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Capitol Hill Negotiations; Federal Bailout Plan; Pakistan Explosion; South African President Resigning; Nashville Panic Gas Buying

Aired September 20, 2008 - 12:00   ET

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

FREDRICKA WHITFIELD, CNN NEWS ANCHOR: All right, we're going to talk about finances involving your house and everything else, the bailout. Congress has a plan in hand, it would give the government authority to assume hundreds of billions in bad mortgage debt. But get this, it fits on just three pages. Congress and the president's money experts are working through the weekend to turn those three pages now into legislation. At least that's the hope. The goal is a deal by Monday morning, congressional approval by Friday and that's when Congress is scheduled to adjourn.
The price tag for this extraordinary government intervention in the private sector is nearly three quarters of a trillion dollars. So how bad is it? The overall scale, one senator says the U.S. financial system was days from collapse, the president's tone at the White House today, sobering.

(BEGIN VIDEO CLIP)

GEORGE W BUSH, PRESIDENT OF THE UNITED STATES: Well, this is Wall Street plus Main Street and I'm worried about Main Street. I'm worried about people being able to send their kids to college, or to build -- be able to afford their homes. And, therefore, I asked, you know, Hank Paulson, who, by the way, in my judgment is doing a fabulous job. He got a lot of credibility. And he's working, and his team, are working hard as are the people at the Fed and the SEC. I said, what's it going to take to make sure Main Street doesn't get affected by the policies of Wall Street?

(END VIDEO CLIP)

WHITFIELD: Well, it is a very complicated crisis. Our correspondents will help break it all down for you, right now. Kate Bolduan is watches negotiations on Capitol Hill. Poppy Harlow has the things you need watch for next week, as well.

Kate, we begin with you. Washington usually works very slow, particularly on the hill, but now the fire is under their feet to try and get to some resolution, some agreement next week.

GATE BOLDUAN, CNN NEWS CORRESPONDENT: Yeah, well they're definitely feeling the pressure. We've gotten that sense ever since that late-night dramatic meeting that was earlier, at was at the end of this week. What's going on right now, it is a weekend, but the staff, the staff of many lawmakers are here right now, talks, meetings, briefings all taking place here on Capitol Hill. I'm told from one Senate aide staff from the leadership on both sides along with the banking, finance and budget committees and their House counter parts are all meeting at this hour with Treasury staff to really talk about this plan and, of course, start talking about some of the details. It's clear lawmakers and their staff are hunkering down this weekend trying to hash through this plan and see where they stand on this.

Here are the highlights of the proposal of what we have right now. It asks Congress for $700 billion, money to be used to buy up bad mortgages from financial institutions. And this is a sweeping authority that would expire in two years. Now, with the meetings and discussions all taking place this weekend, we expect to soon get an idea if this proposal is something that Congress is ready to agree on, as we've talked absence we started getting wind of this, this is going to require some bipartisan support. And we are at least getting initial reaction from some lawmakers. I just was e-mailed a statement from Democratic Senator Charles Schumer of New York, and this is what he writes:

"This is a good foundation of a plan that can stabilize markets quickly, but it includes no visible protection for taxpayers or homeowners. We look forward to talking to Treasury to see what, if anything, they have is in mind in these two areas".

I anticipate getting a lot more as the lawmakers and their staffs start adjusting exactly what this plan includes -- Fredricka.

WHITFIELD: And so Kate, while it may be approved by the end of next week, is there any way of knowing how soon before, you know, the checks go out, that kind of financial injection going to those financial institutions, for example?

BOLDUAN: Yeah, that is really hard to say. I mean, from Congress' standpoint, this is where it requires legislative action. What they're going to be legislating on is they're going to be granting authority, if they decide to, to give the Treasury this power to buy up these bad mortgages and from there, then the Treasury's cordoned, they'll handful it from that point.

WHITFIELD: All right, Kate Bolduan, thanks so much on the Hill watching developments there as the Congress works throughout the weekend trying to work out something, here.

Well, a lot of comparisons are made between this current financial crisis and the savings and loan mess of the late '80s. Is it a fair analysis? Let's ask Poppy Harlow with CNNMoney.com for answers.

So is it?

POPPY HARLOW, CNNMONEY.COM: Hey there, Fred. You know, when you talk about almost three quarter a trillion, it's huge, if it is approved that government intervention. But it is a bit difference than we saw during the S&L crisis with that movement intervention, back in 1989. Let's put a number in perspective for you, $700 billion. Our economic right now just over $14 trillion. So, it's a sizable amount, but it's not unprecedented. In the late '80s what we saw was the government jump in during the S&L crisis to create something called the Resolution Trust Corps. What that did was basically buy off the assets, the troubled assets from these banks, but in a different way that we could see now. So, it's kind of like comparing apples to oranges, however, the invest is huge, this involvement could be the largest we've seen. Some comparing to what we saw during the Great Depression.

