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Palin and McCain Speak in Wisconsin Today; Secretary Treasury Secretary Paulson to Hold News Conference Today

Aired September 19, 2008 - 09:00   ET

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

HEIDI COLLINS, CNN ANCHOR: Some say it could be the mother of all bail outs, the government working on a plan to buy up bad assets from troubled banks. What the cost could be for you. Treasury Secretary Henry Paulson will speak 60 minutes from now.
Both candidates also thinking about "ISSUE #1," the economy. We're about to hear from John McCain. We'll find out what Barack Obama says later this morning.

Also we'll hear from the president, Rose Garden, 10:45.

I'm Heidi Collins. It's Friday, September 19th. And you are in the CNN NEWSROOM.

The nation's economy in crisis. Remarkable new measures this morning and just how worried the government really is.

Right now, the White House is working out details of a massive rescue plan for troubled banks. It would empower the government to buy up bad assets like failing mortgages. It would free up cash to keep banks in business.

Another emergency measure, just a few hours ago, the Treasury Department issues temporary guarantees for the nation's money market mutual funds. It's tapping into a depression era fund to bank roll that measure.

Also this morning, orders to temporary halt to the short selling of financial stocks, a routine practice that's, essentially, bets against struggling companies and sometimes dooms them.

Well, the move shoring up confidence overseas, though. Investors have sent stocks soaring in Asia and in Europe.

And politics and the economy. Any minute now, presidential candidate John McCain will talk about the economy. We are going to be carrying his remarks live.

Democrat Barack Obama weighs in as well. That will happen a little bit later this morning.

Next hour, Treasury Secretary Paulson will hold a news conference on the financial crisis. That event scheduled for 10:00 a.m. Eastern. You can see that live as well right here in the NEWSROOM.

And then, of course, we learned just moments ago, President Bush will address the situation, 10:45, he'll be in the Rose Garden. We'll bring that to you as well.

An awful lot to get to today. The economy, "ISSUE #1." We have a lot of ground to cover. Want to get started with CNN's Christine Romans, part of the CNN money team. She's joining us now from New York.

I'm now taking a breath, Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: Take a deep breath. And that's what Wall Street seems to be doing as well. There is a feeling this morning among a lot of the people who are talking to their clients and economists who are taking a look at these last emergency measures and they're saying they hope, they hope this is the beginning of the end of this crisis.

How much more there is in store, how many more potential failures are in store, we just simply don't know. But there is, at least, for the first time, a feeling that there's some dramatic drastic action happening, and the fact it's sort of comprehensive, that Secretary Paulson and Congress now are getting together to try to come out with this drastic plan and overall broad plan to take some of those toxic assets off of the balance sheets of these banks, that is a first step here.

Another emergency response, the emergency ban on short selling. You started hearing rumors of this yesterday. And that is one of the reasons why the stock market did so well in the beginning of the afternoon yesterday and then also the Treasury coming in and saying it's going to ensure money market funds.

We have seen billions of dollars withdrawn from money market funds over the past week or so. And there are some concerns that maybe they could quote, unquote, "break the buck," meaning a lot of people think their money market funds are perfectly purely safe.

COLLINS: Yes.

ROMANS: Some of them have actually fallen below $1.00 a share, just a couple. But that was enough to start people being a little bit concerned.

So I'll take a deep breath, too.

COLLINS: Yes, exactly.

ROMANS: It's been quite a week. And you know something, Heidi? It's been six months now since Bear Stearns first started this whole thing going. We have seen the dominoes fall one by one by one. And again, this is the first morning when I've heard at least more than one or two different economists and market analysts say they hope -- the hope now is this is the beginning of the end.

But we still -- I mean what could happen next?

COLLINS: Yes, exactly. We are going to have to weather the storm or should I say continue to weather the storm either way on this.

CNN's Christine Romans, part of the CNN money team -- Christine, thank you for that.

Want to make sure that we let you know what's happening at this very moment. We have all of these live events today. One of them, as we mentioned, Senator John McCain in Green Bay, Wisconsin. You see his running mate there, vice presidential candidate -- the Republican side of things, of course, Governor Sarah Palin.

Let's go ahead and listen in to her introduction.

GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: And yesterday -- a couple days ago, we had a town hall meeting in Michigan where we heard directly from folks who shared with us their stories of some economic woes that affect their lives.

A college student who cannot afford health care, a young doctor, 26-year-old guy who had just graduated med school, and he's left with a quarter million dollar debt. He, of course, is worrying about how in the world will he repay that, and how these economic shifts will affect his ability to practice and to pay his loan at the same time.

