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AMERICAN MORNING

Bailout Deal Stalls; Washington Mutual Goes Belly-Up; Presidential Debate in Limbo; What the Bailout's Worth Can Buy

Aired September 26, 2008 - 07:00   ET

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


JOHN ROBERTS, CNN ANCHOR: Well, more on our breaking news this morning. More financial rescue talks scheduled today with our economy getting worse by the second. Leaders are digging in despite some very serious warnings from the Treasury Secretary. Kate Bolduan has the latest live from Capitol Hill.
Kate, Treasury Secretary, the Fed Chairman, President Bush all warning that the financial markets could collapse if something isn't done soon. And yet nothing's being done?

KATE BOLDUAN, CNN NATIONAL CORRESPONDENT: Yes. There seems to be pretty much the talks right now, John, seem to be stalled. We hear these pretty much grave warnings from the administration and the top money men in the administration. And they're just not seeing the kind of action that they want to hear on Capitol Hill. But what is going to happen today? Well, they're going to be heading back to the negotiating table. The key players here -- Democrats, Congressman Barney Frank, Democratic Senator Chris Dodd, and Republican Senator Judd Gregg.

They're going to be sitting down later this morning to try to get these negotiations going again and try to hash out a deal. But notably absent from these talks, according to Barney Frank, will be any House Republican and that is where the division lies here. And that's really why lawmakers had move from nearing agreement, which we saw yesterday, to what now they say really is just fighting over counterproposals. Take a listen here.

(BEGIN VIDEO CLIP)

REP. BARNEY FRANK (D), MASSACHUSETTS: The House Republicans, in fact (ph), stayed for a while and then left. At this point, we have -- we are told that the House Republicans have no plan to participate in helping draw this up or having any commitment to help pass it.

This is the president's own party. I don't think a president has been repudiated so strongly by his own congressional wing of his own party in a very long time now. Maybe this isn't the last word, but that's where we are right now.

REP. ERIC CANTOR (R), VIRGINIA: Most House Republicans do not want to go home and face their constituents saying that we have stuck you with a $700 billion bill and a bailout bill when you can do it by allowing the folks on Wall Street to pay premiums and to fund this bailout.

(END VIDEO CLIP)

BOLDUAN: So that really is the issue -- funding the bailout, how to finance this bailout. House conservatives now say they want to use private money and not taxpayer dollars in order to help -- in order to help Wall Street and get the financial markets out of this crisis. But it's a very different plan than the lawmakers and the administration were working off of until this point. And that's why some say they may be back at square one. We'll have to see where negotiations go today, John.

ROBERTS: They were supposed to begin its recess today. Kate, I don't expect that anybody is going to be going home any time soon.

Kate Bolduan for us on Capitol Hill. Kate, thanks so much.

BOLDUAN: Thanks, John.

KIRAN CHETRY, CNN ANCHOR: Well, the first presidential debate is scheduled to start just hours from now. And John McCain still hasn't said whether or not he's going to show up. McCain's critics are now questioning whether his moves this week are politically motivated. And according to a new CNN/Opinion Research poll, close to 60 percent of voters think that Barack Obama will do better in these debates.

CNN's Suzanne Malveaux is live for us at the site of tonight's debate in Oxford, Mississippi. What's going on there, Suzanne?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Kiran, perhaps this headline in the local paper sums it up. "The show must go on." A lot of people at least here hoping that that's the case.

To give you a sense of just how on top they are on all of this, the vice chancellor of University Relations, Gloria Kellum, I just spoke with her by phone to get the latest update, she says that both her, the chancellor, even the governor of Mississippi, have all been assured from the debate commission that this will take place today. Now, they are going to get their latest update within an hour or so. Whether or not that's going to change, we'll have to wait and see.

But we have seen before, essentially yesterday, the advance teams of both Barack Obama and John McCain here on site with their stand-ins getting sound checks, camera checks on stage at the respective candidates' podiums. We also -- Jim Lehrer is here. He's the moderator of this debate, doing various tests with his own production team. So officials, university officials are optimistic. There are a lot of people who have anxious here on campus. In the meantime, both these candidates are trying to play this in their favor.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: I believe that the most important thing that John McCain and I can do tomorrow is to go to Mississippi for 90 minutes, go before the American people, and explain our vision of where the economy needs to go. One of us is going to be in charge of this mess in four months. And the American people, I think, not only have a right but an obligation to find out where we want to take the country.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Well, I am a betting man, but I'd like to say that I'm very hopeful. I'm very hopeful that we'll get enough of an agreement tomorrow that I'll be able to make this debate. And, again, I would urge Senator Obama to do what I'd asked him to do, and that's engage in 10 town hall meetings. And he has never accepted a single request. But I hope to be in Oxford tomorrow night, and I'm very hopeful.

(END VIDEO CLIP)

MALVEAUX: So, Kiran, certainly a lot of people here who at least hope that this is going to happen tonight. They really still do not know. We're going to get another update in about an hour or so. The debate commission reaching out to university officials to let them know what the very latest is. They're in touch with both of the campaigns.

This could cost Ole Miss quite a bit of money. We're talking about $5.5 million if this does not happen tonight, and there are hundreds and hundreds of people, Kiran, volunteers, employees, who have been involved in this for more than a year. I've spoken to a lot of these folks, and they're very nervous about this evening -- Kiran.

CHETRY: What type of format does it take if McCain doesn't show and Barack Obama does?

