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American Morning
President Bush Speaks to Nation Regarding Bailout; Checking Obama's Claim on McCain's Tax Cuts; Pirates Seize Ship Filled with Firepower; Debating Terms in the Bailout Bill
Aired September 29, 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: On the other side, critics say that Senator Joe Biden has the gift of both gab and gaffe. Next hour, our Jim Acosta looks at some of his slip-ups in the campaign trail and what could make for an interesting vice presidential debate this coming Thursday -- Kiran.
KIRAN CHETRY, CNN ANCHOR: It sure will be. Well, it's a minute after 7:00 here in New York. A look at the top stories this morning.
We've got a deal. Congress has come to terms on a $700 billion plan to rescue the nation's economy. That plan gives Treasury Secretary Henry Paulson a quarter trillion dollars right away to buy up bad loans from financial institutions.
Markets right now are not reacting too well. Asian markets closing lower, and the Dow futures are posting triple digit losses so far.
President Bush will try to reassure the markets and Main Street. In about a half hour from now, he'll make a statement from the White House. We're going to have it for you live at 7:35.
And the House getting right to business on the bailout this morning. The debate is expected to begin in less than an hour. The vote is also expected today followed by a Senate vote Wednesday.
ROBERTS: So after a week of haggling, it is finally in writing now and our Brianna Keilar has got the details from Capitol Hill.
Brianna, it is a long one, a lot longer than the original proposal by about 98 pages.
BRIANNA KEILAR, CNN CORRESPONDENT: This is it, John and Kiran, the 110-page bailout plan the House is expected to vote on today. An agreement on this came down in part to fiscal conservatives inserting a provision they wanted. A provision that allows the treasury secretary to make Wall Street buy government-backed insurance for its bad assets.
(BEGIN VIDEOTAPE)
REP. NANCY PELOSI (D), HOUSE SPEAKER: We sent a message to Wall Street -- the party is over.
KEILAR (voice-over): After more than a week of negotiations and bleary-eyed shuttle diplomacy, the lone holdouts, House Republican leaders finally signed on.
REP. JOHN BOEHNER (R), MINORITY LEADER: Nobody wants to have to support this bill. But it's a bill that we've come to and we've worked on together. It's a bill that we believe will avert the crisis that's out there.
KEILAR: The $700 billion rescue package will be dispersed in stages, $250 billion to start. The treasury secretary will use that money to buy up devalued mortgage-backed securities that are weighing down balance sheets of financial institutions and ultimately making it hard for consumers to get credit approval for houses, cars, even college loans.
The plan includes an oversight board among other provisions, and it curbs hefty salaries and golden parachutes for CEOs of bailed-out corporations.
REP. BARNEY FRANK, CHAIRMAN, HOUSE FINANCIAL SERVICES COMMITTEE: People have read about these companies that were bought out or went out of business, that people are going away with $15 million, $20 million. It would make it illegal to get help from the government. They can't do that.
KEILAR: But just weeks before one-third of the Senate and every member of the House faces an election, lawmakers from both sides of the aisle are working hard to win over voters, afraid Congress is throwing the better part of a trillion taxpayer dollars at Wall Street.
SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: From a taxpayer point of view, if we don't act up here, your 401(k) plan, the value of your home, the ability to grow your business, the ability to borrow money to advance your family's interest will begin to be nonexistent.
PELOSI: People have to know that this isn't about a bailout of Wall Street. It's a buy-in so that we can turn our economy around.
(END VIDEOTAPE)
KEILAR: After the House votes on the bailout plan today, the Senate is expected to vote on it as early as Wednesday after the Jewish holidays -- John and Kiran.
CHETRY: All right. Brianna Keilar, thanks.
Well, it's issue number one on voters' minds, whether you're 20 and saving for college or your 50 and you're trying to put enough away to retire, what's in the bailout for you? Our business correspondent Christine Romans joins us now with more on this.
How does it affect the everyday taxpayer?
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: And the taxpayer is the part that people were really concerned about. Remember the screaming over $700 billion? Well, it looks like there are some safeguards and some provisions in there that are going to try to protect the taxpayer because this is something that the American people were screaming loud and clear. They didn't want to be on the hook for a whole $700 billion for bad debts made by the banks.
Now the idea here, the whole bailout idea, this helps everybody, it's unfreeze the credit markets, to get the banks lending back and forth to each other, and then it helps you by -- your company can make its payroll because they can, you know, borrow short-term to pay the bills and also so you can get car loans and school loans and the like.
Here, number one -- the government can buy stock in rescued firms that helps taxpayers. If a firm -- if the firms fail, the government is the first to recover assets. That helps taxpayers. And extends credit to small businesses -- that helps taxpayers as well because we are the ones who are out there using, starting up businesses and hiring people and the like. So all of these things are pretty key.
Now, we've heard the government say that they don't think they're going to have to use the whole $700 billion. They're going to have to ask for permission, every big chunk after $250 billion.
CHETRY: Right.
ROMANS: We'll see how much they actually have to use and how much they actually get back. There's a little eyeball rolling actually about -- about just how much it's going to cost in the end.
