healer in chief. You're watching the "Most News in the Morning."
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CHETRY: Welcome back to the "Most News in the Morning." The economy issue number one again this morning as President Bush warns of a, quote, "financial panic without a government bailout of financial institutions."
Our next guest understands all sides of the issue, Governor Jon Corzine of New Jersey, also the former CEO of Goldman Sachs, one of the large investment bank giants that's now having to change the way they do business.
You were the CEO from 1994 to 1999. Thanks for being with us this morning, governor.
GOV. JON CORZINE (D), NEW JERSEY: It's good to be here. I'll just correct one thing.
CHETRY: Yes.
CORZINE: I don't think anybody understands all aspects of any of this right now.
CHETRY: But you're going to do your best to help us.
CORZINE: I'll do my best.
CHETRY: Because is there is a lot of anger, there's been a lot of opposition, especially from just the everyday constituents, calling their congressmen, calling their senators saying, there's no way we want to sign on to some sort of bailout. Can you explain to people at home that are saying, why do we need to do this?
CORZINE: Well, first of all, the anger is legitimate because people don't understand how we got into this mess. Second of all, this is a very unattractive solution, but it's about the only solution. Some derivatives. Some version of this plan has to be implemented.
There does need to be money put into the system to keep major financial institutions from going under. It needs to be done with a lot of control. As Barack Obama has talked about, you need oversight, really strong oversight how this program is implemented.
You need to protect the taxpayer to make sure that when we buy the assets, we're not putting money into the pockets of people who created the problem. What we need to do and this gets into a technical issue of talking about how you price the assets, we need to do that, purchase those assets in a way that the taxpayer is going to benefit, not the institution.
And obviously, some of the people who are involved in these, creating these problems shouldn't be rewarded and that's the whole debate about compensation of executives.
CHETRY: It is. And we were taking a look at, a "New York Post" front page from just two years ago, and they called it "Goldmine Sacks." There is the picture. This is the company you used to be the CEO, a few years before this. But it's $16.5 billion in compensation, about $600,000 on average to every employee there. That was two years ago. And today, banks, investment companies like Goldman Sachs are saying we need this $700 billion bailout. It just seems -- how do you explain that to the people at home.
CORZINE: Well, two points I would make. Goldman Sachs has apparently solved most of its problems by its own actions. Got Warren Buffett, the oracle of Omaha to commit and put $5 billion with the potential of putting more and then selling additional stock.
It is not one of those companies, as far as I know, that is about to go into Chapter 11 or bankrupt. What you are seeing, though, is a lot of companies that are at financial risk and peril to do the same things that happened to Lehman and AIG and some of the other issues. And there, the government is saying we will buy some of the securities that they created or bought from their portfolios.
CHETRY: Right.
CORZINE: What's being debated is how that's going to be bought, how much of it we're going to buy, who is going to supervise it. And I think all of those are legitimate questions. But we have to get to a solution to how that's going to happen. That means that we've done expeditiously.
CHETRY: Right. CORZINE: By the way I don't have to think it's got to be done, Friday. It can be done Monday or Wednesday. It would be done right and thoughtfully. But --
CHETRY: You said at the beginning of this interview, that you know, there's a lot of people wondering how we got to this place. Wasn't anybody sounding the alarm bell two years ago when the headlines like "Goldmine Sacks" were out there?
CORZINE: I'm going to be a little partisan. We had an administration for the last 7-1/2 years, up until the most recent days that said regulation was a bad thing. Government was bad. That we don't need to provide oversight. And the fact is, is that people who were administering the offices that were supposed to be regulating, didn't believe in regulation.
So, there wasn't strong attention to managing the economic system appropriately. And there was a constant pace of deregulation that went on, actually over more than just this seven and a half years. Basically for the last 15 years. And kind of like a drunken sailor who never, ever comes out of the stupor with they just got -- the institutions got bigger and bigger with their commitment to risky assets. And all of a sudden, with the spark of the underlying housing market going down, all hell broke loose.
And that's exactly where we are right now. And it is very complicated. Not many people, if any person has a full grasp of how you deal with individual assets. There's a story in the "New York Times" that says there's, I don't know, 4,000 mortgages involved in one of these packages of securities. And there are hundreds and thousands of these securities out there. And it's a problem.
CHETRY: All right. Hopefully our law makers will be able to at least begin to try solve it.
CORZINE: They should. And the system needs it.
CHETRY: All right. John Corzine, Governor of New Jersey.
Thanks so much for being with us this morning.
CORZINE: Thank you.
