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Their Plans, Your Money; Voter Registration Fraud?; Interview With FDIC Chairwoman Sheila Bair
Aired October 14, 2008 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: And good morning everybody. It is Tuesday, October 14th. Three weeks to Election Day.
The Bush administration spelling out specifics of the $700 billion bailout. I will talk live with the woman who heads the FDIC.
Live this hour, John McCain unveils his plan to help struggling Americans get back on their feet.
A grassroots group accused of voter registration fraud. The investigation growing wider by the day. Implications for Election Day growing more serious.
Welcome everyone. I'm Tony Harris. And you are in the CNN NEWSROOM.
A bear plan, your money, the presidential candidates promoting their proposals to help you through the current financial crisis. John McCain unveils his latest plan at a rally this hour in Pennsylvania on the eve of the final presidential debate.
Ed Henry live from the debate site in Hempstead, New York. I believe that's Long Island. I think that would make this a home game for Ed.
Ed, good to see you this morning.
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: I am from Long Island.
HARRIS: That's right.
HENRY: That's right.
HARRIS: Home game for you.
I've got to ask you, Ed, what else would these two candidates dare talk about tomorrow other than the economy? John McCain detailing some new proposals later this hour.
HENRY: It reminds me of the 1992 election. It's the economy stupid. That's all they're going to be talking about, at least mostly -- the financial crisis. That's why John McCain is going to be unveiling this plan this hour, as you noted. The task is urgent for him in particular because he's down in the a lot of these battleground states. Let's take a quick look at what John McCain is laying out. He's got a special focus on senior citizens. They've been hard hit by the loss in savings. But also, let's remember senior citizens vote, and that's important for John McCain, obviously. And he's also gotten the support of a lot of seniors in polls.
He wants to expand the tax deductibility of stock losses from $3,000 a year to $15,000 for those who have taken those big losses. Also wants to lower the tax rate for senior citizens when they make withdrawals either on IRAs or 401(k)s, make it a maximum of a 10 percent tax on those withdrawals.
Also, he's previously talked about, we should say, for a little context, extending the Bush tax cuts on individuals that are supposed to expand at the end of 2010. Also, John McCain has talked about cutting corporate tax rates from 35 percent to 25 percent. So that's kind of the bare bones of his plan; obviously a very urgent task for John McCain in particular -- Tony.
HARRIS: Yes. And Ed, Barack Obama yesterday, with proposals of his own, including a, let's see, couple of points here, tax credits for job creation as a penalty-free deduction from your retirement account?
HENRY: That's right. And it's specifically a $3,000 tax credit for businesses, targeted to small businesses, of course, for each new hire that they have. He also wants, on withdrawals for 401(k)s and IRAs, similar to McCain, targeting the tax penalty. You know, you can withdraw either from 401(k) or IRA without a tax penalty on up to 15 percent of your savings, a maximum of $10,000 of your savings that would not have a tax penalty.
Also, he wants -- Barack Obama does -- immediate tax cuts of $500 for individuals, $1,000 for families, those making under $250,000 a year. It also would affect seniors who have incomes of $50,000 or less if they're on a fixed income, Tony.
So you see both sides really trying to zero in on what is obviously issue #1.
HARRIS: Yes. It really is.
OK. Ed Henry for us this morning.
Ed, as always, great to talk to you. Thank you, sir.
John McCain is in the battleground state of Pennsylvania today with just 21 days until the election. The latest CNN Poll of Polls from Pennsylvania shows Barack Obama leading McCain by 12 percentage points, 52 percent to 40 percent. The poll, as you know, is an average of three different surveys. He is scheduled, John McCain is, to speak this hour, and we will bring you that event live when it begins.
Stocks started the day with a 400-point surge. But the rally, as you see, has not held up. The Dow blue chips are at -- well, still in positive territory, positive 15 points right now. The Dow turned in nothing short of a spectacular performance Monday, a record 936-point increase, the biggest percentage gain since 1933. Investors made back $1.2 trillion in value yesterday alone.
And at the White House this morning, President Bush is revealing the specific steps he is taking in the financial bailout. The government will spend up to $250 billion to buy bank stocks. In other words, the banking system will be partly nationalized.
Washington will also guarantee bank-to-bank lending, at least temporarily. Small business deposits that don't earn interest will be covered beyond FDIC limits. The blueprint mirrors one adopted in Europe last weekend.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: I know Americans are deeply concerned about the stress in our financial markets and the impact it is having on their retirement accounts and 401(k)s and college savings and other investments. I recognize that the action leaders are taking here in Washington and in European capitals can seem distant from those concerns, but these efforts are designed to directly benefit the American people by stabilizing our overall financial system and helping our economy recover.
