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Arm Twisting & Intense Persuasion: Debate over Bailout Continues; Gas Crisis Worsens in Southeast; Thieves Target Military Cemetery
Aired September 29, 2008 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
KYRA PHILLIPS, HOST (voice-over): Decision day, part one. Congress voting on a $700 billion bailout of the U.S. financial system, but not in time to save another huge bank.
UNIDENTIFIED FEMALE: I'm fixing to go to work and I've been looking for gas for three days. And everywhere I go to get gas and sit in line, they run out.
PHILLIPS: Another southeastern drought. But this time it's gas. Atlanta and other cities are running on empty, but why?
And the high price of metal brings out the lowest of the low.
MICHELLE FENTRISS, CEMETERY VISITOR: Clearly, they have no morals and that they would come to a place like this to do something like that is shameful.
PHILLIPS: Metal thieves target military cemeteries. Is nothing sacred?
(END VIDEOTAPE)
PHILLIPS: Well, it's a story that made us all angry. We're going to talk about it more. Hello, everyone. I'm Kyra Phillips, live at the CNN world headquarters in Atlanta. And you're live in the CNN NEWSROOM.
Well, we think we're just minutes away from the first congressional vote on the $700 billion lifeline for the U.S. financial system. Nobody in Washington likes it. Nobody wants it. But the smart money says it will pass.
And it's not the same plan that the treasury put forth days ago, but it is close. The $700 billion now comes in installments, still aimed at buying up the mortgage-backed securities that are kryptonite to the firms that hold them.
Now the plan includes limits on executives' pay and severance and gives the government an ownership stake in the companies getting taxpayer help. Two new boards will oversee the bailout: one in the executive branch; the other in Congress.
President Bush stepped up this morning to give the measure one last push.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: With this strong and decisive legislation, we will help restart the flow of credit so American families can meet their daily needs and American businesses can make purchases, ship goods, and meet their payrolls.
(END VIDEO CLIP)
PHILLIPS: After all the sound and fury, lawmakers are split into two camps now: those who hate the bailout and plan to vote no, and those who hate it but fear the alternative is much worse.
(BEGIN VIDEO CLIP)
REP. BARNEY FRANK (D-MA), FINANCIAL SERVICES CHAIRMAN: If we defeat this bill today, it will be a very bad day for the financial sector of the American economy, and the people who will feel the pain are not the top bankers and the top corporate executives, but average Americans. They don't see it yet. And pain averted is not a basis on which you get a lot of gratitude, but that is what is coming.
REP. JEB HENSARLING (R), TEXAS: I fear that ultimately, it may not work. I fear that it is too much bailout and not enough workout. I fear that taxpayers may end up inheriting the mother of all debts.
(END VIDEO CLIP)
PHILLIPS: Well, we're following the action with CNN's Kate Bolduan on Capitol Hill and Paul La Monica of CNNmoney.com.
Kate, let's go ahead and start with you. Tell us where things stand right now.
KATE BOLDUAN, CNN CORRESPONDENT: Right now the debate continues. We are expecting -- if we -- yes -- we're expecting the debate to stop and the vote to begin. The 15-minute vote, when it does start -- that's at least how it's scheduled -- in the next 15 minutes itself. So we will see.
But as you saw right there, Kyra, a very passionate debate and statement and speeches on the House floor right now. We're told that there remain at this hour, meeting at those debates, many undecided members on both sides of the aisle. Not a partisan issue. This is -- we're hearing from opponents -- they say, basically, this is not the right solution. This misses the mark.
One congresswoman even saying that Wall Street should pay for Wall Street's mistakes. And that sums up the feeling of people who are opposing this legislation.
But on the flip side, the supporters, which include leadership from both sides of the aisle, they say this is needed right now. This is emergency legislation they need in order to avoid further financial crisis. You can guess there's going to be a lot of the political arm- twisting going on on the floor during this vote to get people to line up and vote for this legislation.
PHILLIPS: All right, Kate. We'll be talking about it, too. Thanks so much. Keep an eye on things for us.
Meanwhile, we hit the high points of the bailout compromise, but it's a lot longer than the three-page proposal from the treasury with a lot more fine print.
Here to tell us what lawmakers are really voting on and what it really means, Paul La Monica, CNNmoney.com.
And Paul, thanks for exchanging e-mail with me this morning as I was trying to figure not only this but the gas situation.
All right. Let's start with the bailout plan. Two things that were interesting to me is that curbs will be placed on the compensation of executives and also, an oversight board would be created.
Now, give us a reality check. You and I have both talked about big money. It's really hard to wrap them in when you're talking about that kind of cash in this world. Also, in oversight board, I mean, that's what the SEC was created for.
PAUL LA MONICA, CNNMONEY.COM: Yes. I guess to address the issue of executive compensation first, this does seem to be a step in the right direction, but there are some members of Congress that aren't completely pleased with the way the language is worded. Because golden parachutes, the ability for an executive to leave with a very large severance package, existing golden parachutes are not going to be eliminated by this.
And the way the bill seems to be worded is that an executive can still get a pretty big severance package if a firm is sold as opposed to outright failing. So when you look at something like Wachovia and Washington Mutual, technically, those banks were bought, but they were bought in a highly distressed situation, so to reward those CEOs would seem to be absurd, I think a lot of people would say.
PHILLIPS: OK. And then the oversight board, like I pointed out, I mean, that's the point of the SEC. We already realize the SEC hasn't been doing a very good job. That's what -- a big part of what led us to right now.
LA MONICA: Yes. The oversight board is also going to be something that I think you'll have some continued debate over, because some of the agencies that a lot of people blame for lax regulation are now, you know, in -- you know, being put in charge, minding the store, so to speak. And I think a lot of people, that won't sit very well.
