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CNN Saturday Morning News

Analysis of Last Night's Presidential Debate; $700 Billion Bailout Plan Still in the Works; Presidential Candidates and the Economy; Hurricane Victims on Galveston Island: Salvaging What They Can or Moving On

Aired September 27, 2008 - 07:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

BETTY NGUYEN, CNN ANCHOR: From the CNN Center, this is CNN SATURDAY MORNING. Thanks for joining us. It is September 27th, the morning after the big debate.
Good morning, everybody. I'm Betty Nguyen.

T.J. HOLMES, CNN ANCHOR: Yes, and good morning to you all. I'm T.J. Holmes live in Oxford, Mississippi. You say that big debate, Betty, the big debate that almost did not happen but it did happen. Thank goodness.

And thank you all for starting your day here with us. I am here on the campus of Ole Miss, the University of Mississippi, the Rebels, who really pull out all the stops trying to make this happen here and it finally did happen. So, congratulations to them. We'll be getting in to exactly what happened at the debate last night, and of course, the debate now about who exactly won that debate, if we can declare a winner, Betty.

NGUYEN: Exactly. All right, we'll talk to you very shortly, T.J.

In the meantime, though, that big bailout. They are debating that on Capitol Hill. And we might even see an agreement some time this weekend. $700 billion, so what do you get for your money? We'll delve into that -- T.J.

HOLMES: All right. Well, let's get it to, Betty. Like you said, again, here we are live on the campus of Ole Miss.

Let's talk about that big debate. John McCain and Barack Obama finally going at it, finally, went at it for about 90 minutes last night. Again, we weren't sure if this thing was going to happen at all. This is the first head-to-head meeting in this race, won't be their last. They got a couple more of this coming up.

And the big topic of the debate, it was supposed to be, of course, it was slated to be about foreign policy, but, of course, with everything we have going on with the economy, they weren't going to ignore that topic. So, listen to them talking about the nation's struggling economy.

(BEGIN VIDEO CLIP) SEN. BARACK OBAMA, (D-IL) PRESIDENTIAL CANDIDATE: I put forward a series of proposals that make sure that we protect taxpayers as we engage in this important rescue effort.

Number one, we've got to make sure that we got oversight over this whole process. $700 billion potentially is a lot of money. Number two, we've got to make sure that taxpayers, when they are putting their money at risk, have the possibility of getting that money back and gains if the market and when the market returns.

Number three, we've got to make sure that none of that money is going to pad CEO bank accounts or to promote golden parachutes. And number four, we've got to make sure that we're helping homeowners because the root problem here has to do with the foreclosures that are taking place all across the country.

Now, we also have to recognize that this is a final verdict on eight years of failed economic policies promoted by George Bush and supported by Senator McCain. A theory that basically says, that we can shred regulations and consumer protections, and give more and more to the most and somehow prosperity will trickle down.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R-AZ) PRESIDENTIAL CANDIDATE: This package has transparency in it. It has to have accountability and oversight. It has to have options for loans to failing businesses rather than the government taking over those loans. We have to -- it has to have a package with a number of other essential elements to it.

And yes, I went back to Washington, and I met with my Republicans in the House of Representatives and they weren't part of the negotiations, and I understand that. And it was the House Republicans that decided that they would be part of the solution of this problem.

But I want to emphasize one point, to all Americans tonight, this isn't the beginning of the end of this crisis, this is the end of the beginning if we come out with a package that will keep these institutions stable. And we've got a lot of work to do. And we've got to create jobs. And one of the areas, of course, is to eliminate our dependence on foreign oil.

(END VIDEO CLIP)

HOLMES: And who else who better to talk to this morning than the two ladies who have been following these guys around for quite some time. Suzanne Malveaux -- Dana Bash has been following McCain -- you, of course, have been with Obama.

Yes, they were supposed to be talking about foreign policy last night. No way we're going to ignore that first question, who is going, but we ended up spending 40 minutes on the economy. Who, no doubt, maybe McCain, a lot was riding on the answer he was going to give to this question. DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: And what I thought was interesting is, with regard to what we just heard before, the big question, what's going to happen in Washington? These are two senators, as Jim Lehrer pointed out, neither of them would really give an answer. Now, in part, that's because there's no it. They keep saying, we both for this package. There's not one right now. And they are going to be working at it over the weekend.

But to the most part, they didn't really talk a lot about the crisis. They went back to talking about spending, and tax cuts, and the things that we heard on the campaign trail not just for months and months this year, but frankly, for years. And that's so much really the thing that people at home are worried about with regard to whether they're going to have their mortgage, whether they're going to be able to put food on the table. The bread and butter issue is kind of really frightening for voters (ph).

HOLMES: Were they kind of just put yes -- go ahead -- were they kind of just put on the line there, they didn't want to commit to anything in front of this national audience (ph)?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, I think it was hard for both of the candidates to actually admit to what they were going to be able to give up for that $700 billion bailout package. Obviously, Barack Obama was saying that he felt that there was some component of his energy policy plan that he might have to delay, but he didn't get into specifics.

So, one thing that he did get in to somehow there (ph) is he talked about, he was trying to compare Bush and McCain saying that, you know, McCain voted with Bush 95 percent of the time. And he did link that to the economy when he said we're talking about those budgets, all those budgets you passed, the bloated budgets that McCain was complaining about. That's about fiscal irresponsibility, that's about the financial crisis we are in this moment. So, he was able in some way to...

BASH: Yes.

MALVEAUX: He made the case that that was something that actually linked to the financial situation.

(CROSSTALK)

BASH: I was just going to say, I mean, what was so interesting about that, Suzanne, is that McCain obviously was well-prepared for that and it's one of the sweet spots. They know that. On the stump, John McCain does not mention George Bush's name.

I mean, he understands how unpopular, they understand, the McCain campaign, how absolutely fatal that is to talk about George Bush. He was ready for his answers with those issues. I mean, they were on the economy but he was talking about how he opposed the president on torture and on, you know, a whole host of issues. And it was critical for him, obviously, he thought, to get that in there (INAUDIBLE). HOLMES: On this issue, did we hear anything new? I sat and watched the whole debate, I'm certain that the first 40 minutes, but I was waiting to hear something, I know Jim Lehrer was trying to get them to mix it up. I mean, I'm sorry to say, I don't want to say I was bored, but still, the American people were waiting to hear something definitive and something from these two, somebody who's going to lead this country.