(END VIDEO CLIP)
HARRIS: You know, there is some indication paralyzed credit markets are actually loosening today. That suggests banks are more willing to lend to each other. In turn, that suggests a bit of confidence is returning.
Sheila Bair, the chair of the FDIC, will join us shortly.
Still to come, as the most significant credit crisis in decades rocks your finances, CNNMoney.com has some advice and some answers. Check out our special report, "America's Money Crisis." That's at CNNMoney.com.
Thousands and thousands of voter registration forms are fake. Plus, some voters names are being wiped off the rolls.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: They just needed a signature, and they told me I wasn't going to get in trouble.
(END VIDEO CLIP)
HARRIS: You know, there are several new developments stemming from allegations of voter registration fraud by a liberal activist group. Indiana's top elections official calling for an in-depth investigation of the group ACORN.
Drew Griffin with the CNN Special Investigations Unit is on the story. Here is what he told our Wolf Blitzer on "THE SITUATION ROOM."
(BEGIN VIDEO CLIP)
DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT: 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 is 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 right there, handed in by ACORN, the left-leaning group that is connected with the Barack Obama campaign.
We reported last week that of the first 2,100 of those voter applications, they determined in Lake County that all 2,100 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.
WOLF BLITZER, CNN ANCHOR: 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 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 these 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.
(END VIDEO CLIP)
HARRIS: ACORN's voter registration drives under scrutiny in other states, including the battleground state of Ohio. Election officials there heard from residents who say they were pressured to register multiple times.
Details now from CNN's Bill Tucker.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNN CORRESPONDENT (voice-over): Witnesses came before the Cuyahoga Board of Elections in Ohio. They told of being harassed to register to vote.
CHRIS BARKLEY, REGISTERED VOTER: So the people would walk up to me and ask me would I sign these papers. So I'd be like, "No, I'm already registered." And then they just asked me again.
Like, I need a job. I'm just trying to hold on to a job.
So would you sign this for me? I need 25 of them, or I need a certain amount of them to do it. So me being a kindhearted person, I say, yes.
TUCKER: The workers doing the voter registration were from ACORN, or the Association of Community Organizations for Reform Now. One of the witnesses testified he registered 73 times, even though he was already registered to vote.
FREDDIE JOHNSON, REGISTERED VOTER: Some of the individuals that worked at ACORN gave me you know cigarettes for a signature or you know a couple of dollars for a signature.
TUCKER: After hearing the testimony, the board voted to ask the county prosecutor to investigate ACORN. It is the latest in a long line of investigations of voter registration fraud for ACORN, a line that stretches back over several years. ACORN is currently accused of submitting false registration forms in at least a dozen states. A spokesman for ACORN says that in virtually every case, the fraud now being looked at is fraud, the group identified first.
SCOTT LEVENSON, ACORN: We went through registration forms, tagged potential problems, notified Boards of Elections. That's why one of the things we've been asking for is regular meetings with the state board of elections.
TUCKER: Levenson says ACORN does not tolerate the type of behavior testified to in Cuyahoga County and that workers found to commit registration fraud are fired. The problem for ACORN is this is a repeated pattern, one seen across the country in over several years.
(END VIDEOTAPE)
HARRIS: Boy. CNN's Bill Tucker there.
Around the country there are other allegations of potential voting irregularities. A "New York Times" report said some states are actually taking illegal actions.
CNN's Josh Levs is here to talk us through that.
Good to see you, Josh.
JOSH LEVS, CNN CORRESPONDENT: Good to see you too. Yes, you know, this article certainly got a lot of attention.
What I want to do is show it to you. This is the headline behind me. And it says right here, "States actions to block voters appear illegal."
It leads with this -- I'll put it onto a graphic to make it simple for you to follow here. They say, "Tens of thousands of eligible voters in at least six swing states have been removed from the rolls or have been blocked from registering in ways that appear to violate federal law."
And The Times is basing this on its own state records of state records and Social Security data.
Now, to be fair, I want to do something. I want to zoom in here on a really important line in the story. Let's take a look at this.
"The actions do not seem to be coordinated by one party or the other, nor do they appear to be the result of election officials intentionally breaking rules, but apparently are the result of mistakes in the handling of the registration and voter files."
Here is a summary of a couple of examples they're giving. Some of this is big stuff.
