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Record-Breaking Rebound on Dow; The Charges and Fallout from the Report on Troopergate; Interview with John McCain

Aired October 13, 2008 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, the breaking news -- a stunning turnaround on Wall Street. Stocks skyrocketing with the Dow Jones average seeing its biggest one day gain in history -- up more than 900 points.
Also, does John McCain have a new plan for the financial crisis? He sits down one-on-one with Dana Bash to explain. Plus, his surprising take on the polls that show him trailing Barack Obama.

And abuse of power, but no laws broken -- an in-depth look into the probe of Governor Sarah Palin and the so-called Troopergate scandal.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Election day is just some three weeks off from tomorrow. Republican presidential candidate John McCain is trailing the Democratic candidate, Barack Obama, in the polls.

Listen to what Senator McCain is now telling CNN.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I'm doing just fine. I'm happy where we are. We're -- as I said in my statement, we've got them just where we want them.

(END VIDEO CLIP)

BLITZER: All right. That's just part of our one-on-one interview that Senator McCain gave Dana Bash just a little while ago covering the financial crisis, Republican hostility toward Barack Obama and a lot more. That interview only minutes away. Stand by for that.

First, though, the breaking news. Historic record-setting rebound on Wall Street. Stocks bouncing back from more than a week of unprecedented losses. The Dow Jones Industrial Average surging more than 930 points today. This is the biggest one day gain ever in terms of points.

Our senior business correspondent, Ali Velshi, and our senior correspondent, Allan Chernoff -- they're both watching what's going on -- Ali, let me go to you first.

What does this mean right now for this overall comeback, if you will, where the markets stand right now? ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Well, it means two things. One -- and Allan will give you this perspective. Remember, we've gained 900 points after losing more than 2000. So we're not even to where we were in the first place.

But we gained $1.2 trillion in market value today, because if you didn't see a good reason to buy after all the news that came out today, well, you know what, Wolf, you should just throw in the towel.

The U.S. Treasury unveiled scant new terms of the $700 billion bailout, so that was helpful. At least there was some sense of movement.

Several European banks guaranteed bank to bank loans, that if the banks were to loan each other, the government would guarantee that those loans would be paid.

The U.S. is considering further intervention into the banking system, so that kind of helped.

And Obama came out with a plan for a stimulus package of more than $60 billion worth of stimulus that would go directly to individuals. And Nancy Pelosi said that Congress could come back early to deal with those plans -- not before the election, but just after.

So, if you take all of that together -- and you can't think that that will at least help some of this economy out, again, then, you know what? Then you shouldn't be in the market.

But what happened is a lot of the people who run your 401(k)s -- those portfolio managers were in there buying because they saw benefit, they saw that there are lots of forces at play to try and fix this economy. It's not going to get us out of this recession, but it will certainly to help and it may put money in people's pockets. And that is what led to this rally. Again, we're below where some people thought we would ever be this year, but it's a very positive sign.

The volume, Wolf, was good. It wasn't great. It wasn't like what we saw last week with the sell-off, but it was pretty good.

BLITZER: All right. Ali, stand by.

Allan Chernoff is watching this, as well -- Allan, you've been watching the markets for what, 20 years or so. This was a dramatic day, as all of us know. I guess a lot of folks saw some bargains out there and they went running in.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: No question, Wolf, a history-making day. And the market really, really was due for a bounce back. You always get a bounce back after a crash. Consider -- last week, the stock market was down by 18 percent. Today, we had that 11 percent bounce back -- more than 900 points -- a record point gain.

But this, as I said, always happens after a crash.

Let's go back a little bit in history -- first of all, back to 2001. You'll remember after those horrific terrorist attacks, the market was closed for a few days. The week after, when it opened, down 14 percent. The following week it rebounded 7 percent.

And then, 1987 -- some of us remember Black Monday, October 19th -- the Dow fell nearly 23 percent in one day. The next two days shot back up by 17 percent.

Now will the gains continue? Back in '87, the gains did continue. But in 2001, we started dipping back down. We had a recession and the stock market hit a new low in 2002.

What's happened here is that investor confidence has been shattered. And analysts say it is going to take months totally rebuild that confidence. We had a fantastic day today. We may have another follow through tomorrow. But analysts say do not count on the stock market skyrocketing day after day -- Wolf, back to you.

BLITZER: All right, Allan, stand by. We're going to stay on top of this story for our viewers.

We also want to stay on top of the world of politics right now. We're looking right now at the fallout from a special investigation that found the Republican vice presidential nominee, Sarah Palin, that she did, indeed, abuse her power as Alaska's governor in firing an official who refused to fire her ex-brother-in-law, a state trooper.

Brian Todd is working this story for us. We've been hearing about it since late Friday night. But you've been looking in depth into what exactly the charges were in this independent report and the fallout from then.

What are you picking up?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, a lot of fallout being generated, as you might imagine, not only on the campaign trail, but in Alaska, as well. Sarah Palin herself speaking as if this reports vindicates her.