And like I said, that first answer, which is, OK, no specifics, no nothing, this is going on in Washington, this is everybody's issue and didn't -- did they take advantage of this question?

MALVEAUX: One of the challenges that Barack Obama had, too, is when he talked about the earmarks and McCain went after him and he said that, you know, for every day that you are in the Senate, there's about $1 million worth of earmarks...

HOLMES: Yes.

MALVEAUX: You didn't even suspend it until you started running for president. That is the thing that really kind of plays into McCain's theme about -- well, perhaps, it's Obama first and then country second. That was something that he really needed to kind of address. And he did address that when talked about the loopholes.

What I thought was really interesting however is that the polls, the CNN poll that came out among those who were watching actually showed that many people felt that Barack Obama was, at least, addressing the issues that they cared about more so than McCain, 62 percent to 32 percent.

BASH: And I think because of that fact that the McCain campaign -- they know full well that Obama has an advantage on the economy -- what you saw, you talked about, what you saw is McCain tried to turn the economy into not so much issues specifically about the economy, but turn it into a question of reform, about fighting corruption. That's where the earmark issue came from.

And he didn't really talk about, at least about some of the -- again, from these bread and butter issues. And he's much more interested in talking about the fact that earmarks corrupt Washington. And I'm the guy who helped sent members of Congress to jail. Why? Because that is where his strength is as they believe -- the guy who's going to change Washington because he has experience in doing that, much more than the economy.

HOLMES: All right. We'll leave it here on the economy. And, of course, you two will be with us all morning long. Thank you so much. I know you had a late night. Everybody had a late night. They actually just left the debate hall.

(LAUGHTER)

HOLMES: I will take care of you later. I will bring you back later. But one other thing, how much of a heads up do they get, I know they get a question or two about economy. Did they know it was going to be 40 to 45 minutes? Did we know it was going to be that much time committed (ph) to it?

MALVEAUX: I don't think so.

BASH: Yes.

MALVEAUX: Really, was just that, they knew that it was going to be significant, at least two or three, but it took a long time actually to get through it.

HOLMES: To get them to even talk and you can talk to each other. Some say they maybe still (INAUDIBLE). Dana, Suzanne, thank you so much for being here. We'll be checking them plenty this morning. Again, throughout the morning, they will be talking to us.

We're going to move on to some other topics this morning with them as well, Afghanistan and Iraq is going to be next. That's going to be in the next hour. And then other topics throughout the morning.

And again, if you are keeping count, we certainly, 38 days away from election time. And if you did miss the debate, you have another chance to watch it. You're going to have plenty of chances to watch the debate in its entirety. The best parts, the best analysis, you can watch it all again. John King and the best political team on television, you may have heard of them, "The Next President: Round One," tonight and tomorrow night at 9:00 eastern. You can catch that.

Also, we certainly want to know what you think about the debate last night. Which candidate kind of talked to you last night maybe and made the best impression? Why did they make the best impression to you? You can e-mail us your thoughts at Weekends@CNN.com and we will bring you those comments throughout the morning.

NGUYEN: And, you know, T.J., that's going to be really important, too, because, as we were talking last night during the debate, you and me, where there any seminal moments, were there any zingers? You know, what were the things that really stood out? So, it's going to be really interesting to hear what the folks at home thought because, of course, everyone had their opinion on it, the question is: who won?

So, all right, thank you, T.J. We'll talk to you shortly.

In the meantime, though, just about on everyone's radar this morning, of course, that bailout of Wall Street with us to navigate through all of it, senior correspondent, Allan Chernoff in New York, and we'll hear from him in just a couple of minutes.

But first, Kate Bolduan in our Washington bureau, she joins us now. Let's start with you and the drama in Washington, because, Kate, I understand House and Senate staff members actually worked through the night. They are trying to hammer this thing out. And we are told that maybe we'll see something by the end of this weekend.

KATE BOLDUAN, CNN CORRESPONDENT: Yes. They really are working hard. Congressman Barney Frank summed it up yesterday, Betty, by saying what they are putting into this bill, the amount they would normally put into a bill, but condensed them to about nine days.

I just received a note from Senate -- Republican leadership aide who said that the staff negotiations wrapped up just before 2:00 o'clock this morning. So, they did work through the night trying to weed out where people stand, what people can agree on, and what are the points of contention that they need to have the members address.

And as promised, we talked about both the House and the Senate are going to be back in session today. They are going to be doing some other business as well, but what's on everyone's mind is the $700 billion bailout, where they stand, and what Congress is going to do about it.

So, where do they stand? Well, from yesterday, we, at least, are learning that House and Senate Democrat and Republican leaders seem to agree that they are, at least, back on track -- back on track in the discussions and negotiations from where they were clearly stalled just two days ago. And it was clearly been a wild ride since then. So, they say they are back on track. They're going to be negotiating.

And that's a key point of progress, the fact that all the four key negotiators, two -- a House and Senate Republican, a House and Senate Democrat, are going to be sitting down today and Congressman Barney Frank really summed up why it's important that they come together. Listen here.

(BEGIN VIDEO CLIP)

REP. BARNEY FRANK (D), FINANCE CHAIRMAN: It depends with success on the restoration of confidence in part. If this was presented in a partisan way, if one of the political parties in either one of the houses looked like they were saying no, if one of the presidential candidates appeared to be kind of trying to undercut it, not only it's become hard to pass, it makes it hard to work because something that is not more broadly supported isn't going to accomplish the goal.

(END VIDEO CLIP)

BOLDUAN: So, the staff is going to be getting back underway and continuing these negotiations. We are told that the key members are going to be sitting down to talk today. But there are still some -- there are still about a dozen points of contention I'm told that they really need to weed out, specifically, the basic fact of how to finance this bailout. There are some definite differences on how to do that, Betty.

NGUYEN: Yes, and who gets control of that money. OK. Kate, thank you so much.

BOLDUAN: Yes. Thanks (ph).

NGUYEN: We'll be checking with you.

In the meantime, though, Allan Chernoff is keeping up with these critical meetings in New York and he joins us now.

Hey, there, Allan.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: God morning. Well, I'll be telling you exactly why this matters to all of us, even those of us who have no investments at all -- coming straight ahead.

