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The Situation Room
Dow Soars Some 500 Points; Pictures the CIA Didn't Want Out; President Obama on Goal of Rescue Plan
Aired March 23, 2009 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, CNN ANCHOR: Happening now, financial detox. It's the latest effort to unclog jammed credit lines. Will it detoxify assets to prevent you from getting loans, or will it be a multibillion-dollar waste of money?
Also, pictures the nation's spy agency did not necessarily want you to see. It involves mystery and questions surrounding Leon Panetta's first overseas trip as CIA director. Why did he choose Pakistan?
And two scenes of horror in two places raising new questions about air safety and new fears for travelers.
I'm Wolf Blitzer. You're in THE SITUATION ROOM.
But we begin with the breaking news -- 500 points. Wow.
The Obama administration unveils a plan to free up credit lines, and stocks are responding with a rally, a huge rally. The Dow jumped about 500 points, the largest this year, the largest since last November, to be specific.
We have reporters following the breaking news. Our White House Correspondent Dan Lothian is standing by. But let's check in with our chief financial correspondent, Ali Velshi.
Ali, the pundits are already offering an explanation why. What are they saying?
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Well, the bottom line here, this is about the details of the banking plan that we have so eagerly anticipated from the administration. You remember this was set up for February 11th.
President Obama, the night before, had said Timothy Geithner was going to unveil the banking plan on February 11th. He came out lacking detail and the market was down 5 percent that day. And ever since February 11th, we've been having problems in this market because they want to know what this administration is doing to unclog the credit crisis at the banks.
Well, we got the details of this plan early this morning, and the markets have responded with a gain of about 7 percent, making so much of that loss back because Wall Street is liking this plan. They feel that the administration's plan to partner with the private sector, to buy up some of the toxic assets off the books of the banks, is likely to work and start to head us in the right direction.
They could free up to $1 trillion, Wolf, to help credit start flowing again. And that's credit that's going to go to consumers and small businesses. So the feeling about this is that this plan could work -- Wolf.
BLITZER: And there are some analysts suggesting the housing numbers also sparking this huge rally today.
VELSHI: Yes.
BLITZER: Housing much better than anticipated.
VELSHI: That's right. We get two kinds of housing numbers. One is existing homes and one is new homes.
Existing homes is the biggest part of the market. You might think of that as used homes. Well, we got numbers there that showed an uptick in home sales, largely because some people are thinking a lot of the value has gone out of these homes, they become good deals, and mortgage rates are substantially lower than they've been in a while. There are mortgages that you can get for under 5 percent on a 30-year fixed if you have good credit.
So the bottom line is there are a few things coming together now leading us into our third week of gains on the stock market. And that's got a lot of people hopeful.
BLITZER: Yes, it certainly does, especially here in Washington.
All right. Stand by, Ali. We're going to get back to you shortly.
As we just reported, this market rally comes amid a plan to unclog credit pipelines that are not flowing freely. The Obama administration unveiled it today to open up more of those lines so you could have money for homes, cars, or small businesses. Right now, banks of so-called toxic assets or bad loans, they're keeping them from lending. Under this new plan, the government would entice private investors to buy troubled assets so that banks will start lending again, but the plan is risky.
Let's go straight to our White House Correspondent Dan Lothian. He's got more on what the president and the treasury secretary announced today -- Dan.
DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf. And even this administration is admitting that there are risks involved in this. It's not a sure bet. But, nonetheless, this administration has been hammered away for weeks, Wolf, as Ali was just alluding to earlier, that they didn't have details.
This plan was really lacking in the details. Well, today, the administration tried to fill in some of the blanks.
(BEGIN VIDEOTAPE) LOTHIAN (voice-over): Call it detox for bad assets, a big day for the Obama administration. The treasury point man, Timothy Geithner, didn't make a big splash. Instead, he made a backroom announcement off camera in a pen-and-pad briefing with reporters.
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I guess he's worried a little bit less about what the packaging is on the present and, more importantly, what's inside of the box. You know, I suppose we could have rigged out some flags and printed up some placards and cued up some old campaign music.
LOTHIAN: Geithner has been criticized for a low-key style that doesn't inspire confidence and taken hits for his handling of the AIG bonus scandal. So it was President Obama touting the private/public effort to rid banks of their toxic mortgage loans.
BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: This is one more element that is going to be absolutely critical in getting credit flowing again. It's not going to happen overnight. There is still great fragility in the financial systems.
LOTHIAN: The plan calls for an initial investment of $75 billion to $100 billion by the federal government. Bad assets will be sold to private investors at auction. The government will subsidize half of the cost to minimize the risk.
Already, two companies have indicated they want in -- global investment management firms PIMCO and BlackRock. But the administration admits this is all trial and error with no guarantees.