But, you know. President Bush also said, "it's a big package because it's a big problem" and the government could make money off of this investment. That's a possibility, as well. So, we're not necessarily going to lose money if this happens. Let's look, though. at the government's stake so far this month, it's pretty staggering -- $200 billion, up to $200 billion to bail out Fannie Mae and Freddie Mac, the mortgage financiers, $85 billion in a loan to insurance giant AIG and now a proposed $700 billion to purchase troubled mortgage- related assets from investment firms, get them off their books and try to add some liquidity to the market, and try to shore up our economy -- Fred.

WHITFIELD: So, what sort of things are you looking for next week as we await Congress to agree or at least make some changes on the president's proposal?

HARLOW: Yeah, there's a lot of key economic reports coming out. Kate explained what Congress is going to try to do, try to get this thing passed by Friday, hopefully. But also on our radar, we're going to get a look at August home sales reports, new and existing home sales. And a lot of people saying, remember, the housing crisis is at the heart of the problem that we are in now, the heart of the mess we're in, right now.

Also, Ben Bernanke, the Fed chief is going to be on Capitol Hill three times next week facing a lot of tough questions from different committees. And then Friday to wrap up the week, we're going to get a look at the reading on consumer sentiment. How does America feel about the state of our economy? Something you bet McCain and Obama are looking at, the pulse of America, when it comes to the state of our economy. So, those are all coming up and of course, we'll follow what happens with this legislation all next week.

WHITFIELD: All right, Poppy Harlow, thanks so much, appreciate it -- from CNNMoney.com.

And of course, we're going to continue to watch developments there from the nation's capital and beyond. Tonight, in fact, a special YOUR MONEY emergency edition. Two hours beginning at 6:00 p.m., CNN's money team, Ali Velshi and Christine Romans digging into this week's financial turmoil, all the information that you need to feel more secure about, perhaps. Plus, at 7:00 p.m. they'll be taking your phone calls live. Get the answers on the two-hour special, YOUR MONEY emergency edition. It all starts tonight at 6:00 p.m. All right, on the campaign trail now, Barack Obama is campaigning in Florida, right now. The financial crisis is now one that he and rival John McCain are focusing on. Both are trying to position themselves as the best candidate to fix the nation's financial mess.

Senator Obama says the government bailout of Wall Street must help regular Americans, as well. A McCain spokesman says the campaign is reviewing the bailout plan, and McCain has not yet taken a position on it entirely. Yesterday in Wisconsin he said the Federal Reserve needs to stop bailing out failed financial institutions and get back to its core business.

Senator McCain is suggesting an early intervention system to stop another meltdown. And he accuses Barack Obama of being part of the problem, something that had the Democratic candidate shaking his head. Our Dana Bash has more on what the candidates are saying.

(BEGIN VIDEOTAPE)

(BEGIN VIDEOTAPE) DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): After starting the week with what even advisers admit were a series of stumbles in the face of financial crisis, John McCain played offense, using a take-charge tone, laying out what he would do to prevent another financial meltdown.

JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Government has a clear responsibility to act and to defend the public interest. That's exactly what I intend to do.

BASH: At a hastily arranged address at a Wisconsin chamber of commerce, McCain called for a new government trust designed to step in before financial institutions reach crisis.

MCCAIN: An early intervention program to help financial institutions avoid bankruptcy, expensive bailouts and damage to their customers.

BASH (on camera): McCain is urgently trying to convince voters he has got a specific plan for Wall Street and Main Street. But advisers say his campaign strategy depends as much on discrediting Barack Obama's credentials on the economy as presenting his own.

MCCAIN: Maybe, just this once, he could spare us the lectures and admit to his own poor judgment in contributing to these problems.

BASH (voice over): That's a direct attack on Obama for taking more than $100,000 from Fannie Mae and Freddie Mac and taking advice from two of Fannie's former CEOs, Franklin Raines and Jim Johnson.

MCCAIN: And while Fannie Mae was betraying the public trust, somehow, its former CEO had managed to gain my opponent's trust, to the point that Senator Obama actually put him in charge of his vice presidential search.

BASH: Obama's response?

BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: And after spending the entire campaign saying I haven't been in Washington long enough, he apparently now is willing to assign me responsibility for all of Washington's failures. I think it's pretty clear that Senator McCain's a little panicked, right now.

(CHEERING AND APPLAUSE)

BASH: But the image Obama wanted to get across wasn't so much this, as this, flanked by economic advisers, trying to look and sound the part of chief executive dealing with crisis.