MALVEAUX: So far, the debate commission is saying there are no contingency plans, but they don't believe that this is going to happen. If Barack Obama shows up and McCain does not, they don't believe that that really is a debate format. We'll have to see if that changes. But so far, they're saying either these two candidates are going to show up they'll have a real debate, or likely it will be postponed.

CHETRY: Suzanne Malveaux for us this morning in Oxford, Mississippi. Thanks.

And meanwhile, we're still going ahead with the plans as well. Tonight, CNN, catch the debate here live from Ole Miss at 9:00 p.m. Eastern -- John.

ROBERTS: Five minutes after the hour now, Kiran. And talks will resume again this morning on an economic bailout package. Discussions collapsed yesterday when Republicans appeared to withdraw their support for the administration's plan.

(BEGIN VIDEO CLIP)

SEN. RICHARD SHELBY (R), ALABAMA: He won't be the president of the United States four months from now. Paulson won't be secretary of the treasury, and I don't know how long Bernanke will be at the Fed. But I can tell you this, I wouldn't support any plan like that.

(END VIDEO CLIP) ROBERTS: That was part of my interview last night with Republican Senator Richard Shelby who's the ranking member of the Banking Committee. Joining me to discuss the politics surrounding the plan, Republican strategist and CNN contributor Ed Rollins and Democratic strategist Lisa Caputo.

Good morning to both of you.

ED ROLLINS, REPUBLICAN STRATEGIST: Good morning.

ROBERTS: Ed, I know it was a short turnaround for you. (INAUDIBLE) Well, let me ask you about this question since, you know, you're a tried and true Republican, 49-state victory 1984 for Ronald Reagan. Republicans here almost in full-scale revolt against this administration.

ROLLINS: This administration -- this isn't a lame duck administration, this is a dead duck administration. And there's a lot of resentment against this president who many Republicans think took us over the cliff. Equally as important, Paulson has no relationship there and I think they're going back to their ideology. And I think to a certain extent, this is about the future of our party and the House Republicans. Conservatives always had a very strong opinion about that direction.

ROBERTS: You know, the counterproposal, Lisa, that the Republicans are floating here sounds very similar to something that Hillary Clinton proposed the other day. She wanted to do something modeled along the Depression era Homeowners Loan Corporation which bought up bad mortgages from people and let them stay in their home. Republicans are proposing something like that. So here we have the Republicans in revolt against the president and somehow almost on the same page as Hillary Clinton.

LISA CAPUTO, DEMOCRATIC STRATEGIST: Well, I think what you see here is that lawmakers are concerned about not letting the homeowner benefit. And I think what you see happening with the Republicans is not supporting a president in a time of crisis, which is unprecedented. But I also -- and I hate to say it, they're all thinking about what's going to happen in their districts when they go home for this recess, if they ever get a recess.

ROBERTS: Oh, there's a lot of anger.

CAPUTO: Right. For this election cycle. And then lastly, you can't help but wonder -- let's not forget. There was an agreement yesterday before John McCain landed in Washington.

ROBERTS: So the Democrats said.

CAPUTO: So the Democrats said, but I think everybody at least we were getting word here in New York that there was a deal. So one has to wonder what's going on here and why the Republican leadership is backing away.

ROBERTS: You know, Ed, yesterday you were saying, basically, you thought it was a dumb idea for John McCain to suspend the campaign, come back and start working on this bill. But in essence, when you look at the way that things have gone in the last 18 hours, is it he that's showing leadership and Barack Obama appears to be more of a peripheral figure?

ROLLINS: We'll see, if there's a deal. I mean, the bottom line is we need a deal. We need a deal this weekend. And if John can produce Republicans or bring his friends and the Democrat side together, which I don't think is possible, then I think he comes out OK. If he doesn't, he misses the debate. He looks like he's not made the deal work, then I don't think it will be (INAUDIBLE).

ROBERTS: Speaking of the debate, still up in the air. Barack Obama planning on going, John McCain we don't know yet. We've got a new CNN/Opinion Research Corporation poll. Who would do a better job? Respondents were asked.

Look at this. Fifty-nine percent believe that Barack Obama would do a better job, 34 percent John McCain.

Typically, Lisa, going into these debates, you want a lower expectation. The bar very high for Barack Obama. If this thing comes off, what kind of a performance does he need to put in?

CAPUTO: Well, I think both of them have three things they need to focus on. Number one, you have to look presidential. Number two, you have to exceed expectations. And number three, you have to neutralize your weaknesses. That's for both of them.

I think Barack Obama comes into this in a very strong position because, let's not forget, he leads with voters on his command of the economic issues. Voters trust him to deal with the economy. That's why you see John McCain trying to step in here and change the storyline.

I don't think anybody would say that John McCain is single handedly going to produce a bailout. There's no way. This is going to be a bipartisan effort. John McCain, in my view, has no choice but to show up tonight.

Americans start to focus now on the election. This is the highest watched debate always, the first debate, and they're going to talk about economic security tonight because, if you're not economically secure at home, then you're not globally secure in the world.

ROBERTS: Well, we'll talk about it if two of them show up. If not, it might just be Barack Obama talking about it.

CAPUTO: In a town hall.

ROBERTS: Lisa Caputo, Ed Rollins, good to see you this morning. Thanks.

CAPUTO: Thanks.

ROLLINS: Thank you.

ROBERTS: Kiran?

