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Sarah Palin Investigation Continues; O.J. Simpson Back in Court; Fed Says No to Interest Rate Cut

Aired September 16, 2008 - 15:00   ET

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

RICK SANCHEZ, CNN ANCHOR: OK. Here we go. It's the top of the hour.
Welcome, everyone. I'm Rick Sanchez here at the CNN World Headquarters in Atlanta.

I can't remember when we have had a busier news day, and it is all taking place right about now. So, stay with us. We are going to get you through it.

Let me try and get you up to speed, first of all. In the last hour, the Fed decided not, not, ixnay, ixnay, no to a change in a very important interest rates. And the nation's largest insurer, AIG, is on the brink of collapse, which could mean, some experts in the financial district say, disaster. You may be sitting at home asking yourself why you should care. We're going to tell you why the experts are saying you should most definitely care.

Also, did you know that O.J. Simpson is on trial in Las Vegas? Some drama in that courtroom already today. We're going to check that case out for you.

Some people say it could turn out to be the October surprise. What they are talking about in a legislative investigation in Alaska into Governor Sarah Palin's dismissal of state public safety commissioner. His name was Walt Monegan. This is the breaking news we begin this hour with.

Today, five Alaska Republicans filed a suit asking a judge to block this probe. Monegan claims that he was fired because he refused to dismiss State Trooper Mike Wooten, who happen to be Palin's ex- brother-in-law.

At first, Palin promised to cooperate with this probe, but now that she is the Republican vice presidential candidate, Palin is reconsidering. That is the upshot of this news story.

Said a Palin campaign spokesperson -- quote -- "The governor is not, is not going to cooperate with that investigation so long as it remains tainted and run by partisan individuals who have a predetermined conclusion."

The Obama campaign is now dismissing that assertion as complete paranoia. Governor Palin is not legally obligated, we should note, to cooperate with the legislative investigation, but could her silence cause her political problems? There is so much to look at in this story.

"Newsweek"'s Mike Isikoff has been investigating the allegations. He's joining us now from Washington and I should say has been following this story probably as closely as anyone.

Knowing what you know, Michael, are you surprised by this news that she will likely not answer questions, in essence not be cooperating with this investigation?

MICHAEL ISIKOFF, INVESTIGATIVE REPORTER, "NEWSWEEK": Only surprised to the extent to which they are being up front and public about it this early.

It seemed pretty clear for the last couple of weeks that the Palin/McCain campaign -- or McCain/Palin campaign -- viewed this investigation as a threat, a political threat, the looming October surprise out there that could undermine her credibility on the eve of the election.

And they were determined to do everything they could to thwart the investigation and make sure that doesn't happen. They have been for the last couple of weeks hurling charge after charge against the investigators, suggesting that they have politicized the probe, they are Obama supporters, they're out to embarrass the governor.

There is a slight problem with that, and that is that this investigation was authorized unanimously with bipartisan support by the Alaskan legislature and just as recently as last Friday when the Judiciary Committee of the Senate voted to subpoena a whole bunch of Palin aides, as well as Todd Palin, the first gentleman of Alaska, it passed by a 3-2 vote, with a key Republican from Wasilla, Sarah Palin's hometown, voting to approve the subpoenas.

So, there is a bit of a tension there between the way the McCain campaign is depicting the investigation and the way the investigators are at least describing it themselves.

SANCHEZ: Let me share with you some information we are getting as we speak, a couple of things on that note. First of all, the Associated Press report as it came out last night seemed to indicate that she would be unlikely to cooperate with the investigation. Is there a hedging of bets here?

ISIKOFF: No. I think they are -- I wouldn't read as much into it. I think it is pretty clear that she is not going to sit down and cooperate with the legislative council, at least as it is being conducted now. There is too much at stake.

And, look, the McCain/Palin position here is there is nothing to investigate. In fact, that was the thrust of the filing that the governor's lawyer made last night and interestingly announced by the McCain campaign itself.

They held a press conference in Anchorage to announce the filing by the governor's lawyer of this. And the thrust of the filing is that there was nothing improper in the firing of Walt Monegan; it had nothing to do with the trooper, Mike Wooten, who was, of course, the governor's ex-brother-in-law, and, you know, was involved in this messy divorce custody battle with the governor's sister; that had nothing to do, the Palin people say, with why Monegan was fired. It had to do with these other matters relating to the budget.

Monegan, of course, has said he is convinced that it is only the Wooten matter that the governor cared about and that is the reason that he was fired.

SANCHEZ: Well, I mentioned that, by the way, because we just got a note from the McCain campaign stressing that she will likely not cooperate, as opposed to...

ISIKOFF: Unlikely to cooperate was the phrase that the spokesman used last night.