We heard from citizens worried about earmarks and wasteful spending and, of course, we all know that John McCain is the man there, too, to get in there and reform a corrupt earmark process and the excessive spending by Congress.

So we're hearing from Americans all across this great country with their concerns being shared with us. And it is absolutely paramount that we have a leader in these next four years getting our economy back on track and again not just talking about it, but having the commitment to reform and take action.

And that's based on somebody's track record, whether you can believe that they're going to be the maverick, the one willing to even buck their own party if need be in order to do the right thing for the people whom they're serving. And, of course, that's John McCain.

Times are tough right now across our country. And Americans are facing kind of elements of a perfect storm that we've got to make sure don't all come together at this time. High taxes. That's one of the elements that can result in a perfect storm that will not be good for the future of America.

High gas prices, dependence on energy sources from foreign sources, foreign sources that don't necessarily like America. They certainly don't have our best interests at heart.

We've got too little courage in Washington. That's another one of these elements that, if all put together at the same time, will not be good for America. And then too much greed on Wall Street. Excess on Wall Street. And kind of that status quo politics as usual acceptance of what's been going on on Wall Street.

It was John McCain two years ago. He started warning everybody, Fannie and Freddie have got to be shored up, there have got to be changes in those organizations, or you are going to see what exactly is happening today.

He warned -- he had that foresight. He's got some great foresight on a whole lot of other fronts as, also -- the war in Iraq and so many other things affecting America and our future.

I want to introduce to you my running mate, my friend, Senator John McCain. You will hear from him a sound policy plan that can be implemented and can help cure these ills that we're facing today in our economy.

So, ladies and gentlemen, without further ado, let me introduce to you the next president, John McCain.

(CHEERS AND APPLAUSE)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Thank you, Sarah. Thank you very much. Thank you all. Thank you forgetting up so early and thank you for coming out this morning. Thank you. Thank you.

We had a -- as Sarah mentioned, we had a wonderful event here last night. And it seems to me that the line that people react to with great vigor and enthusiasm is when I say that I'm always proud to be introduced by Sarah Palin, but I can't wait to introduce her to Washington.

And that's quite a response.

So I thank you this morning for coming out. And I want to assure you that if Governor Palin and I are elected in 46 days, we're not going to waste a moment in changing the way Washington does business. And we're going the start with a need for reform as greatest.

In short order, we're going to put an end to the reckless conduct, corruption and unbridled greed that have caused a crisis on Wall Street. Here and all across our country people are wondering what exactly is happening on Wall Street, and with good reason.

They want to know how their government will meet the crisis. Clear answers are hard to come by in Washington, D.C. As Senator Obama's leader in Congress memorably put it the other way, and I quote, "no one knows what to do."

Perhaps given that reaction, it shouldn't surprise us that the congressional leaders of this do-nothing Congress also said that they weren't going to take action until after the election, that it wasn't their fault.

You know, I'm very hopeful that last night's discussions are a sign they have changed their mind and will take action soon. But any action, any action they take should be designed to keep people in their homes and safeguard the life savings of all Americans by protecting our financial system.

(APPLAUSE) MCCAIN: You know, my friends, there are plenty of places to point fingers and it may be hard to pinpoint the original event that set all this in motion. But let me give you an educated guess.

The financial crisis that we're living through today started with a corruption and manipulation of our home mortgage system. At the center of the problem, with the lobbyists, politicians and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac.

These quasi public corporations led our housing system down a path where quick profit was placed before sound finance. They institutionalized the system that rewarded forcing mortgages on people who couldn't afford them while turning around and selling those bad mortgages to the banks that are now going bankrupt.

Using money and influence, they prevented reforms that would have curbed their power and limited their ability to damage our economy. And now, as ever, the American taxpayers are left to pay the price for Washington's failure.

Two years ago, I called for reform of this corruption at Fannie Mae and Freddie Mac. Congress did nothing. The administration did nothing. Senator Obama did nothing, and actually profited from this system of abuse and scandal. While Fannie and Freddie were working to keep Congress away from their house of cards, Senator Obama was taking their money.

He got more, in fact, than any other member of Congress except for the Democratic chairman of the committee that oversees them. And while Fannie Mae was betraying the public trust, somehow its former CEO had managed to gain my opponent's trust to the point where Senator Obama actually put him in charge of his vice presidential search.