CHETRY: This morning, we're talking about the largest U.S. bank failure ever. Washington Mutual, the latest and biggest casualty of the financial crisis. So whether it will be business as usual when banks open today. Ali Velshi, "Minding Your Business."

ROBERTS: One on one with the man behind the one campaign.

(BEGIN VIDEO CLIP)

BONO, SINGER: Don't do an ostrich. Don't stick your head in the sand.

(END VIDEO CLIP)

ROBERTS: Bono live on what he would do with $700 billion. And his take on American politics.

(BEGIN VIDEO CLIP)

BONO, SINGER: Whoever is president, the world will be watching.

(END VIDEO CLIP)

ROBERTS: You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

CHETRY: Beautiful shot of Wrightsville Beach in North Carolina this morning. New video, that's right. This is actually the calm after the storm. Sunrise just a few minutes ago over at Wrightsville Beach. And after a drenching storm, it took many by surprise. That storm now heading up the east coast. Many areas in the northeast on flood alert this morning.

ROBERTS: Sort of apropos, isn't it? That we got terrible rain over New York and Washington today. Kind of really set the scene for the whole thing.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: That's right. It means stay inside and get something done.

CHETRY: That's right. Don't step outside and right into that puddle and ruin your day even more.

VELSHI: Yes. That's exactly right.

ROBERTS: Now, hide under the mattress where you're keeping all your money.

VELSHI: I truly would have thought yesterday afternoon that this morning's news would be continued updates on what's going on with the rescue package. But in fact, we have the failure of the biggest bank in the history of America and the history of the world and even the history of the pre-world.

Washington Mutual is the largest bank to ever fail. It's a thrift savings and loan, if you will, responsible for many mortgages and deposits. That's the bad news.

The good news, your money is safe. Yesterday afternoon, it was closed down by the Office of Thrift Supervision, which is a regulatory agency. It was handed over to the FDIC, Federal Deposit Insurance Corporation, which immediately sold it off and its $188 billion in deposits to JP Morgan Chase.

There is no interruption in services. The banks will open this morning. You will use the same account number. In fact, look at the Web site. We took a look at the Web site of Washington Mutual this morning. Wasting no time over there on the left side of your screen, it says, "Welcome to JP Morgan Chase."

Everything stays the same except for the fact that JP Morgan Chase says it will probably close about 10 percent of the 2,300 branches that Washington Mutual operates. But for you, the consumer, inside of this massive news that this bank has failed is some good news that your money is safe.

CHETRY: The cover shot of one of the little boys covering his eyes, I think that's how a lot of people feel right now.

ROBERTS: Like this.

CHETRY: Yes. Exactly.

ROBERTS: Thanks, Ali.

VELSHI: OK.

(COMMERCIAL BREAK)

CHETRY: Welcome back to the "Most News in the Morning." We're checking in with the truth squad this morning, trying to keep the campaigns honest and helping you sort fact from fiction. Our Alina Cho, a big member of the truth squad, checking in to some of John McCain's comments this morning.

Hey, Alina.

ALINA CHO, CNN CORRESPONDENT: Hey there, Kiran. Good morning to you again. And most of you know by now that John McCain frequently talks on the campaign trail about his early support of the so-called surge in Iraq and he's just as likely to slam Barack Obama for not supporting it. Take a listen.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: First, he opposed the surge then he confidently predicted it would fail. Thanks to the courage and sacrifice of our soldiers, sailors, airmen and marines and to the brave Iraqi fighters, the surge has succeeded. And yet, Senator Obama still can't quite bring himself to admit his own failure in judgment.

(END VIDEO CLIP)

CHO: Pretty strong words. Failure in judgment? Let's take a look at what Obama has said about the surge.

In the Senate, he did speak out against it. In fact, on the day President Bush announced the plan, Obama said, "I am not persuaded that 20,000 additional troops in Iraq is going to solve the sectarian violence there. In fact, I think it will do the reverse."

Now about two months later, he was on "LARRY KING LIVE" and had this to say.

(BEGIN VIDEO CLIP, "LARRY KING LIVE")

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Even those who support the escalation have acknowledged that 20,000, 30,000, even 40,000 more troops placed temporarily in places like Baghdad are not going to make a long-term difference.

(END VIDEO CLIP)

CHO: But by the spring of this year, the violence in Iraq began to drop, of course, and President Bush and John McCain were calling the surge a success. And earlier this month, in an interview with Bill O'Reilly, Obama himself said the surge "succeed beyond our wildest dreams."

So is McCain right in saying that Obama was against the surge from the start? The verdict from the truth squad, yes. This one is true.

But McCain's statement does not include Obama's recent admission that the surge is now working. Obama definitely opposed it from the beginning, but he is now acknowledging success, Kiran.

We're working on another truth squad report. Our researchers are on it. We're hoping to get it to you in the next hour.

CHETRY: We look forward to it, Alina. Good stuff there. Thank you.

CHO: You bet.

ROBERTS: $700 billion. We're taking a look at what else could be done with your money going to the bailout plan. And U2's leader, Bono, joins us live to discuss the presidential race and his efforts to raise awareness for global poverty.

You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

ROBERTS: We're back with the "Most News in the Morning." We've got some big news to tell you about because the shape of the election race is changing even as we speak. Here's where we sit right now.

The states that are in light blue are ones that are trending toward the Democratic side. Dark blue, ones that are fairly safe Democrat. The lighter red color, trending toward the Republican candidate John McCain. The deep red, probably safe Republican states. The rest of them, the eight yellow states here, are all what we call toss-up states, true swing states where it could go one way or the other.