SANCHEZ: To be fair -- and I misspoke if I said that she won't cooperate. It is not that definitive. That would be my mistake and the wrong use of the word.

Let's continue now. Is there anything so far, Michael, in this investigation that would lead a reasonable person to conclude that it is unfair, that someone is trying to railroad her? Because I am reading this note put out by these four Republican legislators in Alaska, and they are calling it a McCarthy-like investigation of Senator (sic) Palin.

Is there any truth of that?

ISIKOFF: Well, look, this in the eye of the beholder, of course, and everybody is looking at this through a political lens.

That phrase, McCarthyite, was first used by Sarah Palin's lawyer. And it is, you know, the other side, which they contradicted by the fact that, as I mentioned before, this had unanimous bipartisan support when the investigation began before Sarah Palin was selected as the vice presidential running mate.

The McCain people look at, point to the fact that Hollis French, who is the project director, is an open Obama supporter, as is the chairman of the legislative council, Kim Elton, a Democrat who is an Obama supporter, and they have pointed to some public comments that the state senator, Hollis French, made that he has acknowledged were inappropriate. He did say, this could turn into a October surprise. This could damage the governor's credibility. That seemed to tilt the investigation -- or taint the investigation, as the McCain people say.

On the other side, the people conducting the investigation say, look, there is a professional prosecutor, Steve Branchflower, who has been hired to conduct it, and he laid out on Friday some new evidence that we hadn't seen before or we hadn't heard about before...

SANCHEZ: Which is?

ISIKOFF: ... that potentially raise the stakes. There were two things. One, he mentioned that the former chief of staff of Sarah Palin, Mike Tibbles, convened a meeting about Mike Wooten in the governor's office in November of 2007, a pretty key sign of just how significant the governor and her top staff viewed the Palin matter, and, more significantly, he outlined evidence that -- allegations that the workers compensation claim filed by Trooper Wooten, there were instructions from the governor's office to deny that claim, reaching down into the state bureaucracy and tamper or influence a medical decision.

And that would -- could fuel charges that the governor -- that is basically underlying all this -- was using her public office to settle a private score against Trooper Wooten.

SANCHEZ: Michael Isikoff with "Newsweek" magazine joining us to talk about the news that Sarah Palin will likely, likely not cooperate with the investigation.

Final question. As I read your article last night, Michael, what I came to understand was just how invested the McCain camp was in this discussion, this investigation. Can you quantify that for us in any way? Is there a number of lawyers?

ISIKOFF: I don't know about quantify it, but we will have some more information on our Web site, Newsweek.com, about this a little later today.

But, yes, there is no question that this is a high-stakes matter. As confusing as it might be to the general public, and muddled, what the underlying facts are, there is no question that this is very -- a great deal of significance to the McCain campaign.

What they are worried about, what they have been worried about for the last several weeks is that a report is going to be issued on the eve of the election that is going to undermine the public statements that have been made by Sarah Palin and potentially damage her credibility.

They don't think that that report is justified. They don't think the underlying facts support that, but that is what they are worried about. And that is why they are devoting so much time and resources to thwarting this investigation.

SANCHEZ: And, obviously, we invite the McCain and Palin camp to bring us all comers and we will continue to look at this story from any perspective that is presented for us here on CNN.

Michael Isikoff, as usual, thanks for being with us. Thanks for taking us through this story as it happens.

ISIKOFF: Thank you.

SANCHEZ: All right. So, that is the background on the investigation.

Coming up next, we have got a spokesperson for the McCain campaign who is going to explain why Sarah Palin will not be cooperating with investigators. We're going to do that for you right after the break. Stay with us.

(COMMERCIAL BREAK)

SANCHEZ: Welcome back. I'm Rick Sanchez here in the World Headquarters of CNN.

"Newsweek" investigator Michael Isikoff just broke down for us the probe in Alaska, which he's been looking into, Alaska Governor Sarah Palin's dismissal of a state public safety commissioner for reasons having to do with her ex-brother-in-law. So say some of the investigators in this case, has not been proven.

Now we are going to get on a McCain/Palin's take on this. Campaign spokesman Ed O'Callaghan is joining us from Anchorage, Alaska.

Hey, Ed, thanks so much for being with us. We certainly appreciate it.

ED O'CALLAGHAN, MCCAIN CAMPAIGN SPOKESMAN: All right.

SANCHEZ: Let me read to you something that is coming to us right now. This is from somebody on our Facebook that we put out. We asked them to start a discussion on this, as we are doing the newscast.

This one says that -- it's from Curtis Ross (ph). He says: "Look, I really feel like she should not be allowed not to cooperate and not be harassed about this. It just does not need -- help her too much in the whole truth-telling thing."

So, basically, here you have somebody saying, if an American doesn't want to cooperate, they don't have to. Is that your take?

