Return to Transcripts main page
Lou Dobbs Tonight
The Big Bailout; Presidential Candidates on the Bailout Plan
Aired September 23, 2008 - 19:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, HOST: Wolf, tonight the Bush administration is trying to persuade members of Congress to rapidly push through the biggest government bailout in history, three pages worth, but even Republican members of Congress are calling the plan simply un- American. And tonight guess who is intimately involved in crafting that bailout plan. The very same people we have been warning you about now for years, the powerful corporate lobbyists who represent the very banks that helped created this crisis and who of course would be receiving much of the money are trying to shape the legislation.
And tonight, the liberal national media's all out assault on Governor Palin, we'll be reporting on that and among my guests here, Professor Peter Morici, of University of Maryland, Martin Eakes of the Center for Responsible Lending, their views on this bailout and three of the most popular radio talk shows hosts in the country join me. We hope you will as well, for all of that, all the day's news and much more with an Independent perspective straight ahead here tonight.
ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Tuesday, September 23rd. Live from New York, Lou Dobbs.
DOBBS: Good evening, everybody. The Bush administration tonight is issuing a blunt warning, warning that if its $700 billion bailout plan doesn't pass, the economy will plunge into recession. Federal Reserve Chairman Ben Bernanke today telling members of the Senate Banking Committee that the financial markets are in what he called a fragile state. But the Bush administration's proposal faces strong opposition from members of both parties. One Senate Republican even called the plan un-American. We have complete coverage tonight and we begin with Brianna Keilar on Capitol Hill.
BRIANNA KEILAR, CNN CORRESPONDENT (voice-over): Dire warnings from the two top money men in America if Congress doesn't come to Wall Street's rescue.
BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: I believe if the credit markets are not functioning that jobs will be lost. The unemployment rate will rise. More houses will be foreclosed upon. GDP will contract. That the economy will just not be able to recover in a normal, healthy way no matter what other policies are taken.
KEILAR: Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson were on Capitol Hill selling their $700 billion bailout, but senators aren't ready to buy it.
SEN. JIM BUNNING (R), KENTUCKY: This massive bailout is not a solution. It is a financial socialism and it's un-American.
KEILAR: Two GOP members including the Banking Committee's top Republican condemned the plan.
SEN. RICHARD SHELBY (R), ALABAMA: How co-do you rationalize or justify bailing out banks and so forth that caused -- are the root cause of a lot of this problem?
HENRY PAULSON, TREASURY SECRETARY: It may make you angry. It makes me angry when you ask about the taxpayers being on the hook, guess what. They're already on the hook. They got put on the hook by the system we have. If this system is not stabilized, they are going bear the cost.
KEILAR: The Democratic chairman of the committee worried about rushing a bill to the president.
SEN. CHRISTOPHER DODD (D), CONNECTICUT: The secretary of the administration need to know what they have sent to us is not acceptable. This is not going to work and they're going to have to come back and work with us.
(END VIDEOTAPE)
KEILAR: Secretary Paulson told Congress they'll need to push through legislation by the end of the week or delay their plan October recess and the White House is saying it's unthinkable that Congress would not get something done by the end of the week. Meantime, on the House side, Democrats there are demanding major changes in this Bush administration proposal and they also want the White House to get more Republicans on board, Lou.
DOBBS: This is a peculiar bailout plan, presented as a three- page document with very little, if actually very little, almost no detail about how this money will be used, where it will be moved and under what conditions. Is the White House basically maintaining that that is in any way attainable approach? That it will not relent and provide far more transparency?
KEILAR: Well, no, we have actually heard from Barney Frank who is heading up the negotiations on the House side and he said he has been able to come to some common ground with the White House on some of the Democrats' demands. But at the same time, Lou, keep in mind that there have actually been at least two new proposals floated in the House today both by Republicans. So it just go to show you that talking about this Bush administration proposal outright without any changes that's being completely rejected by everyone, including Republicans.
DOBBS: Brianna, thank you very much. Brianna Keilar from Capitol Hill.
Well two of the main points of contention holding up any discussion on this bailout legislation include executive compensation and bonuses and the judges control of mortgages. Democrats are pushing for judges to have the power to rewrite bankrupt homeowners' mortgages to help avoid foreclosure.
The Bush administration is adamantly opposed to that idea. Another point of contention executive compensation, some Democrats, some Republicans are demanding executives at failing financial firms will stripped of their multimillion-dollar golden parachute bonuses. The powerful lobbyists who represent the banking industry are fighting to ensure that executive compensation is not included in this legislation.
Those lobbyists have already influenced the shape of this bailout plan by broadening the proposal to include all of Wall Street's bad debt and bailout for foreign banks as well. As Lisa Sylvester now reports, those very same lobbyists are working overtime to make certain corporate America's interests are put well ahead of and maintained ahead of the national interest.
(BEGIN VIDEOTAPE)
LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Wall street's lobbyists are flooding Capitol Hill, trying to squeeze out even more concessions from lawmakers.
