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Lou Dobbs Tonight
Wall Street Fallout; McCain's Attack; Obama's Offensive; Free Pass for Lehman Brothers CEO; Who's in Charge?
Aired October 06, 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: Thanks, Wolf. Rising concern tonight about possible conflicts of interest in that $850 billion bailout of Wall Street. The Treasury Department, appointing a former banker from, you guessed it, Wall Street. Goldman Sachs, in fact to lead the massive bailout.
And tonight congressman giving a free ride to the first Wall Street mogul to give testimony on the financial crisis even as he presided over the collapse of Lehman Brothers.
Tonight the presidential campaign is turning even nastier. The candidates, still failing to offer any new ideas on how to help, our struggling middle class. Three top political analysts join me tonight. We'll be talking about what's going on, on this presidential campaign trail. Is it all sweetness in light? Not anymore. All the day's news, much more from an independent perspective straight ahead here tonight.
ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Monday, October 6th. Live from New York, Lou Dobbs.
DOBBS: Good evening, everybody. The stock market today fell almost 800 points, as investors worried that the $850 billion bailout on Wall Street wouldn't work. The Dow Jones industrial in fact plunging below 10,000 for the first time in four years.
A new CNN opinion poll saying a majority of Americans believe this economy faces another depression. Senators Obama and McCain today launching a barrage of new attacks against one another. The gloves are off, one day before tomorrow's presidential debate, to be held in Nashville, Tennessee.
We have extensive coverage tonight. We begin with Bill Schneider in Nashville reporting on some very important new poll numbers.
(BEGIN VIDEOTAPE)
WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): The bailout package didn't help. Public anxiety continues to mount. The "d" word is back, nearly six in 10 Americans believe the country is headed for another depression. And for the first time, Barack Obama has a significant lead over John McCain in the presidential race, eight points. The two sentiments are closely connected. The more likely you think a depression is, the more you vote for Obama. McCain is offering his prescription. SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: A vote for me will guarantee immediate pro-growth action tax cuts for America's hard-working families, strong support for small businesses, which are the backbone of our economy.
SCHNEIDER: But more and more voters believe that McCain's policies would be the same as President Bush's. And President Bush's job rating, 24 percent, is the same as Richard Nixon's was when he resigned after Watergate. Only 26 percent of Americans have confidence in Bush's ability to handle the nation's financial crisis. Confidence in McCain, 50 percent. More than two-thirds have confidence in Obama's ability to handle the crisis.
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: The rescue package we just passed in Congress isn't the end of what we need to do to fix our economy. It's just the beginning of what we need to do to fix our economy.
SCHNEIDER: Why do voters have so much confidence in Obama's economic skills? Partly because he has a lot of Clinton people around him.
OBAMA: We need to do what a guy named Bill Clinton did in the 1990s and put people first again.
(END VIDEOTAPE)
SCHNEIDER: The bad economy is driving a growing consensus that Obama is going to win the election. Right now, 61 percent of Americans think Obama will get elected. Now, that's more than the number of people who are voting for him. Because 30 percent of Republicans believe that their guy is going to lose. Lou?
DOBBS: And what were they thinking two weeks ago?
SCHNEIDER: Two weeks ago, before the financial crisis hit, the election was neck and neck. But the financial crisis appears to have made a big difference.
DOBBS: Well, I've got to ask you, because I was just stunned today to hear Senator Obama invoking the name of President Bill Clinton throughout the primaries. He was ragging the dickens out of him.
SCHNEIDER: He was, indeed. But he has figured out that a lot of people, not just Democrats, remember the '90s, well I guess there are two ways of remembering it, either as the boom years or the bubble years. But in any case a lot of people were making a lot of money and they would like to go back to the way things were then, even though to a lot of people that was also responsible for the bust of the -- after the turn of the century.
DOBBS: Right. But still, Senator Obama was ragging Bill Clinton throughout the primaries was he not?
SCHNEIDER: Yes, he was but he was running against Bill Clinton's wife, was he not?
DOBBS: Oh, now I remember. Bill, thank you very much -- Bill Schneider from Nashville, Tennessee, where we'll be reporting on that debate, covering that debate here on CNN tomorrow evening with the best political team in the whole wide world.
Well President Bush today pleaded with the American people to give Wall Street -- that Wall Street bailout time to work. The president insisting that the Wall Street bailout will make it easier for consumers and businesses to borrow money.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We don't want to rush into this situation and not have the program be effective. It's going to take a while to restore confidence in the financial system. But one thing people can be certain of is that the bill I signed is a big step toward solving this problem.
(END VIDEO CLIP)
DOBBS: That's right. You just heard President Bush say, we should not rush to implement this Wall Street bailout. Yet, it was the president, and his Treasury secretary, Hank Paulson, who were warning of most dire consequences for the Congress not to pass that bailout legislation quickly.