I spoke to some people last week who thought that a real oversight board would have been better, if you actually went and had a true bipartisan group of people, past and present, from -- you know, from financial services firms and, you know, former secretary treasuries perhaps, as opposed to what this plan will have for an oversight board.
PHILLIPS: So if indeed everyone signs off on this, there are still a lot of questions about what exactly it means and if, really, it is any good. I mean, it looks like it would benefit banks, credit unions, pensions, taxpayers, homeowners. But let's talk about what's in it for homeowners specifically, because that's what's been so tough for people nowadays, especially with all the foreclosures that are taking place.
LA MONICA: Right and that was one of the key additions that was not in the original Paulson plan. Basically, if the government is going to be helping to bail out some of these banks, what the government will now also have the ability to do is try and strong-arm, perhaps, some of the loan servicers and maybe convince them to have some workouts put in place for people facing foreclosure. So it's not strictly just, "OK, you're a bank who made these bad loans, and we're going to bail you out."
You now have to go and help many of the consumers that are stuck in this situation, facing foreclosure right now. So hopefully, the government will actually exert a lot of the pressure on banks in situations like that.
PHILLIPS: All right. I know you're going to be following this vote along with us. So we may be talking again in this hour, Paul. Thanks so much.
LA MONICA: Thank you.
PHILLIPS: Seven hundred billion dollars. It's awfully hard to wrap your head around that number, isn't it? Well, CNN's Gerri Willis will be along at the half hour to try and break it down for us, make sense of it, talk about the bottom-line costs to you and me.
And whatever Congress does or doesn't do with the bailout, it's too late for Wachovia. The nation's fourth largest bank has not failed. You actually heard Paul La Monica mention Wachovia. But early this morning, the government helped arrange a bargain-basement sale to Citigroup for $2.2 billion in stock. Citi gets Wachovia's banking operations, including more than $300 billion in outstanding loans. And it pledges to suck up more than $40 billion in losses, with the feds on the hook for anything more than that.
Now, the sale should be invisible to Wachovia customers. Shareholders, on the other hand, those are the ones that will be suffering.
We should note, too, that Wachovia is keeping its brokerage business, by the way.
So on this Monday after their first debate, Barack Obama and John McCain are back on the campaign trail. After a weekend stop in Michigan, Obama holds a rally this hour in a key toss-up state, Colorado. We're going to have live coverage from Denver as soon as it gets underway.
And for John McCain, another trip to Ohio. He and his running mate, Sarah Palin, kicked off a rally last hour in Columbus. As he's done for weeks now, the Republican candidate talked about his plans to revive the economy, and he took aim at his opponent, Senator Barack Obama.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: You notice in the debate Friday, he was asked to name a single program he would consider cutting to help our country through this crisis. He couldn't name a single program and, in his response, he started naming programs he wanted to increase spending on.
(END VIDEO CLIP)
PHILLIPS: Well, after his trip to Ohio, McCain heads to Des Moines, Iowa.
Well, gaffes on the campaign trail. Joe Biden and Sarah Palin are getting a lot of attention for some of their surprising comments on the trail. And a bit later this hour, we're going to check out what they've said that's raising your eyebrows.
A painful day for a lot of the people in Taiwan as they struggle to recover from a powerful typhoon. The storm lashed the country yesterday with torrential rain and gusts of up to 140 miles an hour, blowing some people right off their feet. At least two were killed. More than 30 injured.
Some 86,000 households are without power today, and offices and schools are closed. The typhoon has been downgraded to a tropical storm and is moving toward China.
Here at home, another storm packing strong winds and heavy rain, threatening to become the first hurricane in 17 years to make landfall in Maine. Kyle did deliver a glancing blow to parts of New England over the weekend, creating a lot of problems for bone owners -- boat owners, rather.
It made landfall in Nova Scotia yesterday, was downgraded to a tropical storm there. And then today, it weakened even more but continues to batter Nova Scotia and New Brunswick with 70-mile-an-hour winds and pounding rain.
Message of hope and faith, though, for all those who have come back to Galveston, Texas, in search of belongings and family. That city took a direct hit from Hurricane Ike, and the storm swept away a lot of homes, possibly, a lot of people. Yesterday, those on the island packed the churches to pray for those who are still missing.
(BEGIN VIDEO CLIP)
BOB SMITHERS, LAURA RECOVERY CENTER: Some of them, their houses aren't there anymore and no sign of the person. And they know that they did not evacuate. So those situations may not turn out good.
CHARLES CHAPMAN, PAUL CHAPMAN'S BROTHER: You feel hopeless. It was like, well, you know, is he OK? You know, and I kept telling her, I said, "Man, I just hope he made it out of the storm all right."
(END VIDEO CLIP)
PHILLIPS: Well, nearly 400 people are unaccounted for more than two weeks after Ike slammed shore.
And an investigation into alleged child abuse leads to a pretty shocking discovery in Maryland. Calvert County authorities are now holding 43-year-old Renee Bowman without bond after finding the bodies of two small children in her basement freezer over the weekend.
Seemed that Bowman told them that the remains are those of her two adopted daughters and that the bodies had been in the freezer since February.
Authorities searched Bowman's home after finding a third adopted daughter who apparently escaped a locked bedroom by jumping from the second-story window. Bowman allegedly told them that she had beaten the 7-year-old with a, quote, "hard-heeled show." She's charged with child abuse in connection with that girl. The investigation into the remains still goes on.
Outrage in Oregon. Thieves on a hunt for a precious metal don't even care who their victims are, and now they're targeting the dead.
And in the Carolinas, Georgia and other parts of the southeast, a lot of folks don't know if they'll be able to get to work and back because of a gas shortage. We're all experiencing it here. We're going to check out the scene at this gas station in Atlanta.