CHETRY: Right. And in some ways it looks like a wish list. How much they're going to be able to put into practice in practical terms seems to still be a big question.
ROMANS: Right. Absolutely. The details of this -- the devil is in the details. And I keep saying, this is a stabilization. Here's the thing.
This is to stabilize where we are. And a lot of people are saying that this pulls us back, rolls back the clock a little bit. We still have a lot of issues, a lot of issues to go forward. If you're facing foreclosure today, it's not helping you today. If you're losing your job today, it's not helping you today. Very near term, we still have a weak economy.
CHETRY: You know, in just a couple of minutes, we are going to be speaking to Senator Chris Dodd. He is one of the architects of this bill. He's somebody that's been talking a lot about homeowners facing foreclosure. So we're going to ask him to break down for us some of the finer points.
ROMANS: Right.
CHETRY: See if he can explain it.
ROMANS: I know.
CHETRY: Thanks, Christine.
Well, stock markets around the world tumbled over doubts about the bailout. Tokyo's Nikkei down more than a percent. Hong Kong's Hang Seng index losing more than four percent. And in London, the stock exchange also in negative territory. Futures here at home taking a hit as well.
ROBERTS: President Bush is going to try to calm investors before the opening bell rings today. He's going to speak to the nation live on CNN about half an hour from now. Kathleen Koch live for us at the White House.
What is he expected to say this morning, Kathleen?
KATHLEEN KOCH, CNN CORRESPONDENT: Well, John, the president is going to do basically what he's been doing for more than a week and that's trying to sell this massive bailout plan to a reluctant Congress and a reluctant nation. Obviously, we got a vote in the House today that really heightens the stakes. I mean, this is where the rubber meets the road.
The president is expected to echo some of what he said in the paper statement last night where he called it a "very good bill." The president says, "It provides the necessary tools and funding to help protect our economy against a system-wide breakdown."
Now, the president in that statement repeated his argument that this isn't just about Wall Street but Main Street saying, "The bill will help allow access to credit so American families can meet their daily needs and American businesses can make purchases, ship goods, and meet their payrolls."
A senior administration official tells me that the president has been personally involved throughout this process. He does not expect that to change. So if it's necessary for the president to personally call and lobby lawmakers that he will do just that. But the official also did say that right now when it comes to the vote, the White House believes it is in "pretty good shape," John.
ROBERTS: All right, though. No question, though, a number of House Republicans still pretty resistant to this whole notion.
Kathleen Koch for us at the White House.
KOCH: It's going to be tough.
ROBERTS: Yes. Kathleen, thanks so much.
You can watch President Bush's statement on the economic deal live at 7:35 Eastern time right here on AMERICAN MORNING.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Senator McCain is proposing $300 billion in tax cuts to some of the wealthiest corporations and individuals.
(END VIDEO CLIP)
CHETRY: Keeping them honest. The record behind the rhetoric. The truth squad dissects the debate and separates fact from fiction.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: John McCain, back on the campaign trail today. He has stops in Iowa and Ohio. He also spent the weekend in Washington trying to help Congress reach an agreement on the bailout package. He says the bill is necessary but not a cure-all.
(BEGIN VIDEO CLIP, ABC'S "THIS WEEK" SUNDAY)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: This is not going to all of a sudden, wow, everything is turned around, everything should be fine now. We've got a lot of other difficulties including the continued decline in housing -- home values. That has to reach a point where it's stabilized and again hopefully will go up in America.
GEORGE STEPHANOPOULOS, ABC ANCHOR, "THIS WEEK": You made the --
MCCAIN: But let's look at this -- let's look at this particular proposal. Let's get it through the Congress and the Senate and then sit down and see what else needs to be done before we say, got to do this, this and this as well.
(END VIDEO CLIP)
ROBERTS: Meanwhile, Barack Obama hit Michigan, North Carolina and Virginia over the weekend. Today he's in Colorado, and our Suzanne Malveaux, traveling with his campaign. She joins us live from Denver this morning.
Good morning, Suzanne.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Hey, good morning, John.
Well, as you realize, both these candidates are trying to prove that they have some leadership when it comes to the bailout legislation. We heard John McCain emphasizing he was in Washington, D.C. this weekend that he is taking credit for bringing some of the members of his own party back to the negotiating table.
In the meantime, Barack Obama was in Detroit, Michigan, campaigning but he is emphasizing that he was on the phone constantly with Secretary Paulson and he is also saying as well to voters, look, I laid out principles, some visions that he believes that basically protects the taxpayers, holds the CEOs accountable that he believes the administration has complied with.
(BEGIN VIDEO CLIP, CBS "FACE THE NATION")
OBAMA: This is probably the most serious financial crisis we faced since the Great Depression. And what we can't do is do nothing. What I absolutely insist on, though, is that the same sense of urgency that we have about Wall Street, we have about folks on Main Street who have been struggling for a long time.