The stock market remains unconvinced that this Wall Street bailout will work after all of the fear mongering from all of our elected officials, senior elected officials, and both political parties. The Dow Jones industrials today, at one point, was down just over 800 points. It did recover lost ground and the Dow Jones industrials gained about half of that loss back to close 370 points lower on the day, finishing at 9955.
Crude oil prices also dropping dramatically on new concerns about the economic slowdown. Crude oil prices down $6 a barrel, ending the day at just below $88 a barrel. That's a huge decline from crude oil's high of $147 a barrel back in July.
Senator McCain today launched a blistering new attack against Senator Obama targeting his economic policies and his character. At one point basically calling him a liar, using some of the harshest language of this campaign. McCain tried to raise new doubts about Obama's fitness to lead. Dana Bash has our report.
(BEGIN VIDEOTAPE)
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): A series of scathing rhetorical questions designed to convince voters of one thing, we don't really know Barack Obama, and that should worry you.
MCCAIN: What does he plan for America? Who is the real Barack Obama? But my friends, you ask such questions and all you get in response is another angry barrage of insults. BASH: One month to go and trends moving towards his opponent, John McCain's aides say his central goal now is to sow doubts about Obama.
MCCAIN: For a guy who's authored two memoirs he's not exactly an open book and where other candidates have to explain themselves in their records, Senator Obama seems to think he's above all that.
BASH: Instead of playing up his own prescriptions for the ailing economy, McCain accused Obama of lying about his record especially Fannie Mae and Freddie Mac.
MCCAIN: To hear him talk now you'd think he'd always opposed the dangerous practices of these institutions, but there is absolutely nothing in his record to suggest he did. Nothing. Zero. Zippo. Nada.
BASH: In his quest to label Obama to risky, McCain mostly stuck to policy. His running mate's task is more personal, stoking concerns about Obama's associations. On the stump it's been about William Ayers, a 1960's radical whose group bombed U.S. buildings. In 1995, then a college professor, Ayers hosted a campaign coffee for Obama.
SARAH PALIN (R), VICE PRESIDENTIAL NOMINEE: Obama held one of his first meetings of his political career in Bill Ayers' living room.
BASH: Camp Obama calls it a casual relationship. And now, even though McCain called Obama's controversial Pastor Jeremiah Wright off- limits, Sarah Palin says he's fair game, telling the conservative columnist Bill Kristol "I don't know why that association isn't discussed more because those were appalling things that the pastor had said about our great country."
(END VIDEOTAPE)
BASH: Now Palin was careful to say it's John McCain's call as to whether the campaign brings up Jeremiah Wright as an issue. But Palin aides say she was simply answering a question honestly for which she had been accused for a long time of not doing enough of. But the reality is that by talking about Wright at a major newspaper with a GOP columnist, Palin already has by definition brought him into the dialogue and, Lou, if nothing else that could send a signal to outside groups, maybe they can do the same.
DOBBS: Palin is showing great initiative here, to what effect we don't know yet, but certainly bringing great energy and a fearlessness in the way she's positioning herself and the campaign. But guess what? As you report, I mean, this is the most animated I've seen Senator McCain in this entire campaign. He was lively. He was -- he was really animated. What's go on?
BASH: What's going on is they see what 29 days left and what they say is that they have sort of presented, they think, enough of the policy positions that John McCain and frankly Barack Obama have out there and right now, they think their strategy, basically their only strategy at this point, is to explain to the American people, wait a minute, this is a guy who is 47 years old, he's a one-term senator, you think you know about him?
You think you want change? Well guess what, you don't know about him. So this is the beginning, Lou, of what McCain aides say is going to be the push from here on out and certainly they hope a preview of what you're going to see tomorrow night.
DOBBS: Well it looks like both campaigns on this fine Monday as the Dow Jones industrials was sort of saying to everyone, you know, you thought that Wall Street bailout was it, it isn't. Both campaigns are saying, no more Mr. nice guy. Perhaps they'll get direct enough with the substantive issues as well. Thanks very much, Dana Bash.
Well Senator Obama today accused Senator McCain of trying to divert attention from the economy in an attempt to bolster his campaign. Senator Obama said McCain refuses to offer any specifics or details on his economic policies. The candidates sparring one day before their second presidential debate, tomorrow, in Nashville, Tennessee where CNN will be covering it all the way. Candy Crowley reporting from Nashville.
(BEGIN VIDEOTAPE)
CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): This debates a town hall meeting. Barack Obama has done hundreds of them, he's thoughtful and thorough but it's not always his best forum. He can seem removed. One New Hampshire supporter described myriad health care problems in her family which forced her husband to join the military as the only way to get insurance.
UNIDENTIFIED FEMALE: He is going off to war and leaving behind a wife and two children so that he can provide a living for us. I mean it's not -- you know he's proud to serve his country but he -- that's the choice we have.
OBAMA: Well, look, the -- I -- you know, I wish your story was unique, and it's not.