This CEO, Mr. Johnson, walked off with tens of millions of dollars in salary and bonuses. Guess for what? For services rendered to Fannie Mae, even after authorities discovered accounting improprieties that padded his compensation.

Another CEO for Fannie Mae, Mr. Rains, has been advising Senator Obama on housing policy. This even after Fannie Mae was found to have committed, quote, "extensive financial fraud," under leadership. Like Mr. Johnson, Mr. Rains walked away, guess what? Tens of millions of dollars.

Senator Obama may be taking their advice and he may be taking their money, but I want to tell you, in a McCain-Palin administration, there will be no seat for these people at the policy making table.

(APPLAUSE)

MCCAIN: They won't even get past the front gate at the White House.

My friends, this is the problem with Washington. People like Senator Obama have been too busy gaming the system and haven't ever done a thing to actually challenge the system.

We've heard a lot of words from Senator Obama over the course of this campaign. But maybe just this once he could spare us the lectures and admit to his own poor judgment in contributing to these problems.

The crisis on Wall Street started in the Washington culture of lobbying and influence-peddling, and he was right square in the middle of it.

The financial services industry -- and there are many honest and honorable people who work in it -- plays a vital role in our economy. Mutual fund companies help Americans save for retirement. Banks and lending companies provide the mortgages that help us buy our homes.

Investment firms supply the seed money that helps the entrepreneurs create tomorrow's jobs. Insurance companies protect us against unknown risk. Yet, as the financial crisis continues, and bail outs and bankruptcies mount, it's clear financial firms have lost the trust of the American people.

That trust can't be regained unless we adopt some fundamental reforms. Government has a clear responsibility to act and to defend the public interest. That's exactly what I intend to do.

First, to deal with the immediate crisis, I will lead in the creation of the mortgage and financial institution's trust, the MFI. The underlying principle of the MFI or any approach considered by Congress should be to keep people in their homes and safeguard the life savings of all Americans by protecting our financial system and capital markets.

That has to be the fundamental principle. This trust will work with the private sector and regulators to identify institutions that are weak and fix them before they become insolvent.

That's critical -- before they become insolvent, unlike the RTC who waited until they became insolvent. The MFI is an early intervention program to help financial institutions avoid bankruptcy, expensive bail outs and damage to their customers.

This will get the Treasury and other financial regulatory authorities in a proactive position, proactive position instead of reacting in a crisis mode to one situation after another.

The MFI will restore investor and market confidence, build sound financial institutions, assist troubled institutions, and protect our financial system while minimizing taxpayer exposure.

This is a vital and important step, but it's not enough. I'll also take the additional actions needed to make sure a crisis like this is never allowed to build and break over the American people ever again.

(APPLAUSE) MCCAIN: Second, I'll propose and sign into law reforms to prevent financial firms from concealing their bad practices, and inexcusable lack of financial transparency allowed Wall Street firms to engage in reckless behavior that padded their profits, fattened executive bonuses when times were good.

But now in the peril the financial security of millions of Americans when their bets turned sour. So much of the damage to our economy could have been avoided if these practices had been exposed to the light of day.

Americans have a right to know when their jobs, pensions, IRAs, investments and our whole economy are being put at risk by the recklessness of Wall Street. And under my reforms of the financial sector, that fundamental right will be protected.

Third, we need regulatory clarity. The lack of transparency in our financial markets somehow went unnoticed by the regulatory agencies scattered throughout Washington charged with protecting the common good.

We've got the SEC, FDIC, CFTC, the SIPIC, the OCC and the Fed. At best -- at very best, this confusing assortment of regulators and institutions was egregiously lax in carrying out their responsibilities.

At worst, worst, they carried out and engaged in the old Washington game of guarding their bureaucratic turf instead of safeguarding the public interest and protecting investors.

(APPLAUSE)

MCCAIN: As you may know yesterday, I called for the resignation of the SEC chairman. He's a good man. There needs to be accountability in Washington. Accountability. It has been missing too long.

One of the books that Mark Salter and I wrote -- they're available on Amazon, by the way. We talked about what to me was one of the most impressive things about one of our great presidents, Dwight David Eisenhower, when he was commander and was in charge of the largest military operation in history, the invasion of Normandy.

He went to his quarters the night before the invasion and wrote out two letters. One of them said -- it was a letter of congratulations, a message of congratulations to the brave Americans and allies who landed at Normandy and made the most successful invasion and brought about the beginning of the end of World War II.

