Return to Transcripts main page

Campbell Brown

Fed to Rescue AIG?; Sarah Palin Unplugged

Aired September 16, 2008 - 20:00   ET


CAMPBELL BROWN, CNN ANCHOR: Hi there, everybody.
Big breaking news tonight to tell you about: another federal bailout in the financial crisis. Just minutes ago, CNN has confirmed that the Federal Reserve is negotiating to rescue insurance giant AIG. The negotiations could include an $85 billion temporary loan to stave off AIG's imminent collapse. This is a blockbuster, folks, and this affects almost everyone out there who has a 401(k).

The news comes about three-and-a-half-hours after the stock exchange closed on what was another stomach-turning day. After all, about this time last night, many on Wall Street were fearing total disaster today. So, another federal bailout of another Wall Street giant, again, as we mentioned, big, big financial news.

So, we want to go straight right now to Ali Velshi to kind of give us a bottom line on this, Ali. And then we're going to get a lot more in-depth on the other issues.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: I will give you more, because we're working on this story to try and get full confirmation on all sides of it. But here are the reports that are swirling around, that there's a deal under way right now for the federal government to perhaps offer up as much as $85 billion or $90 billion to shore AIG over until such time that it can raise the money on its own.

We think this may be a bridge loan, which could stop AIG from collapsing. AIG touches almost everybody in this country, either as a stockholder, from your 401(k)s, or because you have insurance with them or you do business with companies that have insurance with them. So, this is massive. We're working this story right now. We will be back to you in a few minutes with a full update.

BROWN: All right, Ali, we will see you very shortly.

We do want to bring you up to speed on some other stories as well. We have got to figure out how this Wall Street bailout is going to of course play out on Main Street, where average Americans are very worried right now.

A new survey of people who lost money on stocks -- and let's face it -- that would be just about everybody who has stocks right now -- found that one in five of those people are now postponing their retirement.

So, with 49 days to go until Election Day, what are the candidates saying about all this and about the economy? So far, the usual war of words. McCain calls Wall Street reckless and greedy. Obama says McCain is passing the buck.

Tonight, we're going to do a fact-check on their plans, on the specifics of what they're saying in their attempts to get us out of this mess. We will do that coming up shortly.

Then, a little bit later, Sarah Palin unplugged. She has been the most carefully controlled candidate on a presidential ticket in years. That's now about to change. Is she ready to face a live town hall, even a scripted political town hall? Anyway, she will go a little bit off of her standard stump speech.

And then later on, our ELECTION CENTER truth squad turns to Barack Obama and to Joe Biden. We're going to fact-check their campaign claims as well tonight, no bias, no bull.

But, right now, let's do get back to tonight's blockbuster story, the apparent rescue of AIG. Now, for those of us who aren't experts -- I'm certainly one of them -- it's hard to figure out what all of this all means.

And we want to bring back Ali Velshi now. And on the phone with us as well, Diane Brady, who's the senior writer for "BusinessWeek."

And, again, let's just recap, because we know that this is just breaking right now. Ali gave us a bit of what he knows.

Diane, what are you hearing as well?

DIANE BRADY, "BUSINESSWEEK": Well, we're certainly getting confirmation that the federal government is setting a bridge loan to AIG in exchange for about 80 percent. That's not making a lot of investors too happy, and it also comes on the heels of Hank Greenberg, the former CEO, basically looking to control the company itself.

It's been a busy day, and this is what the Fed said they would not do, which is bail out AIG.

BROWN: So, what prompted the change? There was no avoiding it, as some are saying, right?

BRADY: Well, as Ali was saying, there's a sense that this company is simply too big to fail. The repercussions in the financial system would be profound. AIG is a huge property casualty insurer, not just in the U.S. economy, but worldwide. They have more than $1 trillion in assets. And the feeling is, if things are bad now, the failure of this company would make it much, much worse.

BROWN: And, Ali, I mean, is that essentially the case here? Because we all talked about Lehman Brothers over the last couple of days and the federal government unwilling to bail out Lehman Brothers. But this is a different...

(CROSSTALK) VELSHI: Yes. I don't mean to be glib to those who may have lost something out of Lehman Brothers, including their jobs. That's very serious. But the world can manage without one investment bank.

AIG is very intertwined. I want you to think about AIG not as an insurance company. Think about it as an automaker. If an automaker were to fail, think about all the rubber makers, the tire makers, the windshield makers, the seat makers that would go under. AIG is very intertwined.

Can I just show you a picture of what AIG is all about? First of all, we know it is a big insurer. On the personal level, is has personal individual insurance. It has auto insurance, travel insurance, life insurance. So, lots of Americans have their insurance through AIG. But that's not all.