O'CALLAGHAN: No.

Governor Palin very much wants to cooperate. She wants to cooperate with an investigation, however, that is fair and impartial, and not directed by Obama supporters here in Anchorage.

And that place for that inquiry to happen is before the personnel board. There is a personnel board inquiry that was initiated in August. And, under Alaska law, personnel board is the appropriate forum to inquire about any allegations of ethical breaches. And so there is an investigation pending there. It is an impartial, independent investigation.

And Governor Palin is very much interested in allowing that investigation to go forward and cooperating with fully with it. She wants to be an open book in that investigation, so that there is a serious search for the truth as to what happened with the replacement of Commissioner Monegan. That is really the question here.

SANCHEZ: Let me ask you...

O'CALLAGHAN: So, the question is -- yes, sir, Rick.

SANCHEZ: I just have to ask you a question, because you just raised a very important point. You said that it is the Obama camp that is actually directing this. What proof do you have that the Obama camp is in any way directing this? What contact has there been between the Obama camp and the folks in Alaska who are directing this investigation? Please share it with us.

O'CALLAGHAN: Well, yes, Rick. Thank you.

In the legislative council investigation, that investigation is actually being run by, as was revealed in a committee hearing on Friday, two senators that are well-known Obama supporters here. In fact, they are pictured on the Obama Web site as campaign spokes -- not spokesmen, but campaign supporters of Obama. That is Senator Elton and Senator French. That's the investigative council that is going on.

Those were the gentleman that chose the special investigator, Steven Branchflower. There are a number of conflicts between Steven Branchflower and Senator Elton. And all of that has led to a partisan inquiry that has already had a prejudgment as to the conclusion.

The public statements of these gentlemen have said that the Republicans could expect an October surprise at the end of this inquiry. That implicates the national election. And, once that happens, this is no longer an independent inquiry, which is what was originally allowed, but a partisan affair with a predetermined judgment.

The appropriate method to do here is to bring it to the personnel board, impartial. There is an investigator already appointed. There's a filing made yesterday which shows through e-mails from the governor's own office that what really is at the bottom of this affair is Commissioner Monegan's budgetary disputes during a time he was the commissioner of public safety here in Alaska.

He challenged the governor at every turn. And the governor exercised her executive authority to replace him with someone who she thought would be more in line with her budgetary priorities.

SANCHEZ: What would be the harm in just going ahead? If she really does have absolutely nothing to hide in an investigation, what would be the harm in going ahead and answering their questions? Even if they are people who don't like her, but like Obama, as you stated is the case with Senators Elton and Senator French, how could they possibly harm her if there is no -- if there is nothing that has been done wrong?

O'CALLAGHAN: The concern is that they -- Senator French has already stated publicly that they have already reached their conclusion. And their conclusion is that it will not be good for the governor, is what he said.

So, the concern there is that they have already reached their conclusion. Here, we have a personnel board inquiry that is going on. No judgments have been made. They have maintained the integrity of the investigation, which, as a former prosecutors, I can say, is the most important thing that an independent investigator wants to do, is to maintain the integrity of the investigation.

Through the public statements of Senator French and what was revealed at the hearing on Friday, which was that Senator French was actually directing which witnesses the investigator, Branchflower, was going to try to interview, that shows that it is no longer an independent investigation, that is a partisan affair that is being directed by Democrats that are on record as being ardent supporters of Obama.

(CROSSTALK)

O'CALLAGHAN: That is not the appropriate forum.

I'm sorry. There is a little bit of feedback out here in lovely Anchorage.

SANCHEZ: I know it is always difficult when we do these satellite transmissions, so I will try and just ask the question and then hear you out on it.

Do you have any information that would lead any reasonable people to believe that there is direct contact between either Barack Obama, himself, or Barack Obama's campaign and Senators Elton and French?

O'CALLAGHAN: Well, actually, CNN reported several weeks ago that the Obama campaign contacted a gentleman that is the head of the police union here. That is important, because that gentleman, John Cyr, also represents Commissioner Monegan in a personnel board filing that he made against the governor, implicitly recognizing that the personnel board is the appropriate jurisdiction for this inquiry.

I don't mean to get too technical...

(CROSSTALK)

O'CALLAGHAN: ... on you, but that is what they have done.

SANCHEZ: Yes, but that's not the senator's, though, right?

(CROSSTALK)

SANCHEZ: But you mentioned French and Elton. Is there anything that ties Obama's people to French and Elton, though, since you said they're the ones...

(CROSSTALK)

SANCHEZ: Go ahead.

O'CALLAGHAN: Go ahead, Rick.

John Cyr, as CNN reported, was contacted by the Obama campaign. And John Cyr is associated with Senator French, because they have shared some budgetary priorities together.

