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Bonus Outrage; Power Grab; Obama and the Border

Aired March 24, 2009 - 19:00   ET


LOU DOBBS, HOST: Wolf, thanks.

Tonight, President Obama's second prime time news conference coming right up, we'll have complete live coverage for you beginning this hour and tonight, Treasury Secretary Geithner asking Congress for yet more power, unprecedented power to shut down financial companies that are non-banks.

And tonight, the president unveiling plans to send hundreds of crime fighters to the border with Mexico to combat the deadly drug cartel violence. Critics say, however, the plan is long on rhetoric and very short on specifics. We'll have all of that, all the day's news and much more straight ahead right here.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Tuesday, March 24th. Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody. The president's news conference will begin less than an hour from now. It comes just hours after Treasury Secretary Geithner and Fed Chairman Bernanke went to Capitol Hill. There, they faced more stinging criticism for their handling of the banking crisis and the AIG bonus scandal.

But they also made a pitch for even more power, expanded, unprecedented power that would allow the government to virtually shut down failing financial companies, such as AIG -- now the White House apparently trying to wrest control of the message and to deflect the outrage by putting President Obama in front of reporters tonight in a live nationally broadcast news conference. This is the second of his now 64 day-long presidency -- the economy, AIG, the president's new border protection initiative all on the agenda -- Dan Lothian with our report tonight.


DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT (voice-over): The president on offense, ready to face the public in primetime.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: He wants to talk directly to them about what he's seeing and what he's working on everyday. What's being put in place to strengthen our economy.

LOTHIAN: In just two days, the Obama administration has ramped up its domestic and international agenda, toughening its Mexico border policy with a $700 million commitment and deployment of hundreds of border agents, rolling out a plan to rid banks of toxic assets, announcing three of four key senior positions at Treasury, including Timothy Geithner's deputy, and asking Congress renew regulatory powers to prevent another meltdown like what happened at AIG.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I hope it doesn't take too long to convince Congress and in the absence of that capacity you end up with the situation that we've been in, a systemic or an institution that poses systemic risks to the system, but a lack of capacity to shut it down.

LOTHIAN: The economy is a global concern. So the president sent a message to 31 newspapers around the world, writing in an op-ed that "the United States is ready to lead, and we call upon our partners to join us with a sense of urgency and common purpose."

OBAMA: I would love to visit Australia.

LOTHIAN: One ever those partners, the prime minister of Australia, visited the White House, tackling the global economic crisis dominated their meeting.

OBAMA: Our own success in rebounding from this crisis is going to be tied up with what happens around the world.


LOTHIAN: Now, Lou, we did receive some excerpts from the president's opening remarks tonight. He's expected to say that the country here has seen so far some signs of progress, and he will go on to say, quote, "we will recover from this recession, but it will take time. It will take patience, and it will take an understanding that when we all work together, when each of us looks beyond our own short- term interests, to the wider set of obligations we have to each other, that's when we succeed." So we'll hear from the president sort of this upbeat message, although at the same time some reality here that all of this will take time -- Lou.

DOBBS: Yeah, I'm not sure whether we can put it will take time under upbeat or not, but Dan...


DOBBS: What is the urgency? What is the headline that caused the networks to give over to the president about an hour of primetime, which he has requested?

LOTHIAN: Well, the headline simply was a request from the White House to really sort of push their message. They really feel that they need to sell not only the president's economic agenda, but also this massive budget, which of course still is getting some resistance up on Capitol Hill. So you have seen the president go outside of the White House bubble.

He went out to the West Coast last week, holding those town hall meetings. And this is yet another effort in what could be seen as sort of the P.R. campaign by this White House to really sell that message to the American people. DOBBS: Yeah, let's see. The White House bubble, it's ESPN, CBS "60 Minutes", "Jay Leno", I get the idea.

LOTHIAN: That's right.

DOBBS: Thank you very much -- Dan Lothian from the White House.


DOBBS: Well as Dan just reported, the treasury secretary and the Fed chairman today asked Congress to give the president sweeping additional powers. They sat down in front of the House Financial Services Committee. There, they said the government should be able to take a troubled company such as AIG and shut it down. Dana Bash has our report from Capitol Hill.


DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): The treasury secretary is trying to channel AIG anger into a new solution. Give him unprecedented power.

TIMOTHY GEITHNER, TREASURY SECRETARY: AIG highlights very broad failures of our financial system. We came into this crisis without the authority and the tools necessary to contain the damage to the American economy.

BASH: Timothy Geithner wants Congress to grant him that same power over non-banking financial institutions, like AIG, that the FDIC has over banks, the ability to take control of a failing company and do what it takes to reduce risks. Fed Chairman Ben Bernanke backed the idea, saying he would have had better tools to handle AIG's crisis and its controversial bonuses.

UNIDENTIFIED MALE: This bonus issue would not have arisen because all of the contracts could have been adjusted.

BASH: In fact, Bernanke said when he learned of AIG's bonuses he wanted to sue, but was stopped by Fed lawyers.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Connecticut law provides for substantial punitive damages if the suit would fail.

BASH: Bernanke and Geithner's new proposal was clearly intended to deflect outrage but it didn't always work like when this Democrat demanded a full list of companies taking taxpayer dollars that paid bonuses.

REP. BRAD SHERMAN (D), CALIFORNIA: Are you going to give us the chart or are you going to hide the ball?

GEITHNER: I'm not going to hide the ball.

SHERMAN: Are you going to give us the chart?

GEITHNER: I will reflect on the suggestion you made and see if that...

SHERMAN: In other words, you won't commit to telling the American people how many folks at Goldman Sachs or AIG are going to make $1 million this year?

GEITHNER: Congressman, I will think carefully about your proposal.

BASH: That exchange, evidence that Geithner's shaky bailout history will make lawmakers think twice before expanding his power.


BASH: Now, the House Republican leader blasted Geithner for what he called a, quote, "unprecedented power grab". But, Lou, Democratic leaders, they pretty much said that they supported this idea, but you know the big question is what is going to happen with rank and file lawmakers. Many of them say that they're a little bit wary about jumping into a treasury proposal like this on a complex issue because they say they've been burned before. Lou?

DOBBS: Well they've been burned before and there is such a thing as the Constitution, which this administration is having a hard time grappling with. Amongst the issues here, I would think, Dana, would be the realization on the part of the Financial Services Committee chaired by Barney Frank that they simply need to reinstitute Glass- Steagall. That would be the first solution, requiring no expansion of treasury powers, an expansion that it would be unprecedented.

If they wanted to -- if the Treasury Secretary Geithner wants to seize a firm like AIG, all that would have been required is to let it go into bankruptcy and receivership. It has the power to put that institution into a trusteeship. What in the world is he talking about? And why is the committee going along with such balderdash?

BASH: Well what we heard the treasury secretary and the Fed chief argue today is something that we've heard so many times before, is that with regard to AIG, they insisted again that if they allowed that to happen, the whole financial system would have collapsed. But I can tell you there actually is going to be a debate on this.

The day after tomorrow, the Financial Services Committee they're going to reconvene. Timothy Geithner is going to come back here and they're going to really apparently dissect and go through debating this specific proposal on Thursday.

DOBBS: So long as this administration and the previous pursued a policy of too big to fail, those powers are for the most part an absurd triviality. It would have been unhelpful period. The issue is one of values and principles, which they didn't choose to apply in the first instance of their -- under the Bush administration and now continuing that policy under the Obama administration. Dana, thank you very much. Dana Bash.

BASH: Thank you. DOBBS: New York's attorney general says so far 15 of AIG's top 20 bonus recipients have given back that money. That's about $50 million worth. Because of that, today the House Majority Leader Steny Hoyer says the 90 percent bonus tax that the House passed last week may not be necessary after all. If this sounds a little like face saving, there may be a reason for that.

Hoyer went on to say there won't be anything to tax if these payments are received. So in terms of its necessity, it won't be necessary. Still, some $80 million of the bonus pot went to AIG executives, somewhere else, namely London. And it doesn't look like the United States has the legal ability to bring that money back.

That's one of the stories for some reason that the rest of the media hasn't been reporting today. I wonder how much more of your taxpayer money has been sent to London and other places around the world.