Look at the way it touches you in the stock market. AIG is in your 401(k)s and in your mutual funds. It is one of the components that is used to calculate the value of the S&P 500 on a daily basis. And you know, when we talk about the Dow is up 500 points or down? Well, the Dow is made up of 30 companies, 30 of the largest companies in the country. AIG is one of the companies in the Dow Jones.

And that's not all. AIG is involved with businesses. This is why it might be too big to fail, because of the businesses it's involved in. It insures banks. It not only insures banks. It insures a lot of those secondary mortgages that were bundled and resold.

So, if those were not to be paid, someone would be left holding the bag. It insures major airlines. It is in fact the largest leaser of airlines. They have 900 aircraft. It insures Hollywood movies. It insured Angelina Jolie when she was a character in a movie.

It insures the offshore drilling platforms that are affected by Hurricane Ike and Hurricane Gustav. So you can tell that this is not just a company that might disappear. This really might be -- and some people can take issue with this -- but it might have been too big to fail.

BROWN: Diane, let me bring you back into this as well. Bottom- line this for us, because a lot of people who aren't quite feeling the effects, but are watching this, getting that it's a big deal, we're paying for this, taxpayers. We're going to pay for this bailout, right?

BRADY: Yes, yes, ultimately, we are. And I think that the point is there just isn't enough cash in the system to pour into AIG. They went to the investment banks. They don't have it. AIG doesn't have enough itself.

I think what's shocking to people here is, how could the world's largest insurer prove to be so bad at managing its own risk? That's the question. How did AIG get to this point?

VELSHI: That's what they do. Diane's got a point there. They're in the business of risk. And this is what confuses people about the investment firms, about the Wall Street firms going bad, because they're supposed to know this. I'm not. You're not. They are.

BROWN: So, what went wrong? Bad management? Just bad decisions, like we have seen repeatedly on Wall Street?


VELSHI: ... greed.

BROWN: Just pure greed?


VELSHI: These are new ways to make money. AIG has been one of the most aggressive insurance firms on the planet. That's why they're that big. That's why they're successful. They do things unusually.

But because they're so big, they were the only choice in some cases for insuring things that are really big. They had that access to that money. When things go wrong, it hurt them more than it hurt others.

BROWN: Do you agree with that, Diane, just greed?

BRADY: I think that, certainly, they put on a lot of leverage. They got into these esoteric products. They have also been exposed on other fronts. They have a mortgage insurance business. And like every other insurer, they have their own investment portfolio. That itself has forced them to put up $12 billion, just their own losses on bad bets in the market.

BROWN: And to both of you, how many of more of these bailouts and these loans can the government really do? There's another bank that is having issues, Washington Mutual, WaMu.


BROWN: With all of these banks needing help, what does it say about the fundamentals of the economy?

VELSHI: There's a problem here, because what happens, the way the government has to get involved is, a bank tries to raise money on its own, and its credit then is downgraded, like Washington Mutual, to junk status.

Now, that's on the radar, because Washington Mutual, if it needs to raise money, is going to go out to the market. It will find it too expensive to do that. And then it says, well, listen, maybe we can't make a go of it. They're not going to let Washington Mutual go bankrupt either.

So, it is a bit of a problem. That's why the government, I think, has been trying to wait as long as possible, to see if there are any other options. And when they think there isn't any other option, then they move in.

BROWN: Diane?

BRADY: One thing I think we should at right now is keep an eye on the sovereign wealth fund. There's not a lot of money in the U.S. on Wall Street to be propping up these firms.

I would be looking to Qatar, Dubai, some of the Middle East funds. They're sitting on the sidelines right now looking at the U.S. assets, seeing if there are some good things for the taking.

BROWN: All right. We're going to end it there, but a lot more to talk about this during the show and certainly the politics of all this as well. Ali Velshi and Diane Brady of "BusinessWeek" joining us tonight, many, many thanks to both of you.

As we mentioned, both candidates had a lot to say today about the economy and the mess on Wall Street. That's coming up next.

And then a little bit later, Sarah Palin preparing for her first live town hall questioning. Is she ready? That and more tonight in the ELECTION CENTER.


BROWN: The economy is front and center with today's big economic breaking news. Barack Obama and John McCain each spent the day trying to sell their economic plans.

McCain had his not-so-secret weapon, Sarah Palin, by his side for the first time in nearly a week as well.

We have got Ed Henry and Candy Crowley, Candy Crowley out on the trail for us today.

Let's start with Ed, who's following the McCain campaign. He's in Vienna, Ohio.

Ed, John McCain came out this morning and said he wants to create a 9/11-style panel to investigate the roots of the economic crisis. By afternoon, he had dialed it back a little bit, hadn't he?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: He was backpedaling ever so slightly.