(BEGIN VIDEOTAPE)

TODD (voice-over): She stands defiant after a mixed bag report on her conduct as Alaska's governor.

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: There was no unlawful nor unethical activity on my part.

TODD: Yes and no. The final report on Sarah Palin's firing of Alaska's public safety commissioner, Walter Monegan, says it was "a proper and lawful exercise of her constitutional and statutory authority."

The report does not find Palin broke any criminal laws, but it does say she violated state ethics rules and "abused her power by trying to get State Trooper Mike Wooten fired. Wooten had been involved in bitter divorce from Palin's sister. Palin adamantly refutes that claim. PALIN: There was no abuse of authority at all in trying to get Officer Wooten fired. In fact, remember, Officer Wooten is still an Alaska state trooper.

TODD: The report says Walter Monegan's refusal to fire Wooten was a contributing factor in Monegan's own termination last summer. It also finds Palin's husband Todd repeatedly used his wife's office to pressure Monegan and others to fire the trooper and that overall, Todd Palin "spent at least 50 percent of his time in Governor Palin's office."

The McCain-Palin team tells CNN: "Todd Palin acted appropriately as someone concerned about his family's protection."

We asked an expert on political ethics to weigh in on the findings.

LARRY SABATO, UNIVERSITY OF VIRGINIA: It is certainly not insignificant that the governor's spouse, for example, was advocating over and over for the firing of that particular state trooper. On the other hand, Alaska, as with many states, has a strong executive. And that executive is given power to dismiss without cause anyone in a senior position.

TODD: Then there are the claims of partisanship from the McCain- Palin team. They tell us even though the Alaska panel was made up of eight Republicans and four Democrats, the men who led the team, Prosecutor Stephen Branchflower and Senator Hollis French, are Democrats who support Barack Obama.

(END VIDEOTAPE)

TODD: Neither responded to our calls and e-mails today.

Now, Hollis French is a Democrat and supports Obama, but his aides that he's been partisan in this matter. We're told by journalists and legislators in Alaska that Steven Branchflower is a straight-shooting prosecutor who's on the conservative side. And they point out he has been critical of Walter Monegan in the past -- Wolf.

BLITZER: Is there any indication, Brian, that Governor Palin tried to stop her husband from interfering, getting involved and getting this state trooper fired?

TODD: A little bit of confusion there. The report itself says that she "failed to act to stop it." But a campaign spokeswoman points out that Todd Palin's own statement in his interrogatory says that the governor, Palin, told him, her husband, to stop talking about it and that she may not have been fully aware of everything he was saying and everyone who he was talking to.

So there's a little nuance there. It's also a little bit of confusion. It may be something that she uses in the future, though there's going to be a board of inquiry again into this matter and we'll hear more about it.

BLITZER: There's a separate inquiry going on right now -- a personnel board. All right, thanks very much for that, Brian.

Barack Obama and former radical William Ayers, fair game for the McCain campaign?

(BEGIN VIDEO CLIP)

MCCAIN: The fact is that Senator Obama was not truthful in telling the American people about his relationship. Very, frankly, Dana, I don't give a damn about an old, unrepentant terrorist. But what I do care is telling the truth to the American people.

(END VIDEO CLIP)

BLITZER: And he's just getting started. Senator McCain talks one-on-one with CNN about GOP anger at Senator Obama.

Also, McCain coming under fire from a long time friend, who now accuses his campaign of stoking hatred, recalling the darkest days of civil rights movement.

And did a laptop or a cell phone cause a near disaster for a passenger plane?

We have disturbing new details. Miles O'Brien all over this story right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The Republican presidential candidate, John McCain, talking about the financial crisis, his position in the polls, GOP anger at Barack Obama and more.

He sat down just a little while ago one-on-one with CNN's Dana Bash. Here is the interview.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: First, I just wonder if you can clear up a little bit of confusion about whether or not you're going to offer any new PACs (ph) or economic proposals this week?

Your friend, Lindsey Graham, said yesterday that he thought it would be a good idea to have some new reduction in taxes on investments. Some of your aides are saying no, no, no, that's not going to happen.

Are you going to offer anything new in terms of economic proposals this week?

MCCAIN: I'll let you know tomorrow.

BASH: Is that a yes?

MCCAIN: I'll let you know tomorrow.

BASH: Well, your opponent, Barack Obama, did offer something new today. I'm sure you've heard about it.

MCCAIN: Um-hmm.

BASH: He said that he said that there should be a 90-day foreclosure moratorium for homeowners who act in good faith and, also, a $3,000 tax break for businesses that create jobs. What do you think about it?

MCCAIN: Well, obviously, the second part has been a proposal of mine. And I mean, we all want to create jobs and create incentives for doing so.