Still ahead here tonight, signs of trouble in the president's latest poll numbers. We'll take a hard look at the president's new plan to protect the borders from Mexican drug cartel violence.

And assaults on the Second Amendment part of the plan? Well we'll find out. We'll have live coverage of the president's prime time news conference beginning this hour. Stay with us. We'll be right back.


DOBBS: Well, we're about 45 minutes away now from the president's live news conference and we'll be bringing you that live as soon as President Obama steps to the microphones. The Obama administration today outlined a massive plan to deal with the Mexican drug cartel violence along our border with Mexico, of course.

That massive plan was massive in language, but not -- not very large in terms of manpower devoted. Some critics say the Obama administration's plan is simply not enough to even slow down the drug cartel violence that's spreading now into the United States. Lisa Sylvester has our report.


LISA SYLVESTER, CNN CORRESPONDENT (voice-over): The plan calls for sending 100 ATF agents to the southwest border, adding 16 new DEA positions, tripling the number of intelligence analysts and stepping up screening of railcars headed southbound to Mexico, part of the effort to stop the flow of drugs and keep violence from further spinning out of control. Nine bodies found last week were buried on the outskirts of the Mexican border city of Juarez.

JANET NAPOLITANO, HOMELAND SECURITY SECRETARY: What we want to do is to better secure the border area against further violence and make it a safe and secure area, where of course the rule of law is upheld and enforced. SYLVESTER: The Department of Homeland Security and Justice Department are also adding technology resources to cut out the criminal networks where illegal drugs move north and U.S. guns move south.

ARMAND PESCHARD-SVERDRUP, CTR. FOR STRATEGIC & INTL. STUDIES: Drug trafficking is a transnational business that permeates well beyond our southern border. There are distribution channels that permeate throughout the United States all the way to our northern cities.

SYLVESTER: But critics say the DHS proposal is not going to be enough to stamp out the violence. Texas Governor Rick Perry, for example, has asked for 1,000 more boots on the ground along the border. The Obama administration plans to add roughly 360 additional officers and agents.

REP. LAMAR SMITH (R), TEXAS: It is a drop in the bucket. Really what this administration needs to be doing is increasing the number of personnel everywhere, whether it be along the border, whether it be in the interior. Right now we only have about three border patrol agents for every two miles of border, north and south.


SYLVESTER: And the Texas congressman says that's clearly not enough. Representative Smith worries that the administration will merely shift around resources, and he said in a release that it appears, quote, "that the administration is using border violence as an excuse to reduce interior enforcement of immigration laws and enact gun restrictions". Lou?

DOBBS: It's remarkable that they could be talking about moving Immigration and Customs Enforcement agents to the border while at the same time obviously pulling back on their enforcement efforts, an administration that at a very young stage of this presidency demonstrating some contradictions and serious ones. Thank you very much -- Lisa Sylvester from Washington.

Well as Lisa just suggested, gun control advocates are joining with Mexico and the government of Mexico and the Obama administration. They're now in a concerted effort trying to blame Americans for the drug violence in Mexico. Imagine this. They claim that guns from the United States are in fact fueling the violent drug cartel violence.

Paul Helmke (ph), who is the president of the Brady Campaign, today said quote, "Our weak, nearly nonexistent laws are fueling the violence in Mexico. Those same weak or nearly nonexistent laws are fueling the violence in the United States."

He made no mention of a corrupt and incompetent government in Mexico, and a government in this country that is decidedly against securing a border across which drugs and guns are trafficked. Attorney General Eric Holder has made it very clear that he will try to impinge on the First and Second Amendment and to control gun ownership in the United States, trying to restrict our Second Amendment rights. In part it appears he is going to use placating Mexico as part of his rationale.

Up next, President Obama continues to be popular, but not nearly so popular as he was. New poll numbers point to new concerns for the administration and the president's news conference due to begin just minutes from now. We'll have complete, live coverage for you. We'll be right back.


DOBBS: President Obama's second primetime news conference set to begin in just a few minutes, we'll have complete live coverage for you here, beginning at 7:45 Eastern.

New evidence tonight that the president is struggling now to win support for his economic policies, the latest polls show half of Americans now disapprove of his administration's handling of the AIG bonus mess and the banking crisis. Bill Schneider has our report.


WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): Have the controversies over bailouts and bonuses affected President Obama's popularity? Not so you'd notice. Our Poll of Polls shows President Obama's job rating at 63 percent. Up a little since earlier in the month. Mr. Obama is doing better than his predecessors after two months in office, better than George W. Bush or his father or Bill Clinton, a little better even than Ronald Reagan after two months.

But Mr. Obama's personal popularity does not necessarily apply to his policies. The president is facing a populist revolt. Half the country says they're angry over the AIG bonus payments. Here's how AIG's chief executive defended them.

EDWARD LIDDY, CHAIRMAN & CEO, AIG: I'm trying desperately to prevent an uncontrolled collapse of that business. This is the only way to improve AIG's ability to pay taxpayers back quickly and completely.

SCHNEIDER: Do people believe that? No. Populism pits us versus them -- us the people, them the big shots -- in this case, Wall Street. Fifty-four percent of Americans are satisfied with the way President Obama handled the AIG controversy. He's one of us. But the same number are dissatisfied with the way Treasury Secretary Geithner handled the matter. Geithner comes from Wall Street. He may be one of them.

GEITHNER: To get through a crisis like this, you have to do things to try to get the finances to work right, and that requires doing thing that are deeply politically unpopular.

SCHNEIDER: How does the public feel about President Obama's new plan to rescue the financial system? Are they mostly relieved because it could free up credit or mostly resentful, because it could benefit irresponsible executives -- more resentful than relieved.

(END VIDEOTAPE) SCHNEIDER: So the policies are suspect. The president himself more trusting, so the best way for the president to sell the policies is to invest his own personal popularity, therefore we're about to see a primetime news conference. Lou?

DOBBS: And also, therefore, is that perhaps the reason we have also seen this president, as I was discussing with Dan Lothian from the White House, that in quick order he's been on ESPN, the "Jay Leno Show", CBS "60 Minutes" and now a primetime news conference, you don't suppose?

SCHNEIDER: Yes, I suppose because look the best selling point he has is himself.

DOBBS: All right. Thank you very much, Bill Schneider. And a reminder to join me on the radio Monday through Fridays for "The Lou Dobbs Show" 2:00 to 4:00 p.m. each after on WOR 710 Radio New York and go to to get the local listings in your area for "The Lou Dobbs Show".

Up next here, the Obama affect on Wall Street. Things are looking pretty good when they looked pretty bleak not so long ago.

Also the battle the president faces from within his own party. Democrats trying to put the brakes on what they see as a leftist agenda. We'll have live coverage for you of the president's primetime news conference coming up here in a matter of minutes. Stay with us. We'll be right back.


DOBBS: Well as President Obama prepares for his televised news conference tonight in primetime, he's facing growing resistance from within his own party. That resistance moderate Democrats skeptical of the president's multi-trillion-dollar budget and that is creating a significant divide within the Democratic Party -- Louise Schiavone with our report.


LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Amid growing concern about his $3.6 trillion spending blueprint, President Obama personally takes his case to Senate Democrats this week where centrists, now 16 in number, are a growing force. Several in the coalition which calls itself the Moderate Dems Working Group, tell us that in general they support the president but his budget needs work.

SEN. MARK PRYOR (D), ARKANSAS: We don't really walk in lock step. There's a lot of diversity within the Democratic Party. None of us were elected by Barack Obama. We don't represent the president. We represent our state.

SEN. TOM CARPER (D), DELAWARE: There are a number (INAUDIBLE) signing on to a letter to our Budget Committee Chairman Kent Conrad to underline again our belief that it is important that we return to fiscal sanity. SCHIAVONE: Analysts say this is the reality of the Democratic Senate majority. It won't necessarily follow the White House's tune.

NORM ORNSTEIN, AMERICAN ENTERPRISE INST.: There are large numbers who are moderate centrists, even a little bit conservative, who are not going to let some sweeping, very liberal policy go through the Senate.

SCHIAVONE: Among the Democratic moderates, former governors with practical experience in reaching across the aisle.