It sort of came out of left field this morning. Here's John McCain, who's out on the campaign trail, billing himself as an outsider who's going to shake up Washington. So, what's his response to this crisis on Wall Street you were just talking about? Create a Washington-style commission, something that happens inside the beltway all the time, sort of the old style, the old way of doing business, come up with some graybeards, have them sit around and study with it, and then try to fix the problem.

As you can imagine, Barack Obama jumped all over that. And, by this afternoon here in Ohio, John McCain didn't even mention this 9/11-style commission, because I think the campaign quickly realized that, when people are hurting, they want to hear John McCain talk from the gut. They want him to talk about what he can do to actually help them get more money in their pockets, not talk about these kind of commissions. So, it looks like he's already kind of dropped it, Campbell.

BROWN: All right. And, Ed, this afternoon, McCain really hammering sort of this theme of the people vs. the powerful, basically making the Wall Street CEOs into the villains here.

Let's listen to some of what he had to say.


SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: Too many people on Wall Street have been recklessly wagering, instead of making the sound investments we expected of them. When their economies collapse and their companies collapse, only the CEOs seem to escape the consequences, while employees, shareholders, and other victims are left with nothing but trouble and debt.


BROWN: Ed, again, McCain got a lot of flak yesterday for saying the fundamentals of the economy are strong. Today's message definitely sounding different.

HENRY: Absolutely. That's why they're scrambling to get away from the idea that the economy is still strong and instead realize that people are hurting.

And John McCain understands that, if he's going to connect with voters on issue number one, he's really got to talk about it in terms of beating up on Wall Street, talking about these CEO golden parachutes. Sort of that populist rhetoric is going to connect with voters out here in hard-hit states like Ohio, where the economy has really hit and hurt a lot of people. That's going to work a lot better than talking about sort of moving around deck chairs and regulation in Washington.

That's actually going to help people and sort of connect and show McCain's message is going to work a little bit better, Campbell.

BROWN: All right, Ed Henry for us -- Ed, thanks.

And let me move to Candy Crowley now.

Candy, Obama made it pretty clear he has no use for John McCain's 9/11-style panel. That's his solution to tackling the economy? Let's listen to what he had to say.


SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: This morning, instead of offering up concrete plans to solve these issues, Senator McCain offered up the oldest Washington stunt in the book. You pass the buck to a commission to study the problem.


OBAMA: Now, here's the thing. This isn't 9/11. We know how we got into this mess. What we need now is leadership that gets us out.


BROWN: Candy, talk us through how he is taking advantage of this moment, the chaos on Wall Street, to draw some real contrasts between himself and McCain.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, it goes to two central themes of the Obama campaign. One is, John McCain is out of touch. He doesn't get you. He doesn't understand what the problem is. He's got seven houses, anything that they can pour into that particular pot. And the other one is, wait a second, John McCain has been around for all the time that this crisis was building up.

He has supported the Bush administration. He has been a deregulator, as they -- as Obama said today. So, it -- it fits into their framework very nicely. And it's something that they intend to keep pounding. At the same time, they have kind of dropped the high- flying rhetoric. We are now down to the nuts and bolts. Here's what I would do, and here's what John McCain would do, the compare and contrast they always talk about in campaigns, because they believe, if the economy is the issue, their guy's going to win.

BROWN: And, to that point, Candy, Obama today did list a laundry list, if you will, of proposals. He's mentioned and talked about many of them before on the economy, on how to deal with the economy.

But it's not like there's a standout there that seems to be connecting with voters in any specific sort of way. So much of this on the economy is about feeling your pain. I mean, how are they going to make some sort of connection?

CROWLEY: Well, here's what they think. They think that they will make that connection, that, the more voters see Barack Obama, the more they will understand that he understands the paycheck-to-paycheck workers. They say people are beginning to pay attention now. Top strategists said today, listen, when they see him in these debates, they're going to come away knowing that Barack Obama is the candidate that understands what they're going through and can fix it.

BROWN: All right, Ed Henry earlier and Candy Crowley joining us as well, thanks, guys, as always. Appreciate it.

Coming up, everybody, we're going to talk to three of the smartest people in politics about which candidate will come out ahead on the economy.

And then, later, reunited, and the Republicans feel so good. Stand by for today's happy reunion on the campaign trail.


BROWN: Today, the candidates focused like a laser beam on the only issue anybody is talking about today, the crisis in the economy, the panic on Wall Street.

So, whose economic message is getting through to worried voters?

We're going to bring in our political panel now, CNN senior political analyst Gloria Borger, Republican strategist Kevin Madden, and CNN senior political analyst here with me in New York Jeffrey Toobin.

Welcome, everybody.

Gloria, let me start with you.