OBAMA: What we're looking at right now is to provide the Treasury and the Federal Reserve with as broad authority as is necessary to stabilize markets and to maintain credit.

BASH: Obama made clear he supports efforts underway in Washington to rescue sinking financial markets, as long as lenders responsible aren't rewarded.

For now, he said he's holding off on offering his own plan. Camp McCain calls that sitting on the sidelines. Obama calls it responsible.

OBAMA: You don't do it in a day. We have got to do it in an intelligent, systematic, thoughtful fashion.

BASH: Inside seven weeks out, there's no doubt what issue dominates. The competition now is to prove they have got the skills to lead, at a time of major economic jitters.

Dana Bash, CNN, Blaine, Minnesota.

(END VIDEOTAPE)

WHITFIELD: And of course you can hear more from the candidates on CNN's BALLOT BOWL, extended from the campaign trail. The candidates unfiltered and in their own words, BALLOT BOWL extended excerpts from the campaign trail, the candidates, unfiltered and in their own words. BALLOT BOWL starting at 2:00 p.m. Eastern, today right here on CNN.

And, of course, we continue to follow this breaking story taking place overseas. Pakistan, a large explosion has ripped through downtown Islamabad killing at least 34 people. You're looking at pictures right now in the Marriott hotel in Islamabad, where a number of people have been killed and injured. This is a hotel that is frequented by a number of Westerner, and it is considered to be one of the most fortified and safest hotels if not building there's in Islamabad, and that this would happen on this weekend. Reza Sayah is joining us now from Islamabad.

Reza, were you in the CNN bureau at the time of this explosion, and if so are you able to describe for me what exactly was felt, not far from that Marriott hotel?

REZA SAYAH, CNN NEWS CORRESPONDENT: Fredricka, unfortunately I've lost contact with you. I'm not going to be able to hear your questions, but I'm going to go ahead and recap just a horrible Saturday night here in the federal capital of Islamabad. A massive explosion, right in fronts of one of the most popular destinations for foreigners and Western media, the Marriott hotel.

The explosion happened about 8:15 Local Time, a couple hours ago. The death toll is rising, according to police officials. Now, it stands at least 34 people dead, and 200 injured. Local television reports indicate that more than 50 people have been killed. And by the looks of the scene, expect that death toll to go up.

Once again, this explosion took place about two hours ago. To give you an idea how large, how powerful this explosion was, the CNN bureau is located about two or three miles away from the Marriott hotel. I was sitting behind my desk, and I felt a roar and a rumble and soon after the windows shatters. It was so loud, the explosion so large I felt it was right next door. We found out it was the Marriott. We shot over there a couple miles away and saw absolutely an awful scene. Cars mangled, the five-story hotel on fire.

Initially, when we got there, just a couple of rooms were on fire, 30 minutes later, the fire had spread to the left side of the hotel. And Fredricka, at this point, that hotel, it is destroyed. Don't look for anybody to be checking into that hotel tomorrow.

The Marriott hotel considered to be one of the safest destinations in Islamabad. A lot of embassies here don't let their employees go anywhere else other than the Islamabad Marriott because of its security. It has a steel gate and dozens of security guards and the hotel owner, in a local television report is saying this was a truck bomb and it didn't penetrate the gate, it blew up outside of the gate, but it didn't matter, this bomb, powerful enough to destroy the hotel, Fredricka, even outside of the hotel -- Fredricka.

WHITFIELD: Wow. That is incredible. That's extraordinary. Especially this new information now hearing that this truck bomb may be to blame, taking place outside of that building there as you heard Reza reporting from Islamabad, they have a fortified gate right in front of that hotel, so it's difficult for anyone to even get their vehicle inside to check in, to unload your guests there. And then once you get to the lobby of that hotel, they've got magnetometers there, everyone is searched. It indeed a high-security hotel, as you heard Reza Sayah say there. A number of embassy people have their guests stay at that hotel because of the high security. We'll get more information on this hotel, on this explosion taking place there in Islamabad as soon as we can. Right now, he said at least 50 killed.

Meantime in this country, hurricane evacuees from Galveston get word about when may finally be able to go back home, but what will they go home to?

(COMMERCIAL BREAK)

WHITFIELD: All right, we talk about economic near crisis in this country. Well, Africa's economic powerhouse undergoes a major change at the top. South Africa is the country I'm talking about, and the president Thabo Mbeki agrees to resign after the ruling party orders him to do so. CNN's David McKenzie joins us now from Johannesburg.

And David, the urging of Mbeki to step down was very public, but privately did anyone think it would actually happen?