CHRISTINA ROMER, CHAIR, COUNCIL OF ECONOMIC ADVISERS: It's like any policy. You take your best shot. If it doesn't work, you adapt. You innovate and you come up with something that does.
(END VIDEOTAPE)
LOTHIAN: Now, while the market clearly embraced this plan, there are critics even up on Capitol Hill, and some of them are Democrats. And they're concerned that Wall Street really will end up being the big winner here and that taxpayers will end up bearing the brunt of the pain when some of these toxic assets are sold at a loss -- Wolf.
BLITZER: And he scheduled a primetime news conference over at the White House tomorrow night. What's the thinking going into that decision?
LOTHIAN: Well, the thinking here, according to senior administration officials, is just a chance for the president to really sell his economic plan, to sell this banking plan, at a time when a lot of taxpayers out there are going through bailout fatigue -- Wolf.
BLITZER: Dan Lothian at the White House.
Let's have some perspective now on what's going on.
Tack this on to all the other federal spending to fix the economy, and your head may start spinning. The tab so far, get this, at least $5.3 trillion worth of plans unveiled since last fall. That's including the stimulus package and a variety of bailouts. By way of comparison, that's three times more than the combined cost for the two wars in Iraq and Afghanistan, the fight against terrorism over the past eight years, and last year's estimate for federal health spending for things like Medicare, Medicaid, and veterans medical care.
The president, as we noted, is holding a primetime news conference tomorrow, 8:00 p.m. Eastern. CNN will have live coverage. Our coverage will begin at 7:45 p.m. Eastern tomorrow night.
If you had a chance to attend this news conference, what would you ask the president? You can send us your questions at ireport.com/situationroom. We'll try to get some of your questions on the air tomorrow.
Meanwhile, we're on the trail of the CIA's top spy, but Leon Panetta's travels are raising questions about where he's visited and left behind pictures you weren't necessarily supposed to see.
Let's go straight to our Pentagon Correspondent Barbara Starr. She's working the story.
It's significant when the CIA director makes an overseas trip.
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Absolutely, Wolf. And it's not often you get a peek at what the CIA director is doing overseas. But right now, nothing maybe is more important for Leon Panetta than Pakistan.
(BEGIN VIDEOTAPE)
STARR (voice-over): Extraordinary pictures of a closed-door meeting the CIA did not want made public -- CIA Director Leon Panetta and Pakistani President Asif Ali Zardari talking in Islamabad about the latest threats. The CIA won't comment on the meeting, but Monday, another threat to the fragile regime. A police station bombed, and it's just days before President Obama unveils his strategy to fight the Taliban and al Qaeda in both Afghanistan and Pakistan.
JOHN NAGL, CENTER FOR NEW AMERICAN SECURITY: The Pakistan side of the border matters so very much because Pakistan suffers from the Taliban insurgency, al Qaeda central, a very weak central government, a democratically-elected government, and nuclear weapons that are not as secure as we'd like them to be.
STARR: The U.S. intelligence community is worried more than ever about growing cooperation between al Qaeda and Pakistani Taliban groups. U.S. sources confirm, to counter that as part of the new strategy, the administration is offering Pakistan more intelligence- sharing and military training.
The long border between the two countries is increasingly unsettled, especially in the south, where insurgents are crossing into Afghanistan after finding northern routes shut down. But with 17,000 more U.S. troops on the way, and a limited appetite by the allies for spending billions in aid, even Defense Secretary Robert Gates is playing the lowered expectations card for whatever Mr. Obama unveils.
ROBERT GATES, DEFENSE SECRETARY: It's a difficult problem, and trying to come up with new approaches and new initiatives that enhance our prospects for success is hard work, frankly.
(END VIDEOTAPE)
STARR: There is agreement on one key matter. Unless Pakistan can get a handle on the insurgent problem on its side of the border, any new Afghan strategy is not likely to succeed -- Wolf.
BLITZER: Barbara Starr is at the Pentagon.
Thanks very much. What a story.
Let's go back to Jack Cafferty right now. Another week of "The Cafferty File."
This Pakistan situation is causing enormous, enormous concern out there.
JACK CAFFERTY, CNN ANCHOR: Yes. And releasing those pictures of Panetta being in that meeting with the president probably won't do anything to calm the anxieties, you suppose?
BLITZER: No. I think you're right.
CAFFERTY: Are you going to be in New York tomorrow?
BLITZER: Yes, I am.
CAFFERTY: So you and I will be together again?
BLITZER: Yes, we will. Together again.
CAFFERTY: I always look forward to that.
BLITZER: We'll be anchoring the coverage from New York.
CAFFERTY: Well, yes. That's what I said.