They're saying right here -- let's look at the graphic -- they're saying Michigan and Colorado improperly removing voters from the rolls within 90 days of a federal election. They're also saying Indiana, Nevada, North Carolina and Ohio seem to be improperly using Social Security data to verify registration applicants for new voters. Their applications, rather.
Now, The Times says the Social Security Administration is actually now looking into this. And I have something here from The Associated Press. They're reporting, after The Times article was published -- let's look at that. They say, "Election officials lined up to defend their registration procedures and said they had done nothing wrong."
So we are seeing that back and forth. But Tony, what we are seeing really is more and more examples of people concerned about possible fraud here.
HARRIS: Yes.
LEVS: In fact, I saw this story from our affiliate, WSBT. They have this report about voter registration rolls in one Michigan county.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE (voice-over): As of Friday morning, Benton Harbor reported 10,479 registered voters. But in 2000, the U.S. Census Bureau counted the entire population for the city at 11,182. Forty percent were under the age of 18.
(END VIDEO CLIP)
LEVS: You can see why those numbers were pretty striking to people.
And I'll tell you, to be fair, again, officials in that city are saying they think the census figures were wrong and that the town has changed. But all we know when you hear those numbers is that it's an example of people concerned about the integrity of the process in this close election. And Tony, you know what? Next hour we're going to look at the foreclosures issue. Some people hearing they may be turned away if they've been foreclosed. We'll look at that.
HARRIS: I appreciate that. I mean, this is so critical right now, because everybody's vote really counts right now. And the notion that people are being encouraged unfairly, the notion that we've got these irregularities in registration -- boy, thank you.
LEVS: Sure. You got it. I mean, keep in mind, it's a complicated process.
HARRIS: Yes.
LEVS: Every state has rules and every state also has to follow federal rules. That's one reason we see so many things going back and forth.
HARRIS: And everybody is paying attention now.
LEVS: Everyone, as they should. You know what? We should all be watchdogs on this, absolutely.
HARRIS: All right, Josh. Appreciate it. Thank you.
LEVS: You got it. Thanks.
HARRIS: iPod -- let's see, iPhone. Are we getting an iLaptop today?
(COMMERCIAL BREAK)
HARRIS: Let's talk to Sheila Bair in Washington. She heads the Federal Deposit Insurance Corporation, the FDIC. And she was part of the news conference this morning announcing the latest steps to try and stabilize financial markets.
Ms. Bair, thanks for your time this morning. We appreciate it. Thanks for being here.
SHEILA BAIR, CHAIRWOMAN, FDIC: Happy to be here.
HARRIS: You know, I want everyone to have a listen to some of what Secretary Paulson had to say earlier this morning, and then let's talk about it.
BAIR: OK.
(BEGIN VIDEO CLIP)
HENRY PAULSON, TREASURY SECRETARY: Today we are taking decisive actions to protect the U.S. economy. We regret having to take these actions. Today's actions are not what we ever wanted to do, but today's actions are what we must do to restore confidence in our financial system.
(END VIDEO CLIP)
HARRIS: Now, Linda (sic), as we get started here, I'm going to beg of you, please -- I'm sorry. Sheila, I'm going to beg of you to please break all of this down. I know you can talk us into circles on some of these financial matters, but try to break this down for us as best you can so we all can understand here.
Lay a foundation for us here. What is at the root of the lack of confidence?
BAIR: Well, I think it's uncertainty about the economic future, and particularly the credit quality of assets on banks' balance sheets, particularly mortgage assets. We've obviously been seeing some distress in the housing market for some time now. So this uncertainty is creating a crisis of confidence. And this is, in turn, is leading to an unwillingness of banks to lend to each other, which has raised their funding costs.
It's led to uncertainty with uninsured deposits -- for instance, the small businesses with large business checking accounts, payroll accounts that are above deposit insurance limits. They're pulling that liquidity out of banks, creating problems for otherwise healthy banks in terms of their own funding needs, increasing their funding costs, which in turn makes it more expensive for them to lend to businesses and consumers.
So what we're trying to do today with the initiatives we are announcing today is, one, to inject a lot of new capital into banks to make sure the public understands they do have the financial wherewithal to withstand any additional loan losses in my experience because of the problem in the housing sector.
HARRIS: Sure.
BAIR: And also to provide guarantees for certain types of credits that's extended to banks, so that they will have plenty of liquidity to in turn lend to consumers and businesses.
HARRIS: Here's my follow-up. The job of your agency as I understand it -- and correct me if I'm wrong here -- is to maintain public confidence in the banking sector.
BAIR: That's right.
HARRIS: And I hope I have that correct.