(END VIDEO CLIP)
MALVEAUX: And, John, both of the candidates, they didn't praise this plan necessarily. Barack Obama saying that this is something where the taxpayers essentially have to clean up the mess, the mess on Wall Street and that John McCain simply saying this is going to be a hard pill to swallow. This makes sense, obviously, because either one of these men, whoever becomes president, under this deal is going to have to essentially come up with a plan in Congress. If this whole thing falls apart, how are the taxpayers essentially going to be paid back -- John.
ROBERTS: This is going be the first step along a very long road. What about the vice presidential candidates? Of course, they are in the spotlight Thursday night at St. Louis at that all-important debate. What are they up to these days?
MALVEAUX: Well, you know, I mean, everybody is going to be waiting for that and looking forward to that. There's a lot of anticipation. Sarah Palin, she's in Sedona, Arizona, at McCain's ranch, the compound there with a team practicing, studying.
We know that Joe Biden, he went from Michigan back with the Michigan Governor Jennifer Granholm. She is playing Sarah Palin, kind of as the sit-in during their mock sessions here. David Axelrod, the chief strategist, he told us yesterday that look, they're not going to attack Sarah Palin. They're not going to go after her. They're going to treat her with respect, but essentially they're going to make the link here, the case that Sarah Palin is connected to John McCain, John McCain is connected to George Bush -- John.
ROBERTS: All right. They're also trying to raise the bar there that suggests that she's got a lot of expectations to live up to.
Suzanne Malveaux for us in Denver this morning. Suzanne, thanks so much -- Kiran.
CHETRY: Well, join us for the vice presidential debate. It's this Thursday. It's live from St. Louis. It starts at 9:00 Eastern, but you'll want to join us earlier for coverage from the best political team on television.
Well, the truth squad taking on taxes this morning. Our Alina Cho keeping the candidates honest, and she joins us now.
Hey, Alina.
ALINA CHO, CNN CORRESPONDENT: Hey there, Kiran, good morning.
And we are taking a closer look at something Obama said during Friday night's debate. He says John McCain wants $300 billion in tax cuts for the wealthiest Americans. Sounds like a lot. Is it true? We'll tell you when AMERICAN MORNING returns.
(COMMERCIAL BREAK) CHETRY: Welcome back to AMERICAN MORNING.
It's time again to check in with the truth squad. This morning, Alina Cho has been looking into what Barack Obama said in Friday's debate about an issue that hits you in the pocketbook.
Good morning, Alina.
CHO: Good morning, Kiran.
It can hit hard. We're looking at tax cuts, something all of us, of course, care about. The candidates threw out a lot of numbers on the campaign trail and frankly, it all gets a bit confusing. So let's take a look at something Obama said during Friday night's debate.
(BEGIN VIDEO CLIP)
OBAMA: Senator McCain is proposing and this is a fundamental difference between us, $300 billion in tax cuts to some of the wealthiest corporations and individuals in the country.
(END VIDEO CLIP)
CHO: $300 billion in tax cuts for the wealthiest Americans? A lot. Is that true?
We started by asking the Obama campaign where they got that $300 billion figure in the first place. They told us they used the research from Tax Policy Center. That's a nonpartisan group which says that McCain will offer $3.4 trillion in tax cuts over 10 years.
Now, listen carefully. The Obama camp then subtracted from that amount what it believes the middle class and people at lower incomes will save. That leaves about $3 trillion over 10 years. Now take that number, divide it by 10 and that's how the Obama campaign says it came up with the $300 billion figure. Again, tax cuts they say will go to the rich if John McCain becomes president.
Now, we called the Tax Policy Center ourselves and they told us, well, there were fundamental flaws in the Obama math. The main one being that the Tax Policy Center says more of McCain's tax cuts would go to the middle class and people at lower incomes than Obama is counting.
So the question again is, when Obama said during Friday's debate that John McCain would provide $300 billion in tax cuts to the wealthiest Americans, was he right? The verdict from the truth squad is -- oh, boy, misleading.
The very group that provided the key figures for Obama says his conclusions are flawed. But keep in mind that Obama is on the right track. The center says while McCain offers across the board cuts, the wealthy definitely benefit more. Now as for Obama's plan, the center says he offers larger cuts for the middle class and people with lower incomes while raising taxes for the wealthy, but many people already know that. That's the latest. Kiran, back to you.
CHETRY: All right. Alina, thank you.
CHO: You bet.
ROBERTS: A tense standoff at sea as pirates seize a boat filled with deadly firepower and demand millions in ransom. We'll go live to Kenya for the latest on that.
And preaching politics, a group of pastors shares their views on the election and breaks the law.
You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
ROBERTS: High drama on the high seas to tell you about this morning. Pirates seize a ship carrying 33 Soviet-made tanks and a load of munitions. The hijackers are now demanding $20 million in ransom and say, one member of the ship's Ukrainian crew is dead.
Our David McKenzie has got the latest for us this morning from Nairobi, Kenya, which was supposed to be the destination of that armed shipment.
DAVID MCKENZIE, CNN CORRESPONDENT: Well, John, this is a serious situation off the coast of Somalia, as you say, one of the Ukrainian crew members has apparently died because of complications of high blood pressure. A tragic development in what is a tense situation.
There have been many pirate hijackings off the coast in recent months. This one is particularly alarming because of that deadly cargo.