BLITZER: Yes.
CAFFERTY: You'll be in New York tomorrow.
BLITZER: I will.
CAFFERTY: All right.
I like him, but I'm getting tired of looking at him. It feels like President Obama is everywhere these days. When he holds a primetime news conference tomorrow night -- Wolf will be in New York for that -- it will already be the second one in his very young administration. He was chatting it up with Jay Leno on "The Tonight Show" last week, which was great until he started talking about bowling. Every day, some town hall meeting or summit at the White House or elsewhere gets covered to death by the cable networks. We show him leaving, we show him getting there, we show him doing the thing, we show him leaving the thing, we show him getting back.
I mean, it's enough.
Plus, you can't pass a newsstand without dozens of Obamas staring at you from every magazine in the land. Politico dubs Mr. Obama "The Everywhere President," pointing out how, despite a severe recession and two wars overseas, he's making the effort to give off a very personal and intimate presidential image. And he's doing that.
But some experts suggest that a personality-driven presidency does have its risks. One media and pop culture expert says the president's trying to metaphorically remove the moat from around the presidency. But that can be tricky.
Former White House press secretary Dee Dee Myers says that when a president is in the public eye too often, people may just stop listening at some point. Republicans are already critical of the president for appearing on ESPN to fill out his college tournament brackets, and doing "The Tonight Show" interview, but the GOP attacked Mr. Obama for being a celebrity, remember, during the campaign. More specifically, John McCain attacked him for being a celebrity. That didn't work out so well.
And the Special Olympics gaffe on "The Tonight Show" aside, interviews outside the realm of hard news do give him a chance to connect to more Americans. "The Tonight Show With Jay Leno" scored its fourth highest ratings ever the night the president was on.
So here's the question: When it comes to the media, how much of President Obama is too much?
Go to cnn.com/caffertyfile and post a comment on my blog.
And until tomorrow, when we can be together again -- Wolf.
(LAUGHTER)
BLITZER: See you tomorrow, Jack. But hey, we've got a full show today, too. So don't go anywhere.
CAFFERTY: I'll be here.
BLITZER: I'm anxious -- if you find out how the ratings were for "60 Minutes" last night when the president was on, I'd be interested to hear that, as well.
CAFFERTY: I'll get my staff right on that.
BLITZER: Thank you.
CAFFERTY: You bet.
BLITZER: Jack Cafferty will be back.
So will the plan to buy toxic assets be a multibillion-dollar waste of money? Critics say yes, but what does the financial guru Ben Stein think? He's here.
And Lance Armstrong says he's "miserable." He crashed today. You're going to hear from him in his own words.
A FedEx plane bounces, then bursts into flames. We have the latest on those killed in this and an entirely different plane crash that's left many people dead.
(COMMERCIAL BREAK)
BLITZER: The president spoke at length today about the importance of his bank rescue plan, the impact on families across the country.
Let's listen to what the president said.
(BEGIN VIDEOTAPE)
OBAMA: Good morning.
As all of you know, we have been busy on a whole host of fronts over the last several weeks, with the primary purpose of stabilizing the financial system so banks are lending again, so that the secondary markets are working again, in order to make sure that families can get basic consumer loans, auto loans, student loans, that small businesses are able to finance themselves, and we can start getting this economy moving again. As I've said before, there are a number of legs in the stool in economic recovery.
Step one was making sure that we have a stimulus package that was robust enough to fill the huge gap in demand that was created by the recession.
Step two was making sure we had an effective homeowners plan to try to keep people in their homes and to stabilize the housing market. Because of the work that's already been done, you are starting to see glimmers of hope in the housing market that stabilization may be taking place. Mortgage rates are at a very, very low level, and you're starting to see some activity in the housing market.
We then took a series of steps to improve liquidity in what had been secondary markets that had been completely frozen. And we are now seeing activity in student loans and auto loans. We announced last week a small business initiative that ensures that we have more activity, and you start seeing small businesses being able to get credit again in order to sell products and services and make pay roll.
And this morning, Secretary Geithner announced the latest element in this multi-pronged approach, and that is a mechanism that he, in close consultation with the Federal Reserve and the FDIC, has initiated in order to allow banks to take some of their bad assets off their books, sell them into a market, but do so in a way that doesn't just obligate taxpayers to buy at whatever price they're willing to sell these assets. Instead, it involves a public/private partnership that allows market participants who have every interest in making a profit to accurately price these assets so that the taxpayers share in the upside, as well as the downside. And we believe that this is one more element that is going to be absolutely critical in getting credit flowing again.