(COMMERCIAL BREAK)
PHILLIPS: Where is the gas? That's what a lot of us here in Atlanta and the rest of the south want to know. Ad it was our No. 1 topic of discussion in our show meeting this morning. Take a listen.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: How many of us had problems this weekend? We all did?
UNIDENTIFIED MALE: Once I got into the actual station, had to fight for a pump. Because people -- there was a line that nobody knew about coming from the other direction.
UNIDENTIFIED FEMALE: That's how ours was, too. It was just utter chaos. Like drove around for an hour, waited in line for an hour and a half.
UNIDENTIFIED FEMALE: (INAUDIBLE) ... guys from Houston last week, and he was saying that it would be October 15 -- he gave a hard date -- before things would be back to normal. UNIDENTIFIED MALE: This has been happening in Mississippi, too. Parts of it. Not as bad, but stations running out. People -- long lines.
UNIDENTIFIED FEMALE: Much increased demand.
UNIDENTIFIED MALE: ... continues because people are convinced they can get gas whenever they want to, wherever they want to. Until that sets in, you're still going to have this panic.
UNIDENTIFIED MALE: Talking about human behavior, they brought in a piece from WSOC where a man turned himself in after pulling a gun at a gas station. Where are we now, psychologically now with this? Because now it's starting to fester.
UNIDENTIFIED FEMALE: Trying to get Governor Sonny Purdue. We need to try to get our friend back on the line from Colonial Pipeline, answer these questions.
PHILLIPS: Right.
(END VIDEOTAPE)
PHILLIPS: Well, we put those calls in. We couldn't get anyone from Colonial Pipeline or Plantation Popline -- Pipeline, rather. We also put a call in to the governor's office, could not get an interview with the governor, but we do have Rusty Dornin at a gas station here in Atlanta, where they are still pumping.
RUSTY DORNIN, CNN CORRESPONDENT: Not quite as good as the others.
PHILLIPS: I was going to say, Rusty, I love you, but you know, we try to aim really, really high. But seriously, what we -- what we got talking about this because all of us experience this. You live in Atlanta. I'm curious. You have a story, too.
I tried to get gas last night, driving around. Nothing in my neighborhood. I found an overnight manager at a gas station. He said, "Here. Here's my number. Call me in the middle of the night. I'll tell you if the gas comes in." So I did, and about 4 in the morning, and he told me exactly where the gas did come in to -- on my street. And I got in line this morning. I've never experienced anything like this.
DORNIN: Well, you know, some people are actually following the gas trucks. They're going to where the terminals are and following the tanker trucks to the station.
But I know what you're talking about, the telephone. Because the owner here said he would call us if he got another shipment of gas. Well, look at this station. It was packed about an hour ago. They got -- at 6:00 a.m. this morning. It ran out by noon, Kyra.
And the tanker only gave them half as much as they normally do. And they ran out in six hours. You can see all the pumps have signs looking like this. And imagine if you're that is the one first in line, and they close the station.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I was so close. I was the next person in line to get gas.
DORNIN: So how low is your gas tank?
UNIDENTIFIED FEMALE: I have a quarter of a tank. Planned ahead.
DORNIN: But how -- how long did you wait in line here?
UNIDENTIFIED FEMALE: I didn't wait too long, but now I have to go run on my lunch hour somewhere else.
DORNIN: Do you have any idea where you're going to go find gas?
UNIDENTIFIED FEMALE: Right down the street, I hope.
DORNIN: You ran out of gas right just at the time the station ran out.
UNIDENTIFIED MALE: Yes, I sure did. I was right in line. I was, like, next up.
DORNIN: What are you going to do now?
UNIDENTIFIED MALE: Call AAA.
(END VIDEO CLIP)
DORNIN: Now the folks here say they don't think when their shipment, next shipment is going to come. They don't think it's going to be tomorrow.
Meantime, people -- distributors say there is gas coming into the system. You still do have a little bit of panic mode. A few of the folks I talked to here are coming in with their gas tanks half full. That's causing the problem. They're -- as soon as the stations fill up, people are panicking, coming in, filling up, and making the stations go out -- you know, run out of gas.
So, also, Governor Purdue, of course, of Georgia has come under fire because there are claims that he should have filed for environmental waivers a week earlier. The governor, who is in Spain, is now saying that no -- the office is saying that Georgia is special because they have stricter regulations here. They have to jump through more hoops. It takes that much longer to get the waivers.
And by the way, I did talk to a fuel distributor who said, even if they'd obtained these waivers earlier, possibly the situation might not be a whole lot better anyway, Kyra.
PHILLIPS: Yes, and you know, you bring up a good point. I was trying to look for the number. You mentioned the special type of fuel here in Atlanta that we have to use. It has less sulfur. Correct? And I was looking for the number. Actually, 45 countries in Georgia have these regulations.
So is that what station managers are saying to you, because we require a special type of fuel, it makes it even more difficult?
DORNIN: Yes. And the other states who were able to obtain waivers a week before Georgia did, were able to do so, at least the governor's office is saying, because they have fewer restrictions. They have fewer problems with pollution, basically. So they can use a lower grade of oil and were able to have those waivers. They were able to get their supplies in.
But here in Georgia, it needs to go through more refinement than it does in those other states. Now, of course, they were able to get those requirements waived, but not until September 22. Not till last week.
PHILLIPS: Got it.
DORNIN: And by then, the shortage was really developing.
PHILLIPS: Sure. Yes, makes sense. Rusty Dornin, sure appreciate it.
So what's the solution to the gas crisis? Is the end in sight? Later in the NEWSROOM, we're going to ask an energy expert, Kenneth Medlock (ph) of Rice University. Among other things, he served as an adviser to the Energy Department. So we can talk to him about -- talk to him about that special required fuel here in the Atlanta area.