(BEGIN VIDEOTAPE)
MCKENZIE (voice-over): Very little is stopping the scourge of the seas, even an impressive coalition naval force off Somalia unable to slow the attacks. Somali pirates have attacked dozens of ships this year and hijacked 25, but it's number 25 that puts a danger into even stock (ph) or relief.
This photo taken from a U.S. destroyer shows pirates in small skiffs holding the massive MV Faina hostage. The ship has the deadliest of cargo. It was bound for Kenya with 33 Soviet-made T-72 tanks, like these, and packed with small arms, grenade launchers and ammunition. A tense standoff is under way.
The U.S. Navy says that the USS Howard destroyer, part of the U.S. Navy Fifth Fleet, is in visual contact with the captured ship and monitoring the situation. And now the Russians are sending a missile frigate directly to the Horn of Africa.
The captured cargoes crew counts as some Ukrainians, Russians and Latvians. The biggest fear for the coalition is that the weapons can help fuel Somalia's conflict and with such dangerous cargo off the coast, the successful release of the vessel is paramount.
(END VIDEOTAPE)
MCKENZIE: Well, John, I just spoke to a member of that U.S. Navy Fifth Fleet, he said that there's not one boat there, there's actually several U.S. boats, he wouldn't clarify how many and which type of vessels. They're all monitoring the situation closely and now waiting for that Russian frigate to arrive which puts an international dimension to this already difficult situation -- John.
ROBERTS: Wow. It's amazing situation there. David McKenzie reporting for us from Kenya.
By the way, a couple of sources at the Pentagon tell us that there is a concern that if those pirates were to get a hold of those arms, not only could some of them show up on the streets of Mogadishu, but they could also be shipped to Sudan where the rebels there have been causing so much trouble for residents in Darfur.
Twenty-four minutes after the hour. We'll be back with more of the "Most News in the Morning." Stay with us.
(COMMERCIAL BREAK)
CHETRY: Well, it's unprecedented in its size, its detail, and its $700 billion price tag. Lawmakers have hammered out a financial bailout. A vote in the House could come as early as today. And the Senate will likely vote on this later in the week.
ROBERTS: It's supposed to be Wednesday.
CHETRY: Yes. It looks likes Monday today, the House could get it this afternoon or just in a couple of hours. And then after that, by Wednesday, we could possibly see the Senate.
Christine Romans joins us now. She's "Minding Your Business" this morning with a little bit more on what this entails and what we're really talking about here.
ROMANS: Well, we're talking about something that was meant to unfreeze the credit markets. I mean, this is the big goal of this, to unfreeze the credit markets. But as they were talking about this rescue, people started to hear from their constituents that they were concerned about taxpayer exposure and they were concerned about the fact that homeowners might not be helped in here, that this was going to bail out big banks. So there are some provisions in there specifically about homeowners that make this a little more palatable to some of the congressman and women who have to go home and sell it to their constituents.
First of all, it encourages the treasury to use its power to facilitate changes to home loans, especially the loans that are owned wholly by the government. To expand help against foreclosures in its home for homeownership for Hope Now -- hope for homeownership, who knows what it's called, but to help that. It also -- no change in the bankruptcy laws. And that was something that a lot of housing activists, affordable housing activists really wanted was some changes in the bankruptcy laws. They didn't get that.
So we'll see how much homeowner relief there is in this bill. But remember, this was designed to free up the credit system. It wasn't designed to help you pay your mortgage. That wasn't the intent. This was, as they're calling it, the rescue for Wall Street, which is really more like a stabilization for Wall Street. This is about making the lending between the banks easier and unfreezing that situation, and the idea being that helps everybody in the end because it gets the economy breathing again.
CHETRY: Right. All right. We're going to talk much more about it with a couple of senators who were instrumental in this as well.
Christine, thanks.
CHETRY: Right now, it's 28 minutes past 7:00, and we're going to get a look at the top stories.
Congress will get to work this morning as we've been talking about this billion dollar package. A vote on the bill could come as early as this afternoon in the House. Details of the plan were agreed to yesterday and among the stipulations included provisions that protects taxpayers, maybe even let us make some money off the deal. We'll get details on that coming up.
Also, the U.S. Senate agrees to $25 billion in loan guarantees for the auto industry. The goal is to provide the automakers with cash to spend on expansion projects. The provision was tacked on to a resolution that included funding for the wars in Iraq and Afghanistan.
And Wachovia could be the next troubled bank to get bought. Reports say Wachovia is in talks with Citigroup and Wells Fargo. The sixth largest bank in the U.S. saw its shares fall sharply Friday over concerns about its bad mortgages.
ROBERTS: Pardon me, the historic bailout in its current form contains more oversight than the president's original $700 billion plan did, this came after many lawmakers balked about cutting a blank check for the Bush administration.
Joining us now live from Capitol Hill is the House minority whip, Congressman Roy Blunt. He was the chief negotiator for House Republicans over the weekend.
Congressman Blunt, good to see you. A lot of Republicans still unhappy with this bailout plan. Are you going to be able to get it through the House today?