Back in July, ABC News and "Washington Post" did a poll. They asked voters who would they trust most to handle the economy. It was Obama by a mile, 54 percent to 35 percent. But look at what happened when they were asked the same question earlier this month, 47 Obama, 42 McCain. That's five points there separating.

What has happened? Is that because the race has tightened overall?


In talking to Democrats, Campbell, I think there's been a sense, at least until this week, that Barack Obama just had not connected with people on his economic message in a very personal way, that he could do it in kind of a thoughtful, academic way, but what he needed to do was tell people what change means to their lives and how he could make their lives better.

Then along comes McCain/Palin, John McCain, of course, talking about offshore drilling, which had great resonance with the American public, particularly when energy was considered to be our number-one economic problem. And then Sarah Palin comes along, and she connects the two of them as mavericks who tap into a frustration and a mistrust of government.

And that has also a lot of appeal out there to voters. So, you put those two things together, and it really closed the gap on the economy. Now, of course, given what you're talking about tonight, given what we have been talking about all week, there's a sense among Democrats that they can regain that lost ground if Obama can really make his points with American voters that he's going to make their lives better.


BROWN: Why hasn't he been able to do that so far?

JEFFREY TOOBIN, CNN SENIOR ANALYST: Well, I think the issues are complicated, and complicated issues don't lend themselves to sound bites.


TOOBIN: No, they don't. But I think part of the responsibility is with us, too, because we spend a lot of time talking about strategy, but we don't talk about what they're actually proposing, and they do propose things.

I mean, for example...

BROWN: We are, OK, for the record, going to talk about it later in the show.



BROWN: We're doing a fact-check.



BROWN: Because a lot -- they spin a lot of what they're proposing, too.

TOOBIN: They do. But, like, on taxes, they're really very different proposals. Obama wants to cut taxes for people making less than $250,000 a year, raise them for people making more.

McCain wants to cut taxes for everybody across the board, which would certainly benefit wealthy people more. I don't know which one of those is right, but that's a...


BROWN: Part of the problem -- and I think you have to even agree with this, Kevin, is so much of the disinformation, misinformation that's flying around. for example, if you look at some of the polling, a lot of people believe that Obama wants to raise taxes...

TOOBIN: Absolutely.

BROWN: ... based on many of the commercials and information put out by the McCain campaign.

KEVIN MADDEN, FORMER ROMNEY CAMPAIGN NATIONAL PRESS SECRETARY: Right, because the McCain campaign has done their job and offered disqualifying information about Barack Obama.

But, just to Jeffrey's point, I think this has much more to do with economic attributes of the candidates than it does the actual economic plans. Voters don't sit down and look at the spreadsheets and say, OK, well, let me see Barack Obama's economic plan, let me see John McCain's and decide which one they agree with. Instead, they start to identify with the attributes that the candidates exude. And I think John McCain, to Gloria's point, has done a much better job at connecting with voters on the commonsense economic issues of the day, to stop -- stop the rampant spending in Washington, get taxes lower, open up trade avenues, so that American commerce can flourish.

And I think that the -- and the reason that Barack Obama has struggled is that I think, for just the last 48 hours, this is the first time I have seen him put together a really coherent, compelling economic message. And John McCain has been hammering about -- hammering at it for much longer and much more effectively.

BROWN: Gloria?

BORGER: John McCain has shown himself to be a fighter, and people like a fighter when they think that this candidate is fighting for you.

It's going to be very interesting to see how John McCain reacts to the news this evening of the AIG federal bailout, because, of course, that means that the taxpayers in a sense are bailing out a private insurer that the government doesn't directly regulate.

And, you know, this is an interesting question for a Republican, Kevin, wouldn't you think, because...

MADDEN: Yes, absolutely.

It is going to be a very bitter pill for a lot of Republicans to swallow tomorrow, the fact that the government is getting involved in a $90 billion bailout and it's essentially taking over a major private insurance company.

BROWN: Right.

MADDEN: But, again, the argument that a lot of Republicans are going to have to make is whether or not a bailout is going to hurt more than what would have happened if AIG had collapsed tomorrow.

BROWN: Had gone under.

All right, guys, stand by. We're coming back in just a second.

When we come back, the Republican dynamic duo back in action, John McCain and Sarah Palin together again on the stump.

But, beyond the cheers, a question for some: Is Palin peaking now?

And, later, are Barack Obama and Joe Biden being 100 percent honest in their campaign ads and on the stump? Our truth squad goes to work here in the ELECTION CENTER.

(COMMERCIAL BREAK) BROWN: The Republican ticket roared into Ohio today, Sarah Palin and John McCain side by side before a cheering crowd. We are going to see a lot more of this twosome out on the trail together. Just how much will that help John McCain?

Our Ed Henry is back. He's got some answers for us.

And, Ed, McCain-Palin reunited today in Ohio, a packed house and a much different vibe from the solo McCain event you covered in Florida yesterday. Tell us about that.