(COMMERCIAL BREAK)

NGUYEN: OK. So what are we getting for $700 billion? We ought to know, right? We are paying for it. Well, Allan Chernoff joins us now from New York. And the big question here is: where will that money go, because it sure is a whole lot of it, Allan.

CHERNOFF: It certainly is, Betty. And that money, believe it or not, planned as it stands right now, the idea is for that money to actually just go to pay for rotten investments that big banks and investment firms made primarily in securities of mortgages.

They basically bought big pools of mortgages, your mortgage, my mortgage, lots of our viewers' mortgages. They were all pooled together into investments, the banks bought these investments. And, as you know, a lot of the mortgages have gone south in terms of their value. And that's precipitated this whole crisis.

So, that's where the money is going to go. And why should we bother doing that? Why should we bail these guys out if they made a bad investment? The only reason we are even considering this is that it presents a huge threat to the economy. It's all about essentially protecting the economy, we are pretty much buying insurance against the major downturn in the nation's economy for $700 billion.

NGUYEN: Yes. So we get it, you know, taxpayers are on the line for this. But for those who don't own stocks or aren't heavily invested, why does it matter to them because, obviously, this does have an effect?

CHERNOFF: Absolutely. And let's make it very clear -- this is not at all about the stock market. Now, we do look at the stock market as a major indicator here, but none of this really is focused on the stock market. It's really much more about the cost of money and the availability of money. Now, I'm talking, right? I mean, that affects all of us.

At some point, we all have to borrow money whether we are a major corporation, individuals, as consumers. If the economy just freezes up, if lending just freezes up, it has major implications, not just for our ability to get a car loan or mortgage, it's also about jobs. We discuss that with the chief economist of Global Insight this week. Let's have a listen.

(BEGIN VIDEO CLIP)

NARIMAN BEHRAVESH, GLOBAL INSIGHT: Let's just say it this way. If the package is passed, unemployment rate could go up to 6.5 percent up from where it is right now, around 6 percent. If it's not passed, we are looking at 7 percent to 7.5 percent. That's a lot of people without jobs. (END VIDEO CLIP)

CHERNOFF: The unemployment rate could possibly go even higher if the economy were to tumble into a very, very severe recession. And that's what the administration is trying to prevent here -- Betty.

NGUYEN: All right. Allan, we're going to be talking to you all morning long because there's a lot of other things that we need to discuss within this, things that really matter to the people watching at home these days, today. So, we'll get to that shortly. Thank you.

In the meantime, though, will this bailout help homeowners struggling with mortgage payments? We'll bring back Allan to talk about -- to discuss that and what it means, that and so much more. So, you don't want to miss it.

But in the meantime, my partner, T.J. Holmes, is working on another big story that we just finished up last night. But I think it's only just the beginning, T.J.

HOLMES: You're absolutely right about that. Yes, you call it the big story, the big story that almost wasn't, but yes, we did have that debate finally last night here on the campus of Ole Miss in Oxford, Mississippi.

Now, we got the debate about the debate. Who stuck to the facts, I mean, heaven forbid, Josh Levs, we've never heard of a candidate kind of twisting things up in the debate. They always talk to us straight, don't they?

JOSH LEVS, CNN CORRESPONDENT: I'll tell you, no. T.J., you are witnessing history. Was there actually some spin in the debate? I can't imagine how that happened. But here's what we've got coming up for you. We got McCain's votes with President Bush, and also, we've got a Barack Obama on the surge. The truth squad is going to tackle that debate.

(COMMERCIAL BREAK)

HOLMES: Good morning, again. T.J. Holmes here from the campus of Ole Miss, where the big debate did happen last night, the first of three presidential debates. The entire country, that number, the estimates, 80 million, 90 million, 100-plus million maybe watched that debate last night.

And, of course, our iReporters on the job, watching it last night. Here's one of them, Patrick in Panama Beach, Florida. Take a listen.

(BEGIN VIDEO CLIP)

PATRICK PIRES, PANAMA BEACH, FLORIDA: I think Barack Obama has a clear understanding in how to effectively structure this deal. He also understands that the taxpayer dollars cannot be wasted.

And to me, one of the biggest things about this whole $700 billion bailout is that the money cannot go as premium packages for CEOs across the country that were actually guilty for some of the things that have happened. So Barack Obama actually made it very clear that that was not going to be done. To me, he won a lot of votes when he said that.

John McCain also has a very good understanding of what needs to be done and he actually was the one that decided to suspend his campaign to go to Washington to help out. But then after I've done some research, I find out when he went to Washington, he didn't do a whole lot. So how do we explain that?

(END VIDEO CLIP)

HOLMES: All right. Again, one of our iReporters there. We have plenty of iReporters out there who were certainly watching the debate last night. And we want to hear from them. We also want to hear from you. We want to hear from everybody, actually.

Go online, send us your iReports to iReport.com. Now, in addition to iReport, you can send the answers to our e-mail question this morning, we want to know what you thought of that debate last night. Which candidate made the best impression to you? Why did they make the best impression to you? E-mail us your thoughts at Weekends@CNN.com. We're going to bring some of those comments to you throughout the morning. So, by all means, dial us in and let us know what you thought.

Well, it might help you know, who stayed with the facts last night and who didn't. Josh Levs, I can't believe we've even have to ask this question about who stuck to the facts. This is what they are supposed to do. They're supposed to look at us and give it to us straight. Did they do that last night?

LEVS: I love how you are there for this big event and you still hold on to the idealism. It's so beautiful. I wish I could get that back.

HOLMES: We all should. We all should.

LEVS: Trust me, I know, but after a year of reality checking this race, you start to get used to this. But I'll tell you something, there were some really interesting ones last night. And the truth squad worked through the night breaking it down. We're going to start off with something about the surge that John McCain said.

(BEGIN VIDEO CLIP)

MCCAIN: Senator Obama said that the surge could not work, said it would increase sectarian violence, said it was doom to failure, recently on a television program he said it exceeded our wildest expectations, but yet after conceding that, he still says that he would oppose the surge if he had to decide that again today.

(END VIDEO CLIP) LEVS: So, is that true about what McCain says Obama has said in general? Well, you know what? Most of it is. Let's take a look right here. What we have this quote for you in a graphic from what Barack Obama said when the surge was first announced.