REP. ROY BLUNT (R), LEAD NEGOTIATOR FOR HOUSE REPUBLICANS: John, everybody is unhappy with having to do this. There's no question we'd rather not do this. We'd rather not be here. There's also no question that in terms of protecting the taxpayers and having all the oversight and transparency, that basically anybody could figure out how to it put in the bill, it's all there.
I think the alternative is what our members have to think about. Clearly, this is going to have to be a bipartisan effort. We are working closely with the majority to see if we can't get this done and get it done for the country today and it's not easy. There's no question about that but these aren't easy times.
ROBERTS: You know, we've heard the words rescue plan used to describe this. Speaker Pelosi has called it buy-in not a buyout. But Congressman Mike Pence of Indiana says he maintains this is the largest single corporate bailout in the history of this nation and he is urging his fellow House Republicans to "vote their conscience."
Do you have idea how many votes you have?
BLUNT: That's not a helpful view, I will tell you that. But -
ROBERTS: But it's a view that many people hold. I mean, many people are really upset by this.
BLUNT: I didn't mean it wasn't helpful on your part. I mean, when you say vote -
ROBERTS: No, no, no, I know.
BLUNT: It's the worst bill ever, that sounds like a pretty negative thing. I think the results are that the alternative is what you have to look at here. And you also have to understand that have move this from a bailout proposal to a bill that I think is much more of a workout. We put protections in there so the taxpayers shouldn't lose a single penny when this works itself out over a number of years. This is reinvesting back in our economy.
The taxpayers' money needs to be kept somewhere. In this case, we're trying to put it in assets that then become available not for corporations, but for student loans, for housing loans, for moms and dads who are trying to do the right things for their family, for the little guy who's trying to get the loan he needs to improve the corner service station.
That's what this bill is ultimately all about. I think we gut off it a bad start talking about it in the wrong way. We'll see this morning if we can get our members thinking about it in terms of what it really does, rather than what it's easy to say it might do.
ROBERTS: Congressman, I knew you that you were talking about Congressman Pence's view, I wasn't taking offense personally. We do want to let you know that we are a little than two minutes away from the President so we may have to cut this short. Is this going to work? You know, Dow futures are down almost 200 points today. It doesn't seem to be a whole lot of confidence in the market, but at the same time, there are a couple of things going on in Europe regarding banks.
BLUNT: Well, there are things - a number of things happened in Europe over the weekend. We saw a major bank story this morning in the United States. I think our members are now beginning to hear for the first time from their bankers at home that things may not be nearly as optimistic as bankers themselves may have thought they were four or five days ago. Frankly that gives our members some of what they need, we've done some things here that really help local bankers get money available to local people and that's the goal.
ROBERTS: Congressman, we just got about 45 seconds left. So very quick answer if I could. Taxpayers, what about them? They look at the S&L bailout, the bailout of Fannie Mae and Freddie Mac, $300 billion, $85 billion to AIG, now $700 billion. A lot of them are saying never again. I mean, is there any mea culpa from lawmakers, is the sorry our policy got you into this, we'll make sure it doesn't happen again?
BLUNT: I think there is no question the financial system has outgrown the regulatory system. Secretary Henry Paulson, to his credit months ago, proposed a new way to look at that. We're going to have to look at how we regulate this system, where money, not only moves around so quickly but there's so much interlocking action between what happens here and what happens on Main Street. We've got to see that that doesn't happen.
We also need to be sure we're passing the bill today, and I believe we are, where taxpayers don't lose money. They just invest some money in a way that helps families get what they need between now and the time we work through the problems we're facing at this very minute.
ROBERTS: Certainly it would be helpful if it worked out it that way.
Congressman Roy Blunt, good to talk to you. Thanks very much for being with us this morning.
Just waiting for the president now -- Kiran.
CHETRY: Yes, that's right. We have a live look right now from the White House. We see the president walking out right now where he's going to give his comments about this $700 billion deal. All but a done deal by many accounts. Looks like the House is going to talk about it today. Possibly vote today. Here's the president.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Yesterday, leaders in Washington reach an extraordinary agreement to deal with an extraordinary problem in our economy. Working closely with my administration, congressional leaders from both parties produced the emergency economic stabilization act.
A bold bill that will help keep the crisis in our financial system from spreading throughout our economy. This legislation that deals with complex issues and negotiators were asked to address them in a very short period of time. I appreciate the leadership of members on both sides of the aisle who came together when our nation was counting on them.
Negotiations were sometimes difficult. But their hard work and cooperation paid off. Bipartisan economic rescue plan addresses the root cause of the financial crisis. The assets related to home mortgages, that have lost value during the housing decline. Under the emergency economic stabilization act, the federal government will be authorized to purchase these assets from banks and other financial institutions. Which will help free them to resume lending to businesses and consumers. The bill also includes other important ideas put forward by members of Congress from both parties.
For example, the bill requires the establishment of a guarantee program that will insure assets at no cost to the taxpayer. The bill provides strong bipartisan oversight so Americans can be certain their tax dollars are used carefully and wisely. The bill insures that failed executive executives do not receive a windfall from your tax dollars.