CRAIG HOLMAN, PUBLIC CITIZEN: The banking industry has traditionally been the number one lobbying industry on Capitol Hill since 1998 and now with this whole bailout plan happening that you know is in the price tag roughly of $700 million, the banking lobbyists are all over the place.
SYLVESTER: Wall Street's influence has already been felt. The Paulson proposal has been expanded to include not just big businesses' bad mortgage debt, but all types of troubled assets on Wall Street's books. Foreign banks would now be able to get a piece of the bailout and money market mutual funds, even those that are tax exempt, are now backed by federal guarantees.
It's not only what business interests hope to get, but also what they hope to keep out, like limits on corporate pay. The head of the Financial Services Lobbying Group says there should not be curbs on executive compensation. Something both Senators Obama and McCain have suggested.
STEVE BARTLETT, FINANCIAL SERVICES ROUNDTABLE: This isn't about wrongdoing or people that did wrong or did right. There's enough responsibility and blame to go around. This is about getting liquidity back in the market.
SYLVESTER: Securities and investment companies have contributed more than $1 billion to political candidates since 2002. According to the Center for Responsive Politics, Goldman Sachs tax employees, for example, contributed nearly $20 million in the eight years that Henry Paulson was the firm's CEO before becoming Treasury secretary.
(END VIDEOTAPE)
SYLVESTER: Secretary Paulson's former firm would be one of the principle benefactors of this bailout. Now Paulson, while he was the head of Goldman Sachs was highly compensated. His pay, bonuses and stock options in 2003 alone were worth $30 million. Lou?
DOBBS: You know pointing out that Henry Paulson is a beneficiary of these policies and the times that were -- the good times were rolling of course at that point. It's just amazing to me to think that these lobbyists have the courage, the guts, the chutzpah to sit there and say there won't be a -- any suggestion of an adjustment in compensation. Yet if we're going to nationalize Wall Street, there is absolutely no excuse in the world not to set down the pay standards. I mean what is the worse that could happen? They would go broke? They are already broke.
SYLVESTER: That is indeed a very good point. And I've got to tell you these lobbyists are also pushing back, saying that they don't want some of the benefits. You mention the bankruptcy judges and that would give them the authority to rewrite the mortgages. They don't want to see that happen, so clearly they went benefits for Wall Street, but when it comes for Main Street, they are fighting those actually on Capitol Hill.
DOBBS: I think this is -- it's interesting this is coming and I think it's -- that there is a certain amount of serendipity here. That we're seeing this crisis come to a head at precisely the time that it is, with more than a month to go before the presidential election. Both presidential candidates have an opportunity here to stand up.
This government, this administration, both political parties have a chance to stand up here and say, no, we are not going to continue to fund a credit craze economy, led by Wall Street. It's going to stop. We are going to focus on the real economy, creating real wealth for Americans, and we are going to talk about real jobs for the middle class.
If that discussion can be had, the pain of this crisis is worth going through for all of us. If it's simply an extension or further credit on the part of -- under the leadership of former Goldman Sachs CEO, then we are going to be treated to an even more difficult round of crisis in the months and years ahead. Lisa, thank you very much. Lisa Sylvester from Washington.
Well as Lisa just reported, lobbyists are spending a staggering amount of time and money trying to shape this bailout. And the biggest spender of all is none other than the U.S. Chamber of Commerce, of course. Over the past decade, in fact, the Chamber of Congress has spent nearly $400 million lobbying Congress.
On Capitol Hill today Treasury Secretary Paulson conceded the taxpayers are quote, "already on the hook for the cost of this crisis" and in the very same testimony, Secretary Paulson confessed there would be an experimentation period to find a solution. Louise Schiavone reports now on what that experiment is likely to mean to middle class families fighting to save their own homes and jobs.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): There is a growing sense on both sides of the aisle that as long as taxpayers are coughing up close to a trillion dollars, they should be stakeholders in the recovery that follows.
SEN. CHRISTOPHER DODD (D), CONNECTICUT: If you're going to be on the downside of this, you ought to be able to say to people that we are going be a beneficiary if this works as well.
SHELBY: I think we've got to look at some alternatives. I think the secretary now realizes that what he sent up is not going to be just rubber stamped.
SCHIAVONE: As crafted, the Treasury proposal gives authority to the secretary and whomever he decides to use taxpayers billions to buy soured asset back securities from financial institutions. For starters, who gets bailed out?
DAVID JOHN, HERITAGE FOUNDATION: We already see worries that it would be used to bail out Goldman Sachs, Secretary Paulson's former employer or something along that line. And one of the things that is going to be crucial here is going to be an ongoing level of oversight to make sure that we don't have sweet heart deals.
SCHIAVONE: Once these securities are in the hands of the government, the Treasury may or may not be able to sell them at a profit, but for $700 billion the question is asked shouldn't the taxpayers get more for their money?