CROWLEY: In debates, moments matter. His numbers falling as the days disappear, John McCain has the most to gain in the town hall. He is a master in the forum, engaging, funny, direct. And the Obama campaign has been busily jacking up the stakes. McCain, said an Obama aide, is the Michael Phelps of town halls, but the senator can be edgy in what he claims as humor can backfire in front of the uninitiated.
UNIDENTIFIED MALE: Do you ever worry that you might die in office or get Alzheimer's...
(INAUDIBLE)
UNIDENTIFIED MALE: ... or get Alzheimer's?
MCCAIN: Thanks for the question you old jerk.
CROWLEY: In truth they both need to watch it tomorrow. They're in the midst of the nasty season, the hostilities ever more personal. That may work in short sound bites in front of adoring crowds. It does not work over the course of an hour and a half in front of the cameras, nor with those uncommitted voters who will be asking the questions literally within feet of the candidates. Style matters, victory may go to the candidate who can keep his cool.
(END VIDEOTAPE)
CROWLEY: Which doesn't mean that these two candidates cannot be aggressive and both camps believe that their candidates will be. But there is a fine line between personal attacks and taking someone on about policy. So, Lou, both of them walking it tomorrow night.
DOBBS: Well let's just hope that they do better, both of them, than they did in the first one. It would be nice to see both of them at least demonstrate they have a pulse, wouldn't it? Well I don't know if you can answer that.
CROWLEY: Well...
DOBBS: Let me put it this way.
CROWLEY: Well I'll tell you...
DOBBS: It would be nice to see...
CROWLEY: ... it may be different. OK. And it may be different. You may get a lot of those questions that you think are not asked to these candidates. Remember we've got voters, undecided voters, sitting on this stage behind me with them and they'll be asking the questions as well as some apparently on the Internet. So you are bound to get some different sounding, very personal, questions here.
DOBBS: Well let's go with infrastructure spending. Let's go with free trade, outsourcing, off-shoring, and production. Let's talk about middle class jobs. Did I mention illegal immigration, border and port security? Just a few things somebody might think about. Anyway appreciate it. Candy Crowley, look forward to it...
CROWLEY: Sure.
DOBBS: And as I said, the best political team on television will be there covering it right here on CNN.
Much more on the presidential campaign ahead. Also, rising concerns about a possible conflict of interest. A Wall Street insider taking charge of the Treasury Department's bailout of Wall Street. We'll start laying out the possible conflicts of interest. It's quite an extensive list actually.
And we'll tell you what happened when one of Wall Street's richest if not most effective fellows went to Capitol Hill. It wasn't one of Congress' finest moments. We'll tell you that. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: Well Congress has been calling for increased, improved oversight and tougher regulation of Wall Street. Today, members of the House Committee on Oversight and Government Reform had their opportunity to ask the tough questions. Lehman Brothers former CEO and the former Lehman Brothers Richard Fuld testified on Capitol Hill. But the questions from members of Congress, well a lot of paddy cake seemed to be at work. Brian Todd joins us now. You've reported on a lot of congressional hearings. Where would you say this one ranks?
BRIAN TODD, CNN CORRESPONDENT: Well, sorry, Lou, you and I have both seen hearings about you know the administration being grilled over interrogation techniques, days when members of Congress would really skewer people over the firing of U.S. attorneys, over the treatment of prisoners, Abu Ghraib, things like that. This was not one of those days.
The questions for the CEO of Lehman Brothers, Richard Fuld, could clearly have been tougher. He did get a few pointed questions, but then he got questions like this one from the chairman of the Oversight Committee, Henry Waxman.
(BEGIN VIDEO CLIP)
REP. HENRY WAXMAN (D), OVERSIGHT COMMITTEE CHMN.: Do you think it's fair, and do you have any recommendations on fundamental reforms that would bring a new approach to executive compensation?
RICHARD FULD, LEHMAN BROTHERS CEO: Mr. Chairman, we had a compensation committee that spent a tremendous amount of time making sure that the interests of the executives and the employees were aligned with shareholders.
(END VIDEO CLIP)
TODD: That was Chairman Waxman's opportunity to really grill Mr. Fuld about the compensation that he received as chairman and CEO of Lehman Brothers, which was in the hundreds of millions of dollars, much of it at a time when the company was hemorrhaging. Mr. Waxman did ask him another pointed question on the same subject, got a little tougher with him, but then we heard things like this from Representative Peter Welch of Vermont.
(BEGIN VIDEO CLIP)
REP. PETER WELCH (D-VT), OVERSIGHT COMMITTEE: Did you have any concerns that there may be some arbitrary reasons why Lehman Brothers, facing similar predicaments as AIG, was allowed to fail, whereas AIG was the beneficiary of an $85 billion bailout sponsored by the Treasury Department?
FULD: Until the day they put me in the ground...
UNIDENTIFIED MALE: Exactly.
FULD: ... I will wonder.