With this strong and decisive legislation, we will help restart the flow of credit so American families can meet their daily needs and American businesses can make purchases, ship goods and meet their payrolls. We'll make clear that the United States is serious about restoring confidence and stability in our financial system.
I know many Americans are worried about the cost of the bill. And I understand their concern. This bill commits up to $700 billion taxpayer dollars because a large amount of money necessary to have an impact on our financial system. However, both the nonpartisan Congressional Budget Office and the Office of Management and Budget expect that the ultimate cost to the taxpayer will be far less than that.
In fact, we expect that over time, much, if not all of the tax dollars we invest will be paid back. Now that this legislation has been agreed to by leaders of both parties, it must be passed by Houses - both Houses of Congress. I fully understand that this will be a difficult vote. But with the improvements made in this bill, I'm confident that members of both parties will support Congress can send a strong signal to markets at home and abroad by passing this bill promptly.
Every member of Congress and every American should keep in mind, a vote for this bill is vote to prevent economic damage to you and your community. This is a volatile time for our financial system and our economy. Even with the important steps we're taking to address the current crisis, we will continue to face serious challenges.
The impact of the credit crisis, and the housing correction will continue to pressure our financial system and impact the growth of our economy for some time. And I'm confident that this rescue plan, along with other measures taken by the Treasury Department and the Federal Reserve will begin to restore strength and stability to America's financial system and overall economy.
And I'm confident that in the long run, America will overcome these challenges and remain the most dynamic and productive economy in the world.
Thank you.
ROBERTS: Well, quite a different tone there from President Bush this morning, talking about the importance of passing this bill than it was when he addressed the nation last week when he said if we don't get this done we could throw the markets into a panic. The president there saying this will continue to restore strength and stability in the markets and in the overall economy. Reaching out to members of Congress who are going to consider this bill today in the House, who consider it descend on Wednesday, saying the vote for the bill is "a vote to prevent economic damage to your community.
So really bringing it down to the ground level for all of these members of Congress who will be considering whether or not to support this bill. As we were saying, there are a handful of Republicans who are very, very opposed to this bill. Congressman Roy Blunt talking about that just a couple of minutes ago.
And also the president suggesting about the Congressional Budget Office and the Office of Management and Budget at the White House are saying this is not going to cost the taxpayers $700 billion in the long run. In fact the president is saying we will get back most, if not all of the money and there is that provision in there that if they don't get back all the money then he would have to levy some sort of fee or seek legislation seeking some sort of a fee on financial institutions to try to pay back the rest of it.
39 minutes after the hours. You're watching the "Most News in the Morning."
CHETRY: Bailout break through.
(BEGIN VIDEO CLIP)
SEN. CHRIS DODD (D), CHMN. SENATE BANKING CMTE.: To try and put ourselves back on our feet again.
(END VIDEO CLIP)
CHETRY: A key member of the negotiating team speaks out live. Senator Chris Dodd with more on how that $700 billion will be spent.
(BEGIN VIDEO CLIP)
DODD: it's not a bill that we would have written alone.
(END VIDEO CLIP)
CHETRY: You're watching the "Most News in the Morning."
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CHETRY: Well, we just heard from the President about this unprecedented $700 billion plan to stem the bleeding on Wall Street and in the banking industry. Joining me now is Senator Chris Dodd. He is the chairman of the Senate Banking Committee and one of the chief architects of the plan.
Senator Dodd, thanks for being with us this morning.
DODD: Thank you.
CHETRY: We know that some people had to be dragged along a little reluctantly when it comes to this bill, but are you confident this will be approved this week?
DODD: Well, I hope so. This is a very different proposal than what we were sent 11 days ago. The bill, the three-and-a-half page bill asking for $750 billion was just almost when they say dead on arrival. That never would have worked, that would have never supported that nor do I think my colleagues would have. We have added things like very strong executive compensation, no golden parachutes here, taxpayer protection, greater accountability, forbearance on foreclosures and limiting the access to the $700 billion to some extent over the next several months, but I believe this can work.
I believe the alternative of doing nothing was unacceptable. If this were just about bailing out Wall Street, I wouldn't stand here before you or support this for one second, but because I deeply believe this is essential for dealing with people's retirement account, student loans, small businesses all across this country of ours. The credit is not flowing to them and that really the problem here. That's why I'm supporting this and why we spent 11 days putting this together.
CHETRY: Right. Let me ask you about this, Senator Dodd, about some of the specifics, on how it would help everyday Americans. One of the things it calls for is the government to either modify troubled loans for people who are at risk of losing their homes.
DODD: Right.
CHETRY: In some cases if they actually have bought out that troubled mortgage that they can actually directly help out and adjust them.
How will this work? Will homeowners contact a department in the government or will you guys be contacting the home owners? How does that work?
DODD: Well, both. In fact, even the lending institutions, a year and a half ago I tried to get the lending institutions to do this, to reach out to their customer base to resolve these mortgages. Because that is the underlying problem here, more than anything else, we need to put a tourniquet on that if we're going to really solve this problem.