I would say, actually, a good question would be to ask Senator Elton whether -- and Senator French whether the Obama campaign has contacted them.

SANCHEZ: I guarantee you that we will do just that after this conversation.

Let me ask you a question. Can you say for -- can you explain to us, if this thing were resolved and let's say that they got an independent prosecutor in this case, and you felt that they were more fair, would she then likely cooperate with this investigation?

O'CALLAGHAN: Governor Palin has said that she will cooperate with a fair, just investigation. That is in the personnel board.

They, in fact, made filings before the personnel board yesterday indicating her full intent to cooperate. She wants to cooperate with an investigation that going to have a search for the truth here, because we know she is an open book here, and, at the end of the day, what a fair and impartial investigator will find, Rick, is that the governor did nothing wrong here.

SANCHEZ: But are Elton and French the fly in the ointment here for you? Is that what you are saying, get rid of them, and you cooperate with the investigation? Are you saying that?

O'CALLAGHAN: We are cooperating with the investigation that has the appropriate jurisdiction, the personnel board.

SANCHEZ: OK.

O'CALLAGHAN: We certainly agree that Elton and French are no longer impartial and are not interested in conducting a fair and impartial investigation.

SANCHEZ: So, just one more time, for the record, as it stands right now, and as this investigation stands, Sarah Palin is likely not to cooperate? Is that correct?

O'CALLAGHAN: Sarah Palin is 100 percent going to cooperate with the personnel board inquiry that is the appropriate jurisdiction and where this inquiry should lie.

SANCHEZ: But not the legislative inquiry?

O'CALLAGHAN: Well, we have to see how that transpires. The legislative inquiry, they have certain moves that they can make, too, I believe. And what we want to do is make sure it is fair and impartial.

We have had absolutely no indication over the last several weeks that this is going to be a fair and impartial inquiry in the legislative council.

SANCHEZ: But, one more time, as it stands right now, she will not cooperate with the legislative inquiry? Is that correct?

O'CALLAGHAN: If the legislative inquiry asks Governor Palin of certain things, I am sure that Governor Palin's attorney would consider those requests.

However, the personnel board is the appropriate inquiry. And Governor Palin is an open book with respect to that fair and impartial hearing.

SANCHEZ: Ed, thanks so much for being with us. We appreciate you taking time to clear this matter up for us. You have been great to have on. Appreciate it.

O'CALLAGHAN: Thanks very much.

SANCHEZ: Hopefully, we will be able to talk again as we continue through this story.

It was about this time yesterday that the stock market hit a freefall. We are keeping an eye on the Big Board, especially in the wake of the decision today to keep interest rates unchanged. We are going to have all of that for you. That is where it stands right now, up 145. Remember, it was down big yesterday.

Also, what about O.J. Simpson, back on trial?

And that Florida mom Casey Anthony in and out, in and out, in and out of jail again.

We will be right back.

(COMMERCIAL BREAK)

SANCHEZ: Oh, boy.

We are having a -- welcome back. I'm Rick Sanchez here in the world headquarters of CNN. So much stuff going on, first of all, the financial story and the story that we're following about the Dow, and obviously the repercussions that are coming in from that on AIG, also, no decision on that, by the way, as far as we can tell. And none of the officials seem to be talking.

And then there is the Sarah Palin investigation going on in Alaska. Throughout the better part of the last hour or so, we have been telling you that there is news on that front. And that is that four Republican legislators are going after the independent board -- or pardon me -- the board that is investigating Sarah Palin.

And there is a lot of reaction coming in from you on this, because it appears at this point -- and the words are tricky here -- that Sarah Palin will likely not cooperate with the investigation.

That has been reported by the Associated Press, and I believe that is what we are hearing Sarah Palin and John McCain officials tell us here on the air, although there might be some wiggle room there. Let's go to one the comments that we are getting now from you. This is MySpace. We put a discussion board there as we were starting this newscast. We know that many of you are watching us now on the air. We wanted to know what you think.

This is from Missy. She says: "Rick, it looks as if the above the law, I wonder if I, an ordinary citizen, could get away with saying no to a subpoena in a court case against me. I wonder what would happen if I tried to do it?"

That is the question a lot of people have been asking. Obviously, they look at this and they wonder whether it's something that might hurt Sarah Palin, not legally, because she is every much within her right to challenge this investigation, as an American, as we all are. The question is, what about public opinion?

Jessica Yellin has been following this story. She is joining us now from Anchorage, Alaska.

Jessica, bring us up to date, if you would, on these four legislators who had put out this note calling the investigation of Sarah Palin a McCarthy-like document. Who are these people? What are they trying to say?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Right, pretty strong words.