And he said this at the time. He said, "I'm not persuaded that 20,000 additional troops in Iraq is going to solve the sectarian violence there. In fact, I think it will do the reverse." And he has since said, though, that his concern right now is that, yes, the violence has gone down, but he feels that a lot of the goals that were supposed to take place during that time have not happened.

So, if we zoom in on the board for a second, I'll show you the verdict on this one. And actually, they do say, "True, but incomplete. While acknowledging the surge is military's success, Obama says the political goals it was meant to secure have not been met."

Let's jump to the other side now. I want to show you something that Obama said last night about McCain.

(BEGIN VIDEO CLIP)

OBAMA: John, it's been your president -- who you said you agreed with 90 percent of the time -- who presided over this increase in spending, this orgy of spending and enormous deficits.

(END VIDEO CLIP)

LEVS: So, is that accurate? Well, let's take a look at the voting record. We have one more graphic for you here. And actually, the 90 percent figure overall does apply if you listen to "Congressional Quarterly." They look at this overall, 90 percent of the time, McCain has voted in the place in which President Bush expressed an opinion. Seventy-seven percent in 2005 was his lowest.

Obama has voted with Bush 40 percent of the time and Biden more than half, 52 percent of the time. So, one more time, we're going to zoom in here. We have the verdict right here, and our verdict in that one is true.

So, actually, T.J., they are going to start off on a happier note. We are seeing a couple of examples there where the attacks were accurate, or mostly accurate. And some of them really were. We're going to keep an eye on more of these throughout the morning. We got more truth squads coming for you, including some false into misleading.

And also, I want to encourage everybody, once you see this, if you're thinking more about the debates, send us your thoughts at iReport.com. We're going to share those, too, T.J.

HOLMES: So, you are getting on to me for my idealism.

LEVS: I know. You're right.

HOLMES: And like you'd just showed yourself, the truth squad said they were actually telling the truth last night.

LEVS: That's a little gift for you.

HOLMES: Is that going to be the theme all morning?

LEVS: I wish it was the theme all morning. It won't be the theme all morning, but these were two of the biggest ones and I wanted to start off with that right now.

HOLMES: All right, Josh. We appreciate you're a member of the truth squad, for us this morning. Thank you. We'll check in with you, again.

LEVS: Thanks.

HOLMES: And, of course, we have just weeks now until the presidential election. Can you believe it? We are down to about 38 days. You may still not know who you want to vote for. Maybe the debate last night didn't really help you make up your mind.

You can learn more about the candidates' plans from the contenders themselves. You can check out our "BALLOT BOWL." That's today at 2:00 p.m. Eastern and that's right here only on CNN.

So, Betty, the debate season now is underway. And this campaign season seems like it's been going forever. A lot of this were underway.

NGUYEN: Oh, my goodness. Exactly, it's in full swing. And, you know, something that we're obviously going to be talking about in this, you know, this post-debate analysis is the body language. And we talked about this last night in our emailing of each other.

HOLMES: Yes.

NGUYEN: McCain didn't really look at Obama. There are many times where you wanted him to look over and talk to him and speak to him directly.

HOLMES: Yes.

NGUYEN: And we didn't see a lot of that. And I think some of the critics and those, you know, who watched this and make a living watching this, are going to really take issue with some of that.

HOLMES: And what does that mean?

NGUYEN: Right. What does that mean?

HOLMES: I mean, you got people out there who read body language for a living, what does that actually mean? And Jim Lehrer was trying all night to get these two to address each other, to talk to each other, and they wouldn't do it, really. So, yes, that's a very good point. And a lot of people noticed that.

NGUYEN: All right. We'll be talking so much more about this. You there live in Mississippi for us this morning. Talk to you shortly.

HOLMES: All right, Betty.

NGUYEN: In the meantime, $700 billion that are on the line. That is a whole lot of money. You know it, I know it, we all do. So, what do you think would happen if Congress bypassed the banks and gave that money to struggling homeowners? You are watching CNN, the most trusted name in news.

(COMMERCIAL BREAK)

NGUYEN: Welcome back, everybody, on this post presidential debate Saturday morning. What a day it is. Thank you for joining us. I'm Betty Nguyen.

HOLMES: And I'm T.J. Holmes. I like how you put that -- this post debate Saturday, this debate that almost was not.

NGUYEN: Yes.

HOLMES: But yes, I'm at the site of the presidential debate here on the campus of Ole Miss. Thank you all so much for starting your day here with us.

We'll be talking about this debate plenty, the debate that was supposed to be about foreign policy. Well, it was, but, of course, the economy played a major role in the debate. And it should have. It's your number one concern right now, issue number one, no doubt about it.

So, exactly how did the candidates do last night in the debate on that issue of the economy? Our Susan Candiotti is keeping the score for us.

(BEGIN VIDEOTAPE)

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT (voice-over): They walked out of here relaxed and got down to business. As expected, both candidates were first asked about the hornet's nest on Capitol Hill over a financial bailout.

OBAMA: This is a final verdict on eight years of failed economic policies promoted by George Bush, supported by Senator McCain.

MCCAIN: We are not talking about failure of institutions on Wall Street, we are talking about failures on Main Street and people who will lose their jobs and their credits and their homes.

CANDIOTTI: Time and again, they were pressed on what they'd have to give up because of the financial crisis.

MCCAIN: How about a spending freeze on everything but defense, and veteran affairs and entitlement programs.

OBAMA: Another place where I'd like to look for some savings, we're currently spending $10 billion a month in Iraq when they have a $79 billion surplus.

CANDIOTTI: The rest of the debate focused on foreign policy, but McCain is trying to so showcase his experience.

MCCAIN: Senator Obama twice said in debates he would sit down with Ahmadinejad, Chavez, and Raul Castro without precondition -- without precondition.

OBAMA: This is a major difference that I have with Senator McCain. This notion that by not talking to the people, we are punishing them, has not worked. It has not worked in Iran. It has not worked in North Korea.

CANDIOTTI (on camera): There was no apparent single defining moment for either candidate. Next up, the one and only vice presidential debate scheduled for next week.

At the University of Mississippi, Susan Candiotti, reporting.

(END VIDEOTAPE)

HOLMES: And, certainly, if you missed that debate, you will have another chance to see it. The debate's best parts, if you want to call them that, and also the best of analysis, you could see it all again with our John King. And, of course, the best political team on television, that's "The Next President: Round One," that's tonight and tomorrow night at 9:00 Eastern.