SEN. JEANNE SHAHEEN (D), NEW HAMPSHIRE: I was a governor, so I understood that we had to work with Democrats and Republicans to get things done.

SCHIAVONE: The first acid test comes this week as the Senate Budget Committee unravels the president's massive spending plan program by program.


SCHIAVONE: If these centrists have their way, Lou, it will be a refreshing change from the bitter partisanship of recent Congresses, said one analyst, having the centrists on his side won't guarantee success for the president, but he cannot succeed without them. Lou?

DOBBS: And 15 of them, that's quite a sizeable group of senators from the Democratic side. But do we have some sense of what they're looking for here in this budget battle as it's shaping up?

SCHIAVONE: Well, there are actually 16 of them with the -- Senator Mark Pryor of Arkansas just recently joined the group and what they're looking for -- principally they're looking for -- as Senator Tom Carper said, they're looking for fiscal sanity. They're looking for a way...

DOBBS: I'm sorry to interrupt you, Louise, but how are you going to get fiscal sanity out of $3.6 trillion in the middle of this mess?

SCHIAVONE: Well one of the big things they want to do, Lou, is address the issue of entitlement -- the cost of entitlements are completely running away -- they always talk about this, let's agree to that, Lou. But the truth is that they feel that this is the time, this is their moment. They have to address these entitlements or else it will be on the backs of our children, our children's children and so on.

DOBBS: Well, it's nice that someone apparently is worrying about the impact of fiscal policy that's being followed here. But this is talk at this point. Let's see what happens. Louise, thank you very much. Louise Schiavone.

The financial markets have been volatile ever since President Obama took office. The Dow Jones Industrials in quick order plunged to record lows and is only now rallying on news of a plan to buy up bad mortgage assets. Ines Ferre joins me now on the president's roller coaster ride on Wall Street.

INES FERRE, CNN CORRESPONDENT: It's been a roller coaster, Lou. According to the broadest market index up from inauguration day to today, the market has lost $1.5 trillion and regained it. Historians have to go back to the first weeks of President Roosevelt's administration in 1933 to find such market volatility. The day Barack Obama took office, the Dow closed down 330 points, over the next month and a half, the markets dropped about 20 percent, reaching 12-year lows in early March, with the Dow hitting 6,547, the NASDAQ, 1268 and the S&P 500 676. In the last few weeks we regained much of the month's previous losses. The volatility has a lot to do with the policies and the language that the new administration was using, which was disappointing the market.

JACK ABLIN, HARRIS BANK: You could almost count on the stock market going down. Then I'm going to say probably three weeks ago I think President Obama realized that he really does need to pay attention to the stock market and started using, I believe, the stock market as a barometer.

FERRE: And when all is said and done, since President Obama took office, the Dow is down 289 points or 3.6 percent. The S&P and virtually unchanged and the NASDAQ is up 78 points, or 5 percent. Basically the market is close to where it was on inauguration day, but, Lou, it's been one big ride.

DOBBS: It has been that. And I think we can say by any definition President Obama in 64 -- 64 days in office has had a bear market, there's been an Obama bear market, and now there's been an Obama rally of almost the same proportion, which is a remarkable feat. It's interesting that you have to go back to 1933 to see this kind of volatility. Ines, thanks.

Next, the push for, if you can believe it, more control over financial companies. Three of the country's best radio talk show hosts will join us to tell us what their listeners are saying about this unprecedented play for unprecedented power.

And we're just minutes away from the president's primetime news conference, his second. We'll be bringing it to you live. We'll be right back.


DOBBS: Well, joining me now, three of the country's best radio talk show hosts in Macon Georgia, Chris Krok, WMAC in Albany, good to have you with us, in Albany Paul Vandenburgh, WDGJ, and here in New York, my colleague and buddy John Gambling, WOR good to see you.

Let's start this out gentlemen. Chris Krok let's go with, ESPN, "60 Minutes," Jay Leno and now a primetime news conference. What do you think?

CHRIS KROK, WMAC IN MACON: Lou, you set this up perfectly for me. I created something called the people, he's fishing, trolling, looking for dumb fish. That's why he went on Jay Leno. He's looking for people who don't know that he is -- his administration said to Dodd, keep those loopholes in there for the -- for AIG. So he is trolling. He needs to -- somebody needs to tell him, coach k. Should have been more to the point. Fix this country, not run it into the ground and stop worrying about basketball.