On the first one, he wants to give a 90-day moratorium. I don't -- that's fine. But what I want to do is have some of this $750 billion -- about $300 billion of it -- go and buy out these bad mortgage -- and, of course, the parameters are for people it's a primary residence, a certain income level and all that -- and give them a new mortgage. Give them had a new mortgage so that they can afford it and they can stay in their homes.

And I might add, during the Depression, there was homeowners -- it was a -- it was a bureaucracy that was set up that the Homeowners Loan Corporation. And they provided these new mortgages. And after a number of years, actually the government got paid back. And that is a suggestion that Senator Hillary Clinton made not that long ago. I agree with her.

BASH: And I want to ask you, actually, about that particular proposal. I'm sure you've heard -- we've heard some angst, even ire, from some of your fellow conservatives about that, saying, wait a minute, why does Senator McCain -- somebody who follows the conservative credo -- want to use government money to help borrowers and lenders who you yourself said in the spring should not be helped if they're irresponsible?

MCCAIN: Well, first of all, I want to help responsible people. Second of all, who are we helping now? Who are we giving the money to now? The same people who were the co-conspirators in this crisis, the greatest crisis of our time?

That's who we're giving the money to now. And, again, I want people to be able to stay in their homes.

This crisis -- this conflagration was ignited by the housing crisis. And it was Fannie and Freddie and Wall Street and corruption and a certain cronyism in Washington, D.C. that caused it. And so until we get housing prices -- home prices to stop their decline and start back up again, we're not going to really be able to make a lot of progress.

So, in all due respect of the critics, who are we giving the money to now?

The same people who bear a great deal of responsibility for this crisis, when, in fact, there were homeowners who owned their home who now find a plummeting value and their very American dream is being jeopardized.

BASH: Let me ask you about the economy. You said yesterday that because of the economic crisis, that has contributed to your fall in the polls.

But if you believe -- and I obviously know you do -- that you have the right policies, the right ideas, why should had a bad economy being be a negative thing politically for you?

MCCAIN: Well, I think it's a negative for all of us who are in elected office and -- but I have a positive plan. We'll bring the economy back. I'm campaigning all over this country and I see people reacting very positively to my proposals.

BASH: Why has Barack Obama -- he's in elected office -- his poll numbers seem to have gone up and confidence in him with regard to the economy seems to have gone up, while you have had the opposite?

MCCAIN: Well, you know, what seems to be is what seems to be in others. We're doing just fine. I'm happy where we are. We're, as I said in my statement, we've got them just where we want them. We're going to be just fine.

I have been written off, Dana, on so many occasions by political pundits that it's hard for me to count. And I think it's more lives than a cat. But the point is, we're doing fine. I'm happy with where we are. We're fighting the good fight. That's what it's all about. That's what I love.

BASH: Let me ask you about Jeremiah Wright. You have made it very clear in your advertisements and even on the stump that you believe associations with regard Barack Obama are fair game. And you've been specifically talking, though, about William Ayers.

MCCAIN: Um-hmm.

BASH: Many Republicans -- I'm sure you've heard this -- have said to me and to others, why is William Ayers fair game and Jeremiah Wright, who has a much more closer established relationship with Barack Obama, in your view, is off the table?

MCCAIN: Well, because William Ayers was an unrepentant terrorist. I mean he's a person who, on 9/11, said that he wanted to set off more bombs. I mean this is a very big question I think that people have to ask.

And clearly, Senator Barack Obama said he was "a guy in the neighborhood."

BASH: Why not Wright? Why not Wright?

MCCAIN: Because Mr. Ayers is an unrepentant terrorist. And that's -- that's a unique individual in American history -- a person who still wants to destroy America. He and his wife -- they both want to still destroy America. That's an unusual breed of cat.

And so look -- and the fact is that Senator Obama was not truthful in telling the American people about his relationship.

Very, frankly, Dana, I don't give a damn about an old unrepentant terrorist. But what I do care is telling the truth to the American people. Senator Obama didn't tell the truth to the American people when he signed a piece of paper, back when he was a dark horse, that said he would take public financing if I did. That's his signature on a piece of paper.

He wasn't telling the American people the truth when he told them that he would "sit down with John McCain." He looked right in the camera during his debates with Senator Clinton -- he would sit down and negotiate with John McCain before he made a decision on public financing.

BASH: Now, whether or not, since I know you've heard this during your rallies, since you have been talking about Ayers -- and your running mate has, also -- we've heard people in the crowd screaming things like "Terrorist!," "Traitor!," when you talked about Senator Obama -- and worse.

MCCAIN: I've heard the same thing.

BASH: When you hear that do you (INAUDIBLE).

MCCAIN: I've heard the same thing at...

(CROSSTALK)

MCCAIN: I've heard the same thing, unfortunately, at Senator Obama's rallies being said about me. There's always a fridge element that's in politics in America. The overwhelming majority of the people that come to my rallies are good and decent and patriotic Americans. And if they're worried about this country's future, that's correct.