Yesterday, John McCain was in Florida. He was in Jacksonville, and there was actually some empty seats in the arena where he was speaking. That's something you would never see when he's out with Sarah Palin. But, when he's solo, he doesn't get quite as loud, quite as big and as boisterous a crowd.

But today, here in Ohio, with Sarah Palin, it was literally standing room only, people yelling and screaming and cheering on Sarah Palin. And what I found fascinating is that, when Sarah Palin gave up the podium to John McCain, some women in particular were actually leaving the rally. They were going to get their cars and get home and beat the traffic when John McCain was still at the podium.

There's some risk here that the number two might outshine the number one, although the McCain campaign insists, look, we will take the energy and the momentum, though I can tell you they are a little concerned about those questions that are still nagging out there about Sarah Palin's experience. There are indications that, next week, she may be going to the United Nations General Assembly meeting when all these world leaders will be there, meet with some of those world leaders and try to beef up her resume a little bit, raise her profile on the international stage -- Campbell.

BROWN: All right. Ed Henry for us tonight. Ed, thanks.

And we want to bring back our panel to talk about this as well. Gloria Borger, Kevin Madden and Jeffrey Toobin all back with me now.

And, Kevin, I have to ask you. Without question, she raises the enthusiasm level to new heights, but you have this issue of experience, and you have some pretty prominent conservatives now, conservatives, who have been voicing real reservations about Sarah Palin.

David Brooks, he wrote this in the "New York Times." "Democracy is not average people selecting average leaders. It is average people with the wisdom to select the best prepared. She has not been engaged in national issues, does not have a repertoire of historic patterns and, like President Bush, she seems to compensate for her lack of experience with brashness and excessive decisiveness."

I mean, does he have a point, Kevin? And, by the way, you know he's not the only conservative to come out and essentially say this. KEVIN MADDEN, FMR. ROMNEY NATL. PRESS SECRETARY: Right. And I think if this election were left to conservative columnists like David Brooks, maybe she wouldn't win. But ultimately, it's left to the voters, and the voters get to decide whether or not Sarah Palin is ready. And that's the challenge for the McCain campaign. They have to go out there and make the case that she is ready based on her accomplishments.

The fact that she has been the chief executive of a state, the fact that she has accomplishments on issues like energy, she's put together budget, she's vetoed spending, that's how they're going to fill that resume void. That -- you know, it is a -- it is a very important challenge, but it's one they think they can overcome.

BROWN: Gloria, listen to what Carly Fiorina, who's the former CEO of Hewlett-Packard and one of McCain's top economic advisers. Listen to what she said today. This was on a radio show when she was asked about Sarah Palin.


UNIDENTIFIED MALE: Do you think she has the experience to run a major company like Hewlett-Packard?

CARLY FIORINA, MCCAIN ECONOMIC ADVISER: No, I don't, but you know what, that's not what she's running for. Running a corporation is a different set of things.


BROWN: And, by the way, running a corporation is much harder than running the United States of America. Much, much, much more difficult. She went on to say she didn't think McCain was ready to run a corporation either. But -- so, Gloria, a little bit off message here?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Yes. First rule of polls, stop digging, Campbell. And I think she did badly enough on her first answer.

You know, Carly Fiorina has made some mistakes as a surrogate, and I'm not so sure they're going to have her out there in such a prominent role anymore if these things keep happening. This is the last thing John McCain needed today.

BROWN: You get the last word.

JEFFREY TOOBIN, CNN SENIOR POLITICAL ANALYST: I think Sarah Palin's got to get out there and answer questions. You know, show that you're ready, not in staged rallies. Just answer questions, whether from voters or journalists or whoever, and just show that you can take the heat.

BROWN: But why would you do that if you're the campaign and you're looking at her, and you've got people filing out of the room, as Ed told us, when McCain comes on stage after she's done speaking. She's clearly doing the job they want her to do.

TOOBIN: Well, the election is not about people who go to rallies. The election is about swing voters who are concerned, who want questions answered. She's an intelligent person. She'd probably do well.

But if you look like you're protecting her...

BROWN: Right.

TOOBIN: ... if you look like you're hiding her, I think that's a bigger problem than the fact that people are cheering for her when she gives set speeches.

BROWN: All right, guys, stick around. We're coming back to the panel with a lot more.

When we come back, though, we are going to try to cut through the spin, get to the facts. How do the candidates plan to turn the economy around measure up? We'll spell out the proposals and put them to our "No Bias, No Bull" test. That's coming up next in the ELECTION CENTER.


BROWN: Wall Street has been pretty generous to both presidential campaigns. As you can see there, they've raked in millions of dollars in contributions from the securities and investment industry.