Currently, the -- let me hit the default on that. Currently, the electoral vote count the way that the map sits right now is Barack Obama 223, John McCain 200. But we got some new polling data in for the state of Michigan which now shows Barack Obama ahead 49 to 42 percent. That's a margin of plus seven percent, European (ph) seven there, which means that that goes out of toss-up status now, sort of within five, five or less is toss-up status.

So we are now going to take that and turn it light blue. Not solidly Democratic, doesn't mean it's going to go to Barack Obama, but leaning in that direction.

So take a look at this. Our latest electoral vote count now, as we sit here Friday morning, if the election were to be held, 240 for Barack Obama, 200 for John McCain. Of course, 270 needed to win with seven swing states left.

This is a tight race. Going to be a lot of back and forth between now and November 4th, and we'll be following it all for you right here at CNN's "ELECTION CENTER."

CHETRY: Money to burn.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You could buy every NFL team 20 times over.

(END VIDEO CLIP)

CHETRY: What else could $700 billion buy?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Ten years of universal healthcare.

(END VIDEO CLIP)

CHETRY: From infrastructure to education, Christine Romans looks at other ways we could spend the proposed bailout money.

You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

CHETRY: Around the nation this morning, people are struggling to fill their tanks, and lawmakers in California are getting a free ride literally. Free gas and state-issued vehicles are perks that cost taxpayers $220,000 through July so far this year. In addition to fuel, they can charge incidentals like snacks, and the bill gets paid without ever being reviewed. All right.

Well, it's a students' dream in Minnesota, they're living it. Students at MACCRAY High School go to school for just four days a week. By extending each day an hour, the principal says he cut $100,000 from the budget. A short week means less money being spent on bussing, utilities and substitute teachers. And hey, you're forgetting the best part, they get Friday off.

In Nevada, one of the alleged victims in O.J. Simpson's armed robbery trial testified that O.J. was "set up" by sports memorabilia dealer, Thomas Riccio. Alfred Beardsley accused Riccio of doctoring the audiotapes from their confrontation. Prosecutors are expected to rest their case later today. And if convicted, O.J. faces life in prison.

ROBERTS: It's 26 and a half minutes after the hour. $700 billion, 11 zeros with a seven in front of them. Almost sounds like a made-up number, one that Dr. Evil would talk about. But it could be the cost of getting us out of the worst financial mess in 70 years. It got us wondering what else could $700 billion buy? And who better to tell us than business correspondent Christine Romans who's here now.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Hi, John. You know, many Americans are outraged at just the size of this bailout proposal. They're worried that taxpayer money will reward bad behavior on Wall Street, and frankly they can find a whole lot of things they'd rather spend that kind of money on.

(BEGIN VIDEOTAPE)

ROMANS (voice-over): It's a little like dreaming about winning the lottery. How to better spend $700 billion. It would build a lot of roads and bridges, aging infrastructure, something that can't wait. $700 billion is almost half the money the American Society of Civil Engineers says is needed over the next five years to get our infrastructure in good working condition. It would put nine million college students through state university and build roughly 35,000 new schools.

UNIDENTIFIED MALE: It would fund 10 years of universal health care under Obama's health care plan. It would more than be 10 years worth of the current funding levels of the Department of Education. I mean, if you want to be frivolous about it, you could buy every NFL team 20 times over.

ROMANS: But there is nothing frivolous about the bailout backlash.

UNIDENTIFIED FEMALE: The lending institutions are getting bailouts, but there's no bailout for homeowners.

ROMANS: Divide $700 billion by the median price of a home in this country, and the government could buy almost 3.5 million homes outright.

UNIDENTIFIED MALE: To put that number in perspective, that's more homes than are currently in default.

ROMANS: Perhaps the most dramatic comparison, the Wall Street bailout will cost almost as much as the U.S.-led war on terror since September 11th.

(END VIDEOTAPE)

ROMANS: Of course, this is an academic argument. The administration says the cost of not bailing out Wall Street would be simply devastating to the economy. And the government is borrowing that money anyway. It's not like there would suddenly be money to spend if this bailout never happened. But it's an academic argument that gives you a little idea about how much that money that is.

ROBERTS: It just makes you want to reach for the ibuprofen, doesn't it? Wow.

Christine, thanks so much for that.

ROBERTS: It's 29 minutes after the hour, and here are this morning's top stories.

Breaking today, two terror suspects arrested on a plane after police say they found their farewell letters. German special police say that they broke up a hijacking plot. They took two men into custody before the plane took off for Amsterdam today. One is a Somali citizen, the other a Somali-born German citizen.

A strong tropical system drenching the east coast from the Carolinas to Boston. Heavy rain expected all day in the New York City area. Right now, it's causing 90-minute delays at the city's major airports. That's expected to get worse.

The storm may also force the New York Mets to postpone games on the final weekend at Shea Stadium. Right now, they are tied for a playoff spot.

And a sense of panic setting in as the southeast runs out of gasoline. One radio promotion in Florida backfired. Cars lined up for free gas. When they hit their quota, things got ugly. There were fender benders, and a man was arrested for allegedly hitting a woman in the back of the head and then attacking police officers.

CHETRY: All right. Well, the bailout talks break down. A $700 billion plan to save the economy now in jeopardy. Lawmakers go back to work today as the financial crisis dominates the talk on the campaign trail.