DOBBS: Paul?

PAUL VANDENBURGH, WGDJ IN ALBANY: If you go back over the last couple of weeks, it started when he went to a Washington Wizards basketball game, sat there in the front row. He did this thing on ESPN. He then went on "The Tonight Show" with Jay Leno. He did "60 Minutes" on Sunday night and I found it amazing that he said he's home in the afternoon when the girls get home on school and he sees them on the weekend and I'm thinking, when does he work? I know guys that work pretty hard that are never home in when they kids get home, and they're kids grow up and go on and have kids of their own and they're never there once. I'm wondering, if this guy has really latched on to the importance of this job yet.

JOHN GAMBLING, WOR IN NEW YORK: I couldn't agree more with what has just been said. Leave the airplane in the hangar, get into the oval office and get to work. What does he think he's doing? The Leno thing was amazing. When he screamed, I'm stunned at the AIG bonuses. I looked at the television and said, are you kidding me? He knew exactly those AIG bonuses were in that, and the loopholes were there, and he looks into the camera and to Jay Leno and the nation and world and says I didn't know anything about it? Come on. That's disingenuous at its best.

KROK: Because those people that watch Jay Leno don't know, and he needs them. That's all he needs to continue running this country.

DOBBS: First, Geithner also -- I'm going to be generous, instead of calling him a liar, I'm going to say he's a mis-speaker. He said he had no knowledge of this. He was working on these bonuses that goes back to the fall when he was Federal Reserve president in New York. May 3rd, Congressman Crowley of New York in a hearing is laying it out for the Treasury Department, that they are going to be paying these bonuses, not only this year but next year as well. And everyone is painting surprise. Disingenuous is a kind word.

GAMBLING: It is a kind word, you're absolutely right. And America seems to being eating this up for some reason and just not paying attention.

DOBBS: I think according to the newest polls we just got, gentlemen, somebody's paying attention. For the first time since he became president, a significant number of Americans are now expressing disapproval of Barack Obama's actions in this specific area, namely the AIG bonus situation. He continues to get high marks overall, but, but, his job performance and approval rating declining to about a 50/50 situation.

VANDENBURGH: Well, Lou, he still has protection here. When you take a look, his numbers are dropping a little bit, but people are still mad at the banks, the insurance companies, and congress. And to get back to your earlier point --

DOBBS: My question would be why not?

VANDENBURGH: But you see, to get back to your -- remember, there's some fundamentals here that are being skipped over and I'll give you one. This administration is on the same page and you saw it today.

DOBBS: For number two we'll have to come back after this break. I apologize. We'll be right back with our panel. Stay with us. We're just minutes away from the president's live news conference. Stay with us.


DOBBS: We're back and I want to return to Paul Vandenburgh. You were saying, we've had just a few seconds. What is your take on the request for more power, unprecedented power for the treasury secretary?

VANDENBURGH: Well, the treasury secretary, as I started to say before the break, Lou, the treasury secretary and Mr. Bernanke both testify. They both have an idea to give the treasury -- they both have an idea for the government to have more power over banks and financial institutions, but neither one of them even talked about it beforehand because they both have an idea over who should have control. You really wonder if any of those folks in this administration are conversing with each other and not individually.

DOBBS: Chris Krok, your thoughts?

KROK: They want to rush into this just like the pork list bill and say what about the AIG bonuses? No more power to this administration.

DOBBS: John Gambling?

GAMBLING: It's as if failure is part of America, we've been grown up on it, we've grown big on, it we're not allowed to fail anymore. So the government has all the answers, the president says this, the treasury sect says this, the head of the fed says this. We can't fail anymore. But you know what that's going to make us do? Fail miserably.

DOBBS: Well, let's hope -- let's hope.

GAMBLING: I'm wrong. Exactly so.

DOBBS: Appreciate it.

GAMBLING: I want to be wrong.

DOBBS: Chris, thank you very much, Paul, thank you. John, as always.

GAMBLING: Thank you, Lou.