ALAN BLINDER, PRINCETON UNIVERSITY: My fear is that putting Wall Street first, I think we should be putting Main Street first. Congress should try as hard as we can to make sure the taxpayer gets back the upside.
SCHIAVONE: One idea suggests that taxpayers get an ownership piece of the Wall Street firms they're rescuing. The government is selling off its stock at a profit when Wall Street recovers.
(END VIDEOTAPE)
SCHIAVONE: Lou, no one questions these are extraordinary times and something has to be done, but the challenge is how to make a fiscally painful investment work for the people who are paying for it. Lou?
DOBBS: You know well first of all, I'm not sure that I am one of those who wants to accept the premise. First I'm not certain that the taxpayers should be paying for it and if we get to that, if we go beyond that discussion to what they should be getting for it, I think we've already missed the point. The reality is that the American taxpayer should not be on the hook for any of this and to have the secretary of the Department of Treasury to stand up and say that the taxpayer is already on the hook is an arrogant and just a specious non-statement.
This is the most illogical approach that we could have possibly taken. I said at the outset of this sub prime crisis that if we are going have a bailout, we should be dealing first with a trickle up view. And that is send that money into the households that are being foreclosed upon to save off this crisis and to maintain the integrity of those assets on the balance sheets of the lenders.
And unless we -- and that way we are protecting both the individual as well as the institution. The approach that is being taken here is the old, worn out view that you're going to save an institution. These institutions deserve to die. The executives who are running them and have run them into the ground and built a credit crazed orthodoxy on Wall Street deserve to lose every dime they have and that is the bottom line.
Will there be pain beyond that? I believe so. But the fact is if we continue to support these greedy and unscrupulous and irresponsible executives who have led these, as I said, credit crazed firms without any sense of responsibility, then we deserve whatever we get. Thank you very much, Louise. Louise Schiavone.
Time now for our poll. The question is straightforwardly do you believe Congress should write Secretary Paulson and Chairman Bernanke a $700 billion check with no understanding or oversight of how it will be spent? Cast your vote at loudobbs.com. We'll have the results upcoming.
House Democrats at least today said the congressional ban on offshore drill will be lifted. Appropriations Committee Chairman David Obey said the ban will be omitted from the new federal spending bill. That moves comes after a reversal on drilling by House Speaker Nancy Pelosi who once said the ban would stay in place because quote, "In trying to save the planet, I'm trying to save the planet", end quote.
Back in July, Pelosi, the Senate Majority Leader Harry Reid and Senator Obama all were making excuses to not reverse that ban. At the time I forecast that they would reverse their positions, which obviously they did within six weeks.
The American people also strongly in favor of offshore drilling. More than two-thirds of the public want the ban lifted. It will be interesting to see whether the legislation that was put forward by Nancy Pelosi and supported by the House, if indeed that happens, that -- the effect of that legislation would be to maintain the ban.
Coming up next, Senators McCain and Obama speaking out about the bailout, but they are not saying much about what they would do to help American families. We'll be taking you live to the campaign trail for reports from both the Obama and McCain campaigns are next.
And a common sense program that actually works to help enforce immigration laws and secure the country. What's Washington's response? The Democratically-led Congress is intent on killing it. We will have that report. Stay with us. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: The two presidential candidates today outlined their condition to support the bailout plan, Senator McCain insists taxpayer dollars not be used to line the pockets of corporate executives. Senator Obama insisted taxpayer money not be used to reward what he called irresponsible CEOs.
We have reports on both campaigns tonight. We begin with Dana Bash covering the McCain campaign in Middleburg Heights, Ohio. Candy Crowley covering the Obama campaign in Tampa, Florida and we begin with Dana Bash -- Dana.
(BEGIN VIDEOTAPE)
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): At his first press conference in six weeks, John McCain tried to connect with voters by showing he understands the burden of a &700 billion bailout.
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: In essence, what this plan requires is a $10,000 contribution per household in America, $700 billion, for example, could rebuild the crumbling infrastructure in every town, county and state in this country.
BASH: That populist rhetoric capped a day of images designed to appeal to blue collar workers he needs to win in Ohio and Michigan, a visit to a construction site, a tour of two factories with the same promise along the way.
MCCAIN: The economy on Main Street, not Wall Street, not Washington, D.C., but Main Street is the focus of our attention and our efforts.
BASH: McCain repeated principles he laid out a day earlier, an oversight board not the Treasury secretary, in charge of the bailout and a cap on CEO compensation.
MCCAIN: It's wrong to ask teachers and farmers and small business owners to fill the gas tanks or the helicopters of Wall Street tycoons.
BASH: He urged swift action in Congress, yet refused to answer if he would vote for a bailout package that does not include his demands.
MCCAIN: I can't say that at this time, because I think the emphasis should be on the adoption of these principles.
BASH: That non answer is giving Democratic leaders and Washington heartburn.
SEN. HARRY REID (D-NV), MAJORITY LEADER: We need the Republican nominee for president to let us know where he stands on what we should do.