I'm joined now by Obama supporter, New Mexico Governor Bill Richardson, and McCain supporter Senator Lindsey Graham. Thanks to both of you for being with us this morning.

GOV. BILL RICHARDSON (D), NEW MEXICO: Good morning. SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Thank you.

CHETRY: All right. Let me start with you, Governor Richardson.

Where is this bill headed right now? It seemed we were so close early yesterday to something being hammered out. It goes from that to, apparently, House Republicans walking out of the negotiation.

RICHARDSON: Well, there are two issues that need to be resolved. One, where does Senator McCain stand on this legislation? He injected himself into the presidential politics, into the very delicate negotiations.

Now House Republicans, which is a significant bloc, are not satisfied with the potential bipartisan agreement because they want more tax cuts for some of these Wall Street entities, because they want less regulation.

So hopefully, they're going to narrow their differences. But this is a very serious, serious situation. I don't like this bailout, but it's probably going to take both sides coming to an agreement, and Senator Obama has said, I don't want a Democratic solution. I don't want a Republican solution.

I want bipartisanship. I want an American solution. And this is the way Senator Obama acted in the meeting with the president. He asked good questions, tough questions. Senator McCain apparently was silent. So we don't know where he stands, what he wants to do other than get a photo opportunity with the president...

CHETRY: me -- let Senator Graham weigh in on this.

RICHARDSON: ... and with the Senate and House negotiators.

CHETRY: You told reporters last night that this bailout plan had a snowball's chance in hell, and now Democrats are trying to blame John McCain.

Does John McCain play a role in why this hasn't moved forward?

GRAHAM: Let me tell you what happened because I was here. We were meeting with House Republicans to try to get them into the mix, and you had, I think, six members of Congress meet by themselves in the morning, yesterday morning, go to the press, announce an agreement they never told their colleagues about.

At lunch, when this agreement was discussed in the Republican Senate conference, two-thirds of our conference could never sign onto it because 20 percent of the money -- it could be billions of dollars -- instead of retiring debt that will be created to get us out of this mess, will be directed to housing programs called -- like ACORN that are under investigation.

So no Republican is going to take 20 percent of the money that goes to debt retirement to put it in inefficient programs. There never was a deal. If there had been a deal, we'd be voting, and I wouldn't be talking to you.

But there needs to be a deal, and you're not going to get one by blaming people. You only get buy-in. You're not going to get one like we're trying to do now where three days ago Harry Reid called -- said there'll be no agreement without John McCain coming back and supporting it.

After three days of going nowhere, John's here, and all we're talking about is blaming John. The goal is to get agreement and buy- in, and I think we'll get there today. But we're not going to get there by yelling at each other and blaming each other.

We're going to get there by working together, something that hasn't happened yet but it about to.

CHETRY: Governor Richardson, I'm interested in finding out, where do you think that Barack Obama, your candidate, or John McCain, for that matter, should be in terms of handling this?

In three, four short months, it's going to be one of their administration's problems. Shouldn't they be there and have a more active role in exactly what's being hammered out?

RICHARDSON: Yes, and Senator Obama accepted the president's request to come to the White House. But Senator Obama was very careful. He didn't want to inject himself into very sensitive negotiations.

There's also a presidential debate enormously important on national security tonight that Senator Obama's going to attend. I think what we have to make sure of, if there is going to be an agreement -- and I don't like this bailout at all -- is, number one, there has to be protection for taxpayers.

There has to be independent oversight aboard to make sure this money is spent wisely. Third, there has to be no parachute pay -- CEO excessive pay, reward people that have mismanaged...

CHETRY: Right. Those seem to be things that both Obama and McCain agree on. Those seem to be the things that everybody seems to agree on.

RICHARDSON: Well, no. I -- read Senator McCain's statement on Friday. I didn't see anything about CEO pay limiting it. I didn't see anything for protection for taxpayers. I mean, I read that statement he said.

CHETRY: Let -- let Senator Graham just weigh in quickly.

RICHARDSON: The point is we don't know where Senator McCain is.

CHETRY: Senator McCain is for capping -- making sure that there's not overdue -- owed compensation for these CEOs during the bailout, correct?

GRAHAM: Beyond correct. He's been preaching and talking about that, that we're not going to reward people that got us in this mess. We're not going to let one person like Hank Paulson, who we admire, make all these decisions.

John has said, instead of the federal government buying all this toxic debt, why don't we put loans op the table. We lend people money, get our money back, instead of holding all this bad paper.

There's more than one way to do this. It's $700 billion. The taxpayer needs to be better protected. And for heaven sakes, don't put any of the money that we collect into programs that don't work.

Retire the debt that's going to be created.

CHETRY: OK.

GRAHAM: We can get there from here, but not by blaming each other, by working together, which has not happened yet but will begin today.

CHETRY: Quickly, Senator Graham, just -- if you can tell me as quickly as possible, will John McCain show up at the debate tonight?

GRAHAM: I'm more encouraged than ever that the House and the Senate are finding common ground, and I hope he's there. But the most important thing is we have an agreement that people actually buy in to, not political talk.

CHETRY: OK.

GRAHAM: And I think we can get there today.

CHETRY: Hopefully we will.

Governor Bill Richardson and Senator Lindsey Graham, thanks.

GRAHAM: Thank you.

(BEGIN VIDEOTAPE)

JOHN ROBERTS, CNN ANCHOR (voice over): One on one with the man behind The One Campaign.