BAIR: That's right.
HARRIS: So can I ask you -- and I'm not trying to be snarky in any way here. How did this happen? How did the FDIC, your agency, allow this banking crisis to happen here?
BAIR: Well, we are a deposit insurer. We're also a regulator for about 5,200 state-chartered banks. We have four bank regulators in total: the Federal Reserve Board, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the FDIC. I think collectively we have worked very aggressively over the past couple of years to make sure bank lending standards were prudent and safe and sound. I think it is important to note that a lot of this turmoil has occurred outside of the banking sector. It's been with investment banks, which have been highly leveraged, it's been with mortgage finance companies that are not FDIC insured institutions. They rely on the capital markets for funding.
A lot of the economic distress has occurred outside of the banking sector. But nonetheless, we are having some spillover effects into banks.
Overall, though, banks are overwhelmingly safe and sound. The overwhelming majority have lots of capital, lots of loan loss reserves.
They are in a good position to weather the economic challenges that we have before them, but we do have a public confidence factor here. And the public typically does not distinguish between other types of -- what they call the shadow banking system and non-depositor institutions...
(CROSSTALK)
HARRIS: Yes. Will you forgive me for pushing a little bit on this?
BAIR: That's fine.
HARRIS: I just want to understand. I know that you have examiners that routinely visit these banks and make sure that compliance is in order.
BAIR: That's right.
HARRIS: I'm just wondering, was there a moment missed here when the clarion call could have been sounded so that we had a better understanding of what was going on in the -- specifically in the banking sector?
BAIR: Well, I assumed office in June of 2006. We started seeing the problems in the mortgage sector in the fall of '06.
I instructed our staff to buy a database that would give us more information about the loan quality of private label mortgage-backed securities. A lot of these high-risk mortgages had been securitized into what they call private label mortgage-backed securities.
So I think as an agency, the FDIC was among the first to sound the alarm bells on deteriorating underwriting standards that had infected the mortgage markets. And we certainly worked with our fellow colleagues at the other bank regulators to tighten bank lending standards. But again, a lot of this lending was being done outside of the banking sector. And it was only until the Federal Reserve Board recently imposed rules that applied across the board to banks and non- banks that we've really gotten a handle on tightening lending standards across the board.
So I won't say banks are perfect. I won't say bank regulators are perfect. We are not.
There have been mistakes that have been made. But I do think it's important for people to understand the difference between an insured depository institution and other types of financial institutions. And a lot of this bad lending has occurred outside depository institutions.
HARRIS: OK. I'm going to go a little longer with you...
BAIR: OK. That's fine.
HARRIS: ... because I'm not sure when I'll get to talk to you again. A little more from Secretary Paulson on the idea that banks may actually be hoarding cash right now.
BAIR: Right.
(BEGIN VIDEO CLIP)
PAULSON: At a time when the banks naturally make even the most daring investors risk averse, the needs of our economy require that our financial institutions not take this new capital to hoard it, but to deploy it.
(END VIDEO CLIP)
HARRIS: Isn't that exactly what the banks have been doing to this point, hoarding the cash?
BAIR: Well, I think everybody has been holding back because we do have this lack of confidence, this lack of certainty about the credit quality of business counterparties. So, absolutely, we are trying to unlock this liquidity. And with these steps, by providing government guarantees, which, by the way, we are charging for -- we're charging very stiff premiums for the guarantees that we announced this morning -- we are hoping to unlock the liquidity so banks will start lending again to consumers and business businesses, because that is what we need to sustain our economic growth.
HARRIS: Can I stop you there...
BAIR: Sure.
HARRIS: ... and ask you, is there any evidence that the credit markets are loosening today?
BAIR: I think -- well, the last I checked, yes, the LIBOR spreads were coming down. And the United States is not acting alone here. Europe and Asia had taken similar moves, both to recapitalize banks, as well as to provide short-term temporary liquidity guarantees, as has the FDIC. So, yes, we are seeing spreads come down already.
HARRIS: What's LIBOR?
BAIR: What is LIBOR now? I don't know. I think it was around 400 basis points this morning. I haven't checked it recently.
HARRIS: You know, the idea of confidence, part of it comes from the idea that the folks in charge, people like you, are leveling with the American people. So when you say that the bulk of the American banking system is strong, tell me why we should believe that, and where we can go, independent of your words, to see evidence of that.
BAIR: Well, we have something called the quarterly financial reports that all banks must file with. And those are public information. You can see the capital levels and the loan loss reserve levels of individual banks, as well as the industry collectively, by going to those call reports. There's obviously -- there are independent financial analysts who spend a lot of time analyzing bank balance sheets as well.