Now, if you want the most up-to-date up to the minute political news anywhere available, you can go to CNNPolitics.com. That is your one-stop shopping for all that information. You can get those behind the scene details from, again, the best political team you will ever find anywhere. And see why it's the Internet's premier destination for political news. Again, that is CNNPolitics.com.

So, a lot of politics to talk about this morning, Betty. We will continue to talk about it. We have all of our people here, we have Dana Bash, Suzanne Malveaux, who will be giving us the back-and-forth and the ticktack about what happened last night. And those two correspondents, of course, know these candidates better than anybody.

NGUYEN: Oh, absolutely. OK, looking forward to that. Thank you, T.J.

In the meantime, though, Senator Ted Kennedy is back home this morning after an emergency trip to the hospital. Kennedy who is battling brain cancer had what's being called a mild seizure yesterday at his home in Hyannis Port, Massachusetts. Now, doctors say it was caused by a switch in his medication.

In other news, the $700 billion bailout. If you are struggling to pay your mortgage, is it going to help you? Well, here is senior correspondent Allan Chernoff to explain.

(BEGIN VIDEOTAPE) CHERNOFF (voice-over): Giselle James of Bronx, New York is way behind the mortgage payments and she's now fighting foreclosure. She said she needs help far more than the banks and the big investors Congress is about to bail out.

GISELLE JAMES, FACING FORECLOSURE: I'm just been behind and I cannot keep up because I do have to consider I go to work, I have a family to feed.

CHERNOFF: The mortgage squeeze ripping millions of homeowners like Giselle is a major cause of our financial crisis.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: The downturn in the housing market is a key factor underlying both the strained condition of the financial markets and the slowdown of the broader economy.

HENRY PAULSON, TREASURY SECRETARY: We must now take further decisive action to fundamentally and comprehensively address the root cause of the turmoil. And that root cause is the housing correction.

CHERNOFF: So what if Congress spent $700 billion helping struggling homeowners instead of bankers? It would give a boost to the housing market and banks wouldn't have to worry about default on their mortgage investments, but finance experts say, it's not practical. It can't be done quickly and wouldn't be fair to Americans who make their mortgage payments.

JORDAN GOODMAN, MONEYANSWERS.COM: People are free consumers. And if they take on a loan that they can't afford, there's an argument to be made that you shouldn't bail them out, either.

CHERNOFF: And economists say, rescuing struggling homeowners won't solve the current crisis, because banks need immediate help so they can regain the confidence to lend to companies and consumers which is fundamental to the functioning of our economy.

(END VIDEOTAPE)

NGUYEN: And CNN's Allan Chernoff is joining us now, again, from New York.

Allan, you know, you talk about fairness in your story. A lot of people are asking: is it fair for the taxpayers to bail out big investors instead of homeowners?

CHERNOFF: Betty, you know, it's really not fair, but this package is going to ask for a pound of flesh from the banks who do get a bailout. First of all, there will be limits on executive compensation, and also, as you know, there have been calls for the government to gain an equity share in these banks if they do go for the bailout.

Now, in terms of the homeowners, I mean, they really do need a lot of help. They haven't gotten adequate help here, but the issue, the crisis that we are facing right now, even if housing is the root cause of all of it, the crisis that the Fed chairman and the Treasury secretary are trying to prevent is a freezing up of credit.

And that's why they're trying to help the bankers now instead of going to the reckless homeowners. It's just an immediate fix to prevent an economic collapse. That's what we are talking about.

NGUYEN: Oh, yes. OK. Thank you, Allan. We do appreciate it. And, of course, we'll be checking in with you for more information into that $700 billion package that they're trying to hash out this weekend in Washington.

So, even if you aren't caught up in the mortgage, that won't guarantee a secure entire retirement. We're going to explain next hour.

Also, coming up, a special live edition of "YOUR MONEY," a look at the bailout breakdown and what lawmakers need to do to save it. "YOUR MONEY" airs today at 1:00 p.m. Eastern only on CNN.

HOLMES: Well, Betty, we are starting to get a little light here in Mississippi right now. And it's really shaping up to actually be a nice day in many parts of the country, and especially here in the south. But we got some other issues, flooding in the northeast. Reynolds Wolf is in the severe weather center for us.

Reynolds, good morning to you, kind sir.

REYNOLDS WOLF, CNN METEOROLOGIST: Hey, guys. We're all lined up in three little boxes. I mean, we need maybe six more for and we're the "Brady Bunch." I mean, this is going to be fantastic.

(LAUGHTER)

WOLF: You know, guys, you're actually right. Rain is going to be a big story today in parts of the northeast. We got one storm system, in fact, it's going to be pulling its way into parts of New York and back into Connecticut and even into Vermont and New Hampshire. Then you got Tropical Storm Kyle which may move in towards the east.

So, it looks like this part of the U.S. is going to be sandwiched right between that area with anywhere from, say, three to eight inches of rainfall.

We're going to talk about that coming up in just a few moments right here on CNN SATURDAY MORNING.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

NGUYEN: Hey, T.J., what? Did you think I'd forget? Oh, no. We have a big game today. Of course, my Texas Longhorns are playing your Arkansas Razorbacks. I got to tell you, though, it's going to be a real smack down in Austin. You know it. Maybe that's why you didn't want to put a friendly wager on the line. That's all right. You know what? I went in anticipation of your loss and ordered you a little something. It's an outfit. You know, a Longhorn outfit. The only problem is the shorts came in a size small. It looks like it's going to be a tight fit. Hook 'em Horns.

(END VIDEO CLIP)

NGUYEN: I told you I had a surprise for you, T.J. So, about that little wager, huh?

HOLMES: Betty, I'm trying to work here, Betty. There are serious issues going on in the country.

NGUYEN: Look, this is serious business as well.

HOLMES: We had the presidential debate last night, and you want to trash talk from afar?

NGUYEN: It's a big game.

HOLMES: That's how you want to play it, Betty? OK, fine.

NGUYEN: Yes, so bring it, OK?

HOLMES: Well, I assure you, I will have more to say to you this morning about the game and about what's happening, but a lot of people don't realize that I'm not really here to cover the debate. This was by design. People had to separate Betty and I this weekend.