It's not going to happen overnight. There's still great fragility in the financial systems, but we think that we are moving in the right direction. And we are very confident that, in coordination with the Federal Reserve and the FDIC, other relevant institutions, that we are going to be able to not only start unlocking these credit markets, but we're also going to be in a position to design the regulatory authorities that are necessary to prevent this kind of systemic crisis from happening again.
And I'm looking forward to traveling to the G-20 so that we ensure that the activities that we're doing here in the United States are effectively matched with comparable action in other countries. And Secretary Geithner's already traveled and met with the finance ministers of the G-20 states so that we can make sure that we're all moving on the same page.
So the good news is that we have one more critical element in our recovery, but we've still got a long way to go and we've got a lot of work to do. But I'm very confident that with the team we've got assembled, we're going to make it happen.
All right?
Thank you, guys.
(END VIDEOTAPE)
BLITZER: The president outlining his new plan today. We're going to have much more on this story coming up.
Team Obama inherited the war in Afghanistan, but there are some who now say the president of the United States is about to take full ownership. Just ahead, the perception out there that that could be a political nightmare for this new president.
Plus, some really gripping pictures coming in from an airport tarmac. A plane exploding into a fireball. So what went wrong?
And introducing what's being called the cheapest care in the world. But hold on -- what you'll have to give up if you buy this car.
(COMMERCIAL BREAK)
(NEWSBREAK)
BLITZER: Does the administration's new plan to free up credit lines sound complicated to you? Don't worry. Our own Ali Velshi is here to explain. It's a plan designed to help you.
And U.S. agents sent to the border with Mexico to help stem the drug-fueled death and disaster, but the U.S. isn't stopping there.
(COMMERCIAL BREAK)
BLITZER: To our viewers, you're in THE SITUATION ROOM.
Happening now, what was supposed to be a family vacation ends up in a blazing plane crash. Seven children are among the dead. Now a big question, were there too many people on that plane?
Plus, Mexico's lethal problem is now America's problem. The new most wanted criminals and how the secretary of state, Hillary Clinton, is getting involved this week.
And a beast that sat dormant for almost two decades comes to life in an explosive way.
I'm Wolf Blitzer. You're in THE SITUATION ROOM.
Let's get back to our top story.
The Obama administration unveils a plan to buy toxic assets from banks to free up credit lines, and it jumped -- it caused a huge, huge stir up on Wall Street. The $500 billion plan that could cost a whole lot more, potentially, at least, we want to help make sure you clearly understand this plan that's designed to help all of us.
Let's bring back our chief business correspondent, Ali Velshi.
All right, Ali, explain what this is all about.
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: OK.
Wolf, the best analogy for most people would be a garage sale or something that you're selling on eBay, something that is junk to you and taking up room, but could be of value to someone else.
Let's think about those toxic assets as something that is sitting on the bank's balance sheets, taking up room and not allowing them to lend. So, the government has come out with its plan, the plan that Tim Geithner first promised on February 11, and didn't do a good job of delivering the details.
Here's what the plan is. First of all, private investors will partner up with the government to buy the toxic assets. These are homes or they're investments connected to those homes that are sitting on the bank's balance sheet, not allowing them to lend more money, because these homes don't have the value that they had.
The Fed and the FDIC will guarantee that partnership, that government and private partnership, to buy these loans. They will make sure that, if something goes wrong, they will pay up the money. So, that allows a lot of money. How much money? Up to $1 trillion. And that is going to go to the bank, and that is going to allow the banks to resume lending, and everybody should see the effect of that very soon. You saw Wall Street's reaction to this. The Dow was up nearly 500 points, Wolf.
BLITZER: Bottom-line question, is this plan enough? Are we now beginning the uptick? Or is there more pain on the way?
VELSHI: The estimates of how much of these toxic assets are sitting on the banks' balance sheets is actually about $2 trillion. This plan talks of up to -- talks about up to $1 trillion.
But what a lot of people are saying is that it's a complicated system that, if the government is able to get working, a public/private partnership , here there is risk to the government, to the taxpayer, and to individual investors, it may be a plan that works that could be expanded to take up all of the assets. So, it sounds fairly positive right now. Certainly, the reaction today has been very positive to this -- Wolf.
BLITZER: All right, Ali, we're going to have you standing by.
I want to bring in Ben Stein, the financial guru, "The New York Times" columnist. I read you in the Sunday business section every Sunday. Thanks for coming in.
(CROSSTALK)
BEN STEIN, FORMER NIXON SPEECHWRITER: Is this going to work?
It's an interesting idea. It's giving Wall Street what Wall Street likes, shooting fish in a barrel, something for nothing. Essentially, the federal government lends money to the big banks and other lenders, bond funds, other lenders, other investors, and says, we will lend you the money and we will guarantee the results. How can they go wrong?