They are Republican legislators. And I just got off of the phone with the head lawyer for the Liberty Legal Institute. They are based in Texas and they are representing these lawmakers in this lawsuit.

Their claim in the lawsuit is that under the law, everyone deserves even the appearance -- he says the appearance of a fair and impartial investigation, and Sarah Palin is not getting that here. They believe the legislators on that inquiry board have prejudged the outcome.

The challenge here, Rick, is -- and what I should add is they are trying to remove the Democrats from that inquiry board, which would then defang it and make it unable to do its job and require a new vote by the legislature to decide if they want to reopen the investigation with new lawmakers.

So the challenge is a timeline question. None of this was an issue before Palin joined the ticket. And one of the Democrats just said to me, look, they had a unanimous decision by a group of Republicans and Democrats to look into this before she was running. Why is it suddenly partisan now?

One of the issues the lawyers pointed out to me, as you have been discussing, someone on the inquiry panel is a supporter of Barack Obama. And they say he didn't disclose this. Well, in fact, he has endorsed Barack Obama in the primaries months and months before this issue came up. That was public. And it was no secret here.

So, you know, all of this is raising a lot of eyebrows in Alaska. It is a little bit more partisan and bitter of a public brawl than they really are used to here.

SANCHEZ: And we are talking, by the way, by the way, about Senators Elton and French. And I imagine and from I hear you saying, their argument is going to be, well, of course I supported Barack Obama. I'm a Democrat. And he is leading my party right now, right? Isn't that what they would say?

(CROSSTALK)

YELLIN: Well, they are not talking publicly, because they have figured it is not wise to, but that is what Democrats, other legislators and other aides say.

One pointed out to me, look, the lieutenant governor, Sean Parnell, is charged with running the elections commission in this state. He has endorsed Governor Palin. Since he has endorsed Governor Palin, does that make him unable to run the elections commission?

SANCHEZ: Well, that is not what Ed O'Callaghan was telling me moments ago when I talking to him.

He seemed to be inferring without direct proof that there was some kind of perhaps tie -- we won't categorize it, but some type of tie between the Barack Obama camp and these senators, Elton and French. In your reporting, have you found anything like that thus far, Jessica?

YELLIN: Beyond endorsing Barack Obama and supporting that campaign, no.

They have to -- somebody is going to have to provide clear evidence of that, because all our reporting has found that there is no direct interaction on this matter, on the inquiry about this. If anything, I have found that they are being pretty cautious about talking to the press, these particularly -- these two folks, French and Elton, and stepping back from it, because they don't want to be accused of meddling in a political -- in a political context.

SANCHEZ: And it is a big story in Anchorage, and now, obviously, a big story all over the country as well.

Jessica Yellin joining us to bring us up to date on the story that has kind of been exploding while we have been on the air here. The investigation of Sarah Palin and both sides are digging in the heels here both from the left and the right.

Your comments as well. You saw it here first, the Federal Reserve balking today at cutting interest rates despite the turmoil embroiling financial and credit markets.

The Federal Funds Rate is still at 2 percent, but we pointed out that could possibly change at a moment's notice if the Fed sees fit. In fact, Mort Zuckerman told us here, it could very well happen. Maybe not now, but down the line. What are the markets doing in response to the Fed decision? With that, Susan Lisovicz, is joining us now at the New York Stock Exchange.

I was looking at that, just a little while ago, it looked to me like this thing was going up? So what does that mean? They're happy, they're pleased? Why?

SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Well, one trader, just a few moments ago, said the market is running on pure emotion driven by rumor and innuendo. And that, you know, rumors and innuendoes are always part of the market, but in this particular case with AIG twisting in the wind, this enormous company, it can make a difference.

And there has been increased chatter that -- and it is just chatter at this point. We have nothing confirmed that the government may do some sort of bailout. That has propped up AIG. Now, when I say propped up AIG, AIG shares right now are down 21 percent. That would be devastating for just about any company, but compared to 16 percent, that is an improvement. And we actually saw AIG down in the single digits just a few moments ago.

So there is a lot of confusion as to what is going to happen with AIG. It is such a big company and it operates in 130 countries. It is not only an insurance company and a lot of us can relate to it with casualty and property, you know, home insurance. But it is a financial company. It has these things called a credit default swaps. So it is really connected to the financial system.

Everybody knows that the financial system is under a lot of stress. Right now, the Dow is rallying and the three major averages are rallying . Oil close to at a seven-month low, down another $4.50, Rick, at $91 and change. And that is something certainly that is helpful, but the reason why it is declining is because demand continues to decline. And that is indicative of the slowing economy, Rick.

SANCHEZ: All right. There you go. And on and on it goes.

Thank you so much, Susan.

LISOVICZ: I will be back for the close.