I think though that for the average depositor, a better way to spend time is to make sure you're below our deposit insurance limits. Congress has increased the basic limit to $250,000 until the end of 2009. For small business transaction accounts now, for the non- interest-bearing business transaction accounts, we're providing full coverage.
There are different ways of account restructuring. You can get even more than $250,000 of coverage. We have a Web site, myfdicinsurance.gov, that I would encourage consumers to go to, to make sure they're below our insured deposit limits.
That's really where I hope that the retail public would focus their efforts, make sure they're below our deposit insurance limits. If you are, you're safe. The chances your bank is going to fail is remote, but even if it does, the FDIC has a very strong record. No one has ever lost a penny of insured deposits in our 75-year history.
HARRIS: Two hundred fifty billion dollars to buy bank shares, offering new loan guarantees, a $700 billion bailout plan right now, dumping illiquid assets, these banks are in the process of doing that or will shortly.
Do you believe this will work, and how will we know that it's working?
BAIR: Well, hopefully there will be very soon impact and more broader availability of credit. Again, we were hoping the credit spreads will start coming down. It looked like that us was already happening this morning. So I think there will be some indicators that we can look at, tangible indicators, to see if it's taking effect.
And I think that at the end of the day, we all have to have confidence in our system, in our economy, in our banking system, and our economic future. That's one of the reasons the FDIC, along with the Fed and the Treasury, have taken these very dramatic to show that we do have confidence in the system, we can get through this. And really right now it is a confidence game in making sure the public and other banks and those who lend to the public and lend to banks have the confidence to know that their money is going to be safe, that the system is functioning and is well capitalized overall. And I think the steps we're taking this morning to help instill that confidence.
HARRIS: She is the very top of the flow chart at the FDIC.
Sheila Bair, thank you so much for your time.
BAIR: Sure. Happy to be here. Thanks.
HARRIS: You're very patient with your time with us this morning. Thank you.
BAIR: Thank you.
HARRIS: Let's go to Wall Street now for more details on the federal government's extraordinary and historic move. It is all part of the $700 billion bailout.
CNN's Susan Lisovicz joins us now from the New York Stock Exchange with that and investors' reaction today.
I tell you what, Sheila Bair was generous with her time. And we asked her a lot of questions. And we're taking a look at the markets today. And we certainly hope that these extraordinary steps start to loosen the credit markets.
SUSAN LISOVICZ, CNN BUSINESS CORRESPONDENT: Well, you know, Tony, it's not the Dow anymore that everybody is watching. I think that Chair Bair was talking about the LIBOR, which is this other index that has investors obsessing for weeks now because it's an indication of how tight and how expensive credit is.
It's a global index. And it did show that there was -- it was starting to narrow a little bit. And that is a good sign. We have a ways to go, but that was a good sign.
In the meantime here, well, we have a volatile session. And a lot of news to digest.
I mean, there was a lot of expectation that we'd get details today on the biggest bet ever made with taxpayer dollars. It's got the support of President Bush, the Treasury, the Fed and, yes, the FDIC. Treasury Secretary Henry Paulson said today the government will spend $250 billion to purchase stock in nine leading banks, a similar plan announced yesterday by European governments. Washington will also temporarily guarantee bank-to-bank lending and insure all non- interest-bearing accounts, which are typically used by small businesses.
The goal, as Chair Bair was saying, to get banks lending again and give the economy a boost. The move sparked an early rally on Wall Street, but it's -- well, it's kind of moving all over the place.
The Dow up, but just a fraction of its gains at its peak. The Dow is up 65 points. The Nasdaq is down 27. Intel's a big drag on the Nasdaq. Its shares are down 5 percent. It reports after the bell, the closing bell.
And Tony, we're in earnings season, too...
HARRIS: That's right.
LISOVICZ: ... just to add a little more fuel to the fire, make things a little bit more interesting and volatile.
HARRIS: Well, are you kidding me? It can't stand it. High blood pressure here.
You know, there's a fair amount of controversy about the government taking really investor stakes in these private companies. But I guess the question is, is there any real alternative?
LISOVICZ: Well, it's certainly radical. There's no question about it. And the free market, you know, isn't so free when the government is nationalizing companies.
But the president was saying just this morning that the intent here is to preserve the system. It's what the greater good is. And Treasury Secretary Paulson says the alternative -- the alternative is to leave businesses and Americans without access to financing, which is unconscionable.