And so the lenders, the institutions, that were forming. In fact, on October 1, there's a whole program that will begin across the country, reaching out to those people to invite them back in to work that out. Working on the assumption that the overwhelming majority of owner-occupied residences want to stay in their homes in our economy.
CHETRY: Yes. Let me just ask you a quick question, is this going to get easier now that the government may hold some of the mortgages? Because --
DODD: I hope so.
CHETRY: There are a lot of people who tell us that there's hope now and some of the other programs that were designed to help, they're really not getting a response from their banks.
DODD: Well, that's true. That program didn't work at all. The one we designed in July we believed will because it has far greater teeth into it. Within that program, it was sort of a volunteer program that really didn't do much at all. This program we hope will by reaching out to people. In addition to that, the federal government now doesn't hold those mortgages but turns them back over to our communities where those mayors and local governments can then sell those properties, get them back on the market. That's a major feature of this bill as well.
CHETRY: Let me ask you about this one, too, it also mentions that the Treasury is going to have authority to decide what kind of stake that the government should take in some of these companies so the taxpayers will benefit if the companies return to profitability.
How will that work? Will that be in the form of a rebate check? How will taxpayers going to benefit if these companies turn a profit?
DODD: Well, we're first in line. We insisted upon that, I want to make sure that because we're putting up these resources, that we be the preferred, if you will, lender in that sense. So that when there is profit, we hope there is as these assets gain value, that we'll be the first ones to benefit from it. It's what's called a warrant.
In effect, we become a part owner of this so that we can benefit first in line. This will depend -- there are two different kinds of things that may occur here, a direct investment which would help more directly. But then also what they call an auction process, we benefit under that plan as well.
CHETRY: All right. Christopher Dodd, Chairman of the Senate Banking Committee, keeps us posted as this moves through now the House possibly today and then on to the Senate later in the week.
Thanks for being with us.
DODD: Thank you.
CHETRY: Preaching politics.
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UNIDENTIFIED MALE: When you go into the voting booth, I urge you not to vote for Obama.
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CHETRY: From Atlanta, to L.A., a look at how pastors are mixing politics with prayer and why they're breaking the law to make a point.
(BEGIN VIDEO CLIP) UNIDENTIFIED MALE: There's no way in the world a Christian could vote for Barack Hussein Obama.
(END VIDEO CLIP)
CHETRY: You're watching the "Most News in the Morning."
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ROBERTS: Welcome back to the "Most News in the Morning."
The old saying goes you should never talk about religion and politics in a polite company, but a group of pastors ignored that advice and it could cost their congregations. Jason Carroll joins me now.
What's the story?
JASON CARROLL, CNN CORRESPONDENT: It could cost them dearly. You know we've heard the candidates on issues such as the economy and foreign policy, but which candidates best upholds Christian values on issues such as same-sex marriage and abortion? A group of pastors decided which candidate is best and violated federal law by voicing their opinions from the pulpit.
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PASTOR JODY HICE, BETHLEHEM FIRST BAPTIST CHURCH: On these issues -
CARROLL (voice-over): From a pulpit outside Atlanta.
HICE: When you go into the voting booth, I urge you not to vote for Obama.
CARROLL: To church pews in Los Angeles -
WILEY DRAKE, FIRST SOUTHERN BAPTIST CHURCH: There's no way in the world a Christian could vote for Barack Hussein Obama.
CARROLL: Sunday sermons were not just about Christ's teachings but teaching parishioner who they had support for president.
DRAKE: I do believe you could vote for John McCain.
HICE: He is who I'll be voting for and who I urge you to vote for.
CARROLL: Thirty pastors in almost two dozen states endorsed a candidate from the pulpit Sunday and in doing so broke a federal tax law which prohibits churches from and other tax exempt entities from endorsing candidates. Pulpit-free Sunday was organized by a conservative organization called Alliance Defense Fund, ADF. Its ultimate goal, repeal the IRS' 54-year-old ban on political endorsements by tax exempt houses of worship.
The pastors who joined the ADF's effort felt so strongly, they sent their sermons to the IRS.
DRAKE: We're going to stand up to the IRS or to anybody else. We're going to stand up.
CARROLL: A group called Americans United for a Separation of Church and State say what the pastors are doing not only violates federal law, it's wrong for other reasons.
ROB BOSTON, AMERICANS UNITED FOR A SEPARATION OF CHURCH AND STATE: They want to drag churches into the political fray and have them just become another extension of a never-ending ongoing political campaign in this country, I think the American people are saying no to that.
CARROLL: Actually some parishioners who attended the sermons are saying yes.
UNIDENTIFIED MALE: The pastor has every right to teach what the Bible says and if a candidate is not abiding by what we believe in, he has a right to let us know that.
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CARROLL: Well, the IRS is monitoring developments. The pastor from the church in Los Angeles says an IRS agent actually attended his sermon. The IRS has vowed to take action as appropriate. Translation, some of these churches are now in danger of losing their tax exempt status.
ROBERTS: Keep monitoring that for us.
CARROLL: We will.
ROBERTS: All right. I see another shot fired. Jason, thanks so much. 51 minutes now after the hour.