The government is putting up the money and guaranteeing the results. And the bonds and other assets they're going to buy are very, very cheap now by historic standards.
BLITZER: So, when the government, the Obama administration, Timothy Geithner and the president paint, they this as a public/private joint enterprise, what I hear you saying, it's mostly a public enterprise.
STEIN: Well, it's private. They get the gain. Public takes the risk.
BLITZER: So, the private companies who are going to get involved in buying up these so-called bad loans, these toxic assets, they face no risk going into this?
STEIN: Not no risk, but very little risk. It's as if you could buy a house out in Potomac, and you could put up a very small amount of the money, and the government would lend you the rest and the government would guarantee you against the loss. You would buy something, especially if it had fallen a lot from its peak.
These assets that these banks and other entities are going to be buying have fallen enormously. They are probably going to make an incredible amount of money.
BLITZER: So, limited -- limited risk, but they potentially, as you say, could make tons of money.
STEIN: Oh, incredible. They are going to be making so much money off these, it will be insane.
BLITZER: So, which -- what kind of institutions are we talking about?
STEIN: Well, Pimco is getting in. BlackRock will get in. I have no doubt Goldman Sachs will get in. All the big investment banks will get in. All of the big hedge funds will get in. It is what Wall Street likes, something for nothing.
Why wouldn't they get in on it? The loss belongs to the taxpayers. The gain belongs to the big boys.
BLITZER: So, it's going to cost the U.S. government money. I want to play this...
STEIN: I don't think it is going to cost them money, because I think, when they buy these assets, the assets will pay off. I'm not -- I'm not...
(CROSSTALK)
BLITZER: You think some of these assets will be turn -- turn out to be productive?
(CROSSTALK)
STEIN: Oh, I think -- I think they're very much better assets than the market says they are now. They're much, much better than the market says they are now. The market has hit them way harder than they deserve to be hit.
BLITZER: Because they're estimating right now this chunk announced today could cost $50 billion to $100 billion.
STEIN: Right, but I don't think it's going to. Historically, when these assets get way whacked down by the market, over time, they recover, and pay off very, very well for the investors.
BLITZER: Listen to the president. He was on "60 Minutes" last night. And he was asked by Steve Kroft whether there was an unlimited amount of money that the U.S. government can print.
(BEGIN VIDEO CLIP, "60 MINUTES")
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If we don't get a handle on this and also start looking at our long-term deficit projections, at a certain point, people will stop buying those treasury bills.
(END VIDEO CLIP)
BLITZER: Now, when he says people, what we're primarily referring to is, like, China and Saudi Arabia.
(CROSSTALK)
STEIN: It doesn't matter if they stop buying. The Federal Reserve can buy everything we can print. There's -- there's no problem. The Chinese could sell all their bonds to the Federal Reserve like that. We could buy them, go on with our day. It's a -- the Chinese threatening to not buy our bonds is a completely...
(CROSSTALK)
BLITZER: Because only the other day the Chinese prime minister...
STEIN: I know. He said, "I'm a little concerned."
The Federal Reserve can buy all the bonds we need to have bought.
BLITZER: So, are you not worried about long-term national debt and deficit?
STEIN: I'm worried about it very, very long term, but not for now.
The important thing now is to make sure we don't have a depression and get us out of the recession. I think they're doing it pretty well and I think Bernanke some day will have a statue to himself.
BLITZER: Ben Bernanke, the Federal Reserve chairman.
STEIN: Yes. I think he's doing a very good job.
BLITZER: And Timothy Geithner?
STEIN: Timothy Geithner is doing better than he was. He's giving Wall Street what it wants. As I said before, they want a sure thing. That's what he's giving them.
BLITZER: Well, if you're looking ahead, give us an assessment right now.
We have seen a 1,000-point gain in the past couple weeks or so. Is it going to go back down? Is it going to continue to go back -- go up?
STEIN: Well, I cannot predict the future about the stock market, and neither can anyone else.
But I will say that the policies are looking better and better. And all recessions have a bottom. And the bottom often comes when we least expect it. So we may be at a bottom. We may not be. Some very, very smart people who follow the stock market are calling a bottom.
I don't know if it's a bottom or not. I just know that they are pouring money in. Eventually, it always has some effect. You can not win betting against the Federal Reserve.
BLITZER: So, when the Federal Reserve chairman, Ben Bernanke, offers an assessment, by the end of this year, early next year, the -- the growth will resume in the economy, you think he's right?
STEIN: Well, it's -- as I say, you don't make much money betting against the Fed in the long run.
He can't call it the exact bottom. Even he, who has all the power in the world, can't call the exact bottom. But if he keeps flooding the economy with money, there will be a turn.