Also notable, the government isn't just investing in troubled banks, it's also taking a proactive approach by buying stakes in healthy banks to get them lending before another failure occurs. We certainly don't want that, Tony.
Back to you.
HARRIS: Susan, appreciate it. Thank you. See you next hour.
As the most serious credit crisis in decades rocks your finances, CNNMoney.com has some advice, answers. Check out our special report while you're there, "America's Money Crisis." That's at CNNMoney.com.
A wall of fire is forcing thousands of people from their homes. Live to Los Angeles, next.
(COMMERCIAL BREAK)
HARRIS: We're talking about residents on the run. Huge parts of Southern California going up in flames right now. From suburban Los Angeles down to just north of San Diego. Live now to CNN's Ted Rowlands in Los Angeles.
And Ted, these fierce northeast winds making a tough job even tougher for firefighters.
Any relief in sight?
TED ROWLANDS, CNN CORRESPONDENT: Absolutely, Tony. And we are hoping that the winds go down, as forecasters say, in the next few hours. But as you can see they are still up and they're causing problems for firefighters.
They were able to fly helicopters, though, this morning. And they've made a lot of progress over the last few hours. This is one of the leading edges of one of the fires burning in Southern California. Firefighters are attacking it as tough as -- as they can with drop after drop (VIDEO GAP)
HARRIS: All right. We just lost Ted Rowlands. If we get an opportunity we will certainly get back to him. And you can see this live shot from our affiliate in Los Angeles, KTLA, of the wildfire right now.
I want to take you right now to Philadelphia, actually a suburb of Philadelphia. John McCain is holding an economic rally there in Blue Bell, Pennsylvania. Let's listen in.
(JOINED IN PROGRESS)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: ... How about that running mate, the governor of Alaska, Sarah Palin?
(APPLAUSE)
Isn't she great?
We do events together. And she's being -- sometimes she introduces me. And I'll tell you, I can't wait to introduce her to Washington, D.C. to the old boy network to clean it up.
(APPLAUSE)
We'll clean up that mess. We'll clean it up.
It's the old boy corruption and network is leaving town when she comes to town, I'll tell you.
(APPLAUSE)
I'd like to discuss some serious issues with you today and this morning, and thank you for being here. Thank you for your support. We must and will win the state of Pennsylvania on November the 4th.
(APPLAUSE)
We need your help to do it. We need your help to do it.
(APPLAUSE)
As I'm sure you know, tomorrow will be the third and final presidential debate and just 21 days -- who's counting -- remain until Americans choose their next president. Over the last 21 days, we have seen -- we Americans -- have seen once sturdy Wall Street institutions vanish. We've seen huge swings in the market, both down and up. And we've seen new federal commitments, hundreds -- hundreds of billions of dollars. We've seen how suddenly a crisis can unfold these last several weeks, and how great the cost can be in jobs, savings, lost opportunity and taxpayers' dollars. What we need to see now, swift and bold actions to lead this country in a new direction.
(APPLAUSE)
If I'm elected president, I will help to create jobs for Americans in the most effective way a president can do this -- with tax cuts that are directly specifically to create jobs --
(APPLAUSE)
-- create jobs and to protect your life savings. I will stand up, as I have in the past, to the corrupt ways of Washington, the wasteful spending and abuses of power, and I will end these abuses whatever it takes.
(APPLAUSE)
I will lead reforms to help families keep their homes and retirees to keep their savings and college students to pay their tuition.
(APPLAUSE)
-- and every citizen to afford health care, and America to reclaim its energy independence. We'll drill offshore and we'll drill now.
(APPLAUSE)
These will be my priorities. We cannot spend the next four years as we have spent much of the last eight waiting for our luck to change. The hour is late. Our troubles are getting worse. We have to act immediately. We have to change direction now. We have to fight. We have to fight for America, and we must fight now. This is what I will do.
My term as president -- when I leave office, I can promise you that this nation will not be on the same path as it is today. I will not play along with the same Washington games and gimmicks that got us into this terrible mess in the first place.
(APPLAUSE)
I'm going to Washington to fight for you.
I will begin by making certain that the $700 billion you've already committed to economic recovery is not used to further enrich the very people and institutions that invited these troubles --
(APPLAUSE)
-- that invited these troubles with their own reckless conduct. Instead of just propping up institutions deemed too big to fail in this crisis, we will use more of this public money to help businesses and homeowners that may be too small to survive.