DAVID MCKENZIE, CNN NEWS CORRESPONDENT: Well, that's been on the words of everybody's lips this week in South Africa, Fredricka. And there's been speculation running across South Africa about whether President Mbeki would be asked by his own party to step down as leader of South African, which is the biggest economy, as you say, of Africa. Now people are looking to see what will happen in the next few days.

The head of the ANC executive committee, the secretary-general, got up and said, you know, it was time for Mbeki to leave in the interests of national stability and unity. But it's a massive slap in the face for Thabo Mbeki, who's been part of this party since she was 14 years old. He was a major leader of the anti-apartheid struggle. Thabo Mbeki now said he would resign under the constitution, but it would only take -- it will probably take a few days, Fredricka, until we know exactly what will happen in this dramatic day in the South African policy.

WHITFIELD: And interesting too, David, Mbeki succeeded Nelson Mandela in 1999 and this is the man, the video we're seeing on the right-hand side of the screen, that really has been credited with being a real champion of international commerce, bringing a lot of international commerce to South Africa. So, with him out, what is the speculation or what are the fears about economically what may happen to this country?

MCKENZIE: Well, it really depends, Fredricka, on how his cabinet responds when President Thabo Mbeki resigns, as it looks like he will. The key man will be the finance minister, Trevor Manuel, who has also credited with making a business-friendly environment in South Africa. The economy has been growing swiftly in the last few years.

The question is whether this transition can be made smoothly, but, you know, it is quite tragic, in a way, that Thabo Mbeki, who's considered one of the heroes of the liberation, that he was seen disconnected with the rank and file of the African National Congress and not connecting with the average South African. He's being squarely defeated by Jacob Zuma, who's now the head of the African National Congress and who is likely to be the next president of South Africa -- Fredricka.

WHITFIELD: All right, David McKenzie, thanks so much from Johannesburg, appreciate it.

All right, well, back in this country, it has been one week since Hurricane Ike slammed into Texas, and understandably, evacuees are very eager to get back home. Well, now there's a plan to make that happen, at least in the Galveston area, beginning late next week.

The town's 45,000 evacuees will be allowed to return in phases starting from the least damaged areas, but it's going to be tough because there's still no power, limited sewage services and spotty water utilities. Although some business are beginning to reopen and cell phone service improving in places, it's still very difficult.

In Houston, meantime, the power is back on for about half the residents there. And downtown streets are reopening after Ike blew ow skyscraper windows and downed a lot of tree. Karen Maginnis is in the Weather Center for us. Gosh, doesn't seem it was a week ago. Doesn't it feel like it was even longer ago, because we had a chance to see just the widespread destruction in that area? Hard to believe.

KAREN MAGINNIS, CNN METEOROLOGIST: Yeah, it is. And it is just amazing to see those pictures. It was a Category 2, one mile-per-hour below a Category 3 hurricane that came ashore early last Saturday morning and those folks for a week, it probably feels likes a year in their lifetime.

(WEATHER REPORT)

WHITFIELD: All right, thanks so much, Karen. Appreciate it.

All right, panic in Nashville. And this will hit close home for you, too. Here's a hint, it's about gas stations.

(COMMERCIAL BREAK)

WHITFIELD: All right, a lot of folks in Nashville, Tennessee are nursing big headaches, first rumors of no gas, then reality. Jeff Tang, from our affiliate at station WTVS has the story.

(BEGIN VIDEOTAPE)

JEFF TANG, WTVS REPORTER (voice over): Drivers in middle Tennessee have difficulty decisions to make Friday.

UNIDENTIFIED FEMALE: This is unbelievable.

TANG: They all had to deal with finding gasoline.

UNIDENTIFIED MALE: I think it's was a BP had gas, cars lined up in the street, so I kept on going and came all the way down here, and I passed about six or seven on the way and there's nothing.

TANG: Then he chose to wait in line at one of the Lucky stations that even had gas.

UNIDENTIFIED FEMALE: Oh, all them people is waiting on gas. Man, they blocking the drive.

TANG: Others waiting at a place that might get some soon.

UNIDENTIFIED MALE: No, I'm stuck here until 12:00, it's about 10:15 now, so I'm going wait it out and see if somebody can maybe pick me up.

TANG: Here's the next tough decision. What town do you go to? There were slim pickings in downtown Nashville. Lines down the street in Cool Springs.

UNIDENTIFIED FEMALE: Scary. Very scary. I've never seen anything like this.

TANG: It seemed no matter where they went, drivers had to wait.

UNIDENTIFIED MALE: (INAUDIBLE) you know what I mean?

UNIDENTIFIED FEMALE: Oh, that's the police.

TANG: Some handled it better than others.

UNIDENTIFIED FEMALE: Everybody's blowing the horn. The cops have been here.