But to somehow -- to somehow intimate that of the thousands of people -- 17,000 people were just with us in Virginia. And to somehow intimate that the overwhelming majority of those people, with rare exception, are somehow not good Americans or are motivated by anything but the most patriotic motives, is insulting. And I won't accept that insult.

I will tell you right now, I'm proud of my supporters. I'm proud of the people that come. I'm proud of those veterans who have served their country that come to my rallies and fire me up. I love them.

And for anybody to intimate that the overwhelming -- 99 99/100 percent is anything but patriotic and good Americans, is, frankly, unacceptable and I won't -- and I won't stand for it.

BASH: Two more questions on this topic, if you will.

MCCAIN: Sure.

BASH: The chairman of the party of the state you were just talking about, that you were just in today, Virginia, he said that he believes that there is a connection between Osama bin Laden and Barack Obama because he said they both have friends who bombed the Pentagon. When you hear something like that...

MCCAIN: Well, and that's had a GOP leader. And I have repudiated every time there's a statement about Senator Obama made that I felt was inappropriate and unfair. You have people in political campaigns, on the outermost fringe on both ends of the spectrum. Now, a respected member of Congress, John Lewis, who I admire and have written about how much I admire, somehow linked me and Governor Palin to racism, to segregationism, to some of the worst aspects ever to appear in American politics. And Senator Obama refuses or has not yet repudiated those comments.

That's not from some quote party official. That's from one of the most respected people in America. It's unfair. It's unfair and it's outrageous.

BASH: And because I do want to ask this one last question.

MCCAIN: Yes, sure.

BASH: Since you brought up John Lewis and I think there's an important...

MCCAIN: Sure.

BASH: I was told by one of your aides that when you saw that statement from John Lewis, your campaign kind of stopped and you stopped and you talked to your aides and you said this is -- this is a big deal and we need to figure out how to respond to that. And, of course, you ended up coming out with your own statement in your name. And in that statement, you said that you were concerned that Lewis and people like him were trying to "shut down debate."

What did you mean by that? What do you think that they're trying to do with regard to...

MCCAIN: The accusation that Congressman Lewis made is so far out of bounds and so disturbing to me -- so of course it topped me in my tracks. I never believed that John Lewis, who is an American hero, who I admire, would every make a comment of that nature. He even referred to the bombing of a church in Birmingham.

That's unacceptable. It's totally unacceptable. And, of course, I'm not going to accept it and I'm going to reject it.

BASH: When you say shut down debate so you think it's -- do you think that they're using race -- let's get -- let's have some straight talk, as (INAUDIBLE)...

MCCAIN: I say...

BASH: (INAUDIBLE).

MCCAIN: No, when anybody says anything like that, that is so behind the pale, that it stuns me. Because that's not what America and this debate should be all about. And so I will reject vigorously and I will reject that kind of language. And again, I'm so disappointed in Congressman John Lewis, who I have admired and respected. This isn't just some obscure party official. And that's what's so totally unacceptable about it.

BASH: Senator, thank you very much.

MCCAIN: Thank you.

BASH: Just three weeks left, are you feeling well?

MCCAIN: Thanks for having me on. It's a real pleasure. It's always good to be with you.

BASH: We appreciate it. Thanks for your time, sir.

MCCAIN: Thanks, Dana.

BASH: Thank you.

(END VIDEOTAPE)

BLITZER: And thousands of voter registration cards being questioned in Indiana right now. And the secretary of state there is calling for an investigation -- the latest in a growing scandal.

Plus, what caused a passenger jet to plunge thousands of feet? Investigators now taking a second look at cell phones and laptops.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Carrie Lee is monitoring some other important stories right now incoming into THE SITUATION ROOM -- Carrie, what's going on?

LEE: Well, first of all, Wolf, at least 47 people are dead after a series of attacks today in Somalia. A roadside bomb exploded as African Union forces were traveling through South Mogadishu and at least seven people were killed in a shootout. And in another incident, insurgents ambushed Ethiopian forces, killing at least 40 Ethiopians.

Also, investigators trying to find of find out when caused a TV news helicopter to crash today near Houston, Texas. Both people on board were killed. They were a pilot and a photographer, both from the Houston ABC affiliate, KTRK. The two were on their way to cover a shooting when the chopper went down in a wooded area. A sad story, indeed.

And four manmade waterfalls on New York City's East River are about to dry up and many residents are relieved. A Danish artist created the $15 million installation. Residents complained that salty water, though, from the waterfalls had destroyed waterfront foliage. The waterfalls are scheduled to be shut down tonight -- Wolf, I saw those firsthand. I thought they had a rather soothing effect. But I guess not everyone agrees with that.

BLITZER: I saw them, too. I thought they were pretty impressive. All right, Carrie, stand by. We'll get back to you shortly.

There are troubling signs for John McCain in Pennsylvania right now. He's trailing by double digits in a new CNN poll of polls.

Here's the question -- should he pull out of Pennsylvania, as he did from Michigan, and use those resources elsewhere?

Also, new developments in a massive case of alleged voter registration fraud.