(END VIDEO CLIP) TODD: So, telling the world how devastated he is that his company didn't get a bailout like the rest of them, some of the toughest questions for Mr. Fuld actually came from our colleague, Abbie Boudreau, who got to him in the hallway before the hearing and asked him things about his luxury homes, about his collection of expensive artwork, how could he justify all that when so many people are suffering as a result of his company's actions.
He did not answer one of those questions, Lou. He went into the hearing and didn't face many tougher ones. I will say one moment when he was grilled was when Dennis Kucinich, the congressman from Ohio, asked him pointedly about a conference call in just days before Lehman's collapse where investors were told the company didn't need any capital and Kucinich asked him you know did you mislead your investors. He denied that he had, but that was about the toughest it got for Mr. Fuld today.
DOBBS: Why would that be, Brian? I mean this is -- why even go through this?
TODD: It's hard to say. You know, this gentleman knows a lot about the financial world and you got the sense that on the intellectual level he might have known more than these congressmen did but it doesn't mean you can't ask him tough questions. They certainly could have you know asked him some very pointed questions...
(CROSSTALK)
DOBBS: I don't think we should perpetuate one myth and that is the master of the universe nonsense. His I.Q. does not rank sufficiently high to have saved his company. By the way, you're talking about the hundreds of millions, he made about a half a billion dollars in compensation over about a 15-year period. And we should point out one other thing, Brian, and it's really interesting that this committee today failed to discuss this, because Fuld said straightforwardly that they were -- their compensation committee was aligning the interest of the management with shareholders.
Let's be very clear, the five largest Wall Street firms in 2007 lost $75 billion of their shareholders' money, 75 billion. Those five firms paid themselves $39 billion in bonuses and that's the kind of question we get from a congressional committee? Give me a break! Are the American people ever going to get any representation in that screwball town? I mean, it's embarrassing.
TODD: It certainly could have been tougher today, Lou, there's no doubt about it. They should have really you know at least raised their emotion level a little bit. I think when you see the way the administration has been grilled on some other issues like Abu Ghraib and things like that you know that these people have it in them to really you know start to point fingers and yell.
We've seen it before. This is a situation where tens of millions, hundreds of millions of Americans were affected by these actions. Yeah, Mr. Fuld walked away, maybe not feeling that he had been grilled quite as hard as he could have been. DOBBS: Well the congressional leadership of this Congress, I mean first of all, going along with this nonsensical Wall Street bailout, then to put this -- I don't know what we're looking at on the screen there, but let me say that to put him up there, to look at a bailout that had the effect that it has had so far on Wall Street, it's about time some people started questioning the Treasury secretary, this president, the leadership perhaps of this Congress, maybe Nancy Pelosi and Harry Reid.
It's time for them to be questioned by a committee because what they're doing is completely absurd and ineffective. And for the president of the United States to stand up today and talk about this is going to take time, be patient. This is about as much nonsense as any people should have to tolerate from their supposed leaders. I digress. Thank you very much, Brian. We appreciate it -- Brian Todd.
TODD: Thank you.
DOBBS: Well some members of that committee questioning the CEO of what was once Lehman Brothers, they have well strong connections to the financial industry. In 2008 alone the members of that House Committee on Oversight and Government Reform accepted more than $6 million in contributions from the finance, real estate and insurance industries. That's just for this year.
A majority of Americans say the massive Wall Street bailout, by the way, is a mistake. According to a new CNN Opinion Research Corporation poll, 53 percent of all Americans oppose that bailout, saying the plan will not prevent a deep and prolonged recession. Two- thirds of all Americans say they oppose any additional assistance, were the crisis to worsen.
Treasury Secretary Paulson today, appointed a new czar for financial stability to try to, well, whatever. But Secretary Paulson's choice is yet another Wall Street insider, by the way, a former employee of Goldman Sachs. And as Louise Schiavone reports, all of this is beginning, just beginning to raise a few faint questions about the possibility of conflicts of interest.
(BEGIN VIDEOTAPE)
LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): Appointed as interim chief of the Office of Financial Stability, 35-year-old Neel Kashkari, a former space technology professional, turned Goldman Sachs vice president, now assistant Treasury secretary for international affairs recruited by Goldman Sachs former chairman and CEO Treasury Secretary Henry Paulson.
MICHAEL GREENBERGER, UNIVERSITY OF MARYLAND: It is troubling to me the White House chief of staff is formerly from Goldman Sachs, and in fact, going all the way back to the Clinton administration, of course, Secretary Rubin had been head of Goldman Sachs and one of his principal aides, Gary Gensler (ph) who later rose in the Clinton administration to be deputy secretary of the Treasury, was also from Goldman Sachs. SCHIAVONE: With world markets in turmoil the pressure is greater than ever to weed through billions in securities whose value has fallen through the floor. That means Kashkari will have to tap asset managers, people already working for Wall Street firms who have the know-how to do this. But critics say the asset managers would face profound questions of conflict of interest.
JOAN CLAYBROOK, PUBLIC CITIZEN: They're going to try and create a wall between their current business and what they're going to do for the government. I think that's impossible. I think they should have to take a leave of absence. They should be paid as full-time consultants to the government and they should have no contact at all with their existing businesses. That's just a starter.