The other letter he wrote out was his resignation as --from the United States Army taking full responsibility for the failure of that invasion.

My friends, that kind of accountability and responsibility is missing in Washington today. That's why I believe that the chairman of the SEC should resign and leave office and be replaced. (APPLAUSE)

MCCAIN: You know many in the financial services industry also either forgot or neglected their duty to act ethically and honorably. This shortcoming was aided and abetted by the creation of financial instruments that allowed lenders to escape any responsibility for the risk of their loans.

In the past, leaders had -- lenders had to pay a price if they made a bad loan. Today, Fannie Mae and Freddie Mac worked with Wall Street to bundle together all these dicey subprime loans and then push them off on investors who didn't have the tools of transparency needed to assess or even understand the risk.

The current system promotes confusion, encourages bureaucracies -- bureaucratic infighting and creates incentives for financial firms to cut corners. We need to enhance regulatory clarity by holding the same financial activity to one regulatory standard.

We don't need a dozen federal agencies doing the job badly. We need the best federal agencies to do the job right.

(APPLAUSE)

MCCAIN: Fourth, we must ensure that consumers and investors are protected. Our regulatory system must protect consumers and investors by punishing individuals who engage in fraud, break contracts or lie to customers, like the predatory lenders who knew you can't afford an adjustable rate mortgage, but misled you into signing one.

These actions are criminal and the people who commit them should be behind bars. And corporate governance...

(APPLAUSE)

MCCAIN: And corporate governance rules will be reformed so that shareholders have a clear say in determining the pay of CEOs and other senior executives.

On my watch, the consequences for corporate abuse will not be more enrichment, but more likely an indictment.

(APPLAUSE)

MCCAIN: Fifth, in cases where failing companies seek taxpayer bail outs, the Treasury Department will follow consistent policies in deciding whether to guarantee loans. It must have well-developed re remedies for a financial crisis.

With billions of dollars in public money at stake, it will not do to keep making it up as we go along.

Finally, the Federal Reserve should get back to its core business of responsibly managing our money supply and inflation. It needs to get out of the business of bail outs. The Fed needs to return to protecting the purchasing power of the dollar. A strong dollar...

(APPLAUSE)

MCCAIN: A strong dollar will reduce energy and food prices. It will stimulate sustainable economic growth and get this economy moving again.

All of these measures will calm and help us to avoid future panics and disasters in the financial markets. But to get through this tough time for America and come out stronger, we need a strategy of economic growth, and the massive new tax burden that my opponent plans for the American economy is exactly the wrong answer.

His tax increase...

(APPLAUSE)

MCCAIN: His tax increase, along with the enormous new federal programs he proposes, are the surest way to turn a recession into a depression. In every respect the Obama tax hikes would make things even worse for the working people of this country.

I have proposed and will sign into law an economic recovery plan for working Americans that is directed to the middle class. It will grow this economy, create millions of jobs, and bring opportunity back to Americans.

You will get a tax policy that creates family prosperity and allows you to save for the future. I won't raise your taxes on income or investments, and we'll simplify the tax code so people can understand it, and do their tax returns themselves.

Wouldn't that be wonderful?

(APPLAUSE)

MCCAIN: I'll give every family, every family in America $5,000 refundable tax credit to buy their own health insurance policy and let them choose their own doctor. This will make insurance affordable to every American.

I will double the child exemption from $3,500 to $7,000 to help families pay for the rising cost of living.

Under my plan, a married couple with two children making $35,000 will get $5,000 to pay for health insurance and additional medical expenses. This family would get another $1,050 from my child exemption. That adds up to over $6,000.

That's a lot more than what any hard working middle class family gets under the Obama plan.

Business taxes...

(APPLAUSE) MCCAIN: Business taxes will be cut from the second highest in the world, 35 percent. Business taxes are the second highest in the world to 25 percent. Tax incentives...

(APPLAUSE)

MCCAIN: Tax incentives will spur investments in new plants and equipment, research and development incentives will keep companies on the cutting edge of their industries. Health care costs will diminish. Companies will stop sending jobs overseas to low-cost, low- tax countries, and start creating jobs here in Wisconsin and America.

I will expand markets for our goods and services. One in five of all jobs in this country are linked to world trade. In five states alone -- Pennsylvania, Ohio, Michigan, Wisconsin and Colorado -- over five million jobs depend on trade.

My economic recovery plan will create millions of jobs in America instead of driving them overseas.