BASH: Democrats say they worry opposition from McCain could give skittish Republicans political coverage to vote no too and leave Democrats scrambling to pass the bailout.
(END VIDEOTAPE) BASH: Now McCain did give a hint as to which way he's leaning. He said, he actually declared, Lou, that inaction is not an option, but the reality is that neither McCain nor Obama is coming off the campaign trail and going back to their day jobs in the Senate to dig in and negotiate. And at least in the case of John McCain he is just hoping at the end of the day that they can work something out that voters can stomach -- Lou.
DOBBS: Well that is certainly a lofty standard that we would expect from the next president of the United States. Something acceptable that the American people could stomach? Does the senator understand that people are getting kind of tired of this kind of non- statement and non-position on the part of two men who say they want to lead this nation?
BASH: Well I think that the argument that the McCain campaign would make is that he understood at least over the weekend that people were looking for -- for leadership if you will. And that is why starting on Sunday and yesterday, he decided to come out with some -- with four or five principles that he hopes would be involved in what's...
DOBBS: But principles...
BASH: ... going on in Washington and...
DOBBS: But principles that would not be a condition precedent or a necessary condition for his support of a bailout. I mean, that doesn't make any sense.
BASH: You know what. Yep. Lou, the truth is we don't know the answer to that question because it's one that McCain wouldn't answer today.
DOBBS: Well you know if he doesn't want to answer the questions, maybe he just doesn't want to be president. That must be where we're headed. I can't imagine what the other reason would be. Dana Bash thank you very much. Appreciate it.
Senator Obama today laid out his conditions to support the administrations bailout. Senator Obama declared no bailouts for CEOs and that millions of middle class Americans facing foreclosure must get help. Candy Crowley has our report from Tampa, Florida.
(BEGIN VIDEOTAPE)
CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): Candidates can't miss the story of the day, much less the story for the rest of the campaign. So Barack Obama threw on a news conference to talk bailout on Wall Street in populist terms. First he said there can be no big payouts to CEOs being bailed out.
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: There has been some talk that some CEOs may refuse to cooperate with this plan if they have to forego multimillion dollar salaries. I cannot imagine a position that is more selfish and more greedy at a time of national crisis.
CROWLEY: Second, oversight of and accountability for that $700 billion. Third, a Wall Street funded program to act as insurance against another meltdown and a taxpayer dividend if the government makes a profit on the rescue plan. And finally, a bailout within the bailout.
OBAMA: We can't simply bail out Wall Street without helping the millions of innocent homeowners who are facing foreclosure or for that matter are seeing their home values decline.
CROWLEY: Most of the ideas mirror the McCain plan and at the moment Obama is not ready to go to the barricades on this, side stepping the issue of whether he would vote no if the bailout does not include his ideas.
OBAMA: If the plan that emerges does not address the principles that I have discussed, then I will strongly recommend to Secretary Paulson that we go back to the drawing board and find an approach that does address them.
CROWLEY: As for the effect of the bailout, the Democrat candidate says he would press ahead with spending plans for a tax cut, education and health care, but not no matter what.
OBAMA: It would be irresponsible of me to say I'm not going to take into account what things look like should I take office.
CROWLEY: Everybody knows the price tag of the bailout Obama said, but nobody knows the details.
(END VIDEOTAPE)
CROWLEY: As for whether Obama will go back to Washington to vote on this plan when it comes together, he says it really depends on whether they need his vote, if it's overwhelmingly for or overwhelmingly against, he will probably be out on the campaign trail -- Lou.
DOBBS: So like -- like McCain, he has these ideas, these principles if you will. But won't make them a requisite for his support of a bailout. I mean what is going on with these two presidential candidates? I thought they wanted to be leaders in this country.
CROWLEY: I think that the politics of this are difficult for both of them. I think they understand...
DOBBS: Well bless the little darlings' hearts.
CROWLEY: ... the term Wall Street.
(LAUGHTER)
DOBBS: I mean I'm sorry...
(CROSSTALK)
CROWLEY: It's a real world of politics.
DOBBS: You know one of the few things I would quote President George W. Bush on is you know "it's hard work". And if these two gentlemen don't understand that and understand the requirements, the guts and character here and the decency to be honest with the American people and straightforward we're in a world of hurt from which there is no bailout. Surely the -- surely the Obama campaign is beginning to understand that.
CROWLEY: Well let me just try to give you I think some insight into their thought process here. Is that this is clearly something that they look at and they hear these warnings from Secretary Paulson and others saying the whole place is going to collapse unless we do this. And they are trying to weigh that against taxpayers whom they think maybe in fact sort of against the three words Wall Street bailout. It just doesn't have a ring that they are liking much on Main Street.
DOBBS: You know and that's good. That's really good that they start paying attention to the popular view, if you will, the will of the majority. That would be novel. Because they're both so arrogant that one would imagine that they would even ignore that under the most difficult of times.