Well, the hallowed ground of a military cemetery, the target of metal thieves. This is one of those stories that got us all outraged this morning. We'll take a look at what's happening and the apparent driving force.
And it's enough to make a campaign manager cringe. Sarah Palin and Joe Biden making some big gaffes on the campaign trail. We've got the latest.
(COMMERCIAL BREAK)
PHILLIPS: Well, the fate of a convicted Georgia murderer, Troy Davis, is in the hands of the U.S. Supreme Court today. The high court intervened last Tuesday, issuing a stay less than two hours before Davis was scheduled to die. Now the nine justices are meeting to decide if there's enough evidence to warrant more scrutiny in the case. A decision is expected by October 6.
Davis was convicted of the 1989 killing of a police officer in Savannah, Georgia, but most of the witnesses have recanted their testimony.
He may be the last witness for the prosecution in the O.J. Simpson robbery and kidnapping trial. Michael McClinton returns to the stand today, where he faces intense cross-examination. McClinton took a plea deal which could keep him from prison. Simpson hopes to cast doubt on his claims that Simpson asked him to bring a gun and look menacing when Simpson confronted two sports memorabilia dealers in a Las Vegas hotel.
Clearly, they have no morals. That's what the reaction of a mother of a Marine buried in Oregon's largest military cemetery said. Metal thieves have hit that burial ground three times in the past week.
Wayne Havrelly of our affiliate, KGW, reports from Portland, Oregon.
(BEGIN VIDEOTAPE)
WAYNE HAVRELLY, KGW REPORTER (voice-over): Copper gutters gone. Copper roofs peeled away. Thoughtless thieves have been assaulting these shelters used for military funerals. Metal crooks hit the Willamette National Cemetery three times this week.
KAILAH KINGSLEY, BROTHER BURIED AT WILLAMETTE NATIONAL CEMETERY: These people give their lives for us so that we can -- so that we can have a country that has copper that the thieves could still, I guess.
HAVRELLY: Kailah Kingsley and her family visit her brother, Seth's, grave nearly every week. He was killed eight years ago during a training mission when the MV-22 Osprey he was in crashed in Arizona.
FENTRISS: Clearly, they have no morals. And that they would come to a place like this to do something like that is shameful.
K. KINGSLEY: This is all that we have left of him. We have nothing but our memories. And this is the only place that we can come to be even a little bit close to him. And that they would try to destroy what we -- what little we have left, I don't know how they can live with themselves.
HAVRELLY: Kingsley's husband, Ben, is a soldier who just returned from his second tour Iraq. He says this is sacred ground.
BEN KINGSLEY, U.S. ARMY: This is sickening. You know, if this is happening here, in cemeteries around here, it's got to be happening in cemeteries all over the place.
HAVRELLY: Ben's right. Over the past several months, we've seen brass grave markers and urns ripped from cemeteries in Portland and Vancouver.
Metal recycling businesses say they are trying to stop the sales.
(on camera) But obviously, there's a church or school or monument somewhere missing a brass plaque.
(voice-over) This Iraq soldier says metal thieves would never steal again if they could walk in his combat boots.
B. KINGSLEY: They would have a lot more respect that, you know, we went through, our families had to go through, our friends.
(END VIDEOTAPE) PHILLIPS: The Portland, Oregon, Police Department is urging anyone who might have information on this case to call them. Here's the number. It's 503-823-3333.
Your money, your debt, your loss, your gain. We're going to see what's in the bailout for you.
(COMMERCIAL BREAK)
PHILLIPS: One thirty Eastern Time. Here's some of the stories we're working on for you right now in the CNN NEWSROOM.
Voting has started in the House on that huge Wall Street bailout bill. President Bush is pushing for the passage of the $700 billion measure. He calls it an extraordinary agreement to deal with an extraordinary problem. And Senate action is expected on Wednesday.
A shocking discovery in Maryland. Authorities are holding a 43- year-old woman, Renee Bowman, without bond after finding the bodies of two small children in her basement freezer. They say Bowman told them that the remains are those of her two adopted daughters and they had been in freezer since February.
A lucky breakdown. East Maine escapes a direct hit from hurricane Kyle. That storm did bring heavy rain to the state, before losing some steam and hitting New Brunswick and Nova Scotia. We're going to find out what the storms are doing now.
Cheaper mortgages, safer jobs. What's the potential upside of a banking system bailout for consumers? You know, the people who actually drive the economy. Personal finance editor Gerri Willis is looking into that.
Gerri, let's start with what's in it for us. The reality of what this really could do, as we struggle.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, you know, we're hoping it's going to ease market panic. You know, as we watch these legislators vote today, we've seen the stock market losses come in a little bit. You know, we want to see it stabilize and start to trade on something other than fear, like you know, corporate earnings for example. That would be a good thing. That's what the experts that I talk to, the financial advisers, the economists say this bill could actually do.
Also, we want to see loan availability improve. It's been very difficult in the last two weeks to get the mortgage loan, to get a loan for an auto, which if you're buying a car out there, can be very hard to get money. But, as we see this work out, it's not just you know, bank to bank lending that's been difficult. It's been bank to consumer lending that's been difficult. That should ease improve. Not today, not tomorrow. But, over the next few weeks. And as a matter of fact, we talked to the people at bankrate.com. They say mortgage rates here could go lower, over the long term as this money that's coming into the markets starts circulating around, freeing up the credit freeze, making money available more broadly. PHILLIPS: All right. Well, let's talk about the job market. Will this expect that at all, as people lose their jobs and struggling to find new ones?