(APPLAUSE)

MCCAIN: I will adopt an all-of-the-above energy policy which expands our use of oil, natural gas, clean coal and nuclear facilities. We will embark on a national mission to build an alternative energy base creating millions of new jobs.

We will create the most diversified energy economy in the world.

(APPLAUSE)

MCCAIN: And I'll return to the American economy the $700 billion we send overseas every year to buy foreign oil.

(APPLAUSE)

MCCAIN: My opponent offers a very different economic future. He has continuously shifted his position on taxes.

At the beginning of this campaign he promises to -- he promised to raise taxes on your savings and investments. He said he won't raise taxes for most people, but he's voted 94 times in his short Senate career for tax increases and against tax cuts.

He said he would only tax the rich. But he voted this year to raise taxes on those making just $42,000 a year.

Senator Obama has simply not given Americans good reason to trust him with your tax dollars. My opponent is against lowering taxes on businesses which are the second highest in the world.

He will impose mandated health insurance on businesses that would cost up to $12,000 per employee. He opposes free trade. He also wants to take away the fundamental right of workers to have a secret ballot when voting to become part of a union or not. Now is not the time for these destructive policies that will cripple business growth, destroy jobs, and hurt the middle class. Now is the time to take action to address this crisis and take action to put our economy back on a path of growth.

Even though Democratic leaders say they don't know what to do, I believe the deep problems afflicting our financial system won't be solved by one political party.

There's only one candidate in this race who has a record of reaching across the aisle to work out the bipartisan solutions needed to move our country forward in times of crisis.

And I will bring that same spirit of bipartisan cooperation to the White House. It took members of both parties to get America into this mess, and it will take all of us working together to lead the way out.

I promise you I would do that.

Thank you for your -- coming this morning. Thank you very much.

COLLINS: How very interesting, at the end of Senator John McCain's speech there coming to us from Green Bay, Wisconsin. We heard the ringing of the opening bell as well after all of this news happening overnight and early this morning.

We are going to be talking much more about it here. Don't miss our interview coming up in just a couple minutes with former SEC chairman, Harvey Pitt.

Stay right here in the CNN NEWSROOM.

(COMMERCIAL BREAK)

ANNOUNCER: You're watching CNN NEWSROOM on CNN, the most trusted name in news.

COLLINS: Quickly want to point out that big board, what are we, two minutes into the trading day? And right now Dow Jones Industrial Average already up 234 points. We had expected some pretty big numbers at the opening today.

So, of course, you can see in the bottom right-hand side of your screen there. We'll keep it up for you all show long. It's called a gizmo. And you can continue to check that out if you like.

Meanwhile, the nation's financial crisis, how bad is it? And just how worried should we be?

Our next guest is uniquely qualified to shed some light on this. Harvey Pitt is a former SEC chairman -- Securities and Exchange Commission, of course -- and he is now chief executive officer of the global business consulting firm, Colorama Partners.

Thanks so much for being here, Mr. Chairman. Sure do appreciate it.

HARVEY L. PITT, FORMER SEC CHAIRMAN: It's good to be with you.

COLLINS: Thank you.

Senator John McCain just spoke in Green Bay, Wisconsin. One of the things I wanted to ask you, particularly, about because of your former position -- he said this, we need regulatory clarity. The lack of transparency in our financial markets went unnoticed by the regulatory agencies scattered throughout Washington charged with protecting the common good.

We've got the SEC, FDIC, CFTC, SIPC, the OCC and the Fed. He went on to talk about accountability.

What do you say, as a former chairman of the SEC, about that very point?

PITT: Well, I have been saying throughout this crisis that there is a need for greater transparency. I think my concern is that trying to point fingers of blame when you're in the middle of a crisis instead of trying to solve the problems is really, basically, a useless act.

What we need now are hard solutions to come up with the transparency. What's worse is that in 1999 when Congress reorganized financial service provision in this country, it deliberately did not change our regulatory system and thus there are enormous questions about who has what authority in the system.

So I think what we need now are action plans, not sort of criticisms of who should have done what when.

COLLINS: Well, to be fair, both candidates have put forward action plans. And some would say that you have to look back before you can move forward in order to not make the same mistakes again.

PITT: You do need to learn the lessons that went by. And one of the critical lessons is transparency. What we need is, when a new market evolves, like the subprime debt market, we need to know exactly how much leverage there is, we need to know exactly what instruments are outstanding and what the positions are.

And that, I think, is a very real plan for going forward.

COLLINS: In fact, you say Wall Street as we've known it for the last 200 years absolutely doesn't even exist anymore.