Plus, wildfires burning out of control -- we'll take you there live.

Stay with us. You in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, is the bailout working? The Dow Jones has its biggest point gain ever. Investigators -- excuse me -- investors pocket big gains as companies like Morgan Stanley and General Motors see their share prices soar. We're going to have much more on this historic day on Wall Street. That's coming up.

And we're investigating new developments in a voter fraud scandal involving a group known as ACORN. Could thousands of registrations be in doubt right now?

Plus, hundreds of acres of fast-burning wildfires threatening the Los Angeles area right now. We're live from a smoke-filled San Fernando Valley.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Georgia Congressman John Lewis has stirred up debate again about racism and the race for the White House. The civil rights icon accused of the McCain-Palin campaign of "sowing the seeds of hatred and division."

CNN's Mary Snow is in Ohio as part of our special battleground coverage.

(BEGIN VIDEOTAPE)

LINCOLN WARE, WDBZ-AM RADIO HOST: People are starting to get a little scared. It could really happen. We could really have a black president. The bogeyman could leave the country. That's what they're saying.

MARY SNOW, CNN CORRESPONDENT (voice over): Radio host Lincoln Ware of WDBZ-AM who supports Barack Obama wasted no time taking on the issue of race among his mostly black audience in Cincinnati. But not all of his listeners are black.

CHARLES, CALLER: You're right. It does scare me now. WARE: I know. Why does it scare you?

CHARLES: What's going to happen is...

WARE: Why does a black man, if president, scare you, Charles?

CHARLES: Because we have the first black in sports, first black here, the first black there.

SNOW: Another caller, a black Republican calls in to take aim at Democratic congressman John Lewis for bringing up the issue of race over the weekend.

UNIDENTIFIED MALE: I mean, look at Lewis, Lewis had to come up -- what, Lewis want a racial war?

SNOW: Lewis, a civil rights leader, accused John McCain and Sarah Palin of stoking hatred and compared the political atmosphere to that of George Wallace, the former Alabama governor who is a segregationist.

McCain called it a shocking character attack that goes behind the pale.

George Wallace may have been stretching it a bit but even George Wallace changed near the end of his lifetime.

SNOW: Bobby Hilton, a Cincinnati minister, does not think Lewis went too far.

BOBBY HILTON, CINCINNATI MINISTER: It was kind of like we needed that confirmation. We have been feeling that, that there were racial undertones being spread. Things being allowed to go forth in the campaign rallies to say, "terrorist, terrorist," "off with his head," "kill him," that stuff should not be allowed. So we were glad to see that John Lewis came out and made that statement.

SNOW: Critics of McCain credit the Republican presidential candidate with stopping a woman at a town hall meeting who said she was scared of Obama because she thought he was an Arab, which McCain denounced.

MCCAIN: No, ma'am. No, ma'am.

SNOW: Others, though, say there are undercurrents of a racial tone.

UNIDENTIFIED FEMALE: They have been playing the "he's unknown, he's different."

SNOW: Rosemary Williams isn't surprised.

ROSEMARY WILLIAMS, OHIO RESIDENT: It's expected, you know, because it is so under cover that people don't know that racism still existed in the United States let alone in Ohio.

(END VIDEOTAPE)

BLITZER: Mary Snow reporting for us from the battleground state of Ohio.

Few people can speak on these issues with the moral authority of Congressman John Lewis. The son of an Alabama sharecropper, he was only 23 years old when he helped organize and spoke at the historic 1963 march on Washington.

He also spearheaded the 1965 march on Selma, Alabama known as "Bloody Sunday" after the police attacks on the peaceful protesters. Since 1986, Lewis has represented the Atlanta metro area in Congress where he and John McCain became good friends, making Lewis's criticism especially stinging.

You saw how he reacted Senator McCain this that interview with Dana Bash.

Let's get some more on what's going on right now, specifically inside the McCain campaign. We're joined by our political contributors, Republican strategist Leslie Sanchez and Hilary Rosen, editor at large at Huffingpost.com.

Senator McCain made this point, Leslie -- I'm going to my the clip and I want all of us to discuss. Listen to this. Listen to what he said today.

(BEGIN VIDEO CLIP)

MCCAIN: My friends, we've got them just where we want them.

(END VIDEO CLIP)

BLITZER: All right, what do you think, Leslie? Is the -- because he is significantly behind in the national polls in the several of those key battleground states.

LESLIE SANCHEZ, REPUBLICAN STRATEGIST: I don't think it is worded -- I think it's comic in its approach. But I think that -- you know, a lot of people are going to think that.

But the bigger issue is, this is the time when I think John McCain of all candidates is at his best. When his back is against the wall and you've seen it historically. He is somebody who comes back with incredible vigor and really has an engaging efforts any time in his career that he's been challenged.

And I think the best friend that he has is an overconfident Barack Obama campaign.