WILLIS: Well, you know, if they don't pass the bill, if we don't get some kind of change in place, then the risks are very, very high. Not just to the stock market, but also the jobs market.
You know, you worry about your 401(k). You should also be worried about your job here. But this bailout should stabilize even the job market because it will stabilize the economy. There was some expectation the jobless rate could soar to 9 percent, maybe higher if there was no bailout. This will probably stabilize that somewhat and make it easier out there for folks who are in the job market.
But again, this is going to take a long time to work through. This is weeks coming. Not days or even minutes.
PHILLIPS: All right. Gerri Willis, thank you so much.
WILLIS: My pleasure.
PHILLIPS: Stick around. We'll probably want to talk more after we find out how the voting goes.
WILLIS: My pleasure.
(BUSINESS HEADLINES)
PHILLIPS: Well, when Wall Street sneezes, the rest of the world catches a cold. That's an old saying proving true earlier today. Markets have tanked from Asia to Europe, and the ripples have reached around the globe.
(BEGIN VIDEO CLIP)
JOHN DEFTERIOS, CNN CORRESPONDENT (on camera): I'm John Defterios in Beijing, where people on the ground are starting to feel the pinch of the U.S. credit crisis. Growth is expected of around 9 percent this year, which is stellar by world standards but well off the peak of last year.
Asian bankers broadly happy with the agreement that's on the table but makes no doubt about it, this agreement will bring the U.S. and China closer together. The world economy is depending on China's growth and U.S. will be ever more dependent on China's vast reserves fund its budget deficits.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
SON JIE AE, CNN CORRESPONDENT (on camera): I'm Son Jie Ae in Seoul, with the Korea Exchange, where the board behind me is mostly green reflecting market losses as well as the not so optimistic reaction to the news coming out of Washington. Traders tell us that when the market first opened investors were initially optimistic about the bailout plan, hoping that it would bring stability to Wall Street and Seoul. But as the day progressed, any type of initial gains were overweighed by questions raised about the effectiveness of this plan as well as concern about the Korean economy, especially the rising of the U.S. dollar against the Korean won.
(END VIDEO CLIP)
PAULA HANCOCKS, CNN CORRESPONDENT: I'm Paula Hancocks in Jerusalem's central market. Israelis are rushing to finish last- minute preparations ahead of Rosh Hashanah, the Jewish new year, which starts Monday evening.
It's a time of celebration and as you can see, all but frantic spending. But there is an underlying fear of the unknown. A fear of how U.S. financial problems will affect Israel. Now, the local currency, the shekel is still strong. The governor of the bank of Israel, says the banking system is still strong and it's very unlikely that any bank will fail. But growth forecasts for this years have been lowered. They've been lowered to 3 percent, which is still fairly respectable.
(END VIDEO CLIP)
PHILLIPS: Meanwhile, on the other side of the screen, as you can see, we're monitoring the voting right now. The debate is over, the vote has stared in Congress on the huge Wall Street bailout bill. We're going to bring you the final results as soon as we have it.
Sarah Palin and Joe Biden getting some unwanted attention on the campaign trail. Both vice presidential candidates have made headlines with slip-ups. Sarah Palin may have bitten off more than she could chew over the weekend during a stop at Tony Luke's Cheesesteak Restaurant in South Philly. A Temple University grad student, who's a supporter of Barack Obama by the way, asked her a question concerning the war on terror.
(VIDEO CLIP OF GOV. SARAH PALIN IN TONY LUKE'S CHEESESTEAK RESTAURANT IN SOUTH PHILLY)
PHILLIPS: Well, Palin seemed to agree with Barack Obama's support for unilateral strikes inside Pakistan in the hunt for terrorists. McCain actually disagrees with that. Now in defending his running mate yesterday, McCain insisted that Palin shares the views on the issue. In our next hour, we're going to hear from that Temple student who actually asked Palin that question.
Meanwhile, as I told you, we're also monitoring the vote that's happening right now. The debate is over. We're going to find out soon what Congress has to say on that $700 billion bailout plan.
Let's actually get to Jessica Yellin. She was there on the floor, earlier today, as the House vote began.
Jessica, was it contentious?
JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Kyra, it is an unusual sight in the House. I was in the press gallery, which is right over looking the House. You can go in there and watch other members talking to each other. You usually during a vote, a few members walk in and then leave. It's not a very crowded sight. Today, it is packed in there. All eyes is on the board. Nobody knows which way this is going to go.
And there is not just tension, but a lot of finger pointing already, with Congressional aides on both sides, constantly updating me and our producers saying they, meaning the Dems, or they meaning Republicans, have to get the vote. It's up to the other side to make this pass.
Right now, some anger and frustration over some of the different speeches that on the floor. The eyes are all on the Republicans for the most part because as we've reported, Democrats really do want this to be a bipartisan effort. And there are members on both sides who are not going to vote for this bill because Democrats and Republicans say they're getting calls 90 to 1 against it.
And so some people, just to keep their seats, have to vote no. They're looking for some strong members on both sides to sign on and it looks like right now -- I'm sorry, I'm checking the count -- the Republicans -- they're relying on Republicans to bring along some more votes. And Democrats really saying to me, if we don't get the votes, this is on the Republicans. We're hearing the same from the other side of the House.
What's really going on here Kyra, and it's interesting, I've been hearing a lot of people say this is the hardest vote they've taken since the vote to authorize the Iraq war. They say some comparing it to that because they say they don't have information in the same way. They feel they're told that if they don't do this, the U.S. will face peril. But if they do, they just don't know what they're voting for. So, a lot of tension and anxiety. The vote is just two and half minutes away, even less. And they do not have the numbers yet -- Kyra.