NGUYEN: Yes, it's all out war.

HOLMES: It's good (ph) to be in the same state. Yes, it is. But I will have more to say on the game. You have a big game coming up this afternoon. So, I can't be there to watch it you.

NGUYEN: I don't think you're sorry that you won't be here to watch it with me. You just don't want to hear anymore the trash talking.

Reynolds is joining us now. And, Reynolds, you are kind of -- the person in the middle here, poor guy.

WOLF: Absolutely. What time does that smackdown begin?

NGUYEN: 3:00 Eastern.

WOLF: OK. And this is also, this is actually a game that was actually set back, was set to take place a few weeks ago, but because of Hurricane Ike...

NGUYEN: Yes, Hurricane Ike.

HOLMES: Yes.

WOLF: Exactly. OK. Well, I will...

HOLMES: And this is what Betty does, we have a really down year this year. Betty kicks people when they are down. She does this.

NGUYEN: I can't help it if we are ranked number seven and you're not even on the list. Come on. That's not my fault.

WOLF: T.J., dude, get ready for the boxers, man. It can happen, I'm telling you, man. (INAUDIBLE)

(LAUGHTER)

WOLF: Hey, guys, let's start talking about what the smackdown the Atlantic right here and we're talking about Tropical Storm Kyle. This is a storm that sure to intensify. Right now, it's not really in good shape. It is, at this point, a lot of sheer of this coming in mainly from the southwestern quadrant at this point.

The storm is, though, expected to pick up some speed and should intensify to a hurricane. And when it does, it is forecast to pull its way to the north at a fairly quick rate -- winds toward 70s. So, as soon as those winds exceed 74 miles an hour, boom, it's going to be considered a hurricane. It will push (ph) to the north, at least, according to the latest forecast, the path we have from National Hurricane Center.

Now, I'll tell you, it should remain off the eastern seaboard. Still, in many places like New Jersey and Long Island, you can have some massive waves. Some story for, say, Martha's Vineyard.

Now, keep in mind, though, although the storm, at least, the latest forecast path has it going right on just to the extreme eastern border of Maine, there's certainly that possibility the storm could veer a little bit more to the west, perhaps making landfall in extreme eastern Massachusetts, perhaps on to the Maine coast. It's certainly something to watch very carefully.

In the meantime, we got an issue with flooding in parts of the northeast. And lot of that issue comes not just from Kyle making its way up to eastern seaboard, but rather, from a pocket of showers and storms that were at parts of the Appalachians, that is going to be drifting off to the east. The heaviest rainfall right now in places like Burlington (ph), back over to Syracuse, and even into, say, Scranton. But later on today, we are going to see that rain begin to pick up in parts of New York. In fact, a good part of New England.

Notice the areas shaded by the light green, that's your watch. Anywhere from three to eight inches is expected in this area. One place you shouldn't see rain, will be in Austin, Texas. Take a look at this shot that we have for you, not far from auditorium shores. It is a beautiful morning, a great day for football.

T.J. will be in tears by this afternoon. Let's send it back to you guys, Betty.

NGUYEN: And I can even tell you this, a high of 93. I know what is going on today.

WOLF: That's what I'm saying. NGUYEN: And like I said, it's going to be a Texas smackdown, T.J. I'm so sorry.

WOLF: Sorry, T.J.

HOLMES: Oh, my goodness. Betty, you know what, Betty, I'm going to do actually is that punishment...

NGUYEN: I'm in trouble because you are going to get me, I know.

HOLMES: No. If we lose the game, (INAUDIBLE) I'm going to wear those shorts -- I'm going to wear those shorts tomorrow morning during the entire show.

NGUYEN: Really?

HOLMES: Yes. And you have...

WOLF: Over your suit.

(CROSSTALK)

NGUYEN: Oh, because I have them with me today. Don't you worry, they will be here front and center tomorrow.

HOLMES: OK, fine.

NGUYEN: We will get video of it.

HOLMES: Fine.

NGUYEN: YouTube watch out. All right. See you.

WOLF: I'm leaving right now.

NGUYEN: You are so in trouble, T.J.

All right. OK, speaking of that storm that Reynolds was talking about, we actually have some video, this is another tropical storm that obviously turned into a hurricane. Victims of Hurricane Ike, they still need your help. The video I was telling you about, we'll get to that in a little bit.

But, back to Ike, if you'd like to get involved, visit our "Impact Your World" page there. You're going to find the links to organizations working in Texas and elsewhere along the gulf coast. That's at CNN.com/impact.

Washington, working on that financial bailout for Wall Street. They've been working on it for about a week now and we are expecting something hopefully this weekend, T.J.

HOLMES: Yes, hopefully everybody has their fingers crossed. We are expecting it maybe to happen by this weekend, but who knows now. So much to get worked out. Tough economic times right now, but, you know, still during these times, the game must go on. What really is the impact on sports?

Of course, we get that answer from our sports business analyst and a good friend to our show, buddy, Rick Horrow. He's looking into that for us. We'll talk to him right after the break.

NGUYEN: Hook 'em Horns.

HOLMES: Good morning to you.

(COMMERCIAL BREAK)

NGUYEN: We all know the state of the economy is affecting everything. And in fact, the world of sports is no exception. To analyst now, Rick Horrow, who joins us from West Palm Beach, Florida.

You know, Rick, a lot of people just simply don't have the extra cash to catch a game. On top of that, corporate sponsors, they're dialing back. So, where does this leave the sports industry? And does that going to lead to maybe higher ticket prices down the road?

RICK HORROW, CNN SPORTS BUSINESS ANALYST: Betty, in honor of the candidates last night, I will give you a non-answer, OK? So, it depends...

NGUYEN: Don't waste our time with a non-answer. I need an answer.

HORROW: An hour and a half of that. It depends on who you talk to. On the negative side, it's taking longer to get to games, gas prices are more expensive, and the seats that are the cheaper seats are the ones that are being bought all over the country, for example, naming deals are harder to do. There is a silver lining in this cloud, though.

First of all, more people are watching on TV. Why? You know, they're staying at home. And so, the advertising is going up. And on the other hand as well, of the "Fortune 400," nearly 2/3 of them are involved indirectly or directly in some kind of a sports endeavor. So, the rich, the people with means, are still able to buy franchises or parts of the sports industry.