BLITZER: Because he has been written off, as you know, before, only to come back after the 2000 election when he lost in the primaries to George W. Bush. And a year ago in the summer, when his campaign was basically written off. He's come back. So it's still three weeks to go. HILARY ROSEN, HUFFINGTONPOST.COM: It is. And I -- but I sure don't think he likes being down and I know for certain the Obama campaign is not overly confident. They are being very cautious.

The interesting thing, there was a study released yesterday about how many appearances both John McCain and Barack Obama have made in key battleground states and during this campaign over the last number of times. And Barack Obama has essentially been in twice as many places as John McCain.

BLITZER: So you think he's as -- is hungrier.

ROSEN: And in some respects, I think that's hurt John McCain. He has fewer places to play now. That he's in Virginia this -- he's only been in Virginia twice. He's got to hold on to Virginia.

(CROSSTALK)

ROSEN: He can't afford it lose some of these states that he is just not playing hard enough in.

SANCHEZ: Well, two parts, I think to say that the Barack Obama campaign or people surrounding it are not becoming confident in measuring the drapes, I think, is a fallacy.

ROSEN: I said they're not over confident.

SANCHEZ: No, they're -- I think they are becoming tremendously giddy at the idea that at the can really have a whole flush in terms of winning not only the majorities -- maintaining the majority in Congress but also the White House, and what that means for a very leftist agenda and you can see them getting very excited about that. And that's been reported widely.

But I think the second part, she is correct in the sense for a Republican candidate to be in southern states is a problem. That -- to be in tide water, you know, this close out is a compelling issue.

BLITZER: It's -- he's got serious problems right now, Senator McCain, but he likes being the underdog.

ROSEN: He, in theory, likes being -- well, most people would rather be ahead, but you know, he's not down and out because he's the underdog and he has come back with...

BLITZER: He's got -- can't ever write him out.

ROSEN: Right.

BLITZER: All right. Here's our latest CNN Poll of Polls in the key battleground state of Pennsylvania right now. Obama 52 percent, McCain 40 percent, unsure eight percent. That's a 12-point, double- digit lead right now.

Here's the question. Two weeks ago -- I think about two weeks ago or so, the McCain campaign announced they were pulling out of Michigan because he was behind in the poll of polls, in their own internal polling there. They had limited resources. They wanted to devote those resources to other states where they had a better chance.

Is it time, Leslie, for Senator McCain to think about doing that in Pennsylvania, state that John Kerry carried in 2004, pull out of Pennsylvania and take those resources to North Carolina, to Virginia, to other battleground states where he could be in trouble?

SANCHEZ: No, I think he needs to fight, fight aggressively. Pennsylvania is a fascinating state in the sense that if you talk to the voters out there, they have very independent minded. They are split ticket voters. They are concerned about guns. They're concerned about judgment, experience and their bipartisanship, particularly.

These are people that want to see someone reach across the aisle and be effective. They're tired of the nonsense of politics...

BLITZER: Is it time for him to be out of Pennsylvania?

ROSEN: He made a big mistake being so public about his exit from Michigan. But if the campaign hasn't already taken some of the resources they've been planning on spending in Pennsylvania and move it to hold on to the strongholds in Ohio and Florida and Virginia and Nevada and Colorado, then they've really lost this election.

They have to hold what Republicans won in 2004.

SANCHEZ: But...

BLITZER: All right.

ROSEN: That's (INAUDIBLE).

SANCHEZ: They have those resources in those states.

BLITZER: But the question is, would they have more resources.

ROSEN: Whether they have enough.

BLITZER: All right. We'll see what they do this Pennsylvania. See what the poll numbers show as well, guys. Thanks very much.

We've all heard the warnings. Turn off your portable electronic devices before it take off. But could they have caused a jet to nose dive mid-flight? Miles O'Brien standing by.

And hundreds of voter registrations could be in doubt as charges of fraud are investigated in Indiana.

Stick around, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Florida is one of those key battleground states we're keeping a very close eye on. CNN's John Zarrela is spearheading our special battleground coverage in Florida. He's joining us now from Miami.

Twenty-two days to go, John. Over these next 22 days, we're going to count on you to tell us everything we need to know about Florida.

JOHN ZARRELA, CNN CORRESPONDENT: Well, Wolf, let me start with the fact that right now it remains so tight. No breathing room. The latest CNN Poll of Polls has Senator Barack Obama at 49 percent, John McCain at 46 percent, with five percent unsure.

Now sources in the Republican Party are telling me today that's actually pretty good news. They are encouraged by that because, quite frankly, Barack Obama has been killing them with television advertising, outspending them enormously here.

Television markets, Miami, Ft. Lauderdale, up in Orlando, Tampa, Jacksonville, very expensive buys those are.

And you see very few McCain spots on television. But just about every half hour, I can tell you, we see a Barack Obama television spot.

One Republican Party source told me, quote, "money is still an issue." But by no means are they giving up on Florida. The Republican Party officials tell us they believe that with their very, very deep-rooted volunteers, grassroots, that they can go ahead and pull this out for John McCain.