BONO, LEAD SINGER: U2: Don't do an ostrich. Don't stick your head in the sand.

ROBERTS: Bono live on what he would do with $700 billion and his take on American politics.

BONO: Whoever is president, the world will be watching.

ROBERTS: You're watching the most news in the morning.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

ROBERTS: Welcome back to the most news in the morning. And time now for an AMERICAN MORNING exclusive.

U2 front man Bono was one of the most recognizable faces at the United Nations general assembly this week. As leaders from countries around the world attended the general assembly, Bono and his ONE Foundation were lobbying for aid to fight disease, hunger and poverty in developing nations and quite successfully as well.

He joins us now for an exclusive interview. It's great to see you this morning. Thanks for joining us.

BONO: Good to be here.

ROBERTS: So, you know, all this talk has been about the economy collapsing, $700 billion bailout. Congress is absolutely absorbed with that.

Did that, in any way, affect what you were trying to do this week? Are people more focused on this economy than in helping out developing nations?

BONO: Well, we got good news this week. I know normally I'm on your program you have bad news, the wingie (ph) rock star, but it's great. You know the disease malaria, it's 3,000 African kids die every day of mosquito bites. Sounds mad, but it's true.

And people have committed and looks like the funds are on the table so that disease will be no more by 2015. That makes people like me punch the air and everyone who wears the ONE T-shirts and all our white band campaign in college campuses all over the country.

They -- it was a great day for them yesterday. So we're celebrating that. I know it's extraordinary, that while you're having this meltdown on the markets that this -- you know that people could even concentrate on this stuff, but I'm really grateful that they did.

We have both candidates make, you know, very powerful statements about the necessity for, you know, nonmilitary tools, for instance, in foreign policy. And that this is an America that both candidates want to show to the rest of the world, the greatness of America.

ROBERTS: So you're hearing what you want to hear from these candidates?

BONO: Yes. And you couldn't imagine a few years ago that you would have candidates so close to the election talking about this stuff, so yes.

ROBERTS: Yes. You were talking to Christine Romans outside the studio, who just did that piece for us a few minutes ago on what else could you do with $700 billion?

What could you do with $700 billion?

BONO: We wouldn't be asking for that kind of money. I mean these are serious matters. People lost their jobs. But for -- I think the world, the bill for the whole world so America would be like about a third of it.

For $25 billion, you could absolutely change the world. So you could put kids in school, most kids in school. You could eradicate diseases like malaria, as we're saying. We could change the water supplies.

But what's important is -- you know, is that people who want to change the world want to see their country -- want to be -- they see it as a patriotic act to show the world the -- you know, innovation of America, technology of America, pharmacology of America.

ROBERTS: You -- for $25 billion, you could put every kid who's out of school in the world into school?

BONO: Yes.

ROBERTS: That seems like a lot of people for $25 billion.

BONO: Yes. Well...

ROBERTS: That's a pretty good return on your investment.

BONO: It's a great return on investment. You heard me on your program before talking about debt cancellation? Strangely Americans don't know that because of debt cancellation there are already an extra 29 million African children in the school.

That's unbelievable. And because people got out on the streets in the Red campaign and stuff like that, there's now, I think, 2.5 million Africans on AIDS drugs, which are expensive.

So your country's -- it's turning for me in the right direction on these issues.

ROBERTS: So you're hearing some of what you want to hear, particularly on malaria issues.

BONO: Yes.

ROBERTS: But European Union had promised to increase aid by $50 billion between 2005 and 2010. Looks like they're going to fall $40 billion short.

BONO: They are, but they're still ahead of America. That's the bad news. You don't want to get me into the ring.

ROBERTS: Oh yes, absolutely. Come on. That's why you're here.

BONO: No, no, no. We've meeting with Sarkozy this week, as well as, you know, talking with the McCain and Palin and as well as always talking with the Obama campaign.

We do keep up the pressure on the Europeans, but the Europeans are way ahead of America on these aid -- on aids, so just to put it in context. But you're right. They're not coming through on all of it. And we will torture them, too. That's our job. ROBERTS: You talk a lot about these United Nations Millennium Development Goals.

BONO: Yes.

ROBERTS: Let me just go over a couple of those. It was supposed to cut global poverty in half by the year 2015, universal access to HIV/AIDS treatment by 2015, begin to reverse the incidence of malaria by 2015.

How far along that road are we?

BONO: The Millennium Development Goals are in a bit of trouble. And it is astonishing to me...

ROBERTS: And whose fault is that?

BONO: Well, you know, politicians, they love signing checks, but they don't love cashing them. They love the photographs. And, you know, these G8 meetings, you'll see myself and my partner Bob Geldof, you know, arm wrestling and, you know, politicians up against the wall.

ROBERTS: You're really effective in doing that.

BONO: Yes.

ROBERTS: You get access to a lot of places.

BONO: Yes, it's true. And...

ROBERTS: I remember that I was on a -- I was on a trip with President Bush once, and you walked on Air Force One, and the (INAUDIBLE) watching you do it.

BONO: Well, it's the absurdity of celebrity. You know I don't consider myself a celebrity in this sense, I think I'm an activist who knows what he's talking about.

But yes, we get access, and we use it. And it's true that there was a very ambitious plan signed up in 2005 that further committed what was decided in the year 2000, that we could actually, across eight goals, completely change the face of poverty and hunger in the world.