BLITZER: We're hearing from the White House and the Treasury Department they're now thinking of coming up probably within the next week or two weeks or pretty soon with some proposed new federal regulations to make sure the disaster that has occurred with the securities and all of that can never be repeated.
STEIN: Right.
BLITZER: Is this a good idea...
STEIN: It's a very good idea.
BLITZER: ... to tighten regulation right now?
STEIN: Very good idea.
We still have a huge problem with the credit default swaps, which are a complicated instrument, that's causing all the problems at AIG. Taxpayers are essentially eating bad wagers that these insurance companies made. That's ridiculous.
Essentially, we have these big insurance companies and banks turning into casinos, making multi-tens of billions of dollars of bets. If those bets go bad, the taxpayer in Dubuque or Des Moines should not have to eat that.
BLITZER: So, you want the SEC to have a robust regulation?
STEIN: I think they should end credit default swaps, period, unless they are an actual edge.
BLITZER: Ben Stein, thanks for coming in.
STEIN: Honor, sir.
BLITZER: My pleasure.
A FedEx plane tries to land, but instead bounces, ten bursts into flames. Could weather conditions that many of us experience when we fly have caused the crash?
Also, another deadly plane accident, this one fell out of the sky into a graveyard.
And the president says Iraq was easier than Afghanistan. So, could Afghanistan be harder than he or many other people ever imagined?
(COMMERCIAL BREAK)
BLITZER: A family ski vacation has ended in tragedy.
A plane carrying seven adults and seven children crashed into a cemetery in Butte, Montana, yesterday. Witnesses reported seeing the plane nosedive. And pictures captured the fiery aftermath.
Investigators say the children were all under the age of 9. Authorities say three families were headed to a resort near Yellowstone National Park when their single-engine plane diverted to Butte.
Coming up in the next hour, why investigators will look at whether too many people were on the plane.
Unfortunately, this Montana crash isn't the only plane tragedy. Take a look at this video. It's grainy, but what you're seeing is a FedEx plane attempting to land, instead, bouncing, then erupting into a ball of fire. Could weather conditions that many of us experience when we fly have caused this?
Let's go straight to our Brian Todd. He's outside Reagan National Airport here in Washington.
You're speaking to investigators and experts. What are they saying, Brian?
BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, they say that wind conditions do play a role in any takeoff and landing. Right now, the wind is blowing north to south, kind of in this direction behind me. Some planes are taking off and landing going in this direction.
They have to take off and land right into the headwinds. We are getting indications that wind played a role in that crash in Tokyo, so we brought an expert down here to talk about the dangers of wind shear.
(BEGIN VIDEOTAPE)
TODD (voice-over): Two violent bounces, a dramatic roll on its left side, and the FedEx cargo plane is in flames. Wind gusts at Tokyo's Narita International Airport were reported to be between 30 and 50 miles an hour at the time. A veteran pilot says it's possible to land a plane in those conditions, but:
BEN BERMAN, FORMER CHIEF INVESTIGATOR, NATIONAL TRANSPORTATION SAFETY BOARD: And if it's blowing pretty much straight down the runway, you can usually operate in it, with special care. If it's across the runway, then it's going to be subject to limits. And if it's over the limits, you can't do it.
TODD: Ben Berman, commercial pilot and former NTSB chief investigator, says the maximum crosswind limit he is most familiar with is about 40 miles an hour. He says wind shear, those sudden gusts that come from nowhere as planes shift in altitude, isn't always as dangerous as it looks, and most airliners are structurally built to withstand those odd-angled landings. They can even touch down sometimes, he says, with just one wheel hitting first.
But he says the MD-11, the model that crashed in Tokyo, has an automatic stabilization system built in to compensate for a smaller tail. That system kicks in when the plane is losing stability, but can also cause pitch problems if the plane encounters wind shear at landing, or the system can disengage on its own.
BERMAN: When an airplane has reduced stability, it's very susceptible to the pilot starting and then getting into oscillations that start small and get worse and worse.
(END VIDEOTAPE)
TODD: Now, Berman is very careful to say that the MD-11 and that particular design just could be one possible cause of the crash. He's very careful to say it may not end up being the main cause.
Now, the MD-11 was made by McDonnell Douglas, later bought out by Boeing. So, Boeing does have current responsibility for the design of that particular plane. We called Boeing and FedEx to talk about the MD-11 design. Officials at both companies told us they would not speculate on that at all. They encouraged us to wait until the results of this investigation.
They don't really want to talk about the design of the MD-11 yet, Wolf, but this does have some similarities to some other crashes.
BLITZER: Talk about that, because there's one crash, one recent crash, specifically, that it may have some similarities to.
TODD: That's right.