SCHIAVONE: Is Kashkari the man for the job? Reports are mixed. Several who have worked with him say he's a quick and capable study.
JOHN DALTON, HOUSING POLICY COUNCIL: He really is a true professional that makes things happen.
SCHIAVONE: Others say he's skilled in politics but not necessarily in the fine points of investment banking.
(END VIDEOTAPE)
SCHIAVONE: And Lou, there is this question, is there enough time to bring any one in this post up to speed? One idea slowly gaining currency, we're hearing, is to steer away from using bailout money to buy securities of questionable valuable. In this scenario the bailout money would be used to buy stock in the most shaky institutions allowing them to stabilize and taking the controversy and guesswork out of buying bad assets. Lou?
DOBBS: Well it would be delightful if this Treasury secretary and the so-called economic team had the sense to come to that conclusion because this is simply unworkable. The so-called toxic asset purchases by the government and part-time Wall Street employees walling themselves off, if we witness another debacle on the part of self-regulation and the honor system on Wall Street, then this administration, this Congress, its leadership, all should be impeached immediately.
It is time to get serious about what is happening here. Bill Isaac, former head of the FDIC, and a number of top economists, Joe Stiglitz, you know Carla Maris (ph), a number of these guys can talk intelligently about what should be done. We've talked about it on the show. Let's hope that this Treasury secretary has the sense to understand that what Congress and this president have given up in a Wall Street bailout is simply unworkable because it will be a disaster if they try to implement what is now law.
This administration should have no problem in not implementing a law, they have a great track record in that regard. Thank you very much. Appreciate it -- Louise Schiavone.
The subject of our poll tonight -- are you concerned that at times the taxpayer bailout of Wall Street appears to benefit Goldman Sachs and Henry Paulson's friends? We'd like to hear from you. Yes or no. Cast your vote at loudobbs.com. We'll have the results here later in the broadcast.
Up next, two leading opponents of this Wall Street bailout haven't given up their fight. They've only begun. Congresswoman Marcy Kaptur, Congressman Peter DeFazio have their own plan that wouldn't cost the taxpayers much money at all. They'll be with us.
And states now facing job cuts and service cutbacks, are they collateral damage of this Wall Street bailout? We'll have that report and more straight ahead. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: The impact of this financial mess extents beyond Wall Street, of course, many states are struggling as credit dries up, state tax revenues decline and more citizens lose jobs and their homes. The nation's most populous state is of course California. It may be the hardest hit as our Casey Wian now reports.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT: The number of jobless Californians increased by 413,000 people over the past year. The state's unemployment rate jumped to 7.7 percent in August, more than a point and a half above the national level. It's the highest jobless rate in California since the state's historic recession in the early 1990s. California's housing market bust and other economic woes have strained its budget and as Governor Schwarzenegger warned in his weekend radio address, California's nearly out of cash.
GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: Even we always take short term loans for cash flow. Other states and government do the same thing. With credit markets freezing up, financing has been hard to come by. California's case, those cash flow loans are not available state services will be jeopardized.
PROF. DAN MITCHELL, ECONOMIST, UCLA: The state runs out of cash, somebody doesn't get paid it could be civil servants, it could be some local governments, it could be almost anybody who is dependent on the state for some kind of receipt.
WIAN: Last week, Schwarzenegger went hat in hand to the financially strapped federal government saying that $7 billion loan may be needed soon. Treasury department did not respond to a question about whether it even has the authority to make such a loan. One certainty, if California's credit crunch is not solved, the pain will spread quickly.
GARY TOEBBEN, LA CHAMBER OF COMMERCE: The burden is shifted to local governments, school districts, private contractors with the state. It's like, yes, we owe you the money but we'll play the float here for the while.
WIAN: Schwarzenegger told Californians the $700 billion federal bailout should help ease California's short-term borrowing squeeze.
(END VIDEOTAPE)
WIAN: Throughout the budget crisis Schwarzenegger pressured so they're vulnerable to the boom and bust cycles clearly that did not happen soon enough.
DOBBS: Boom and bust? The state of California has been spending and spending raising spending beyond any level approaching I mean, soaring past the inflation rate as well as the growth in the state. It's insane what California's been doing. This governor, your state legislator democratically led-republican governor, the people have been abject fools in their stewardship and fiscal responsibilities there. It's insane what's go on in the state of California.
WIAN: And it looks like the pain is going to deepen and get worse. UCLA's economic forecast widely respected says conditions are going to get worse before they get better. The economy in California, which in many ways can be a bellwether for the nation, 13 percent of the U.S. economy, is searching for a bottom. They haven't found the bottom yet.
DOBBS: Thank you very much, Casey Wian.