Children left behind --
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UNIDENTIFIED MALE: Trauma that will last throughout the child's life.
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ROBERTS: A safe haven law intended for infants backfires when parents start dropping off troubled teens. Plus, hip-hop devote. Bow-wow on getting young voters in the booth on the most politics in the morning.
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CHETRY: Barack Obama and John McCain are back on the campaign trail this morning after facing off Friday on their first presidential debate. The primary focus was foreign policy so how did they do? Well, Drew Westen is an expert on voter psychology and in his book "The Political Brain," he writes most people actually vote with their gut not necessarily along the issues.
So this is fascinating. What do you find that draws people to specific candidates most? It's not ideology or issues?
DREW WESTEN, FMR. INFORMAL ADVISER, OBAMA CAMPAIGN: Well, it's mostly how they feel about the parties and their principles, which is about 80 percent of their votes. The other is how they feel in their gut about the candidate, do they like them? Do they feel comfortable? Do they feel like this is someone who shares their values?
CHETRY: Very interesting. So let's take a look see what you consider are some of the hits in the debates, thing that the candidates did well. We'll start with Barack Obama. He was taking on John McCain about the Iraq war. Let's listen.
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OBAMA: You said we knew where the weapons of mass destruction were. You were wrong. You said that we were going to be greeted as liberators. You were wrong. You said that there was no history of violence between Shia and Sunni and you were wrong.
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CHETRY: Did this score well with the people watching the debate, why?
WESTEN: I think mostly for a couple of reasons, one is that he took it straight to McCain. He showed that he had strength and in a debate on national security that's what you really need to be able to show, who is going to blink in the face of an argument with Putin. But I think the other thing was there was a rhetorical device he used where he said you were wrong, you were wrong. It's like kind of repetition that we're all used to hearing from our preachers, our rabbis, our pastors and that kind of rhetorical device works very well.
CHETRY: Very interesting. John McCain challenged Barack Obama about congressional spending. This is what you called a hit for John McCain. Let's listen to what he said.
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SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: We had an energy bill before the United States senate. It was festooned with Christmas tree ornaments. It had all kinds of breaks for the oil companies. I mean billions of dollars worth. I voted against it. Senator Obama voted for it.
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CHETRY: There you go. You said this was a hit for John McCain, why?
WESTEN: Well, it was one of the few times that either one of them used any kind of metaphor. And you could see the independent spike on the bottom of the screen on CNN that they liked it. People want to feel, they want to feel like their candidate is connecting them and metaphors are rich and they make people connect.
CHETRY: What happens -- we've been doing a lot of what we call truth squadding on this show and on this network in general. When we take something that the candidate says and show people whether or not it was truthful. How does that resonate after the fact?
WESTEN: Well, you know, I wish I could tell you that it resonated more. It does have some impact if there's really a whopper. You know, if someone says that I said thanks but no thanks to the bridge to nowhere and they actually said, please, give me that bridge to nowhere. So that kind of fact might resonate, but the biggest thing that resonates are stories. That's what was really missing from this debate is that we didn't hear either one of them tell a terribly coherent story about why I understand people like you.
CHETRY: Right.
WESTEN: And why I share your values and why this guy over here really doesn't.
CHETRY: All I'm thinking about is Bill Clinton when you say that because he was a master at that.
WESTEN: He was brilliant.
CHETRY: Let's get to the debate on Thursday. This is going to be probably one of the most highly watched events on television in this political season. It's Joe Biden and Sarah Palin in the vice presidential debate. How does Joe Biden go about -- because he's the one that has a little bit -- a lot more experience, let's say, a lot more time in the Senate. Seems to talk easier off the cuff. How is he going to go against Sarah Palin without appealing to sort of steam roll her?
WESTEN: Well, the first thing I think he needs to do is do exactly what he did Friday night after the debates when he was on as a surrogate for Barack Obama talking about Barack Obama's performance afterwards. He was so comfortable in his skin. He was funny. And when he attacked, he did it in a way that was you know, just, it was actually the way that Sarah Palin does it. She'll stick that dagger right in. It comes out and all you see is a smile on her face, the lipstick and the blood. You have no idea that you just got stabbed.
CHETRY: She got hit a lot with some criticism after some of the interviews that she gave to Katie Couric, et cetera. How does she keep it real, I guess you can say, and continue in the vein that got the GOP base so fired up and yet at the same time make sure that she's not making campaign gaffes?
WESTEN: I think what she needs to do is what she will do, which is that she will communicate directly to the voters. She'll try to connect with them in a way that's close to their hearts. She'll use colloquial phrases. She'll use the kind of metaphors that people understand. And I think the biggest mistake the Democrats could make is to keep expectations low for her because I think there's been a real attempt to keep them low.
And I think they need to say, look, this woman, I don't know how many colleges she went to but at least a couple of them she was a broadcast journalism major. She's a great speaker. I would not, as President Bush would say, I would not misunderestimate her.
CHETRY: All right. Drew Westen, the author of "The Political Brain." Thanks for being with us.
WESTEN: Thanks for having me, Kiran.