And there was a $25 billion bill by 2010 that would enable them to do that. They haven't come through on that. And another day I'll tell you why, but today I'm punching the air because malaria will be no more by 2015.

And it's Americans, people from the private sector, Peter Chernan there, you know, Ray Chambers -- all kinds of people, Bill Gates. Your mayor of this city, you know...

ROBERTS: Bloomberg, yes. BONO: Bloomberg is an amazing guy. He's working on this stuff. I just want Americans to know that side of their country because I'm a fan of America. And, again, that you have candidates, you know, like John McCain taking time out this week to talk to us. Barack Obama before. This is fantastic.

ROBERTS: I was reading your blog on Financialtimes.com.

BONO: Yes, I'm a reporter as well as you right now.

ROBERTS: You've been writing all week, doing a great job, too. You mentioned in one of your pieces that you've been writing some lyrics. And I'm wondering where the lyrics are going.

BONO: The lyrics. Statistics don't rhyme. I -- you know, songwriting comes from such a different part of my brain and such a different part of my -- just who I am.

ROBERTS: And are you writing about all this?

BONO: No, it's strange. It's very strange. I used to work in a garage when I was a kid, you know, pumping gas, and I used to dream when I was -- pumping the gas about getting to rehearsals on a Saturday, you know, so I could be with my band and write songs.

The work that I'm doing now, as we say, we're working like a dog, living like a Shih Tzu. We're like spoiled people. We travel well, but we work on these issues.

ROBERTS: Yes.

BONO: Because you're working for the world's poor, we work like dogs. But I find myself at times, sometimes, I just wake up in the morning, and I just want to be back with my band in a rehearsal room.

ROBERTS: Right. And you will be soon. New CD coming out next year.

BONO: I'm not complaining about the work. This is the most inspiring thing I've ever been involved in my life, and it's working. It really is working. And that's why I'm on your show this morning. I just want to thank Americans really.

ROBERTS: And we want to thank you for coming in this morning.

BONO: Thank you.

ROBERTS: It's really great to see you. Good luck on the new CD coming out next year, right?.

BONO: Thanks.

ROBERTS: Looking forward to it.

Bono, good to see you. Thanks for coming in.

BONO: Thank you.

ROBERTS: Kiran?

CHETRY: Oh OK. I'm sorry. I was paying attention. Lost me for a minute.

But we're talking jetpacks now. Happening right now, a Swiss adventurer tries to cross the English Channel with jet propelled wings. We've got a live report still ahead.

(COMMERCIAL BREAK)

CHETRY: Welcome back to the most news in the morning.

The so-called "Jet-Man" is making another attempt at crossing the English Channel with his jet-propelled wings. He just took off from Calais, France, and should be arriving in Dover, England very soon.

And that's where Atika Shubert is live for us this morning, probably keeping an eye on the sky there.

What's going on?

ATIKA SHUBERT, CNN CORRESPONDENT: Well, we're here at the landing site. He's just taken off. And the plan is he's going to launch from midair Calais, France. He's going to almost skydive out of the plane, unfold this carbon fiber glass wing, fire up his jet engines, and fly across the channel.

The whole journey should take about 12 minutes. He'll be traveling at about 125 miles an hour. What's so incredible about it, he's basically a hybrid of jet and man. His body is the fuselage. So when he wants to turn, he turns his body.

It's a very risky and skillful thing that he's attempting to do. If he can cross the channel successfully, he will be making aviation history -- Kiran.

CHETRY: And how's he doing so far?

SHUBERT: Well, so far he's just started. He's going to (INAUDIBLE) it's a lot like skydiving, where he's going to jump off, going into free fall, and then comes the tricky part, where he has to sort of gather enough speed as he fires up those engines.

It's a risky thing. And one of the risks is the fact that this is the furthest he's ever attempted, more than 21 miles from Calais to Dover. He will really be running on empty by the time he gets here. He'll cut his engines and parachute down.

So it is a risky venture, there (INAUDIBLE) safety around him, but it is -- it's going to be exciting to watch.

CHETRY: All right, well, we'll be tracking it, you'll be tracking it for us. Sorry, your mike was breaking up a little bit there, but the pictures were just amazing. Atika Shubert for us in Dover, England, thanks.

(BEGIN VIDEOTAPE)

ROBERTS (voice over): Bailout, not so fast.

REP. BARNEY FRANK (D), MASSACHUSETTS: Yes, we are on track, I believe, to pass this.

ROBERTS: The $700 billion plan derailed. What went wrong? Congressman Barney Frank, live.

Lindsey Lohan, Clay Aiken, and gay in primetime.

UNIDENTIFIED MALE: These characters are being placed on television shows for propaganda purposes.

ROBERTS: It's in to be out on TV. The cultural tug-of-war.

You're watching the most news in the morning.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. ERIC CANTOR (R), VIRGINIA: As far as I know, Senator McCain has not endorsed this plan and this is not a product of his campaign and we are working again to try and find bipartisan support here in this House so we can get something moving.

(END VIDEO CLIP)

CHETRY: That was Republican congressman Eric Cantor on the bailout that so far has been a bust.

Democratic congressman, Barney Frank, chairman of the House Financial Services Committee -- he's playing a key role in the negotiations and he's here this morning to tell us exactly where things went wrong.

Thanks for being with us this morning, Congressman Frank.

FRANK: You're welcome.

CHETRY: So what's going on? A total change from yesterday morning when there seems to be a lot of optimism.