Massachusetts looks like they're next in line for a federal bailout. The state's treasurer wants a loan from Washington on the same terms grant to, you guessed it, Wall Street. More than half of the states in the nation are facing budget shortfalls, Florida, Maryland have imposed cuts on state spending. How about that? Anybody listening in Sacramento, California? Virginia facing a $3 billion deficit over the next two years planning new budget cuts. And the president of the federation of state county and municipal employees says 7,000 state employees have been laid off, another 26,000 more could follow. We should point out that more than 160,000 employees have been added to the payrolls in this nation over the course of this year. All of them in local state and federal government while we've lost more than 700,000 jobs in the private sector.
Up next, Senator McCain launches one of his most aggressive attacks against Senator Obama. Three top political analysts join us to assess whether that will help.
Troubling new evidence that airlines, as we've been reporting here for four years, are outsourcing your safety to foreign countries. We'll have that report.
And the stock market selling off again despite that big Wall Street bailout. But now we're being told to be patient. Two leading congressional opponents of the Wall Street bailout join me here next. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: Well, congress, last week, ignored the will of the American people, as usual, and passed the Wall Street bailout. But they had to put up -- pony up another $150 billion in pork to make it happen. Some lawmakers, however, listened to the voice of the people they represent and they introduced the no bailout act to strengthen the oversight of any bailout and to do it in intelligent way, modeled in fact on what the former head of the FDIC, Bill Isaac, said would be a prescription for success. One of the lawmakers joins me now, Congresswoman Marcy Kaptur, democrat of Ohio, Congresswoman, good to have you here.
REP. MARCY KAPTUR (D), OHIO: Thank you. It's a pleasure.
DOBBS: I want to share with our audience what you said Friday on the floor of the house. You said this -- if we can put that up on the screen. "Pray for our republic, she is being placed in greedy and uncaring hands." I couldn't agree with you more. I suspect most nearly every American agrees with you. Yet this congress went ahead and passed this bailout of wall street ignored the people who are suffering the most and you and I and everyone else all know it's unlikely the people, the people who need the most help, the soonest will get it.
KAPTUR: That is correct. And you can tell by the global markets today, which have been going down, they're registering the opinion that congress' action didn't fix anything that's wrong with our financial markets or our economy. And the immediate need that we have is to give confidence inside our banking system which is fundamentally sound, but seized up. We need to give it confidence that we can do loans in between banks, both in this country and abroad. And I think --
DOBBS: Let me do this, let me put up on the screen your legislation that you and Peter Defazio of Oregon put forward, let's put this up and just show what it would accomplish. One, require the FCC do require economic value standard to measure the capital of financial institutions. Two, require the SEC to restrict naked short sells permanently. Three, require the SEC to restore the up-tick rule permanently and create the net worth certificate program which would be in effect a way to create tier one capital from the FDIC straightforwardly to those institution institutions thereby providing, frankly, a very low cost recapitalization program that proved to be effective during the S&L crisis years ago. So where do we stand with that? Any interest in at all on the part of the leadership?
KAPTUR: We have been picking up co-sponsors, we're over a dozen now. We dropped it the other day been we were trying to convince the leadership to adopt our approach, Congressman Defazio and myself along with a dozen members now as a first step and see if it worked, allow a few, let's say a month, about four weeks and if we had to go to the plan that they had, all right, we could debate it fully. They chose not to do that and --
DOBBS: That's just unconscionable. I mean what we have watched here's a rush -- not to judgment but a rush to pork. $150 billion in pork, I've got to get your reaction to White House Speaker Nancy Pelosi had to say about getting the bailout passed, if we could all listen in.
(BEGIN VIDEO CLIP) NANCY PELOSI, HOUSE SPEAKER: So many of our part of our leadership were part of this success of this legislation today, I don't say that we celebrate it because I frankly think we could have had a much better bill under different sixes. But these are not the circumstances we were under. We were dealt a bad hand. We made the most of it. I think the American people will benefit from it.
(END VIDEO CLIP)
DOBBS: I guess the question is, when and at what cost ultimately?
KAPTUR: Yes, this plan was the wrong medicine. Unfortunately it will be prompt it was the wrong medicine with each day that goes by. I beg our own leadership, the president of the United States to use the powers that already exist in the law. We don't have to pass any new law to adopt the net worth certificate program at the federal deposit insurance corporation. Do what we did back in the 1980s, let's steady markets here at home so our banks lose the anxiety they have for inner bank lending. That would do so much along with accounting changes at SEC to deal with the real estate that these institutions have on their books.
DOBBS: First thing to accomplish that is get the so-called leaders, that would be President Bush, Speaker Pelosi, Senator Reid, Treasury Secretary Paulson and two presidential candidates to just shut up on the issue of these markets and this economy and quit talking us down in this country and start acting responsibly.
By the way we should point out, congresswoman, correct me if I'm wrong, just because this bad bill is out there now as law doesn't mean that we have to implement it. In fact we could follow your recommendations, those of Bill Isaac, the former chairman of the FDIC, which has the support of so many economists with whom I've spoken, we wouldn't have to do anything but follow that approach rather than spend all of that money and just be a laughingstock in friend of the world.