But the other part is I can't for the life of me understand why these guys even want the job if this is a tough call for them. I mean this is -- this is disappointing I think to the supporters of both men and to all of us who care about this country certainly. Not the kind of leadership that we would -- we would certainly hope for in the months and years ahead.
Maybe they will find what would be the word intestinal fortitude to deal with these very difficult times. We certainly hope.
CROWLEY: If not I imagine they will get asked about it. We have got three dates -- three debates coming, Lou. And I imagine that is going to be front and center on one of them at least.
DOBBS: And if this -- by the way -- well I -- Candy, thank you very much. And I admire -- I have to say I admire you for putting up with the nonsense of the campaign trail in and out over the days, thank you very much. Candy Crowley.
Coming up next, the liberal mainstream media continuing to set its sights, while we are in the midst of all sorts of crises on Governor Palin. They are simply slandering her. We will set the record straight here tonight. And you -- if you're a real big fan of the liberal national media, you're not going to like what you hear.
And one of the successful federal programs, one that actually protects our national security and enforces immigration laws, well Congress is trying its very best to kill it, supporting corporate interests and ethnocentric interests. We'll have that report and a great deal more next. (COMMERCIAL BREAK)
DOBBS: Well this just in to CNN. CNN has just learned that the FBI is now investigating Fannie Mae, Freddie Mac, Lehman Brothers and AIG. All of that according to CNN sources. Law enforcement officials tell CNN that the FBI is now looking at possible fraud by those four institutions. The inquiries are said to be focused on the firms and the executives who ran them. We will continue to update you on this story as we get word we will be letting you know what is developing throughout this broadcast.
Again, we have just learned the FBI is launching investigations on Fannie Mae, Freddie Mac, Lehman Brothers and AIG and their top management and executives for fraud. Last Wednesday right here I called for jus such a criminal investigation.
Well e-verify one of the federal government's most successful programs targeting workplace enforcement of our immigration laws is now in danger of being eliminated and leaders on the congress are hoping you will won't will paying attention because at the presidential election, because of that campaign and of course the turmoil on Wall Street and under cover of all of that, they are trying to kill the program. Supporters of the program said it's all because one senator wants to link the program to an expansion of legal immigration, one senator.
Casey Wian has our report.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT: 13% of new employees are now being checked through e-verify, a voluntary federal program allowing employers to determine if new hires are using legitimate social security numbers. More than 87,000 businesses have signed up for the service. It's said to be 99.5% accurate and according to the Department of Homeland Security, it can help protect companies for being prosecuted for hiring illegal aliens.
MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: The value of e- verify, assuming a company uses it in good faith, it will be a defense.
WIAN: However, the e-verify program expires in November. The house overwhelmingly passed a five-year reauthorization in July. The senate has failed to act. Time is running out because lawmakers will adjourn from October 1st at least through the presidential election.
JANICE KEPHART, CENTER FOR IMMIGRATION STUDIES: E-verify has huge broad bipartisan support. On the senate side, they have been unable to get action because one senator has decided to put a hold on it, Senator Menendez from New Jersey.
WIAN: Last Thursday night, Menendez blocked he is in support of e-verify. He's demanding the senate agree to admit between 300,000 and 550,000 additional legal immigrants to the United States next year, family members of legal permanent residents and citizens. SEN. ROBERT MENENDEZ (D), NEW JERSEY: I think we are being reasonable and it is not able a broad comprehensive immigration reform.
WIAN: The Department of Homeland Security urged lawmakers to extend e-verify, saying it is one of the nation's best and most effective tools for ensuring a legal workforce.
SEN. JEFF SESSIONS (R), ALABAMA: If the congress allows e-verify to expire it would rightly cause every American, hearing members of the senate and congress, promises to restore of rule of law to immigration, they would know we are not serious at all.
(END VIDEOTAPE)
WIAN: Studies recently examined e-verify and found that it rejected about five percent of the new employees whose identities were run through the system which is about the same percentage of illegal aliens estimated in the U.S. workplace. Another example they say that e-verify is working.
DOBBS: It is precisely the reason that Nancy Pelosi, the speaker of the House and Harry Reid, the Senate majority leader and of course Bob Menendez want to kill the program along with the U.S. Chamber of Commerce. I just cannot imagine how Bob Menendez can manage to smile, even lightly, when he discusses the national interest, how he can even embrace the concept of being an American, when he is putting obviously his views of the illegal immigration ahead of the national interest. It's unconscionable what he is doing.
WIAN: We contacted Senator Menendez's office today both by phone and by email to get him to explain this linking of legal immigration with the program designed to target illegal aliens and he did not get back to us.