PHILLIPS: Well, it makes sense when you say they're saying it's the toughest vote since the one concerning the Iraq war. I mean, if you look at the poll numbers, more than 50 percent of voters are saying the economy is their number one concern right now.
This is what's driving the election. This is what's driving fear at the gas pumps. This is what's got everybody up in arms about where our money is going. What do we do about those 401(k)s? I mean, it's everything that drives us. Whether it's having a job, getting to work, saving for the future. So, there's a lot of the responsibility on the shoulders of Congress right now. And then of course, it has to go to the Senate, which I believe will be Wednesday.
Is that right?
YELLIN: Wednesday, or even possibly Thursday, depending on their scheduling.
If I could just add to what you said. You nailed it. And part of the frustration they're feeling is, members say they're told by the administration and by outside experts, it's essential that they pass this without being told exactly what happens if they don't.
In other words, it's dire -- I should say it's dire if they don't. But they're not given the specifics of what's in this, what this really means. And it's sort of like, some of them saying, being told, we promise you, take our word for it. There's WMD in Iraq, just trust us.
PHILLIPS: Wow. Really great point. You hit it on the head, as well, Jessica. All right, stay with us. Jessica Yellin, there was on the floor earlier today as this vote was taking place.
Let's get back to Kate Bolduan. She's on Capitol Hill. Give us a little perspective of what it is like there. You have probably a little bit of what Jessica was saying. She just came off the floor.
What's your sense, Kate?
BOLDUAN: Well, you can tell people who are where we're standing are all huddled around televisions, trying to watch this vote and see around the words on the screen to see where things stand.
You can see right now, it's clearly a tight race. It says that just a few -- just a little bit of time left. But that doesn't mean that the vote is necessarily over. If the leadership needs it, they can extend the time for this vote indefinitely. And you can very well guess, at that point, if they don't have the votes they need to pass this legislation, there's going to be a lot of political arm twisting going on.
I'm sure Jessica talked about it. People really trying get them either to hold their vote or to change their vote in support of this. You can tell that many people at this point, we hear from our producer Dierdre Walsh, who is on the floor, looking at all of what's going down there. She says that a lot of lawmakers right now are still holding off to see where the numbers fall before they come out and vote. There's a lot of political calculation that goes into voting on such a big bill that's being watched by so many eyes, especially in an election year for many people, Kyra.
PHILLIPS: I can just imagine. Stay with us, Kate Bolduan. We'll take it over to the White House now, where Kathleen Koch is.
Kathleen, as you heard Kate, all eyes circled around the tubes, trying to figure out what's going to happen here. What Congress is going to say. There at the White House, I'm assuming the same thing is going on. All eyes on the television sets, waiting to see what's going to happen.
KATHLEEN KOCH, CNN CORRESPONDENT: All eyes on the television sets, yes Kyra. And all fingers busy on the phones, according to Deputy Press Secretary Tony Fratto. In the White House briefing just over an hour ago, he said, anyone with a phone is right now calling lawmakers who are on the fence, lawmakers who are skeptical to try to get them to vote for this measure.
The president, the vice president, the Treasury secretary, Ed Gillespie, the counselor to the president. He said, they're reaching out to as many as 50 lawmakers. And he said, they're finding some they can persuade, some will commit. But, a lot do remain very skeptical. And Fratto said, the White House understands that it is very difficult to vote to prevent a crisis and to get credit for it. And that a lot of the problem is obviously this reference to this is a bailout for Wall Street. The White House has been trying very hard to make the connection that this is something that would really do a lot to help Main Street, as well.
Let's listen to Fratto, from the briefing.
PHILLIPS: We're waiting for that gavel to go down. Stay with us. Tell me where you told me, Ed Henry was, folks? OK. Ed Henry, who also covers the White house for us, is actually in the D.C. bureau right now.
Ed, we've got all of you covering every angle. What do you have for us?
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, just picking up on what Kathleen's saying. I mean, the reason why she's absolutely right. You've got everyone from the president on down, working the phones like that. As you look at the screen right now, they're losing this vote.
The nays are at 216. They're perilously close to getting to that magic number of 218, which I see it is at now, is at actually. It's just hit it. Which suggests that they've lost the vote.
Now, it's still open. It says time's expired. Now it's up to 220. You need to get, normally, if everybody's there and we don't know how many members are actually there -- 218 to pass. They're only at 195 now, as you see. They're well short of reaching that 218. And instead, the no's are beyond 218. That is a really bad sign.
So, what's going to happen now on the floor, we've seen it so many times before, is you're going to have leaders really, not just twisting arms, but trying to almost break arms and get people to switch their votes because they can do that. There have been many controversies where the House leadership will keep this open. Keep these kinds of votes that are very close, open beyond the time.
And you see, it's expired in the bottom right, all those zero's there. The speaker sort of has the prerogative to keep it open. They're not supposed to keep it on too long. You'll remember a few years ago, the president wanted to pass his Medicare prescription drug benefit. They had lost that vote. This was going on in the middle of the night. And they kept it open well beyond the time it was supposed to have closed. And at the time, Republicans were running things and they took a lot of the heat because they kept the vote open, they switched a lot of votes. And in the end, the president won that Medicare prescription drug benefit. But not without a lot of the controversy to this day.
So you're looking at it right now. It essentially it appears that they've lost the vote. Because the time has expired. They only have 199 to pass. That's not going to do it. They need 218. Now they're at 200 -- you see 224 against. They're obviously still letting some people vote. Maybe some people were just getting to the chamber. And it looks like nine have not voted yet if you add it up. And so we don't know whether those nine are absent. Are there nine who are --
PHILLIPS: Ed? All right. Let me ask you a question. We need 218, or Congress needs 218 to pass.
How much, how long does it take to get all, to get everything counted?