They also tell me, another indication is that their resolve is that the McCain campaign has relocated its Michigan victory director to Tampa, a swing area in a swing state -- Wolf?

BLITZER: Zarrela is going to be all over this story over the next 22 days in Florida.

Colorado is another state that could still go either way. What are the candidates doing to try to sway voters there? Our special battleground coverage continues with Dan Simon in Denver -- Dan?

DAN SIMON, CNN CORRESPONDENT: Wolf, Colorado has been reliably red for a very long time. No Democrat since Lyndon Johnson has cracked more than 50 percent. Bill Clinton won in 1992 but that was only because Ross Perot siphoned off a large percentage of the vote.

But Obama has a couple of things going for him in his quest to turn this state blue. First, Denver and its suburbs, they lean Democratic and this area has been growing over the last several years thanks, in large part, to the high tech industry.

Again, this area leans Democratic. The question isn't if Obama will win this area, the question is by what margin.

Also, new voters. Obama -- the Democratic campaign has done a much better job. They have been more successful in attracting new voters to the rolls. It's really been by a 2-1 margin over the last several months.

And third, Hispanics. The Hispanic population has been growing here. About 20 percent of Colorado is now Hispanic and overwhelmingly they vote Democratic. John Kerry got about 70 percent in 2004.

But McCain does have some things going for him. The rest of the state is very red. Colorado Springs, of course, is home to a huge Evangelical base and if McCain gets his base out in large numbers, it might be just enough to offset the gains that Obama is expected to make here in Denver and the surrounding areas -- Wolf, back to you.

BLITZER: All right, Dan, thanks very much.

There are also new developments right now in a massive case of alleged voter registration fraud in Indiana. The secretary of state in that state now asking the attorney general to investigate.

Let's go to Drew Griffin of CNN's Special Investigations Unit. You've been working this story for us. What's the latest, Drew?

DREW GRIFFIN, CNN SPECIAL INVESTIGATIONS UNIT: Yes, Todd Rokita, the secretary of state, calling for a wide ranging investigation, Wolf. He's asking for the U.S. attorney, along with the prosecutor in Lake County, to look into this fraud.

Here's what he said in the letter. "I've secured credible evidence of fraud in the voter registration process." This has everything to do with the 5,000 newly registered voter applications -- there you see them there -- handed in by ACORN, the group, the left- leaning group that is connected with the Barack Obama campaign.

We reported last week that of the first 2100 of those voter applications, they determined in Lake County that all 2100 of those were fraudulently filled out. So now it looks like there is a call for a widespread investigation into this allegation of voter registration fraud.

Still no word from the attorney general. He is looking over this letter and has not made a decision on whether or not to launch this investigation -- Wolf?

BLITZER: Did the alleged fraud take place during the primary season or during the general election campaign? Because, as you know, the Obama campaign says they did work with ACORN during the primary season in registering new voters but haven't -- hasn't worked with them since. So what do we know?

GRIFFIN: This is all voter registration forms that have come in nearing the deadline for the general election. So these are voters who want to vote in the November election. They had to have this applications right there in by October 6th. They all came dumping in at the same time. So these are connected with the general election, Wolf, not the primary.

BLITZER: All right, Drew. Stay on top of this story for us. I suspect it's growing. A passenger jet makes a terrifying mid-flight nose dive. Could a laptop or a cell phone be the problem? Miles O'Brien has been investigating. This is information you need to know.

And fast-burning wildfires threatening the Los Angeles area. We are live. That's coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Wildfires burning out of control north of Los Angeles. One person is dead. More than 1,000 people have been told to evacuate.

CNN's Ted Rowlands is in Porter Puerto Ranch, California with the latest. What do we know, Ted?

TED ROWLANDS, CNN CORRESPONDENT: Well, Wolf, more evacuations are under way. Look at what this fire did within the last hour, ripped through this canyon. It did take out some homes, a lot of homes were saved, though.

This was so intense because of the win -- it jumped the street, it went to the other side. Firefighters have their hands full because of those intense Santa Ana winds.

(BEGIN VIDEOTAPE)

ROWLANDS (voice over): With wind gusts, at times, topping more than 65 miles per hour, firefighters are struggling to gain control of several fires burning throughout Southern California. Several structures have gone up in flames. More than 1,000 people are out of their homes.

JENNIFER SINGLETON, HOMEOWNER: Please get the pets out of the house. I'm not worried about the material things. But I have a lot of pets in the house. My birds, my turtles, my dog.

ROWLANDS: Porter Ranch, northeast of downtown Los Angeles a massive fast-moving fire sent plumes of smoke into the air and people scrambling from their homes.

CHRISTINA AARONSUN, HOMEOWNER: It spread really fast. We didn't even have a chance to pack or anything.

ANIA ZADOR, HOMEOWNER: And my mom is 80 years old. And I told her, just grab your medicine and whatever you can. Your passport documents and we go.