I want to give you a picture here, and you may have seen it last night. It's pretty incredible picture, in fact. We saw Nancy Pelosi, Harry Reid, Hank Paulson, and as well as Ben Bernanke, and even the current Securities and Exchange chairman, Cox, all coming together.

You see them at the podium there to handle this financial crisis, if you will. What is this plan going to look like? Can you break it down or give us an idea of at least one thing that absolutely has to be handled? Because we're likely to hear about this comprehensive plan coming up shortly here.

PITT: Yes. I think the first and most important thing is that there has to be a game plan, and it has to be comprehensive and not ad hoc.

I think the political leaders coming together and the regulatory leaders yesterday is a very good start in that direction.

What we need, number one, more transparency. Number two...

COLLINS: What do you mean by that exactly?

PITT: What I mean is that when we are evolving with new synthetic -- securities markets and the like, we need to make certain that everyone understands how much leverage there is in the system.

The biggest problem we've had up to now has been that many firms have been incredibly over leveraged and even they...

COLLINS: Right.

PITT: ... didn't understand how leveraged they were.

COLLINS: Well, I guess I wonder then, when we talk about regulation and reform, there are many things, obviously, that can be done to control some of that. But can you ever control greed?

PITT: No. Unfortunately you can't. What you can do is create a discipline. My experience both in the private sector and the public is most people want to obey the law. They just need to know what it is.

This is a situation where we had new markets evolving, and the rules were not clear. They need to be clear.

COLLINS: Quickly, I'm dying to ask you, what do you think Wall Street is going to look like 10 years from now?

PITT: Well, I think it won't look anything as it has looked. I think we will have just a handful of mega conglomerate firms that do insurance, banking, securities and commodities.

I will look nothing the way it did at the start of this country and up until very recently.

COLLINS: Well, we will all be watching and waiting, and certainly, a little nail biting in between, I imagine.

Former SEC chairman, Harvey Pitt, we appreciate your insight today.

And as we finish up with you, looking again at the Dow Jones Industrial Average. The big board there up 400 points. And we've only been open for about seven minutes or so.

Coming up in just a moment, CNN's Christine Romans and Ali Velshi to break down the rest of the day down for us.

(COMMERCIAL BREAK)

ANNOUNCER: Live breaking news, unfolding developments, see for yourself in the CNN NEWSROOM.

COLLINS: Washington racing to get a grip on the nation's financial crisis. So do new plans mean possible new hope? I'm sure that's what everybody at home is hoping for.

CNN's Christine Romans and Ali Velshi are in New York as part of our CNN money team, going to talk about all of this.

Hey, guys, we just heard from Senator John McCain in Green Bay, Wisconsin. He laid out sort of a six-point plan. We are also later on, about 11 o'clock or so going to be hearing from Senator Obama. He will also have an economy speech today coming to us out of Florida. So we'll bring that.

But right now what we have to work with is Senator McCain's plan. Let's go ahead and listen in for just a moment. I'll get your comments on the back side.

(BEGIN VIDEO CLIP)

MCCAIN: The financial crisis that we're living through today started with the corruption and manipulation of our home mortgage system. At the center of the problem with the lobbyists, politicians and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac.

These quasi-public corporations led our housing system down a path where quick profit was placed before sound finance. They institutionalized a system that rewarded forcing mortgages on people who couldn't afford them while turning around and selling those bad mortgages to the banks that are now going bankrupt.

Using money and influence they prevented reforms that would have curbed their power and limited their ability to damage our economy. And now, as ever, the American taxpayers are left to pay the price for Washington's failure.

(END VIDEO CLIP)

COLLINS: We've been talking about it for days, guys. A lot of finger pointing and if we pretend like this isn't political, I think we're kind of kidding ourselves.

But let's try and stay on track with the finances of it all. You know he says that the corporations led our housing system down a path where quick profit was placed before sound finance.

What do you guys think, Christine?

ROMANS: Well, you know, Ali and I were listening to this together when he was giving that speech, and we sort of both said that this is the most distinct, sort of clear explanation of how we got from a crazy mortgage to a big problem in the securities market. And it wasn't institutionalized system. He's right about that.

And sort of taking a look all the way down the path from Fannie Mae and Freddie Mac and its close ties with people in Congress and attempts over the years to try to reform it that never really happened.

Ali, you know, to try to strip out the politics of it, I guess, and talk about some of the other parts of his plan, you know, he's coming up with -- you know, everyone is talking about this RTC type, this...