Ben Berman told us he was actually involved in the investigation into the 1997 crash of an MD-11 at Newark International Airport. That was also a FedEx plane. He said the way this particular plane in Tokyo touched down, it bounced, and then it rolled over on its side, was almost identical to that -- to that particular crash of an MD-11. That's what made him think of that particular design feature on the MD-11, that stabilization system.
He says it does cause pitch problems when you come in for landing and when there is wind shear. It could have been a factor. But, again, he's -- he's very careful to say, as we all need to be, that could be just one cause, that particular design feature of that plane.
BLITZER: Brian Todd over at Reagan National Airport here in Washington.
The war in Afghanistan, why this battle could be harder than anyone anticipated and how it will shape the president's legacy, that's coming up.
And Venezuela's president unleashing on President Obama -- why Hugo Chavez is calling Mr. Obama -- and I'm quoting now -- "ignorant."
(COMMERCIAL BREAK)
BLITZER: Let's get right to our "Strategy Session."
Joining us, the Democratic strategist Steve McMahon, and the CNN political contributor, the Republican strategist Alex Castellanos.
Guys, thanks for coming in.
There is some suggestion out there that the president is not doing enough to confront his own, Democrats who are raising questions about him. He's more eager to confront Republicans.
Should he get tough with his own base?
STEVE MCMAHON, DEMOCRATIC STRATEGIST: Well, I don't know -- I don't know what getting tough means.
Certainly, he didn't make the liberals in the Democratic Party very happy when he said he was going to leave 50,000 troops in Iraq, for instance. And increasing troop presence in Afghanistan has a lot of anti-war people in our party upset and concerned.
So, I -- you know, and -- and leaving the Bush tax cuts in place until they expire was something that...
(CROSSTALK)
BLITZER: I guess the argument was, when he signed the spending bill, he didn't want to irritate the Democrats, like David Obey and -- and Nancy Pelosi, among others, in the House or the Democrats in the Senate, who had -- all of whom had a lot of earmarks in there.
MCMAHON: Yes, I don't think he really wants to upset anybody.
As the Obama administration people will tell you, they have got a very big agenda this year. They want to try to do health care reform. They want to do something on energy. And there -- there are some people up on the Hill that -- that are very important to making that happen.
A lot of those people had earmarks. And I think that's why they signed that bill.
BLITZER: He -- he doesn't have a problem irritating Republicans.
ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: No, he seems to be doing a better job of that with every passing day, another day, another trillion.
(LAUGHTER)
CASTELLANOS: He does need to demonstrate strength.
And you don't do that just by picking on the minority, the Republicans. You need to stand up to your own party. One of the things that inspires confidence in us all is a strong president. The way to do that is to stand up to his own party.
And it's interesting. He's being criticized by some in the Democratic Party not for what he should be criticized for, which is moving to the middle. He's being criticized for being too Wall Street, for bailing out Wall Street, being -- it's almost, you know, antithetical to what a Democrat is. So, in the end, he's becoming -- he's making the Democratic Party the party of financial irresponsibility and elitism.
BLITZER: You -- you mentioned Afghanistan. You mentioned Iraq.
On Afghanistan, the president making the comparison with Iraq, he told "60 Minutes" this. Listen to this.
(BEGIN VIDEO CLIP, "60 MINUTES")
OBAMA: Iraq was actually easier than Afghanistan. It's easier terrain. You have got a much better-educated population, infrastructure to build off of.
But it is not acceptable for us to simply sit back and let safe havens of terrorists plan and plot.
(END VIDEO CLIP)
BLITZER: There are some in the Democratic Party, on the left, who say, Afghanistan potentially could be for President Obama what Vietnam was for LBJ.
MCMAHON: And that's possible.
But, if you don't go into Afghanistan, if you don't try to root out the terrorists where there appear to be a safe haven, then you're going to have bigger problems.
I think he correctly stated the challenge. It's obviously more difficult than -- than Iraq in many respects, but it's also more dangerous than Iraq. And to let it fester and to not do anything about it is surely more dangerous than Iraq.
CASTELLANOS: Well, I was -- that was nice to hear the president give George Bush credit, then, for doing such a good job in Iraq and getting it done when it was so easy.
MCMAHON: Taking his eye off the ball and...
CASTELLANOS: Yes, but, no, this is -- this is, from the British to the Soviets to all through history, Afghanistan has been the graveyard of armies and the graveyard of political leaders who get ensnared in there and find it is much more difficult to get out than to get in, especially when you don't have an exit strategy. You really don't.
You're going to try to -- just a containment strategy in Iraq. So, I think we're going to see, this is one he is going to antagonize the left and he is not going to please the right.
BLITZER: He did say you need an exit strategy. He's working on that. In fact, they're coming up with a new strategy even as we speak. But they did make the commitment to send an additional 17,000 U.S. troops there.