(END VIDEOTAPE)

ROWLANDS: And, Wolf, the evacuations continue. This fire has now moved through the Porter Ranch area and it is heading towards the ocean. The winds, according to forecasters, are going to get worse before they get better sometime before.

BLITZER: All right, Ted, we'll watch it with you. Let's hope it gets better quickly.

Investigators want to know if a laptop or another portable electronic device could have caused the Qantas jet to plunge hundreds of feet mid-flight.

Let's go to CNN's Miles O'Brien. He's been looking into this story for us. Miles, what are you finding?

MILES O'BRIEN, CNN CHIEF TECHNOLOGY CORRESPONDENT: Well, Wolf, I've discovered that, while it may be highly unlikely, you can't rule out the possibility that a gadget you and I carry could create a very dangerous in-flight scenario.

(BEGIN VIDEOTAPE)

O'BRIEN (voice-over): Let's be honest here. When the flight attendant tells you to turn your electronic devices to the off position, what do you do?

UNIDENTIFIED MALE: I turn it off just to conserve batteries. But not to follow the instructions necessarily.

UNIDENTIFIED MALE: They said that electronic devices will interfere with their equipment, so if we know that's true or not, we don't know.

O'BRIEN: But hold the phone, say the experts. There still is something odd going on in the cellular-filled skies. A NASA database that compiles anonymous reports from flight crews lists dozens of incidents.

GPS devices, cell phones, palm pilots and laptops possibly interfering with navigation instruments, causing a fuel gauge to go blank, or generating false collision warnings or auto pilot failures.

Just lack week, an Qantas Airbus A-330 dropped 650 feet in 20 seconds, sending unbelted passengers and crew flying. More than a dozen seriously hurt.

So was the wild ride caused by a spinning hard drive? Investigators have no evidence, but they are asking questions just the same.

GRANGER MORGAN, CARNEGIE-MELLON UNIVERSITY: Oh, we're really pleased that the Australians are including possible radio interference as one of the things they look at.

O'BRIEN: Granger Morgan is an engineering professor and expert on this subject. Four years ago, he sent a grad student on to dozens of flights with a suitcase-sized scanner. The results won't surprise you.

MORGAN: We found that people were making cell phone calls during climb-out and on final approach.

O'BRIEN: And these days there are more and more electronic boxes on both sides of the cabin. The latest airliners like the Airbus 330 are controlled by computers, wires, and electric motors. They might be more vulnerable to iPods and BlackBerries.

MORGAN: It's important that we also look at the long shots because they may be the things that get us.

(END VIDEOTAPE)

O'BRIEN: An industry commission just released some new guidelines for designing future airliners, Wolf, to make them a little bit more resilient to this threat with better shielding of electronics, wires, and antennas.

BLITZER: They clearly got to do something, I suspect. All right, Miles, thanks very much. Miles, looking at that story.

Rethinking the Wall Street bailout and a record-breaking day for stocks. Lou Dobbs is standing by to weigh in also.

Oil prices are down, but will we see the same ripple affect we did when they were skyrocketing?

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's check in with Lou Dobbs. He's been keeping an eye on the stock market like all of us. Today a record-setting day today, Lou. As you know, the single largest gain as far as points are concerned ever. What's your analysis?

LOU DOBBS, CNN ANCHOR: Well, it's a terrific day. And it's nice to not have to sit here, Wolf, isn't it, and say to our viewers another down day on Wall Street. Whether this is lasting or not, even a temporary relief is -- I mean I'm overjoyed that we have this respite. How about you?

BLITZER: I'm pretty happy about it, too. I'm sure all of our viewers who were worried about their 401(k)'s and their retirement plans and everything else were happy, but the question is, is this a one-day wonder or is it the start of something good?

DOBBS: Well, let's hope it's the start of something good. But you know, all the geniuses who are trying to tell you what this is or what it isn't are just that. They're phonies and fools.

The fact is, no one knows at this point. And the real issue is whether or not we can stabilize these credit markets. The good news within that is that secretary of the treasury Paulson is finally coming to his senses. He's working on recapitalization. That's one of the reasons that these markets are beginning to stabilize rather than paying off all of his good buddies on Wall Street buying those toxic assets.

And if these fools continue with the program of trying to buy those toxic assets, you will -- I'll tell you right now -- see this market nose dive again. It's got to stabilize and the way to do that is to be responsible, to recapitalize these ailing banks and to manage these markets rather than be abjectly stupid and try to do something the Treasury Department is not equipped to do, and that is buy assets in which there is no price mechanism, in which the taxpayer will be paying for years and years.

At this -- and that would -- there would only be one outcome and that would be Hank Paulson's buddies being bailed out. And that isn't the point of this slack.

BLITZER: All right, Lou. Lou's going to be back in one hour with a lot more on this story.

DOBBS: You bet.

BLITZER: He's got strong views, as you know.

And to our viewers, you're in THE SITUATION ROOM.

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