SANCHEZ: We will be waiting with bated breath.

The U.S. economic crisis is not just affecting us here at home. It turns out that money troubles don't know borders. We have Richard Quest standing by, he's in London, to take us through the global pain being felt as a result of what is going on here.

Yes, doesn't that tell it all? Thanks, Richard. We will be right with you.

(COMMERCIAL BREAK)

SANCHEZ: We welcome you back to the CNN NEWSROOM. I'm Rick Sanchez. Back to the deepening crisis embroiling financial markets. Lehman Brothers and Merrill Lynch, and in the words of "The New York Times" today, "both are as good as gone."

Now, we brought you that story yesterday. Today, the crisis looming at AIG, which is the world's biggest insurer, all three are American firms, but the drama is playing out and being watched very carefully way outside of our shores. In fact, all over the world. Best place to go is London. Best person to go to is Richard Quest, who has been following this today. What is the take over there so far on this embrolio (ph), we seem to be following.

Oh, my God. Take it away, Richard?

RICHARD QUEST, CNN CORRESPONDENT: Well, it is because you have to remember, Rick, that for most of the Tuesday session London was on its own. Wall Street had not kicked. London was just seeing the devastation from what had happened the night before.

Now, of course, everybody has pretty much left their trading desks in London, leaving the very sad message. The point being that nothing happens in one financial market that is not immediately felt on the other side of the Atlantic or the opposite side of the Pacific. What happened here today is reacted to in Asia tonight. And on and on it goes.

And all everybody is looking for the first crack, the first sign of weakness, the first bit that the financial architecture is crumbling. Everybody is making rumors, speculation, and from that that you end up with the markets moving.

SANCHEZ: Richard Quest following things there in London.

Thanks, Richard, for checking in. We will continue to check with you.

You want answers about gas gouging and the race for the White House and Troopergate? I get answers from the governor of Minnesota. He is live and joining us here in just a little bit. Tim Pawlenty when we come back.

(COMMERCIAL BREAK)

SANCHEZ: Well, we just got a message from you moments ago, it says, "Woo, Rick, hot show today." Yes, it is a hot show. You know who else is hot? The Minnesota Golden Gophers, where I went to school. More on that in a minute.

First, let's look at the polls that we were talking about yesterday that put Minnesota not in the win column for John McCain, but certainly a lot further up than he was before. I mean, look at the difference from where this used to be. Dead heat, 45-45. Now a new "Star Tribune" poll shows McCain and Obama at that 45 percent. Tim Pawlenty is the governor of Minnesota. He was one of the short list contenders for Republican presidential nomination.

Good enough to join us now as a Golden Gophers, I am honored to be talking to the state that I seem to love the most.

Where the people are the most genuine, I should say, Governor. OK, enough with the great Minnesotan lines.

GOV. TIM PAWLENTY (R), MINNESOTA: Rick, we are very proud of you, Rick in Minnesota. We're glad to have you if only virtually back in our state.

SANCHEZ: Thank you so much. And we are doing a lot of virtual stuff these days.

Governor, this is a very important day in your state, because you are marking the reopening of a story that we carried here on CNN that really scared an awful lot of people. It was the day the bridge collapsed. It was a bridge to somewhere, by the way. It was the 35-W that collapsed last year. Bring us up to date on how that is going and why this is an important day for you.

PAWLENTY: Well, firs and foremost, we remember the 13 lives that were lost on that bridge and the over 150 people that were injured. And we announced in addition to the bridge reopening a memorial, and also we've been trying to help through special programs with the families and victims.

As to the bridge, itself, it reopens on Thursday at 5:00 a.m. Central time. State-of-the-art modern bridge, it was done in 11 months. The bridge itself cost about a quarter of a billion dollars, a little less. With all the cleanup and debris removal, all in, it is going to be over $300 million. It has redundancies, unlike the old bridge, for safety it has electronic sensors so traffic and maintenance issues can be monitored even remotely, Rick, from the University of Minnesota, or the Department of Transportation. So, it really is a state-of-the-art bridge in all respects.

SANCHEZ: M-I-N-N-E-S-O-T-A, Minnesota, Minnesota, go, Gophers. I had to get that out.

Let me ask you a question about something. The bridge is there, but a lot of Americans soon won't be able to use it if gas prices keep going the way they're going. I was talking - I'm sure your good friend - Charlie Crist, yesterday in his office. And , talking to members of his office, I should say. And they say the governor is furious about this gas gouging that is going on. Are you experiencing the same thing in your state? What is your reaction to it?

PAWLENTY: Well, we certainly keep an eye on it here, both through our Department of Commerce and our attorney general's office so with some minor exceptions we haven't been able to identify or prove any gas gouging in Minnesota. But we're certainly on the look out for it.