FRANK: Well, apparently, the House -- the House Republicans are in revolt against George Bush. I can understand why, but they picked an odd way to do it. I just heard Mr. Cantor say, we're trying seriously here.

This is not a serious effort so far on their part. Let me give you an example. On Wednesday -- look, we have a terrible crisis in this country that was brought about by too little regulation and by not having enough regulation, we allowed the financial community to make a lot of mistakes.

I do believe there is a need to help them dig out from under the mistakes, because the mistakes are not just hurting them. They're starting to choke off auto loans and refinancing for homes and home furnishing purchases.

So we're trying to deal with this. The president sent us a plan which he thought was the best way to deal with it. We are trying to make improvements by curtailing executive compensation as part of this, by trying to give more taxpayer protection, et cetera.

You know you might -- the abstract sort of a different thing, but when the secretary of treasury and the Federal Reserve chairman say to you, this is the best way to do it and you've got to do it quickly, if you don't do that, you run risks.

Well, if the Republicans had right away come up with alternatives a week ago -- the House Republicans -- that might have been serious. We did not see anything except the one -- first thing we saw in this alternative plan was a one-page series of caps on notes.

But yesterday afternoon, Wednesday...

CHETRY: Right. So what are the sticking points? What is it about their plan -- what is it they want added that's too difficult?

FRANK: Well, one, it's a bending -- I can't tell you that because they have surfaced it. They're not serious about it. It's, I think, a ploy to explain...

CHETRY: So they didn't present a plan?

FRANK: No. What we saw yesterday afternoon for the first time was one-page with some bullet points. At the White House, several of us said to John Boehner, what is it you have in mind?

On Wednesday Chairman Bernanke and Secretary Paulson testified before the House Financial Service Committee, Republicans were there as well as Democrats. Not a single Republican mentioned this alternative plan.

This was Wednesday, the day before yesterday, or asked Paulson about it. The reason is that Secretary Paulson has already said that he doesn't think their plan will work.

Now to wait until a day before, you know, the weekend to give us -- and not even a full plan, just an outline, isn't serious. We had a negotiating session yesterday morning, House and Senate, Democrats, Senate Republicans, we were seriously working on it.

The House Republicans were there, they said, well, we're not -- they were represented, we can't fully participate. During that three- hour session, the House Republican who was there never mentioned that they had an alternative plan. This is a kind of ambush plan that doesn't come out until yesterday afternoon. And I said, it's not a serious effort, we can't get Senator McCain to say whether with he's for it or against it.

The Republican Party is in such a complete shambles that it's hard to do anything serious.

CHETRY: You know, Lindsey Graham was on the show earlier and he said that, basically, what's been going -- he used to claims that six members of Congress met by themselves yesterday morning, went to the press and announced they had an agreement, but never told their colleagues about it.

Is that true?

FRANK: That's a lie. And I'm ashamed for Lindsey that he would do in behalf of the McCain campaign. He's talking about his Republican colleagues. He's talking about Senator Robert Bennett of Utah, Senator Judd Gregg of New Hampshire, Senator Bob Corker of Tennessee.

They were there as representatives to the committee. I will tell you on my behalf, I did not tell any of my colleagues. I've been going to caucuses. I've been listening to all the members. Senator Dodd has done that and Senator Schumer -- I mean I know Lindsey is trying very hard to be McCain's faithful, but he's a jerk if he says he doesn't...

CHETRY: Let me ask you about John McCain. What -- why does it seem that John McCain is taking a bunch of the blame for why this isn't being hammered out more?

FRANK: Because we were going well until he decided that he'd rather not debate, but come to Washington and create a big photo-op. Look, I think McCain is hurting because people do not think he's very good on the economy for obvious reasons.

He then decided he would get into this and he announced without consulting with anybody that I know of who's seriously engaged here, Democrat or Republican, that he was going to come in and solve the deadlock.

Well, we were on the way to solving the deadlock. And again, Lindsey Graham suggested that because a handful of members...

CHETRY: So, let me just ask you one quick question. Are you saying that if John McCain didn't suspend his campaign and come there that John Boehner and the House Republicans would have come together and -- and agreed to the bill?

FRANK: I don't know that. I don't know that. I think he encouraged them. The answer is, we really don't know. And we didn't have to deal with this uncertainly. I think it did give cover to some Republicans to hold it back.

But I want to go back where we're having serious conversations and we knew the House Republicans had some political problems -- everybody does, it's not a pleasant thing. But for McCain to use this as an excuse not to debate is ludicrous. There's nothing for him to be doing here tonight.

CHETRY: All right, let me just ask you this quickly. Do you think there's going to be an agreement today? Are they going to work something out before the...

FRANK: It depends on the House Republicans.

CHETRY: ... recess this afternoon?

FRANK: As long as the House Republicans to say not only that they disagree what take an entirely -- we're not going to negotiate, we won't come to the meeting position -- Paulson asked us to meet yesterday, Secretary Paulson.

Each leader designated somebody. The Republicans first didn't designate anybody in the House and they sent Mr. (INAUDIBLE) back because he said, I'm here because Mr. Boehner asked me to come. I can't negotiate. I'll probably leave. And he walked out an hour later because he had no role.

CHETRY: All right. We're going to try to get some of those House Republicans on today, as well, to ask about what's going on there.

FRANK: Well, get a lot of them. Because if you get any one of them you're going to get a different opinion from the next guy.

CHETRY: Barney Frank, this morning. Good luck. You guys seem to need it this morning. Thanks.