KAPTUR: My question is what do they have to lose by trying?
DOBBS: Right.
KAPTUR: They'll find that it works. And they ought to get the best advice in America, people who have actually done work out, people who have handled financial crises before. The law's on the books, use them. It makes imminent sense.
DOBBS: One of the things, we've lost over half a trillion dollars in the markets since your colleagues passed that legislation. Marcy Kaptur, congresswoman of Ohio, we thank you very much for being here.
KAPTUR: Thank you. I'm sorry Peter Defazio of Oregon couldn't join us tonight.
DOBBS: Thank you very much, Congresswoman. Up next, Senator McCain launching his most aggressive attack against Senator Obama and three top political analysts will assess whether or not it's effective.
Also, troubling new evidence that our airlines are outsourcing your safety as we have been reporting here for four years. We'll have that report.
And the stock market sell-off again despite that bailout of Wall Street. It's the number one issue on America's mind this year. It's been the number one issue on our mind for over 40 years.
We'll be right back. Stay with us.
(COMMERCIAL BREAK)
DOBBS: New findings confirm what we've been reporting for years, this nation's airlines and their regulator could be putting the financial concerns ahead of safety. Nine domestic airlines in fact are outsourcing most of their aircraft maintenance. Bill Tucker has our report.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNN CORRESPONDENT: U.S. airlines outsourced 71 percent of the maintenance work on planes in the last year. That's more than double that of 2003, when 34 percent of the work was outsourced according to the latest Department of Transportation Inspector General's report. 27 percent of the work is being done by foreign repair shops. The industry defends outsourcing as a legitimate and safe way to cut costs, saying, "We wouldn't offshore that work if it wasn't safe." Domestic mechanics see it differently.
STEVE MACFARLANE, AIRCRAFT MECHANICS FRATERNAL ASSN.: The fact is they're able to circumvent OSHA, EPA, worker rules, you know, worker compensation, labor laws, all of these things are circumvented by going overseas.
TUCKER: One of the chief criticisms is the federal aviation administration relies on the airline industry to police itself. Senator Claire McCaskill a long time critic of outsource maintenance responded saying, "It's unacceptable that the FAA continues to be asleep at the switch." This is not the first IG report showing major flaws in the FAA's oversight of these facilities in fact, reports in 2003 and 2005 is well as congressional testimonies in 2007 reach similar conclusions. Consumer advocates were neither surprised or pleased.
BRENT BOWEN, AIRLINE QUALITY RATING REPORT: It's never a good idea to outsource maintenance and it's especially not a good idea to send that to other countries that are not going to be under the scrutiny of the federal aviation administration. And this is another cost-cutting measure that could harm the public.
TUCKER: Nothing about this latest report suggests outsourcing will do anything except continue to grow. (END VIDEOTAPE)
TUCKER: Nothing suggests that regulatory oversight will improve either. Lou, the fact is that, for years we have been talking about this very problem. And in your book "War on the Middle Class," you devote a section about the outsourcing of aircraft maintenance.
DOBBS: Actually 2004, I wrote an entire book called "Exporting America" which we dealt with that, too. The idea that, you know, that this mess on Wall Street is somehow unrelated to the ignorance and the myths and the phony precepts of corporate America and the multinationals, all sorts of areas, whether it's outsourcing, whether it's offshore of production, contempt for the American worker putting the middle class of this country into direct competition for the cheapest labor in the world. It's unconscionable what corporate America has done and it's worked just as well as geniuses on Wall Street which we've watched institutions blown apart by the pigmies that pretended to be giants both intellectually of course and philosophically. Did I mention their ethics? Thank you, Bill Tucker.
Well coming up at the top of the hour, THE ELECTION CENTER and Campbell Brown.
Campbell, tell us all about it.
CAMPBELL BROWN, CNN ANCHOR: Well thanks Lou. As you probably know, it is getting pretty ugly out there on the presidential campaign trail. In just a few minutes, we'll take the most inflammatory accusations, Sarah Palin saying that Obama pals around with a known terrorists, and the Obama campaign's internet video of the John McCain and Keating five, and put them to the no bull test.
Plus, the after hours fall out of today's wild ride on Wall Street. We'll talk about that. see you at the top of the hour Lou.
DOBBS: Up next, the former chief of one of the Wall Street firms at the center of the wall street meltdown, and while the presidential candidates is ignoring America struggling to deal with what wall street dealt them. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Joining me now, three of the best political analysts, CNN contributors, republican strategist Ed Rollins, Ed white house political director under President Reagan, chairman of Mike Huckabee's presidential campaign, Pulitzer Prize winning columnist "New York Daily News" Michael Goodwin, and democratic strategist and democratic national committeemen, Robert Zimmerman. Let's listen to Barack Obama.