UNIDENTIFIED FEMALE: It's been real crazy. I had to lock the doors at one time.

UNIDENTIFIED FEMALE: They just wanted to fight over who was going to get gas first, and I wasn't having it.

TANG: Ultimately, the decision drivers made, carried consequences, those with patience got what they were looking for.

UNIDENTIFIED MALE: Time for gas.

TANG: Those with luck, got close enough.

UNIDENTIFIED FEMALE: Yeah, but I ran out right here. It's scary.

TANG: But, those who waited too long have to make another series of tough decisions tomorrow.

UNIDENTIFIED MALE: I could start right now, but it's got one mile on the gauge, so I'm not going anywhere.

UNIDENTIFIED FEMALE: Lord, give us strength to endure this. To endure this, I'm telling you.

(END VIDEOTAPE)

WHITFIELD: Wow. Well, there was a lot of trauma on Wall Street taking place and so did you -- this is a little pop quiz, A, shrug, or, B, come unglued? We'll see if our profile fits you, coming up.

(COMMERCIAL BREAK)

WHITFIELD: All right, high gas prices, for starters, have some of you getting a little creative with your vacations. Michelle Cary (ph) is "On the Go" as we hit the rails in scenic California.

(BEGIN VIDEOTAPE)

MICHELLE CARY, CORRESPONDENT (voice-over): It can be romantic and relaxing, but best of all, it's all aboard for less money than a typical road trip.

UNIDENTIFIED FEMALE: Let's go! All aboard! PETER FISH, SUNSET MAGAZINE: One of the best train rides anywhere in the world is to take the Pacific surf line on the Amtrak train that goes all they way from San Diego to Santa Barbara and it's really fun, beautiful scenery and lots of good places to stop.

CARY: Places like Metropolis Fine Foods Merchant in Santa Barbara are close to the tracks. Or San Diego's popular jazz club Anthology.

FISH: It's a very kind of hip, urban vibe and all of that's really close to the train station.

CARY: A round-trip ticket on Amtrak between San Diego and Santa Barbara cost about $32 with comfortable seating and a snack bar without the stress of the highway.

FISH: You're not dealing with traffic. You're not dealing with freeways, and you can just sit back and enjoy the ride.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

WHITFIELD: A huge and deadly blast taking place in Islamabad. The presumed target, the Marriott Hotel. It's believed at least 50 people were killed during this explosion.

Our Nic Robertson is in Jalalabad, Pakistan. Just three days ago, he was a guest at this hotel, the Marriott Hotel in Islamabad, which is a very fortified hotel, one that is very popular with Westerners and a lot of journalists as well.

Our Nic Robertson joins us now from Jalalabad. So, Nic, give me an idea what it was like just three days ago at that hotel, the security measures and if you felt very safe?

NIC ROBERTSON, CNN SENIOR INTL. CORRESPONDENT: You know, I did feel pretty safe there. The hotel was attacked a couple of years ago, they've stepped up security. You know, just to give you an idea of where this hotel is, it's just around the corner from the prime minister's house, just around the corner from many government buildings, from Pakistan State TV. Just across the road, there are lots of houses like government ministers live. So, this is an area where there are security checks on the road and you feel safe.

And right outside the hotel, you have to go through armed guard security check, who would look under the hood of the car, look in the trunk. They had video cameras to look underneath the vehicle and only when the vehicle was cleared would they lift this big steel bar to let you get close to the hotel. So yes, you felt safe when you went in. You went through a metal detector as would you at an airport, your bags went through an X-ray machine. So, security has been stepped up.

But this blast seems to have overridden all of that, and this is perhaps one of the most popular hotels in Islamabad for the sort of elite Pakistani society in the capitol. Government officials, international diplomats. You know, a lot of people go and hang out there, have dinner with friends. So, this is a target right at the heart of the capital, right at the heart of the government, right at the heart of the international community. It's shocking in its size and the fact that it was able it get through so many layers of security, Fredricka.

WHITFIELD: Yes, and you're painting the picture of exactly what I remember staying at that hotel a few years ago while on assignment there as well and I was struck by the levels of security before you -- well before you even get to the front desk to check in.

But now to hear, according to our Reza Sayah's reporting earlier that a truck that may have penetrated or been loaded with these explosives had not quite even gotten past the security gate that most of the vehicles as you described would have to get to. So, it really just speaks to the amount of explosives that may have been on this vehicle, because of the reach of this explosion causing.

ROBERTSON: Oh absolutely. If the vehicle was at the security check gates, as you'll remember yourself, that's probably 20, 30 yards from the exterior of the hotel. The sortof entrance security area had been built out so that vehicles like this couldn't get close. That was glass (ph) -- one could see how that could get damaged easily. But the fact that the blast could reach so far and get -- and cause so much damage in the hotel -- that level of -- that amount of explosive must have been massive.