Today, both Barack Obama and John McCain were sounding like modern day Paul Reveres in speeches. Both men said they have long been sounding the alarm that Wall Street was heading for trouble.

We're going to listen inform what they're saying, put it to our "No Bias, No Bull" test right now. Take a listen.


SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: In January, I outlined a plan to help revive our faltering economy, which formed the basis for a bipartisan stimulus package that passed the Congress. Senator McCain used the crisis as an excuse to push a so-called stimulus plan that offered another huge and permanent corporate tax cut, including $4 billion for the big oil companies, but no immediate help for workers.


This March, in the wake of the Bear Stearns bailout, I called for a new 21st century regulatory framework to restore accountability, transparency and trust in our financial markets. Just a few weeks earlier, Senator McCain made it clear where he stands. Quote, "I'm always for less regulation," and referred to himself as "fundamentally a deregulator."

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Senator Obama is not interested in the politics of hope. He's interested in his political future and that's why he's hurling in insults and making up facts about his record. Today, he claimed the congressional stimulus package was his idea. That's news to those of us in Congress who supported it. Senator Obama didn't even show up to vote.


He talks a tough game on the financial crisis, but the facts tell a different story. Senator Obama took more money from Fannie Mae and Freddie Mac than anyone but the chairman of the committee they answer to.


And he put Fannie Mae's CEO, who helped create this problem, in charge of finding his vice president.


BROWN: You heard the candidates. Now, Tom Foreman joins me from Washington to put their cleanup plans to our "No Bias, No Bull" test.

And, Tom, do they have the story straight?

TOM FOREMAN, CNN CORRESPONDENT: Well, Campbell, cleanup is a good word. I don't think you could find as much mud flying at an Alabama stock car race. Let's turn it right at the top of this and look all the way (ph) through it here.

Barack Obama says he came up with the outline for the economic stimulus plan approved earlier this year. He did come up with an outline for a plan, but a lot of people were involved in formulating the plan that was finally voted on and that makes a real big difference here. It was, in fact, widely praised as a bipartisan effort that grew out of talks between the House and President Bush, and the Senate largely wound up following the House's lead on all of this.

McCain now says Obama did not even vote for the final bill. He's right on that. But Obama did vote the day before, as Senate Democrats tried and failed to expand benefits offered under the plan.

Obama says McCain was pushing a stimulus plan proposal that included a big corporate tax cut. That is true. John McCain now is trumpeting the need to get control over big corporations, financial markets, and CEO pay.

But did he say previously I'm always for less regulation, as Obama claims? Yes, he did, in the "Wall Street Journal." "The New York Times" also scrutinized McCain's record and concluded that he has shown little or no enthusiasm for regulating financial markets before now. And also noteworthy, one of McCain's chief economic advisers is former Senator Phil Graham, was a strong opponent of regulation.

McCain, in those statements, slams Obama saying he took more money in campaign contributions from Fannie Mae and Freddie Mac than almost anyone. Yes, it looks like he did. The Center for Responsive Politics says employees of the two companies and their political action committees have given Obama about $126,000. What McCain does not mention is that he, McCain, also received about $22,000 from employees of those firms.

So, Campbell, that's how it all comes down. Almost too much to check there.

BROWN: I was going to say.

FOREMAN: A lot of things being said. Aren't these the guys who were promising this was going to be a clean campaign...


FOREMAN: ... with none of this going on?

BROWN: Yes, they are. You must have had a very busy afternoon.

All right. Tom Foreman for us.

FOREMAN: Busy in the morning, too (ph).

BROWN: Tom, thank you very much.

Coming up everybody, we are going to have the very latest on our breaking news. Tonight, word that the federal government is working to bail out insurance giant AIG. We've got new developments to tell you about coming up during the ELECTION CENTER.


BROWN: In a few minutes, Larry King will be here to tell you how to keep your cool in this red hot financial crisis. Larry, I know you've got some very special guests tonight. Is that right?

LARRY KING, HOST, "LARRY KING LIVE": You got it, Campbell. If the financial bloodbath this week has you worried about your money, stick with us. Suze Orman is here to answer your questions and calm your fears. These are scary times. I'm glad she's with us.

We'll talk about the candidates and the economy, and will the election turn on the money issue? Plus Dr. Phil will be here to discuss the Palin factor. She's now a factor.

It's a big hour on "LARRY KING LIVE" next, Campbell.

BROWN: We'll be watching, Larry. See you in a bit.

Coming up next everybody, more developments in tonight's breaking story. Reports the federal government will bail out insurance giant AIG.

Senior business correspondent Ali Velshi is going to have an update for you in just a moment.


BROWN: Breaking news tonight, the federal government is negotiating a bailout of insurance giant AIG. Senior business correspondent Ali Velshi has been working the phones since the story broke.