NGUYEN: OK. But, you know, let's get down to the folks that make up the majority of the fans. A lot of them, even if they have a ticket and can afford that luxury of going to a game, because a lot of people do consider it a luxury now with the high price of everything, some don't have enough gas to get there.

In fact, here in Atlanta, gas stations are simply on empty. You can't find it hardly in many spots. So, what kind of an impact is this having on the game?

HORROW: Well, yes. And I was at the tour championship in Atlanta on Thursday. And the bottom line of it is that gas, if you can find it, it's $5 a gallon or so.

NGUYEN: Right. HORROW: That's your iReport here. The bottom line is people are just staying home in many cases and are taking it out on the fan/cost index, which is an analysis they use to measure what you buy when you get to the game. You're buying less beer, you're buying less concession, you're buying less merchandise. So, it is having that ripple effect on sports as well.

NGUYEN: You know, but at the same time, though, when you're hurting and the economy, folks down in Texas hurting from Hurricane Ike, you know, the roof on Reliant Stadium was damaged, yet when it comes to bringing things back to some sense of normalcy, a lot of people look to the sports teams to kind of bring you back to the days of old. Remember when things were still good.

How important is it for, you know, sports teams and the stadiums and the fans to all try to get that sense of normalcy back?

HORROW: Well, sports is very important for culture. Just look at what happened with the Saints after Katrina. And the stadium deals that are being done -- everybody talks about public money and how you shouldn't be spending it -- but of the 250 deals in the last 15 years, many of them are now done as hurricane and disaster relief centers, not only for distribution of food but remember how important Katrina and the Superdome was.

NGUYEN: Right, yes.

HORROW: But also these facilities in Houston, remember when Katrina came through, what happened with Rita and now just recently what happened with Ike. And as you know, your game -- I guess you have a little game this weekend.

NGUYEN: Yes, was postponed because of Ike, but it's on today. And I got to get your prediction. What do you say?

HORROW: Well, here's my thought. I think this is very important. I'm wearing a pink shirt today because that's the combination, I guess, when you deal with your Texas orange and the Arkansas red. So, I think it will be a really close game. You know, I've been working with you longer -

NGUYEN: That's what we've done to you. That's what you get for a non-answer. We cover your face.

HORROW: Here we go.

NGUYEN: That's the treatment here on CNN. Come back with an answer and we'll listen to you. All right.

HORROW: All right. There's the bottom line, OK? Texas by seven...

NGUYEN: Teen?

HORROW: There you go.

NGUYEN: All right. Thank you, Rick. T.J., you're speechless.

HOLMES: Why can't he (ph) even get a helmet on that hair of his, OK?

(CROSSTALK)

NGUYEN: You do need a bit of a haircut, my friend. I don't know how they fit that helmet on the head with all that hair.

HORROW: Wow.

HOLMES: With all that hair.

(CROSSTALK)

NGUYEN: With all that hair. I could say something else, but I didn't go there, Rick. All right.

HOLMES: You can't go there.

NGUYEN: Looking forward to seeing you again in the coming weeks. Thank you -- T.J.

HOLMES: All right. I never really liked Rick anyway.

NGUYEN: Oh, stop it.

HOLMES: But hello again to you all. I'm T.J. Holmes here, (INAUDIBLE) in Oxford, Mississippi, actually one of my rival schools here, Ole Miss. I'm a Razorback, I shouldn't even be on campus. But this is a good reason for me to be on campus, the two presidential candidates had their first debate here on campus last night.

Josh Levs is back at the CNN Center for us this morning, talking to us about a lot of the iReports. We're not the only reporters here on campus. We've got iReporters all over the place. They're helping us out once again.

Good morning to you, Josh.

LEVS: T.J., you are just happy to have a change of subject at this point, aren't you? You know, like I'll talk about anything else. Oh, man, what a morning for him.

All right. Here's the deal. You know, when you're watching the debate, folks, and you see the analysts afterwards and you feel like no one is expressing your opinion, well, you can express your opinion and then we just might air it, thanks to iReport.com. That's coming right up.

(COMMERCIAL BREAK)

HOLMES: All right. Well, they sort of made their cases last night, Barack Obama and John McCain, one-on-one for the first debate over foreign policy. Well, the economy was talked about a lot last night, though. Let's bring in our Josh Levs again. Voters weighing in on this. They had a lot to say.

LEVS: They did, they weighed in through the night to iReport.com. We got so many. We had a team that iReport going through and through the night last night.

One of the interesting ones comes to us from Trevor Dougherty who was in Ithaca, New York, who was at a debate watch party and interviewed everyone there.

(BEGIN VIDEO CLIP)

TREVOR DOUGHERTY, IREPORTER: Who do think won, Obama, McCain, or tie?

UNIDENTIFIED FEMALE: I think it was a tie. I'm in more McCain, though.

DOUGHERTY: Yes, what about you? Obama, McCain or tie?

UNIDENTIFIED FEMALE: I say Obama (INAUDIBLE). He spoke about the issues. McCain had nothing to say.

DOUGHERTY: And what about you? What do you think?

UNIDENTIFIED FEMALE: I don't think they answered the questions the entire night.

DOUGHERTY: Who do you think won? So, who do you think won?

UNIDENTIFIED MALE: We'll know soon.

DOUGHERTY: All right. Who do you think won?

UNIDENTIFIED MALE: I think -- I think Obama won.

DOUGHERTY: What about you? Obama, McCain, or tie?

UNIDENTIFIED MALE: I think that McCain exceeded my expectations.

DOUGHERTY: So, Obama, McCain or tie?

UNIDENTIFIED MALE: Yes.

(END VIDEO CLIP)

LEVS: I love how he answers that "yes." It's the most ambivalent thing possible, which is what a lot of people were saying to us, that they didn't get the kind of meat they were looking for. You can weigh in whatever you think, if someone won, if you got what you wanted, if you didn't hear what you wanted. Just go to iReport.com, send us your photos, your videos, your story, whatever you want. We'll keep sharing them with you throughout the morning -- T.J.

HOLMES: All right, Josh. Thank you very much. We'll see you again soon.

The next hour of CNN SATURDAY MORNING starts right now.

NGUYEN: From the CNN Center in Atlanta, this is CNN SATURDAY MORNING, September 27th. I'm Betty Nguyen here in Atlanta and my partner, T.J. Holmes there in Oxford, Mississippi.