DOBBS: I can help you out there. It just so happens I can help you out there. Right up to June 28, 2007 as the senate was preparing to vote on closure, he was demanding more visas to bring in the families of illegal aliens who would be granted amnesty and move to the front of the line. This is unconscionable what is happening and I would urge everybody watching this broadcast to tell your senator how I want them to vote on the issue of e-verify whether you want it authorized or not. I hope you do because it's one of the few programs that actually works. 99.5% effective according to the General Accountability Office. That is why the powers that be want to you ignore it and to let Senator Menendez where have his way. We will have more for you. Tell your friends and family. Because this is one senator destroying the one program that works. And by the way, the democratic leadership in the house and senate sure hope he gets his way.
Up next, the showdown over Capitol Hill over the government's bail out of Wall Street. I'll be talking with two of the country's leading economic experts and what the liberal media is saying about Governor Palin's visit to the United Nations. They just love Sarah Palin. We'll have a report for you next. We'll be right back. (COMMERCIAL BREAK)
DOBBS: There have been more charges leveled against Governor Palin by the national media than you can count. One of the most recent accusations, when Palin was the mayor of the Wasilla, refused to pay for rape victims examines, the McCain campaign saying Palin never believed that rape victims should have to pay for evidence gathering tests and to imply she did is an utter distortion of reality. Wasilla's police chief said it was a cost he didn't think the city should bear. Palin's former deputy explains the situation.
JUDY PATRICK, WASILLA'S FMR. DEPUTY MAYOR: The bigger picture of what was going on at that time was that the state was trying to cut their own budget and one of the things they were doing was passing on costs to cities and that was one of many things they were passing on to the city.
DOBBS: Well, Jessica Yellin went to Alaska and she found absolutely no record that Governor Palin was aware when she was mayor that the city was charging rape victims. In fact one of her chief opponents, former state representatives Erik Croft admits he can't recall even discussing the issue with her. For the record, Governor Palin has approved increase spending to victims of the domestic violence.
Now to the nonsense about Governor Palin banning books. Despite what the liberal national media tried to suggest, many parts of it, there never was a list of books to be banned and there was never a banning. A closer look at the list put out by some left wing websites, the list of booked banned were not published yet. But don't let that disturb you. Let's go get them.
Governor Palin was at the United Nations today meeting with foreign policy advisers. She also met with Afghan president Hamid Karzai. It is part of the McCain's campaign effort to showcase the Alaska governor on foreign policy. Many republicans say Governor Palin does not need stage management. She should be able to do whatever she wants. She's a no nonsense straight talker.
Ed Henry has the report.
ED HENRY, CNN CORRESPONDENT: Sarah Palin feels like she is acing her first big foreign policy test. Especially after a sit-down with Henry Kissinger where she saw his tutelage on last month's crisis in Georgia.
The carefully choreographed photo ops were largely a substance pre zoned included the one on one with Afghan president Hamid Karzai. The only drama, Palin tapping her heart as she learned about president's baby boy.
Low risk for Palin, but the McCain campaign tried to make it easier, initially refusing to allow reporters to join cameras in the Karzai meeting but the five U.S. television networks threatened not to use video without the presence of a reporter who might ask Palin questions and the McCain champ backed down and allowed a reporter in. PAUL BEGALA, DEM. STRATEGIST, CNN CONTRIBUTOR: If your purpose is to show that Governor Palin can hold her own in a meeting with major international figures, let her hold her own. Don't exclude the press. Don't keep questions from being asked. Don't coddle her.
HENRY: Republicans say despite a mountain of media criticism, Palin is coming across as poised.
KEVIN MADDEN, REPUBLICAN STRATEGIST: The enduring image that the McCain campaign wants left with voters is someone who can close the stature gap, someone who can stand with world leaders and essentially fill in the void in her resume.
(END VIDEOTAPE)
HENRY: Governor Palin got an intelligence briefing from Admiral Mike McConnell. He is the director of national intelligence, to get up to speed on some of these issues and that is what republicans are saying. They should let her get out there. She is on top of the issues.
DOBBS: Whether she's on top of the issues or not it's silly to try to manage the press. That could never happen. I'm not the national networks have stood up to the Obama campaign and saying he is accessible at all times.
DOBBS: I'm sure at times and others not.
HENRY: I don't know of a single time. Can you think of one?
DOBBS: Are you talking about specific examples?
HENRY: When he has a photo op, he may not ask the questions.
DOBBS: That is interesting. I would never dream that. It's good to see a journalist stand up against a tall, and tough woman like that. If it were, that would be great. This is about undisguised liberal bias work in the national media. We can take that to you bank but given the bailout, let's take that as it is. She held herself well.
HENRY: I thought it was an interesting day.
DOBBS: Ed Henry, thank you very much.
Up next, what impact would the bailout have, if there is such a thing, on middle class Americans who have to pay for it who are struggling to save their homes and provide for their families? I will be joined by two of the country's top economic advisers next. Stay with us. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: Well, the proposed bail out that $700 billion hung up in congress and CNN tonight has learned from sources the FBI is now opening up investigations of fraud at Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Joining me now from Raleigh, North Carolina, Martin Eakes. He's executive director and CEO of the Center for Responsible Lending and in our D.C. bureau, Peter Morici, professor at the Robert H. Smith School of Business at the University of Maryland. Good to have you gentlemen here.