BROWN: Still working the phones.


BROWN: He's got his phone on the table.

VELSHI: I've got it here.

BROWN: All right.

VELSHI: Because we are waiting for absolute confirmation of what's going on. Here's what we know because we've got a few people telling us a few things that the federal government seems prepared to offer a bridge loan, a temporary loan to AIG...

BROWN: Right.

VELSHI: ... for about $85 billion. In exchange for that, they may get an 80 percent stake in the company as collateral so that if the loan doesn't get paid off...

BROWN: Right.

VELSHI: ... and bridge loans tend to be very strict and time sensitive. Now, we know that Senator Harry Reid met with Henry Paulson today. We know Senator Schumer was involved in that because he has said that the federal government is about to take an unprecedented step. And we know that in about 45 minutes, we're going to hear from the governor of the state of New York who has been pushing for federal assistance here, because AIG is such a big employer in the state of New York that the financial implications of a failure of AIG and Lehman Brothers would be devastating to the state of New York.

So, something is happening. There appears to be some federal involvement in AIG to stop this from being -- from collapsing. And we understand that that could be developing. Right now, we are hoping to go get some sort of announcement and then we have to figure out what this means to the market.

There's two things about this. One is that people will be happy that AIG is not failing because as we heard...

BROWN: Right.

VELSHI: ... some say it's too big to fail. There are going to be others who say, when do these bailouts stop? How much can the government continue to pay it? Because when the government puts $85 billion up, you know where that comes from.

BROWN: Taxpayers.


BROWN: Me and you, baby.

VELSHI: The minute we've got it, we will have it for you.

BROWN: All right. Ali Velshi for us tonight. Ali, thank you.

And we will be updating you on the story obviously throughout the night right here on CNN.

Here in the ELECTION CENTER, we are all about truth telling, "No Bias, No Bull." Tonight, we are also going to take a look at Barack Obama's campaign, his claims that may not pass the truth test. We're going to have that story when we come back.


BROWN: Here in the ELECTION CENTER, we are keeping our promise to be aggressive about fact checking what all the candidates are saying. Last night, our truth squad looked at John McCain and at Sarah Palin. Tonight, Joe Johns is here with the "No Bias, No Bull" look at where Barack Obama and Joe Biden are taking liberties with the truth.

And, Joe, what do you have?

JOE JOHNS, CNN SENIOR CORRESPONDENT: Well, Campbell, Barack Obama has all but accused the McCain campaign of making things up. And we've already taken a look at some of that evidence. But today, when we took a closer look at some of the Obama campaign's ads, it turned out they're also pretty good at exploiting and sometimes stretching the truth.


JOHNS (voice-over): Clean shot or cheap shot? Obama's ads speak for themselves. You be the judge. Take the dust-up over the economy. Just one day after John McCain talked about the current Wall Street crisis, the Obama campaign pounced with an ad, repeating over and over again a short little McCain sound bite.


SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: The fundamentals of our economy are strong. The fundamentals of our economy are strong.


JOHNS: But the fact is McCain said more than that. He also acknowledged in his speech that these are very difficult times though now, after the Obama attack, he suddenly had some explaining to do. MCCAIN: Well, what I obviously was saying and I believe is the American worker is the most productive and most innovative. They're the fundamental of our economy and the strength of it and the reason why we will rebound. We will come back from this crisis. But right now, we are the victim of greed, excess and corruption in Wall Street.

JOHNS: In another ad, Obama attacks McCain and spending for schools.


NARRATOR: John McCain voted to cut education funding.


JOHNS: Well, did he? Take a look at the fine print. It's tiny, up there at the top of the screen. The ad lists five dates which appear to be, well, several McCain votes. But the truth is McCain only voted once to cut education funding.

Another time he voted to increase funding. The other three votes, he opposed an increase.

VIVECA NOVAK, FACTCHECK.ORG: I would call that simply false. He did not vote to cut education funding five times. There was only one instance where you could say he actually cut from the current baseline.


SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: It's over. It's over for the special interests.

NARRATOR: Wait a second. John McCain's chief adviser lobbies for oil companies.


JOHNS: Example number three, an Obama ad running now says a top McCain adviser lobbies for oil companies, Charlie Black. The truth is Black used to lobby for oil companies but not anymore.

NOVAK: Actually, nobody who is paid by the McCain campaign is permitted to currently be lobbying. So they've all taken leave or they're not currently lobbying.

JOHNS: In one Obama ad, the issue may be more omission than distortion. In a commercial targeted at Michigan -- remember, Detroit is Motor City, and it's having tough times. Obama claims that McCain opposed loan guarantees for automakers, which is true.


NARRATOR: But John McCain refused to support loan guarantees for the auto industry. Now, he's just paying lip service.