And the fact that it was able to go in that direction. So often, these blasts, you know, build up, they make a big crater and things are damaged in all sorts of directions. Here, you get the impression that the blast was really been focused towards the hotel. Very carefully thought out, clearly.

WHITFIELD: And one has to wonder what kind of connection is being made between this explosion and the so-called changing of the guard there, politically, there in Pakistan.

Our Nic Robertson joining us live from Jalalabad, not far away -- from Islamabad there. We appreciate your time.

All right. Well, we'll get much more information on that explosion throughout the day here at CNN.

Meantime, let's talk about the markets in a tailspin here in this country. A lot of folks are worried about their own money, and investors are already starting to hit that panic button as well.

Senior correspondent Allan Chernoff looks at one person who fits the category of panic.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT (voice-over): As her stocks plummeted Thursday, Charlotte Forbes watched her financial security collapsing before her eyes. CHARLOTTE FORBES, INVESTOR: Very, very scary. Very scary. I was just on the edge of my seat and thinking that disaster could happen at any moment.

CHERNOFF: Financial shares were dropping like a stone, and Charlotte sold her stake in investment firm Goldman Sachs only to buy it back later in the day.

FORBES: It was very frightening. It was -- I panicked.

CHERNOFF: Charlotte, an author and her husband, artist Joe Stallone rely on their stocks for mortgage payments on the apartment they just bought last month and for their daughter's private school tuition. Never in her 10 years of actively trading stock had Charlotte seen a day or week like this. And the year has been tough enough. Charlotte's stocks are down 25 percent since January.

FORBES: Financial security is at stake. And that's a very big deal. Everything I have, all the money that I've saved and invested over the years.

CHERNOFF: Some financial advisers say when the market appears on the verge of collapse, it's often best to just sit back and do nothing.

ALYSE ZOLLMAN, FINANCIAL ADVISER: Oftentimes when we make changes, in reaction to short-term market events, we often end up hurting ourselves. So, you know, panic is definitely not an investment strategy.

CHERNOFF: Staying in for the long term often pays. Even after all the zigs and zags, the Dow Jones Industrial average is up 19 percent over the past five years.

Charlotte doesn't know what next week will bring, whether the market will swoon or soar, but even after riding Wall Street's rollercoaster, Charlotte says she still believes the stock market is the best place for her family's money.

Allan Chernoff, CNN, New York.

(END VIDEOTAPE)

WHITFIELD: All right, well, this financial crisis is issue No. 1 for the candidates on the campaign trail as well. What are they saying and not saying?

Our CNN senior political analyst Bill Schneider is on the Election Express passing through Cincinnati. How are you doing, Bill?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: I'm doing fine. The question is, what are the candidates doing? They've spent all week trying to keep up with fast changing events.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Barack Obama and John McCain agree, the problem is greed.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: We're going to reform the way Wall Street does business and put an end to the greed that has driven our markets into chaos.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: CEOs got greedy. Lobbyists got their way. Politicians sat on their hands until it was too late.

SCHNEIDER: What can the government do about greed? Not much, but it can try to curb bad behavior. How? Regulation. By nearly 2- 1, the public favors significantly increased regulation of Wall Street. So guess what? Both candidates favor it, too.

OBAMA: It's time to get serious about oversight. It's time to get serious about real regulations that are going to prevent the kind of mess we're seeing right now.

MCCAIN: Our regulatory system must protect consumers and investors by punishing individuals who engage in fraud, break contracts or lie to customers.

SCHNEIDER: Obama argues he has a stronger record on regulation than McCain does.

OBAMA: When I was warning about the dangers ahead on Wall Street, months ago, because of a lack of oversight, Senator McCain was telling the "Wall Street Journal," and I quote, "I am always for less regulations."

SCHNEIDER: Oh, yes, says McCain?

MCCAIN: Two years ago, I warned this administration in Congress, regulations for our home loan agencies, if you know of and barely heard of, Fannie Mae and Freddie Mac, needed to be fixed.

SCHNEIDER: So, which candidate do voters believe would do a better job handling the problems on Wall Street? They don't know. They can't see a lot of difference.

(END VIDEOTAPE)

SCHNEIDER: And when asked whether they favor or oppose a government rescue of the AIG insurance company, voters were split down the middle on that as well -- Fredricka?

WHITFIELD: And so you know, issue No. 1 has always been the economy as a whole, but now this makes it a little bit trickier for these candidates to talk specifically about, say, the bailout, for example. McCain's kind of being a little reticent about some of his language, and Obama showing his economic adviser team. Are there huge risks for these candidates to talk specifically about what they would or wouldn't do in this kind of time, if elected president?