(APPLAUSE)
I know you know this financial crisis started with our housing crisis, and we cannot fix our markets and the economy until we fix the housing crisis. My plan will protect the value of your home and get it rising again by buying up bad mortgages and refinancing them so if your neighbor defaults, he doesn't bring down the value of your home with him. I will --
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-- I will direct the government to refinance troubled mortgages for homeowners and replace them with mortgages they can afford. This is what we did during the Great Depression, and we can do it again. Helping families who face default, foreclosure and possible bankruptcy helps all homeowners and will begin the process of recovery on this crisis.
With so much on the line, the moment requires that government act. And as president, I intend to act quickly and decisively. When the government does not provide funds to shore up companies, the terms will be demanding, there will be complete transparency and the safety net for our financial system will not become a golden parachute for failed executives.
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-- more over, we will not merely inject billions of dollars into companies and walk away hoping for the best. We will require that those companies be reformed and restructured until they are sound assets again and can be sold at no loss, or perhaps even a profit, to the taxpayers of America.
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And when that's accomplished, in each instant, government will relinquish its interest in these private companies. We're going to get government out of the business of bailouts and equity stakes and back in the business of responsible regulation -- responsible regulation.
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We will learn from this crisis to prevent the next one with much stricter oversight. No more wild over leveraging, no more liabilities concealed from the public and from shareholders, no more bundling of assets to maximize profit by assuming insane risks. Those days are over on Wall Street.
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With new rules of public disclosure and accounting, my reforms will make certain that these betrayals of shareholders and the public trust are never repeated. We must restore trust to our financial system. On my orders, the Department of the Treasury will guarantee 100 percent of all savings accounts for a period of six months. This will calm the understandable fears of widespread bank failure, while also restoring rational judgment to the choices of the market.
As president, I will also act to protect investors, especially those relying on their investments for retirement.
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Current rules mandate that investors must begin to sell off their IRAs and 401(k)s when they reach age 70 and one half years old. Those rules should be suspended to spare senior citizens --
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-- from being forced to sell their stock just as the market is hurting the most.
Under the emergency measure I propose, we will also cut the tax rate for withdrawals from tax-preferred requirement accounts to 10 percent. Retirees have suffered enough and need relief.
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And the surest relief is to let them keep more of their own savings. It's essential -- it is essential we avoid an exodus of capital from the market. Senator Obama yesterday offered up a proposal that would have the effect of encouraging early withdrawal funds from 401(k) accounts by suspending penalties through 2009. This is an invitation to capital flight and, therefore, to continued instability in the market at a moment when exactly the opposite is needed. Any family that takes part in this will not see the benefits of the market recovery that smart policy can help bring about.
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In my administration we will instead revive the market by attracting new investment. I will cut in half the capital gains tax on stocks purchased --
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-- and (INAUDIBLE) for more than a year.
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-- from a rate of 15 to 7.5 percent. This vital measure will promote buying, raise asset values, help companies and shore up the pension plans for workers and retirees. We should also not penalize Americans who are forced to sell investments in today's tough markets. I will increase the amount of capital losses from $3,000 to $15,000 which can be deducted from your ordinary income in tax years 2008 and 2009.
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So much -- so much of this decline in our markets and value destruction was due to the failure of Congress and the administration to come out with a timely rescue package. Investors -- investors are always responsible for their investment decisions. But the hard- earned savings Americans should not be penalized by the erratic behavior of politicians.
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It will not be enough for the federal government to correct the excesses of Wall Street without reforming its own reckless practices.
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Spending is out of control in Washington, and I'm going to reign it in. As president I will veto the pork barrel special interests that are wasting your tax dollars --
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-- that are wasting your tax dollars, driving up our debt and weakening dollar. I have proposed a one-year spending freeze, with certain exceptions, such things as defense and veterans' care. We're going to use that yield to turn Washington inside out and get rid of wasteful, inefficient programs that do no one any good.
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While we put government back on your side, we must reform our tax system to deliver needed tax relief to working Americans and to create jobs. I will double child deduction from $3,500 to $7,000.
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Every person in America who chooses it will receive $5,000 towards the purchase of health insurance, health plans that will be theirs to keep, even if they change jobs or move to another state. And we will --
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-- and we will reduce the federal business tax rate from 35 percent, the second highest in the world, to 25 percent.
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I'm also proposing today that for those who are between jobs, we eliminate all taxes on unemployment benefits.
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It's unclear to me why the government taxes money it's just sent you. And we should --
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-- and we should relieve this burden from Americans who have been hit the hardest. Reducing business tax rates has the potential to stop and reverse the rise of unemployment and could create millions of new jobs. Despite the frequent changes to my opponent's tax plans in recent months -- he seems to revise them with each new poll -- his plan to raise taxes on 50 percent of small business income has survived. And even as he rails against companies -- even as he rails against companies that shut down their plants and move overseas, he refuses to cut the tax rate that drives many of these companies away.