Let me start with you, Martin first. This bailout, the $700 million bailout, what kind of idiots are running the government who believe that you can write a check for $700 billion and cure what they have failed to prevent?
MARTIN EAKES, CTR. FOR RESPONSIBLE LENDING: Good evening, Lou. The key thing is that the plan will not work unless it deals with the under lying problem unless it deals with the home prices. The plan will simply not succeed.
DOBBS: Why do you propose the idiots have not figured it out?
EAKES: I wouldn't call them idiots.
DOBBS: I am calling them idiots. You call them whatever you want to. That's what we love about America.
EAKES: I think the work we have on the plan now has to focus on the under lying problem or it will not work and it should not be passed, if it does not have provisions to help people facing foreclosures, not just for the people being fore closed, but for 40 million people with houses in foreclosure, we are talking about people losing homes' value. We have to deal with the problem. It's not to deal with the financial markets.
DOBBS: Professor Morici, I would say we are past worrying about financial markets and arguing if they will have multi-million dollar severance packages. Is there a basis in the world, any rational basis for the absurd bailout?
PROF. PETER MORICI, ROBERT H. SCHOOL OF BUSINESS: Not the way it's structured. It's going to get us out of the soup for a few months but we will be back in it again. If we don't reform the compensation structures, if we don't deal with the problems of the housing market, the banks will go on their merry way and continue to make reckless loans.
One of the basic problems we have is Ben Bernanke has already advanced these guys $400 billion and then from other sources there's even more. You came up with a number of $800 billion the other night. The banks are backed out of mortgage financing. If you want to buy a house today, you can not get conventional financing. If we don't have conventional financing out there, Fannie Mae and Freddie Mac can't do the job. The housing market stays depressed. When we take the paper of the ultimately off the bank's books permanently for the purchases, we will get stuck with bad paper. We'll end a couple hundred billion dollars easily and middle class Americans won't be any better off.
DOBBS: Isn't it we have to deal with the culture that is just obsessed with credit and get real wealth, instead of credit based wealth? MORICI: We need to do that absolute. We need to start to educate consumers about using credit wisely and we also need to educate Wall Street about not enticing people into terribly poor decisions.
DOBBS: We call that education where back in my day, regulation, but that was --
MORICI: We have to certainly regulate what they communicate.
DOBBS: It was so passe. Martin, what is the one thing that the folks in the senate and house should do to assure that this is going to make some kind of sense?
EAKES: Look at this, the senate and house are working to try to make the proposal make some sense. And the one provision that they have both put in that makes sense is something that will cost the taxpayer one single penny. That is the provision that most people don't even realize, is prohibited for individual homeowners. And that is --
DOBBS: What is Martin? We're out of time.
EAKES: The ability to ask a court to modify a bad loan.
DOBBS: Right.
EAKES: Businesses, investors and people who own second and third homes are able to go to court to fix their bad loans.
DOBBS: Right.
EAKES: But the only asset in America that cannot be protected is someone's personal residence. So, the senate and house have put this provision in and it's probably the most significant provision.
DOBBS: Martin, we have to run.
EAKES: In terms of helping ordinary people.
DOBBS: Mark Eakes, thank you for being with us. We appreciate it.
Professor, thank you as always.
MORICI: Take care.
Up next, Senators McCain and Obama finally talking about the bailout problem but not talking real strong. The liberal media's relentless attacks on Governor Palin, we'll be talking about three of the best radio talk show hosts in the country next. Stay with us. We'll be right back.
(COMMERCIAL BREAK)
CAMPBELL BROWN, CNN ANCHOR: I'm Campbell Brown in the CNN Election Center.
Breaking news tonight. CNN sources confirm the FBI is now looking into Fannie Mae, Freddie Mac, Lehman Brothers and AIG as part of a mortgage fraud investigation. We'll have the very latest on that.
Plus, a look at the slow moving bailout deal that's happening up on Capitol Hill.
We'll take you to Alaska for a brand new look to nowhere, it was supposed to lead to that infamous bridge that never got built. LOU DOBBS TONIGHT will be right back.
(COMMERCIAL BREAK)
DOBBS: Joining me now, three of my favorite talk show hosts; in Kansas City, KCMO's Chris Stigall, in Houston State Senator Dan Patrick heard on KSEV in Houston, KVDE in Dallas and in D.C. our D.C. bureau, my friend Joe Madison, XM Radio's very own. It's good to have you with us.
Let's go out to Dan Patrick really quickly and get a quick update. How are the folks in Houston and that area, how are they doing in the aftermath of the hurricane?
DAN PATRICK, KSEV IN DALLAS: Well, when you don't have power and water, life is difficult. We still have a third of Houston, which is the fourth largest city in the country, Lou, without power, many without water. We'll have 50,000 people totally displaced. We'll probably have 40 to $$40 to $50 billion in damage. We're blessed, not a lot of lives lost. We'll recover. It's been a great Texas spirit of recovery. Thank you.