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Right.

ROMANS: This big trust to come to the rescue. His plan is for something before the company becomes insolvent.

COLLINS: The NFI?

ROMANS: Right. Something before they become insolvent is even sort of more proactive than what we're hearing from Washington right now, I think.

COLLINS: Could that work, Ali?

VELSHI: You know, I think we'll probably start splitting hairs about what's before and what's after. The bottom line is...

COLLINS: (INAUDIBLE) before that agony?

VELSHI: ... we all agree we're in a big pickle right now.

ROMANS: Yes.

VELSHI: And the reality is that if something is going to get down, it kind of has to get done at this point. So even the partisan bickering at this point, this deal that Henry Paulson is going to probably talk a little bit about...

ROMANS: Right.

VELSHI: ... about 15 minutes, they're talking about getting this done in a matter of days and getting legislation through. This could be a trillion dollar deal according to Senator Shelby, who is in that meeting.

Look at the Dow in the bottom corner.

COLLINS: I know.

VELSHI: Up 377 points. Heidi, that's not a straight shot up given where we thought futures were today, given the losses that we've had in the past week.

So again, there's some doubt about this. I'm looking at the Dow. Not every stock is up. The financial stocks are up quite dramatically, looking at Bank of America, Citigroup, JPMorgan.

So this is definitely -- there's some sense that there's some fix coming for the financial sector, but there's not a feeling that there's a fix coming for everybody. And I think that's a bit to the point that John McCain was making.

ROMANS: Right.

COLLINS: Yes, and then what about what was already announced this morning about the money market mutual funds and the insurance for them?

ROMANS: I think that's fascinating because people have been concerned that -- you know you think that's the safest place in the world for your money, that's where you put your money that you're going to use it for something else or you have to have it kind of liquid, and then suddenly to think that something could go wrong there, the treasury is saying that at least for the next year that there will be a back stop to that.

Right, Ali?

VELSHI: Yes, and -- you know the money markets, Heidi, are places where you invest. It -- like Christine says, it seems very safe. But you're investing in the bonds of major companies and the government.

Well, some of those major companies were AIG, Lehman Brothers, companies like that. So the value of one unit of a money market mutual fund, in some cases, went below a dollar. They never go below a dollar. This happened for the first time this the week.

COLLINS: Yes.

VELSHI: There are a whole bunch of people, millions of Americans who didn't think there was any risk to your capital when you invest in a money market mutual fund.

Well, there is. And this is why the treasury is coming in because they know if people take their money out of money market mutual funds, those companies already in financial trouble have nowhere else to go to raise the money.

ROMANS: And I think that move in particular could have a direct impact...

VELSHI: Yes.

ROMANS: ... on a whole lot of people. I mean that's going to be something that a lot of people who have been asking us, what does all this mean for me? I mean that's one move that we've seen from the federal government that will have a direct and immediate impact for a lot of people.

COLLINS: Well, we will certainly be watching it, and good point to make there, Ali, as well, about the Dow. We're expecting it to be higher but what...

VELSHI: Yes.

COLLINS: What does that mean? It needs to go -- we heard the word explode. I don't know if that's an explosion. But we will continue to watch.

VELSHI: It's pretty big.

COLLINS: Yes.

VELSHI: We wouldn't -- we don't want to pooh pooh a 400-point gain on the Dow. But it took a few minutes to get there, I got to tell you.

COLLINS: Yes.

VELSHI: It sort of struggled on its way up.

COLLINS: Yes. All right, guys, we're watching. Sure do appreciate it.

Ali Velshi, Christine Romans, thanks guy.

Quickly now want to get to CNN correspondent Suzanne Malveaux who is traveling with the Senator Barack Obama campaign. Actually she's going to join us after a quick break here. Don't go away, everybody. We'll be right back.

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COLLINS: Awful lot to cover today regarding your finances. This, one of the first events, just a few minutes from now, in fact. Treasury Secretary Hank Paulson will hold a news conference on the financial crisis scheduled for 10:00 Eastern. You can see that live when he comes to that podium right here in the NEWSROOM.

Barack Obama is campaigning in Florida today and we're going to hear what he says about the economic crisis during an 11:00 a.m. event in Coral Gables.

We have already heard from Senator John McCain out of Green Bay, Wisconsin.

With Barack Obama, though, CNN's Suzanne Malveaux joining us now live.

So, are you going to tell us what he's going to say ahead of time, Suzanne?

SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, Heidi, he's actually huddling with his economic advisers at this hour in Coral Gables. Some real heavy hitters, billionaire Warren Buffett. We're talking about former treasury secretaries, Robert Ruben, Paul O'Neill, Lawrence Summers, among some others.

What we expect to hear at 11 o'clock or so is very much in line with what he has said before, his principles about how he believes the government's role should intervene, not only on Wall Street, bailing out these big financial institutions, but on main street.

He talked about creating jobs, expanding the middle class. He says any kind of program -- bailout program must be temporary. They must have strict oversight -- strict oversight of some of these financial institutions, and he also is going to talk about the need to get other countries involved, really, a global initiative to give greater confidence, restore confidence in the stock market.

And Heidi, we also expect as well, this is something that he's really been squeaking John McCain on, especially the last couple days. He said -- he says John McCain's position is inconsistent when it comes to fixing the economy.

Take a listen.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: On Monday he said the economy was fundamentally sound, and he was fundamentally wrong.

On Tuesday he said the government should stand aside and allow one of the nation's largest insurers, AIG, to collapse. I mean he said this in three different interviews, despite the possibility that it would put millions of American at risk.

But by Wednesday he said he had changed his mind. And today he accused me of not supporting what the Treasury and the Federal Reserve Bank did with AIG, despite no evidence whatsoever that that's what I had said.

(END VIDEO CLIP)

MALVEAUX: Heidi, there was quite a bit of back and forth yesterday over that very issue, whether or not Barack Obama supported the $85 billion loan to AIG. The Obama campaign put a statement out late yesterday saying, in fact, he did.

Both of these campaigns, both of these candidates being a kind of reticent about providing a lot of details about this, trying to see how this shakes out, the financial mess. This is a statement that Barack Obama put out earlier today.

He said, "I have asked my economic team to refrain from presenting a more detailed blueprint of how an immediate plan might be structured until the Treasury and the Federal Reserve have had an opportunity to present their proposal.

It is critical at this point that the markets and public have confidence that their work will be unimpeded by partisan wrangling and that leaders in both parties work in concert to solve the problem at hand."

So Heidi, he's saying this is -- he wants to avoid this partisan wrangling. But it's also quite obvious that both these candidates in these campaigns want to hold back a little bit in providing some of those details and just wait and see how all of this shakes out, because, obviously, this is unchartered territory -- Heidi?

COLLINS: All right. Suzanne Malveaux, we do appreciate it, coming to us from Coral Gables, Florida. We'll wait to hear from Senator Obama coming up around 11:00 today.

Meanwhile want to take another look for -- more politics coming your way after a quick break.

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COLLINS: Quickly I want to bring you these pictures out of Los Angeles, because we are learning -- according to the police department there -- that they got a report about 30 minutes ago or so -- 7 o'clock in the morning there as we speak -- of a passenger train, which you see on the right-hand side of your screen, that collided with an MTA commuter bus.

We are understanding at this time about seven people there saying with minor injuries, not quite sure if those people were on the train or on the bus. But the blue line, as they call it there, is now shut down.

Obviously, this is particularly of interest because of the story we told you about on Friday, very near this area, another suburb of L.A., Chatsworth, where that Metrolink liner collided with a freight train. 25 people died in that accident and, obviously, that investigation under way.

So now we have this, a completely separate incident again of metro rail train colliding with an MTA bus. LAPD telling us seven people with minor injuries at this point.

We'll stay on top of this one for you if any of those details do change.

On to this now, Detroit has a new mayor this morning. Former city council president, Ken Cockrel taking over for disgraced mayor, Kwame Kilpatrick.

Kilpatrick vacationing with his family before beginning a 100-day jail -- 120, excuse me, jail term. He'll spend that many days in jail next month. He pleaded guilty to obstruction of justice. He admitted lying on the witness stand in a civil law suit over the firing of two police officers.

Sarah Palin's husband is not talking. Todd Palin will not testify before a state legislative committee investigating the firing of Alaska's public safety commissioner.

Todd Palin is one of 13 people subpoenaed to appear today before the panel.

The McCain-Palin campaign says the legislative probe is, quote, "tainted by partisan politics."

The Alaska governor is accused of firing the public safety commissioner for refusing to dismiss her state trooper ex-brother-in- law.

Next hour, Treasury Secretary Paulson will hold a news conference on the financial crisis. That is scheduled for 10 o'clock Eastern, just a couple minutes away. You can see it live right here in the NEWSROOM.

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