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Typical middle class family of four, making $42,000 a year, with health insurance, will get $4,350 more under my plan than they would under Senator Obama's plan. That example --
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-- that example of $42,000 a year in wages is especially relevant, because just last year Senator Obama voted to raise taxes on individuals making that amount. Senator Obama is also the same fellow who requested a million dollar as day in pork barrel earmarks and thinks that wasting $18 billion a year in earmarks is not worth worrying about. Who proposed a near doubling the taxes on dividends and capital gains during the primary. who has voted 94 times for tracks increases or against tax cuts who is now promising almost a trillion dollars in new spending.
He came to the Senate a few years ago and already earned the title of its most liberal member. This is the man who now presents himself as a tax cutter and champion of middle class America. He's an eloquent speaker, but even he can't turn a record of supporting higher taxes into a credible promise top cut taxes.
What he promises today is the opposite of what he has done his entire career. Perhaps never in history have the American people been asked to risk so much based on so little.
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You can look at the record of what he's done, or you can just go with your gut. But either way, you're left with the same conclusion: Senator Obama is going to raise your taxes. In this economy, raising taxes is the surest way to turn a recession into a depression.
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Senator Obama also promises to restrict international trade and risk access to foreign markets for American goods and services. The last president to raise taxes and restrict trade in a bad economy was a man named Herbert Hoover. That didn't turn out so well.
They say those who failed to learn the lessons of history are doomed to repeat them. Well, I know my history lessons.
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And I sure won't make the mistake Senator Obama will. And were my opponent elected with a Democratic Congress in power, not only would there be no check on my opponent's reckless economic policies, there would be considerable pressure on him to tax and spend even more.
This weekend a plumber concerned that Senator Obama was going to raise his taxes asked him directly about his plan. The response was telling. Senator Obama explained to him he was going to raise his taxes to quote, "spread the wealth around." This explains how Senator Obama can promise an income tax cut for millions who aren't even paying income taxes right now.
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My friends, my plan isn't intended to force small businesses to cut jobs to pay higher taxes so we can spread the wealth around. My plan is intended to create jobs and increase the wealth of all Americans.
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My plan for economic recovery does not require guesswork or blind faith from the American people. You know my record. You don't have to hope I will do what I promise. When I say I will cut spending you need only look at my record to know that it's true.
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When I say I will defend taxpayers, you know it's true because it's what I've always done. When I say I will work across the aisle, you can see it in the results that I've delivered. When I say that I will change Washington, you know I'll do it. Change --
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Change isn't a political slogan. It's what I've been doing my whole career. My friends, I know you're worried. America is a great country, But we are in a moment of national crisis that will determine our future. Will we continue to lead the world's economy? Or will we be overtaken? Will the world become safer, or more dangerous? Will our military remain the strongest in the world? Will our children and our grandchildren's futures be brighter than ours? My answer to you is, yes.
Yes, we will lead. Yes, we will prosper. Yes, we will be faithful.
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Yes, we will pass on to our children a stronger, better country. But we must be prepared to act swiftly, boldly, with courage and with wisdom. My friends, I know what fear feels like. It's a thief in the night that robs your strength. I know what hopelessness feels like. It's an enemy that defeats your will. I felt those things once before. I will never let them in again. I'm an American, and I choose to fight.
(APPLAUSE) CROWD (chanting): John McCain! John McCain! John McCain!
MCCAIN: Don't give up hope. Be strong. Have courage and fight. Fight for a new direction for our country. Fight for what's right in America. Fight to clean up the mess of corruption, in-fighting and selfishness in Washington. Fight to get our economy out of the ditch and back in the lead. Fight for the ideals and character of a free people. Fight for our children's future. Fight for justice and opportunity for all.
Stand up to defend our country from its enemies. Stand up -- stand up and fight. America is worth fighting for. Nothing is inevitable. We never give up. We never quit. We never hide from history. We make history. Now, let's go win this election and get this (INAUDIBLE).
HARRIS: There you have it. John McCain. Doing a little podium pounding there in Blue Bell, Pennsylvania. That is a suburb of Philadelphia.
Laying out new proposals to turn around the economy right now. John McCain unveiling some new proposals and his economic plan. We will -- and a lot to chew over here. We will do that next hour with the CNN money team. But first, a quick break.
The next hour to CNN NEWSROOM starts in a moment.
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