But more profoundly, Rick, we have a energy crisis and the country is going to have to move to provide more energy supply and deal with this energy crisis. We should have done it 30 years ago, we're finally dealing with it now, and hopefully more to come.

SANCHEZ: Has anyone told you that you would probably make a very good VP choice?

(LAUGHTER)

PAWLENTY: Well, there is no silver medal in that contest, my friend.

SANCHEZ: Well done.

Let me ask you something about what is going on with this economy. A lot of Americans are very frightened right now. They see what's going on, on Wall Street. You have seen what's going on. Are you concerned that this thing has not yet hit bottom?

PAWLENTY: Well, we are. And I'm concerned about it. And I know the McCain campaign, and Senator McCain and Governor Palin are concerned about it as well.

You have a system that has been outdated in terms of it's oversight, its regulation needs to be modernized and it needs to be toughened up dramatically. There's been speculation, there's been misbehavior, there's probably been criminal misdeeds done. And so this has to be cleaned up and we have to put the mechanisms put in place to make sure it doesn't happen again.

And in the meantime, we have a lot of people who are hurting. Rick. And so, we have to look for ways to provide relief. One way to do that is to bring down energy prices and not raise taxes, try to create more job growth. The main ticket to most people's economic future is their job and the country needs to be adding jobs not subtracting.

SANCHEZ: One final question, what advice would you give to Sarah Palin, as fellow governor, a fellow Republican governor, given the situation she finds herself embroiled in now, with this trooper investigation, as it is being called? Would you say cooperate or not cooperate?

PAWLENTY: I'd listen very carefully to Governor Palin's account and she has said very forthrightly and very straight forward, she never gave anybody the direction or an indication to put pressure on to have that trooper fired. In fact, the trooper is still employed there. So, her statements have been unequivocal and she was willing to cooperate, but now it appears that the review or investigation is becoming quite partisan. So I don't think she wants to go into a situation, in good faith, only to be - you know, have it be partisan or political.

So, she has made the statements very clear. I think if it's an open and fair and bipartisan process, she should participate, but that is not what is going on, at the moment, it appears.

SANCHEZ: Tim Pawlenty. Thanks so much, Governor, for taking time to join us and I send my salutations to all my fellow Gopher friends out there.

PAWLENTY: Come on home now, Rick. We want you to spend some of that money right here in Minnesota.

SANCHEZ: Will do, Governor.

PAWLENTY: That big contract. All right.

SANCHEZ: A whole lot still to get to, including O.J. Simpson on trial today. Casey Anthony in, and out, of jail, again. And a last look at the markets just to see how the Fed's decision has impacted your money. We will be right back.

(COMMERCIAL BREAK)

SANCHEZ: We welcome you back to the World Headquarters of CNN. I'm Rick Sanchez.

Trial day two in Las Vegas. O.J. Simpson charged with kidnapping, charged with armed robbery and facing possible jail time. There is a bevy of charges, actually, they date back to that alleged sports memorabilia heist a year ago in Vegas.

A judge had to lay down some law of her own today in the courtroom. Watch this.

(BEGIN VIDEO CLIP)

JUDGE JACKIE GLASS, CLARK CO. DISTRICT COURT: At the time of the incident, at the time of the event on September 13th -- ask it.

UNIDENTIFIED MALE: Sure. At the time that the defendant came in with a bunch of people with guns and took your property --

UNIDENTIFIED MALE: Objection!

GLASS Sit down!

UNIDENTIFIED MALE: I apologize.

UNIDENTIFIED MALE: I would move to strike that question, Judge.

GLASS: All right. Listen, folks. The last thing you want me to do as the judge is to start losing my temper in front of the fine ladies and gentlemen of the jury and having to deal with all of you. You've been warned, folks. So you need to stay in your seat. Thank you.

I appreciate all of you staying in your seats. That was good. And could we please conduct ourselves appropriately with regards to the questions that we are asking these witnesses, or this is going to be a very, very unpleasant event for everybody here.

(END VIDEO CLIP)

SANCHEZ: Whoa. No Judge Ito, there, huh?

Other legal news, Casey Anthony is in and out of jail again in Orlando, Florida. She is the mother of Caylee Anthony, a three-year- old girl reported missing in July, a month after she was last seen. Police consider that Caylee's mother is a person of interest.

Casey Anthony turned herself in yesterday on theft and check forgery charges, walked out of jail free on bond a couple of hours ago.

Let's go to Jackie Jeras now. Shall I say, fellow Minnesotan.

JACQUI JERAS, CNN METEOROLOGIST: Yes, you can.

SANCHEZ: With some news for us. What's going on, Jacqui?