SCHNEIDER: Well, of course, there are risks, because they're floundering around just like everyone on Wall Street, just like many voters are. What we're seeing is widespread agreement that the answer is more government regulation.

But when everybody seems to know the answer, you've got to start asking questions like: were Fannie Mae and Freddie Mac -- did they get in trouble because they were under regulated? And will more government regulation prevent these kinds of problems which are really caused by greedy and sometimes corrupt behavior in a highly competitive industry like Wall Street? Nobody really knows.

WHITFIELD: All right. Meantime, Bill, next week, the big showdown, if you will, of these two candidates that folks are really waiting for. Especially when I say folks are really waiting for, I'm really talking about people who are still undecided. A lot weighs on this debate between Obama and McCain.

SCHNEIDER: That's right. Debate is like a restart button for the campaign, people look at the two candidates as equals and they put aside their preconceptions, at least temporarily and they say I'm going to give them both a fair chance and see how they do.

Believe me, these debates, starting next Friday night, are going to attract a big audience because they are unscripted, they're prepared but they're not scripted. And so, we're going to see how the candidates behave when they're asked a question face to face for the first time.

WHITFIELD: Right. And not just verbally, but a lot of body language is read, too. Isn't it?

SCHNEIDER: Oh, yes.

WHITFIELD: At times like this. All right.

SCHNEIDER: That's right. They get coached on that, too.

WHITFIELD: I know they do. Especially -- was really highlighted after the whole Al Gore debate, right, with the hmm, all that kind of stuff.

SCHNEIDER: The sighing.

WHITFIELD: All right. Yes. All right, Bill Schneider, thanks so much, in Cincinnati, on the road with Election Express.

All right. A lot to talk about with our legal team today. A prominent senator getting ready for trial and O.J. Simpson back to a familiar place, the courtroom.

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WHITFIELD: All right, picking up the pieces in Galveston, Texas, or in this case using a crane to pick up boats and yachts, all the things misplaced as a result of Hurricane Ike. It's been exactly one week since Hurricane Ike hit, and it's very much slow-going on trying to resume to some sort of normalcy. Nearly half the households without power, still without power, and so, a number of people unable to get to the locations where their homes once stood there in Galveston.

All right, we're also following a developing story out of South Carolina, Columbia, South Carolina. This morning, a deadly plane crash involving a popular DJ and a former drummer for the rock band Blink-182. Officials say the Learjet crashed during takeoff, killing four people onboard. Federal investigators have been sent to the crash site to figure out exactly what happened. You're looking at debris there.

Two others on the plane are in critical condition. They are Travis Barker, the former drummer for Blink-182 as you see in this image, and Adam Goldstein known as DJ AM. Authorities say they have extensive burns and are now being treated at the largest burn center in the country, which happens to be right near Columbia, South Carolina.

We'll have much more straight ahead in the NEWSROOM.

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WHITFIELD: All right, a couple legal stories we're watching in Washington. The corruption trial of Alaska Senator Ted Stevens begins on Monday. Stevens is accused of lying about more than $250,000 worth of gifts from an oil pipeline company.

All right, let's turn to our legal guys. Avery Friedman is a civil rights attorney and law professor. Good to see you.

AVERY FRIEDMAN, CIVIL RIGHTS ATTORNEY: Hi, Fredricka.

WHITFIELD: And Richard Herman is a New York criminal defense attorney and law professor. Good to see you as well.

RICHARD HERMAN, CRIMINAL DEFENSE ATTORNEY: Hi, Fred.

WHITFIELD: All right, gentlemen, Richard, let me begin with you. Senator Stevens' attorney, he's well known, very highly respected Brendan Sullivan. What might he have up his sleeve?

HERMAN: Well, Fred, you know -- I'll tell you, it looks like another barracuda out of Alaska, that's the defense here. And you know, they're pushing for a speedy trial, which they have every right to do. However, it's not done with success in many defense cases.

FRIEDMAN: Yes.

HERMAN: He's claiming -- the major problem here, and it's going to be so easy for the jury.

WHITFIELD: Yes.

HERMAN: Did he fail to disclose a quarter million dollars worth of gifts, open and shut. That's it.

FRIEDMAN: Right, right. HERMAN: From 2000 to the present. From the president of Viko (ph) doing business with the state and the federal government in Alaska.

WHITFIELD: Yes, and among those gifts, it ends up being something that's extremely visible. We're talking about renovations of your home.

FRIEDMAN: Sure.

WHITFIELD: One that's been photographed extensively, Avery. This is going to be a real tough one for the defense, but at the same time, you know, I guess the prosecutors still have to prove that money was funneled in order to pay for all these things.