JOHNS: But what the ad doesn't say is that McCain actually changed his tune in August.

NOVAK: Well before this ad was aired, he had changed his position and come around to supporting the loan guarantees.


JOHNS: And, of course, there is perhaps the biggest whopper of all, and that is the remark Obama made months ago that McCain would keep troops in Iraq for 100 years. McCain actually said troops should stay in a non-combat role as long as it takes, not, of course, a century.

Not everything Obama says certainly is untrue. But regarding these issues, the campaign would not give us anyone to interview. Still, it's clear they stand by the ads -- Campbell.

BROWN: All right. Joe Johns for us tonight. Interesting stuff, Joe. Thank you.

When we come back, our political panel back to talk about how little of the truth the candidates can get away with. How much lower can they go in this campaign season? Stay with us everybody.


BROWN: The candidates speak, and we listen. You just saw our truth squad take apart some of the claims Barack Obama, Joe Biden are making about John McCain. Well, now, I want to bring back our political panel. CNN senior political analyst Gloria Borger, Republican strategist Kevin Madden, and CNN senior political analyst, in New York, Jeffrey Toobin.

And, Jeff, I've got to start with you here because -- start with you here because I know that you think John McCain's exaggerations, falsehoods, whatever you want to call it, are far more extreme than Obama's.

TOOBIN: We do a lot of parity here at CNN, and we match things up, but there is no comparison. John McCain has told outright falsehoods about Obama and sex education, about the bridge to nowhere, about earmarks, about taxes, and the examples we cited in those Obama ads are not even close to the falsehoods that have been said about Obama by the McCain campaign.

BROWN: And, Kevin, even some conservatives essentially last week, especially after that sex education ad, I think came forward and said, whoa, we are really crossing a line here. But I know you think this is just politics to a certain extent.

MADDEN: Well, you know, look, remember in 1988 where there was a big moment where Bob Dole said, stop lying about my record. I feel like we have three moments like that a day here on this campaign. But look, you know, John McCain campaign, well, they documented every single charge that they've made against Barack Obama. And at the end of the day, they still have the truth on their side, they believe, with all of these, and they continue to document them and make sure that reporters know about those charges.

BROWN: McCain?


BORGER: Well, I don't think they did that really on the ad that Jeff Toobin was referring to on sexual -- on sex education because that legislation was about teaching children to recognize sexual predators.

MADDEN: Well, the first thing you have to remember about that charge is that I think it even came up during the Democrat primary. And secondly, Byron York had a very lengthy examination of that charge today in the "National Review" that documents entirely what is in that bill, and it would be troubling to a lot of Americans to see that Barack Obama supported that.

TOOBIN: It was a bipartisan, non-controversial program. Look, this last week, since Sarah Palin has been on the campaign, they brought out Sarah Palin saying, she was the woman who fought the bridge to nowhere. And we now know that she is someone who embraced the bridge to nowhere, who has sought out earmarks, that kind of thing. The focus that the McCain campaign has put on something that turns out not to be true is simply unprecedented in this campaign and frankly, in any recent campaign.

BROWN: And, Kevin, as stupid as it sounds, the "lipstick on the pig" thing, I mean, do you honestly in your right mind -- you're an intelligent man.

MADDEN: I don't.

BROWN: Do you think Barack Obama was calling Sarah Palin a pig? Come on.

MADDEN: I appreciate that, that I'm honest, and I will tell you, no, I do not. But I think -- let me take you inside the mind of a campaign. The mind of a campaign is to, again, disrupt your opponent's message. If for even 48 to 72 hours, Barack Obama was explaining that issue instead of talking about his issues, the McCain campaign wins the news cycle.

BORGER: And, Campbell, they've got so much money to do it with now.


BORGER: They can do new ads every day, and they've got, you know, $1 billion to spend.

TOOBIN: But we are the news cycle. We're not required to report on whatever silly thing they said. We're in charge of the news. They're not in charge of the news. We should be the people who are trying to say what's true, not whatever the campaign says.

BORGER: Well, that's what Joe Johns did.

Now that's what Joe Johns did. But I'm telling you it's out there for the public to look at.

BROWN: And a totally different issue here, I think, is the fact that when you even talk about it as a falsehood, you leave the impression with a lot of people who are watching this --

TOOBIN: That's always the question. That's always the issue is that do you draw more attention to something by denying it.


But you know what? We should do it because it's -- we got --

BROWN: It's our job. That's what we do as journalist.

TOOBIN: It's the news.

BROWN: I'm with Toobin here.

All right. Gloria, Kevin, Jeff, thanks to all of you.

BORGER: We all agree.

BROWN: Many, many thanks.

That's it from the ELECTION CENTER tonight.

"LARRY KING LIVE" right now.