And the president told "60 Minutes" that was the hardest decision he's had to make so far since becoming president of the United States.
Guys, thanks very much.
President Obama is holding a prime-time news conference tomorrow at 8:00 p.m. Eastern. Our coverage will begin at 7:45 p.m. Eastern right here on CNN.
And if you had a chance to attend that news conference over at the White House, what would you ask the president? Send us your video questions at ireport.com/situationroom. We're going to try to get some of those questions on the air tomorrow before the news conference.
It's a supreme question to be decided by the highest court in the land. Is a harshly anti-Hillary Clinton movie just a critical political documentary, or is it a 90-minute attack ad?
Near the U.S. border with Mexico, a level of death and devastation not seen in years -- now the U.S. is sending more agents to the border. And that's not all.
And it was asleep for almost 20 years, but it woke up in an explosive set of events -- an Alaska volcano erupting, not once, but five times within hours.
(COMMERCIAL BREAK)
BLITZER: On our "Political Ticker": The Supreme Court will decide this question. Are ads for a 90-minute movie that's unquestionably against a political candidate attack ads, or is the movie simply a critical documentary?
At issue is the movie entitled "Hillary The Movie." It was released during the presidential campaign by fierce conservative critics of Hillary Clinton. They also wanted to air TV ads for the movie in battleground states, but federal courts said they would violate campaign finance laws.
President Obama beat John McCain in the presidential race, but McCain is beating the president -- so far at least -- in another high- stakes race, the competition to predict winners in the NCAA college basketball tournament. Both McCain and the president picked the same final four teams North Carolina, Louisville, Memphis, and Pittsburgh. But McCain is reportedly beating the president with his pick for the Sweet 16 bracket.
Remember, for the latest political news any time, you can always check out CNNPolitics.com.
Let's go back to Jack for "The Cafferty File" -- Jack.
JACK CAFFERTY, CNN ANCHOR: Speaking of the NCAA tournament, my producer, Sarah Lieder (ph), is married to a guy who fancies himself a bit of a sports aficionado, you know, jock and all that, goes to spring training. And, every year, they bet on the tournament. She knows little or nothing about college basketball. Going into the Sweet 16 this year, she has 14 teams still in the tournament.
BLITZER: Wow.
CAFFERTY: He has -- he has nine. This is the fourth year in a row that she's laid waste to this guy. Todd Bonin (ph), CNBC, are you listening?
(LAUGHTER)
CAFFERTY: Wolf, you asked about those ratings for President Obama's interview on "60 Minutes" last night.
CBS, we called them, and they said that they had 16.2 million viewers, one of their best performances in recent weeks, and "60 Minutes" clearly the number-one TV program for the night last night.
And if there's ever anything else I can do for you, all you have to do is ask. I'm here for you.
The question this hour: When it comes to the media, how much of President Obama is too much?
If the e-mails are any indication, people just can't get enough of this guy.
Jo writes in Fort Collins: "Pooh on you, Jack. I love to see as much as possible as this president. It is so refreshing to get updates almost daily. I feel more a part of the process of this country than ever before. He's trying to make us feel like responsible Americans again, and I think it's exactly what we need."
Michele writes from Sparks, Nevada, right next to my hometown of Reno: "Tired of seeing him? Come on, Jack. He is the most approachable, open president we have ever had. He's talking to his employers, us, about how he's doing his job, staying in touch with what matters to Americans. I would rather have this new setup than the secret administration from years past. We're through being kept in the dark. We are not mushrooms."
(LAUGHTER) CAFFERTY: "And we should not be treated as such."
Marsha writes: "Enough already. Get to work, Mr. President. You look far too relaxed and jovial for the current state of affairs. Trust me, Mr. President, the American people are not doing a lot of smiling right now."
Joe writes: "How much fresh air do we need? It's a big relief so far. I will let you know."
Liz in Los Angeles: "Depends how you voted, don't you think? The Republicans are still sore that he won. They're natural whiners, to boot, so there you go."
Ken writes: "It's going to be a transparent administration. If so, we need to see a lot. We need Obama to be there to explain the process to those of us who don't understand it. The unnecessary appearance on 'The Tonight Show' is another thing altogether."
And, finally, "Are you kidding, Jack?" -- this from John. "After that last guy in the White House, we need to listen to actual intelligence, wit, and charm. Damn, stick one of those Obama I.V.s in my arm. I will take more intravenously."
If you didn't see your e-mail here, you can go to my blog, CNN.com/caffertyfile, look for yours there, among hundreds of others -- Wolf.
BLITZER: He has got a lot of fans out there.
All right, Jack...
CAFFERTY: He does.
BLITZER: ... thanks very much.