FRIEDMAN: Or the value of getting it done. That's true. Actually, one of the -- one of the pieces of evidence, Fredricka, is a $29,000 fish.

WHITFIELD: Huh?

FRIEDMAN: And it was purportedly going to be donated to the Stevens library. The problem is, there is no library. So, there's going to be a substantial amount -- in fact, from my perspective, the government's case has a breathtakingly amount of significant evidence here, and Richard's right. All it's going to be is, was there a disclosure of it, was there not? Yes, a speedy trial. Great defense team, but the prosecution has a very powerful case.

WHITFIELD: Oh -- I wonder -- oh, go ahead.

HERMAN: He's 85-years-old, Fred. It's really tragic.

WHITFIELD: Yes. Yes, it is. OK, well, we're going to move --

FRIEDMAN: Well, I'm not sure I agree that it's tragic, but you know, what it is is what it is, whether he's 14 or 84 or whatever. If he did it, he's going to be convicted. If he didn't, then he's set free.

WHITFIELD: Wow.

HERMAN: And he's probably going to be forced to testify and that should bring a host of problems for him.

WHITFIELD: And that's -- yes, that's always very uncomfortable.

All right, well, talking about uncomfortable. O.J. Simpson's trial, Las Vegas and the jurors get to hear the tapes, or at least some of the tapes, and in which Simpson is up against a dozen charges including kidnapping and armed robbery.

FRIEDMAN: Right.

WHITFIELD: And he apparently says on this tape, you know, hey, I want some of my stuff, I want it back. But Richard, does he say anything about his further intent, intent to do harm, does he say anything, or do these tapes prove that there was a gun present? Because that's perhaps among the most serious of charges.

FRIEDMAN: Sure.

HERMAN: Fred, the government case here has more holes in it than swiss cheese. It really does.

WHITFIELD: Oh boy.

FRIEDMAN: What?

HERMAN: The authenticity of these tapes are in question, whether they were doctored after the fact. They're not going to be reliable for the jury. There may be a juror nullification issue here as well. Some of that material there was stolen from O.J. He was looking to get it back, just some family photos.

FRIEDMAN: So what?

HERMAN: He didn't care about anything else and he says he didn't know there were any guns involved.

WHITFIELD: All right, Avery, a lot of grumbling back there.

FRIEDMAN: All right, look, look -- All right, I'm not for the O.J. support fan club here. Listen, the truth is that there were -- there's six minutes, seven people in the room. Six of the people say there were guns. Two of them are going to say O.J. said bring guns. The key evidence in the tapes, Fredricka, which you identified, is "don't nobody leave the room." He was doing his Dan Aykroyd impression in dragnet.

Look, I think the government's case is very strong. We've got a while to go here, but I think you got two lawyers seeing -- O.J. is the gift for people like us, the gift that keeps on giving.

WHITFIELD: And you look so --

HERMAN: Fred?

WHITFIELD: What? Go ahead, Richard.

HERMAN: I'm sorry. Every government witness is a convicted felon, they're looking to avoid prison time here and they're really not reliable. The caveat, the magic thing here is O.J.

FRIEDMAN: Extra (ph) tapes.

HERMAN: Are there still jurors that won't forget what happened and are going to go after him on this one.

WHITFIELD: Yes, because in addition to looking at the intent that O.J. Simpson may have had about going to get his stuff ...

FRIEDMAN: Sure. WHITFIELD: ...the intent of perhaps the collector who said come on down and then just happened to have a tape recorder?

FRIEDMAN: No, nothing wrong with that.

WHITFIELD: Really? Who does that?

FRIEDMAN: I mean, I think it's morally questionable.

WHITFIELD: OK.

FRIEDMAN: But legally, it's certainly admissible and the judge -- actually, considering Richard's argument is permitting that tape in.

HERMAN: Yes.

WHITFIELD: OK. I'm sorry.

HERMAN: And that particular person Riccio said he did not know there were any guns.

(LAUGHTER)

WHITFIELD: Interesting. Well, we can argue all day can't we, over this?

FRIEDMAN: You bet.

WHITFIELD: Or at least I can hear you all's arguments. But producer's screaming at me we've got to go.

FRIEDMAN: OK.

WHITFIELD: Avery, Richard, good to see you.

HERMAN: See you. Go into the house, Fred, there at the desk (ph).

FRIEDMAN: Take care. All the best.

WHITFIELD: That's right. I want tickets to the house. Hey, maybe we should all three go.

HERMAN: Let's go. Tomorrow's the last day.

FRIEDMAN: There you go.

WHITFIELD: All right, take us to the house. Let's go.

All right, see you all later.

Much more in the NEWSROOM right after this.

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