JERAS: You might remember, Rick, about a week ago we had hurricanetrack.com on our air with those big yellow suitcases that they put out on the beach during hurricanes and record the storm surge coming in. Well, Mark Sedas (ph), who operates that business now has that video in. He actually went to Galveston Island, at Bermuda Beach, and has this video, nine hours prior to night fall, because obviously, you're not going to see anything after the sun comes down. This is a really good example to kind of help explain what storm surge is and what kind of conditions happened on Galveston Island.

There you can see that water slowly but steadily coming in. This isn't like a tsunami. This isn't one big wave of water that comes in and crashes and is over and done with. This comes in slowly, steadily, over 12, maybe even 24 hours; and also takes a long time to come out.

One interesting note, that blue house that you see in the background, the one closest to the water, no longer there anymore. Unfortunately, we did not catch that on video because it was dark out when that happened.

I want to take you to Google Earth and give you a better idea of where this was and what it looked like. There you can see we zoom in. Here's the ocean. There's the street view. We're going to take you down, all the way in, there you can see what that area used to look like. So just a lot of devastation there.

Also an interesting note that I thought that would catch your attention, Rick, you know those before and after photos that you were showing earlier in the show from the USGS? There's a tiger on the loose in that area now. That's in Crystal Beach. Apparently it got out of an exotic pet shop. People are a little worried about it. I believe it was found in a church.

SANCHEZ: Oh, great. First you get hit by a hurricane, then you lose your house. Then for those coming back to see what they got left, they got to deal with a tiger on the loose.

JERAS: Not fun.

SANCHEZ: No. Unbelievable story. Thanks so much.

JERAS: Sure.

SANCHEZ: When we come back, big story really today has been the financial story. At least going into the early part of the day. What is going on with the market, what will happen with AIG?

Those are three very important letters that you're going to be hearing a lot about over the next couple of days. If they go under, the problem gets much worse. What'll happen? We're going to be on it. We're coming back with Ali and Susan Lisovicz to bring you an update on how the markets will close. That is going to happen in the next couple of minutes. Stay with us.

We'll take it to the very end with you. Stay right here.

(COMMERCIAL BREAK)

SANCHEZ: Welcome back to CNN NEWSROOM. I'm Rick Sanchez. There really is a bevy of political news going on this day. Let's get to the man who follows it daily. Our own Wolf Blitzer.

Wolf, what you got?

WOLF BLITZER, CNN ANCHOR: Thanks very much, Rick.

Coming up at the top of the hour: McCain and Palin are reunited in the battleground state of Ohio. We'll go there live in a few moments.

Also, AIG, as you've been reporting, is fighting for its survival. The New York governor, Governor Patterson, says failure is not an option. What will he do to help? He'll be here in THE SITUATION ROOM.

Obama pounces on McCain's characterization of the economy. Former Republican presidential candidate Mitt Romney responds, also here in THE SITUATION ROOM.

And Obama and Biden clearly on the offensive right now. They're taking a page out of James Carville's playbook. Is it enough? I'll ask him.

All that, Rick, and more coming up in a few moments -- Rick.

SANCHEZ: Sounds like you're loaded for bear. All right, Wolf, I'll look forward to watching that.

Let's go over to Susan Lisovicz now. A lot of investors today waiting to see how this thing's going to end up.

What's going on, Susan?

LISOVICZ: Well, the surprises never end on Wall Street, Rick.

It's a surprise to the market that the Fed did not cut interest rates today at a regularly scheduled meeting. And it's a surprise that the markets are rallying, quite honestly. You know, we opened with a triple-digit loss, with a lot of uncertainty about AIG. And it looks like we're going to close with a triple digit gain and a lot of uncertainty about AIG.

What's transpired in the meantime? There's a lot of chatter, unconfirmed reports that the government may reconsider its decision to intervene on behalf of this -- this company, this huge company, whose tentacles extend worldwide. And that is something the market would like to see. It's too big to fail, you know, according to not only Governor Paterson of New York, a lot of the folks here on Wall Street. Because the stock is down under enormous pressure.

One quick headline -- I just want to tell you that we're seeing reports that Barclay's is picking apart Lehman's carcass, buying Lehman Brothers broker/dealer business for $2 billion.

With that, we're in the green today in the final seconds of trading, Rick. Go figure.

SANCHEZ: It looks like we're going to close with about, what, plus 129?

LISOVICZ: Yes, some nice gains. I should also mention that oil closed down another $4.50 today, closed at $91 a barrel. That's a seven-month low. And normally that is something in and of itself that would inspire a rally. And a rally is what you have. See you tomorrow, Rick.

SANCHEZ: It's amazing. Yesterday they were crying in their cereal. Today they're applauding. They're up 135. Big difference yesterday. Of course, the key words here are AIG. Wolf Blitzer among those following it.

Wolf, take it away.