DOBBS: Thanks. Let me go to you, Joe Madison, real quick. The folks in your town there, in Washington, D.C., I mean, those folks on capitol hill have lost their minds if they're listening to the same -- the same people -- I'm going to clean this up, the same people who didn't prevent this crisis and who now say they have a clue about how to fix that. Does anyone believe that nonsense?
JOE MADISON, XM RADIO: No one believes it. Let me tell you, I had a meeting today, a discussion with John Conyers, who is absolutely livid, and I took notes, and I usually don't do this when I'm on the show, but I wanted to be accurate. In this bill, most people don't know this, that they preclude judicial review and prosecution of these guys they were listening to today. Now, if there's anything that's unconstitutional, that is, in fact -- so it was good news to hear the FBI is now investigating and may be a few executives will get frog- walked out of their offices. Let me add one more thing real quick. The other thing is, there's no protection or relief for small banks, for credit unions and for minority banks. Maxine Waters is apparently on that one. So there are a lot of people up here who aren't buying this package.
DOBBS: Chris, you know, in the heartland, let me just say to you, I just reported moments ago, I called for a criminal investigation of Wall Street over a week ago, just a week ago.
CHRIS STIGALL, KCMO IN KANSAS CITY: Yeah.
DOBBS: And nobody responded. And now we find out tonight, as we just reported, the FBI is going after, in its investigation, AIG, Freddie Mac, Fannie Mae and Lehman Brothers. I mean, what is going on?
STIGALL: You've talked about this extensively on your show before, and rightly so. What is so paramount to acknowledge here is how qui congress is being about their own housekeeping. Have you noticed this congress who is consistently dragging people to capitol hill to testify on everything from videotapes of the sidelines of football games to steroids in baseball to too much money and excess profits in oil, quiet, hushed about this mortgage. I'll tell you, this mortgage crisis, and the problem, Lou, is not only the investments, take a look at some top investors Fannie and Freddie, that have gotten fat and taken political donations, those two combined make for a very, very dirty setup that does not look fondly upon some people that I think will ultimately be investigated.
DOBBS: We're talking Franklin Reins --
STIGALL: Chris Dodd, my god, Chris Dodd took a VIP loan from countrywide, he's the senate of the banking committee --
DOBBS: Wait a minute. Chris, you may not do business that way in Kansas City, but this is Washington, D.C. we're talking about, right?
MADISON: Yeah, yeah, it is Washington, D.C., partner, you're absolutely right. This solution has got to be from the bottom up. It cannot be from the top down. I'll be honest with you, I am surprised after walking out of the Rayburn building yesterday, I said to myself, you know, maybe there ought to be a second American revolution, you know, and do like we did in the first one.
DOBBS: Let me tell you, I think these idiots -- if these idiots pass $70 billion without transparency, without requirements, like it's going to do something? There ought to be a revolution.
PATRICK: The problem, Lou, is the people who created this problem, the Democrats and the Republicans in Congress, along with the administration, and our leading agency directors, and Wall Street are now in charge of fixing the problem. And most of the people in the legislature are clueless when it comes to their economic understanding. I have no confidence in Washington.
But Barack Obama should be asked by the media specific questions, because he has received more money from Fannie and Freddie than anyone in the Senate. And the media's giving him a pass on this.
(CROSSTALK)
DOBBS: Well, wait a minute. The national media has given him a pass on lots of things. But let's not give either one of them a pass. (CROSSTALK)
DOBBS: Gentlemen, I just want to point out to you one thing, let me finish. Neither one of these men today -- they had a chance to stand up and say what they would do with the principles they put forward on this bailout, and both men acted like abject jokes. I mean, it was just ridiculous. They want to lead this country? Give me a break.
STIGALL: I don't want to come off as too partisan here, Lou, but I've got to say, in John McCain's defense, 2005, take a look at the history books. Senate Bill 190...
DOBBS: Look, I'm not talking about 2005. I understand exactly your point, but my point is, right now we need leadership, and these two men aren't providing it.
PATRICK: McCain had a solid five-point plan today.
DOBBS: Say that again?
PATRICK: I said McCain had a solid five-point plan today. And the thing is, Lou, we don't want a quick, knee-jerk reaction. We need to think this through and solve this problem.
DOBBS: I'm with you.
MADISON: McCain won't even go back and show leadership with his Senate colleagues. They both need to go back to work.
(CROSSTALK)
DOBBS: Gentlemen, I'm going to say -- I've got to say, Chris, Dan, Joe, thank you very much. We're out of time. Appreciate it. Doggone, (inaudible), Joe Madison, I can't tell you.
Tonight's poll results -- 94 percent of you say you don't believe Congress should write that $700 billion check. We'll -- we appreciate your vote. And we thank you for being with us tonight. Good night from New York. "The Election Center" with Campbell Brown is beginning right now-- Campbell.