HENRY: Normally, since this is electronic voting system, it really happens almost in real time. And that's why you're seeing those numbers from CSPAN. The electronic voting system normally updates in very much in real time.
But, then just -- for a few minutes, they'll have those reading clerks and others that you see right below the speaker's chair, sort of go through everything, make sure the electronic voting system didn't malfunction, make sure that people who said, yes, I want to vote aye, actually were counted as aye, et cetera, to make sure it's accurate. Normally, that just takes a few moments.
And now, if you basically add that up, so we're at 429. There obviously are 435 members in the chamber. So, only six have not voted. Now another one's been added. So, there's only a couple who have not voted now. Now we don't know whether those maybe are back home. Some people could absent. There might just be a couple more who, in the well of the chamber, trying to decide which way to go.
But, they're pretty close to having all 435 members vote. And as you can see, they are short. At this moment, it looks like they are not going to win this vote. The House Democratic and Republican leadership, they want to get this done. We saw an interesting moment a few moments ago when the Republican leader John Boehner, and the Speaker, who's essentially the Democratic leader, Nancy Pelosi, were sort of huddling together on the floor.
That's interesting because on most votes, I can tell you, they're on opposite sides. And Pelosi's on one side of the chamber rallying her people, Boehner's the other side. This is one of those rare cases where the Democratic and Republican leaders have a lot of stake and they're actually working together. But what I think we're seeing, you don't see right on that screen. But just off screen, in the back rooms and in the back of the chamber, is that a lot of the rank and file members, specifically rank and file Republicans, I think the number we need to circle is 133.
PHILLIPS: Well, the number we need to circle now is that the Dow is tanking as this vote is going forward. Stay with me Ed. Dow Industrial is down 495 right now. A minute ago it was down 600 points. Susan Lisovicz and Ali Velshi with me now.
Ali, put this in perspective for us. OK, there we go. Now it's down 500, 503 --
ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: This is a big improvement over where it was. It was down more than 680 points a few moments ago, which by the way, would be the single biggest Dow drop we've ever witnessed.
We are seeing it coming back on the basis of a lot of what Ed has been saying. But again, when it's an improvement and the Dow is down 527 points -- let me just tell you, this is what happened this morning and overnight. There was some relief that there was a deal. The rest of the world doesn't care about the provisions in the deal. They just wanted the lubrication of U.S. money into the system.
Overnight it started to look like there were some on the House Republican side that were challenging this enough to the point that it may not pass. And as we went into this vote, the Dow has been down between 250 and 300 points, pretty much all day. And it was staying there, waiting for this vote. And as it started to go the other way, you saw this, the Dow plummeted dramatically in a way you haven't seen before.
Now we are seeing -- again -- we are seeing stabilization, which means what is happening is people are panic selling and then there are buyers getting in and saying this is a big discount, let's get in. Eventually this is going to pass, but this is the argument you're seeing between buyers and sellers on the New York Stock Exchange right now and other major markets. We're seeing oil selloff, we're seeing all sorts of things selloff right now.
SUSAN LISOVICZ, CNN CORRESPONDENT: Yes and you know, I mean, basically what you saw was -- we saw a vicious selloff globally. Ali, as you know, Kyra, we've been watching it all day. But when the market really started to tank was when those numbers first started coming up, when we first started seeing the vote and that it wasn't going to be some sort of done deal, that it wasn't going to get done, may not get done after all.
I saw a big crowd of traders on the floor. I completely forgot that the voting was just about to take place. They were all watching it. And one of the things that has been said over and over is how this has been sold to the American public -- calling it a Wall Street bailout. Now, I realize the bias coming from this particular vicinity, but calling it a Wall Street bailout is just simply wrong. It is not going to just benefit fat cats, big financial institutions on Wall Street.
What this is supposed to do is get credit flowing to corporations, big and small, so they can do business. And if they stay in business, that means we keep our jobs. We get paid. And that means you can maybe get a mortgage or get a loan to buy a car. It is to keep the engine running in the U.S. economy. That's what it's all about. That's why the market started to tank.
And when you see a loss of 600 points on the Dow, that's when I start looking at my sheet as to when they start halting trading. We'd have to drop 1,200 points for the Dow to -- for the NYSE to actually halt trading for any time. That's the kind of concerns when you see a big loss like that.
VELSHI: A good point here that Susan makes, and, Kyra, this is important, and that is if you see the market going down 680-some points and then you see a very quick pull-back into the $400 and $500 range, it means there are still buyers. This is not capitulation. This is not people running away from the market.
There are still people who say, all right, you know what? Even if this deal looks like it's in jeopardy, they may be able to work something out and get it back. That's why when you're looking at these markets, you're seeing them with these massive swings. Everybody is not running away from this right now. There's still a lot of faith that this is going to get done.
LISOVICZ: But there's still a lot of concern. And it comes on a day, by the way, when you have Wachovia, a company that was basically pushed into the -- one of the biggest banks in the country -- pushed into the arms of Citigroup, which had its own problems. And you had three big European financial companies that were basically propped up by European governments. So this is -- this is a crisis.
And the kind of action we're seeing on Wall Street is a reflection of the turmoil that we're seeing in the financial market, in the -- in the financial industry and in the credit market. This is not just confined --
PHILLIPS: All right, Susan and Ali, stay with us. Keep watching those numbers. Dow Industrials down 429. Keep monitoring this for us.
I want to get Jessica Yellin back in here. She was on the floor just a little while ago. She's watching this for us.
Jessica, now, if you add up the numbers -- we've got 435 members, correct? 433 votes are in. It's not looking good because it takes 218 to pass. There's 206. However, minds could be changed when?
YELLIN: Anytime. They're hoping immediately, Kyra.