(BEGIN AUDIO CLIP)
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: We don't throw the first bunch, but we'll throw the last, because if the American people don't get the information that is relevant about these candidates and instead in the last four weeks, all they are hearing about -
(END AUDIO CLIP)
DOBBS: Well, that's pretty tough talk. Skinny but tough. I'm going to throw the last punch? I like that.
ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: It's a great message for democrats. The message is that this is not the 1988 campaign. This is not the 2004 campaign.
DOBBS: Democrats are in trouble if they have to be reminded of that.
ZIMMERMAN: They have to be reminded we will tough back -- and if Sarah Palin is going to lie about Obama's record --
DOBBS: No, she did that? Oh, my gosh. I am so disillusions to think these candidates are lying.
ZIMMERMAN: I only said one of them.
MICHAEL GOODWIN, NEW YORK DAILY NEWS: McCain gave a tough speech today, too.
DOBBS: We'll listen to that.
ZIMMERMAN: I want to hear about that.
GOODWIN: He really went after Obama, and both sides now are coming down the stretch. The strategy involved for McCain, this is the only way with the economy killing him, this is the only way to dirty up Obama and create doubts that Obama is the answer.
DOBBS: You talked about McCain toughening up. I think he got animated today -- we don't have it. Let me tell you what we can do. I will read that, because I can do that. This is Sarah Palin today, and today they are saying for the first time Barack Obama didn't no back then about Ayers' radical background, and it was only a few months ago Ayers was saying that was a guy in my neighborhood. And are they starting to get the tempo up here?
ED ROLLINS, REPUBLICAN STRATEGIST: They are getting the tempo. The tragedy is the two guys are running a different campaign. And obviously, Barack Obama wanted to raise the tone, and the country in the desperate state that it is needs to hear the -- McCain is desperate, and he is behind, and we may lose a dozen senate seats and --
DOBBS: Wow!
ROLLINS: Everybody is scared to death today.
DOBBS: Why in the world weren't they a little scared two or three years ago, four years ago?
ROLLINS: Well, when the numbers drop, everybody with a race thinks they are in trouble.
DOBBS: We'll be back, and we'll see just how much that pleases Robert Zimmerman. We'll be back.
(COMMERCIAL BREAK)
DOBBS: We're back with Ed Rollins, Michael Goodwin, Robert Zimmerman. How good do you feel, basically, Ed conceded a dozen seats in the --
ROLLINS: I shouldn't say they were going to lose them. But there is 12 of them worried about losing their seats.
ZIMMERMAN: Yeah, and ten to 15 house seats potentially, democrats can pick up.
DOBBS: Is he low balling you on that.
ZIMMERMAN: And the economy is driving the numbers --
DOBBS: The thing is either presidential candidate, based on the fear-mongering that both of them engaged in, they all indulge in it, and it has been one of the most shameful episodes I believe in this country's history. Absolutely shameful.
ROLLINS: The first time there is poll out today where 56 percent of the public say if they could vote the entire Congress out, would do so.
ZIMMERMAN: I think that's why tomorrow night's debate...
DOBBS: Let's hold the vote.
ZIMMERMAN: That's why tomorrow's night's debate is going to be so critical. Because it's going to be essential for these candidates to step up...
DOBBS: Did you see the first debate?
ZIMMERMAN: That's why I am talking about tomorrow night's debate.
DOBBS: Oh my God. They were dreadful.
ZIMMERMAN: Because in this economic climate, they've got to be prepared to talk about what they cannot do, what parts of their programs they are going to have to...
DOBBS: Jim Lehrer asked that question, and neither one of them...
(CROSSTALK)
GOODWIN: Something else to remember too, Lou, that the next president, whoever it is, we are going to have four more months of the Bush administration administering this economy, including the bailout package. This 35-year-old guy they hired today from Goldman Sachs basically to run the whole $700 billion bailout? I mean, a lot more damage could be done in the next four months. So it could likely get worse.
DOBBS: Well, that was a cheerful thought. I mean, I can't even imagine what -- I just -- one of the great hopeful moments is that as Louise Schiavone reported tonight, there is a report that the Treasury is thinking about adjusting to the issue of capitalizing institutions rather than buying the so-called toxic assets, which would be -- frankly would be a relief to me, because intellectually, this plan that the Congress passed and the president insisted upon is an absolute disaster, and will only create more problems.
Do you want to tell us whether or not McCain can come back with this new animated (ph) fighting spirit?
ROLLINS: He can't come back. I think McCain can still make a spirited campaign, but it's going to be on policy, and drawing the difference between him and two of the most liberal members of the Congress.
DOBBS: Ed Rollins, Michael Goodwin, Robert Zimmerman, did I congratulate you, both of you? Thank you, gentlemen.
Tonight's poll results -- 98 percent of you say that at times the taxpayer bailout of Wall Street does seem to benefit Goldman Sachs and Henry Paulson's friends.
Thanks for being with us tonight. Join us here tomorrow. For all of us, we thank you for watching. Good night from New York. "The Election Center" with Campbell Brown begins right now.