What they're trying to do right now is - they've called order and people are huddling. I can't tell you how high the tension is on the floor right now. People are aware on the floor of the House the news of the markets. They know what's going on. As soon as that word spread, they started huddling in groups, trying to twist arms, change votes. I think the last I checked, only one vote had changed.
And right now, what we're getting is a lot of blame. People on the Republican side blaming a hyperpartisan speech -- what they're calling a hyperpartisan speech -- by Nancy Pelosi for turning off their members who were going to vote for it. On the other side, Democrats saying that's absolutely ludicrous, as if members were about to vote and then a speech would change their minds.
What they're doing right now is trying their best to try to find a way to rescue this. With that same language we've heard all along, that we cannot afford a crisis and people have to step up. But I tell you, Kyra, people are desperately afraid of not just losing their seats, but doing something wrong for the American people, because, despite what we're hearing from our analysts, from Wall Street, they're hearing from their constituents that this is not what they want. And Americans are really concerned about this bill.
Members are really caught in a box right now. And just as the members on the floor are twisting arms, their staffers are already getting out the talking points.
PHILLIPS: Yes, how do they -- how do they -- Jessica, how do you get someone to switch their vote? Are they all down there talking to each other and they know who voted yea, who voted nay? And they come together and they go, OK, let's go tackle so-and-so and get them to change their vote? Is it sort of like Wall Street where they're just kind of going are at each other?
YELLIN: Well there are designated members who are experts at this, like Clyburn on the Democratic side, is what you call -- the whip is the person who counts the votes and goes around. And these are the people who are best at persuasion. And what they'll do is they'll find somebody who has voted no and they'll say, let me remind you of the consequences of this. Let me remind you of what we did for you. Let me remind you of how much money we raised for you. Let me remind you of how important this is to America. Do you want this on your shoulders?
I mean, persuasion by any means they have. They're working them person by person. And it's what's happening right now until they unfreeze this vote. They're just going to hold it closed until they can get enough yea votes.
PHILLIPS: Wow. OK, Jessica continue to monitor that for us.
Meanwhile, I want to bring in Kathleen Koch. She's at the White House.
While this is going on, Kathleen, apparently the White House is working on another plan right now?
KOCH: Kyra, the White House actually wouldn't go to where we were trying to get them to go today, you know, what's next? What if this doesn't succeed? But what was very interesting, something a lot of lawmakers have been expressing concern about, was -- so is this the end of it? If we commit $700 billion taxpayer dollars to this, is that going to be it? Then are we done?
And we brought that up to Tony Fratto in the briefing today and he said, you know, it does no good to speculate where this goes next. Very, very unsettling comment. He went on to say, well, this will prevent a great deal of instability, a great deal of uncertainty. He said there will still be financial institutions that will continue to be under stress. So right there, in the briefing, the implication that even if this did pass that this wouldn't be the end of it, that other firms might be coming back to the federal trough for more bailouts.
So, again, the kind of talk that a lot of lawmakers have been worried about -- the White House not yet reacting. Obviously there are these continuing efforts to potentially try to change these votes. The White House had been confident, it was very interesting, that was the word that I heard this morning and I heard last night from senior administration officials. Confident. They thought they were in good shape. They thought they had the votes, but clearly they were wrong.
PHILLIPS: All right.
Jessica Yellin, are you still with us?
OK. All right. We -- if you're -- first of all we want to welcome our international viewers right now. What you are watching live here, the counting -- or the debate has ended. The voting has ended. And what's happening now is a negotiation process between Democrats and Republicans, trying to pass the $700 billion bailout plan to try and resuscitate the U.S. financial systems here in the United States.
As you know, around the world, everyone has been talking about what's been happening to the U.S. economically with regard to banks, financial institutions, crashing. You can see the Dow Industries down 453 points right now as all eyes from Wall Street to the White House are watching what is happening right here on the House floor with regard to that $700 billion bailout plan to try and rescue the U.S. on so many different levels on the financial spectrum.
Kate Bolduan is on Capitol Hill. Kathleen Koch is at the White House. Ed Henry is in our D.C. bureau, Jessica Yellin was there on the floor. We're covering all the angles.
Kate, let's get back to you. As Jessica was saying, this is a tough sell right now, tough negotiation as -- the win would be 218. It's now 207 to 226. Votes are in. And a lot of -- a lot of persuading to switch people over to vote this through the House to get to the Senate on Wednesday or Thursday.
BOLDUAN: Exactly. And, you know, we talked about the -- this was -- the normal time for this vote is 15 minutes. It's clearly gone far past that. And since then, the vote, as we've been watching closely, it has been frozen for a little bit. We see that there's still one member that has not voted. And it was frozen for a little while, but just a little while ago we did see that you saw one Democratic vote and one Republican vote move from the nay into the yea category. So you can see that there is a lot going on off-camera on that floor as they're trying to twist arms and convince people to not only change their vote for some members, but to also hold their vote.
And we've talked about how this debate -- the debate period and this voting -- scheduled voting period has ended. But this doesn't mean in any way, shape, or form that they're going to be -- the gavel is going to come down any time soon.
In 2003, when the Republicans were in the majority, another controversial bill that had to do with adding prescription medication to Medicare, this brought about a similar situation in the effect that the Republican majority held the vote open for three hours. Not saying that would happen here, but this is a similar situation where if the -- if the people in the majority, and here we're talking about leaders on both parties in support of this bill, they can hold this vote open indefinitely, as long as they can in order to try to twist those arms and get as many people that are on the fence that they can persuade to get them over into the supporting column. So we're definitely watching for that right now. And as we can see, the numbers are holding. But you know that they are running around on that floor, trying to convince people why they need to change their vote and hold their vote.
PHILLIPS: All right. Kate let us know as soon as you get something new.