Good morning, T.J.

HOLMES: Hey, there. Good morning to you there, Betty. I am here, and we all know why. And John McCain showed up, sweet. And this is the site of the first presidential debate last night. Thank you all for being with us for it.

Yes, Senator Obama, Senator McCain; this was slated to be about foreign policy. Well, we talked a lot about the economy and then we didn't have any choice but to give in to everything that's going on with the economy.

We will be talking plenty about what happened last night and, of course, the debate about the debate. We have a couple of members of the best political team on television right here with me. We'll get into that in just a moment, Betty.

NGUYEN: It's going to be good because they have followed the camps very closely. They're going to provide some great insight.

In the meantime, that $700 billion bailout that they're working on, how it's going to impact corporate America; how it's also going to impact Main Street. We have the latest on all of that.

So let's start with this, banks on the brink. The financial world is in crisis. And this morning your lawmakers say they are making progress on that $700 billion plan to stave off economic disaster.

There's word the Republicans are forcing, though, a concession on the part of Democrats, and Congressman Barney Frank, the top Democratic negotiator, says he is confident there will be an agreement by Sunday.

So, Congressional staff members worked on that bailout plan compromise until, I don't know, about six hours ago, 1:00 in the morning Eastern Time, about 1:30.

Following this story for us is Kate Bolduan on Capitol Hill and senior correspondent Allan Chernoff in New York.

Kate, we do want to start with you. Talk to us about those forcing of concessions there on the part of Democrats. What are you hearing about that?

BOLDUAN: Yes. It's something we've been hearing a lot about over the past couple of days. This is -- this came from House Republicans, they really are digging in on talking about having alternative financing options in this plan. It gets a little complex, but basically to sum up, what House Republicans say they're really sticking on is the fact that they don't want it to be taxpayer-funded finance. They also want some private dollars to be part of this plan so the Treasury Secretary can use optional financing options in trying to finance this bailout.

You mentioned Betty that they've been staff level meetings have been happening all night, they wrapped up before 2:00 and promised to start getting these talks under way once again.

We do also hear that the key negotiators of this dealer are going to be sitting down today to try to hammer out, talk about at least and discuss some of the most -- biggest sticking points that they have been dealing with over the past couple days.

Democratic Congressman Barney Frank, one of the key negotiators here, he talked about yesterday why it's so important to members to have broad, bipartisan support of this plan before moving forward.

Listen here.

(BEGIN VIDEO CLIP)

FRANK: It depends with success on the restoration of confidence, in part. If this were presented in a partisan way, if one of the political parties in either of the houses looked like they were saying no. If one of the presidential candidates appeared to be trying to undercut it, not only does it become hard to pass, it makes it hard to work because something that is not more broadly supported isn't going to accomplish the goal.

(END VIDEO CLIP)

BOLDUAN: Accomplishing a goal, that's definitely what everyone has an eye on, everyone also having an eye on markets open Monday. They're definitely working hard this weekend.

I just spoke to Republican Congressman Roy Blunt, another one of the key negotiators here. He told me he's very optimistic they can get something done. And is also, as we've just talked about, Betty, he did say there needs to be alternatives in this plan when it comes to financing for Republicans to sign onto it.

NGUYEN: We'll see what's in it come Sunday, tomorrow, if indeed the plan is hashed out by then.

Kate, thank you for joining us live.

In the meantime, the world of finance is coming off a roller coaster week. CNN's Allan Chernoff joins us now from New York to talk about it.

Allan, what does this mean for corporate America and how dire the situation is? Because we hear from the candidates, we hear the politicians that this is huge. So break it down for us. How dire is it? CHERNOFF: it is actually very critical for corporate America right now because it's all about money being tight and the cost of money going way, way up.

Right now, banks are extremely nervous. You saw what happened to Lehman Brothers, AIG had to get a rescue, and then, of course, the bailout plan was thrown in there to make sure that we didn't have more finance companies falling one by one.

The bottom line is this is all about credit. Companies need credit to keep on operating. And if you think that doesn't affect you, think again. Think about your employer, if you work for a big company. They need money to keep on operating.

Let me just give you a few examples of the measures that companies had to go to. First of all, General Motors, they had a huge credit line, and they tapped it. They tapped $3.4 billion of their whole credit line was $4.5 billion. They said, "Hey, let's tap into the rest that we haven't already taken." This is essentially GM saying we're taking money, we're going to put it under our mattress right now, just in case we need it.

Another example, Goodyear Tire; now, here this company tapped a $600 million credit line because they could not get access to a whole bunch of money that they had put into a money market fund at the reserve fund. That's a fund that had invested in Lehman Brothers bonds. The bonds went to zero, and they couldn't get their money out, Goodyear couldn't. So they had to actually tap in to that.

Betty, companies are really trying here to make sure they've got enough cash to keep them going.

NGUYEN: All right. So this is how it shakes out. Some companies could be stuck in a cash squeeze that could put them on the brink. So it sounds like this is all about restoring confidence to a large extent as well?

CHERNOFF: Absolutely. That is the key question, the key issue over here. Bankers are afraid to lend because they don't have the confidence that they're going to get their money back, and if the bailout plan is most definitely intended to restore that confidence. So, that's this is all about, Betty.

NGUYEN: All right. And another question is, is this going to be an instant fix? We're going to talk about that with you a little bit later this morning. So stay tuned.

T.J. a lot of issues when it comes to the big bailout package that some people are calling it, but what we know is $700 billion is a lot of money and folks want to know where that money is going.

HOLMES: That is a lot of money. Most of us cannot keep up with all those zeros to be quite honest with you.

That was talked about a bit last night. Of course, the debate last night was slated to be talking about foreign policy last night. I'm here in Oxford where the debate did happen here, on the campus of Ole Miss. Big question this morning exactly how these candidates did, who won, if you can ever really pick a winner in a debate like that, but everybody always tries to.

I'm here with Suzanne Malveaux and Dana Bash, two of the best political team on television. They are a couple of the best because you have been following these candidates around for some time.

This was supposed to be McCain's debate, his topic, foreign policy. We finally got into it and we heard some of the same things from these two, one saying I was for the surge, it worked. The other saying, I was against the war from the beginning, some of the same, familiar themes.

We're going to take a quick listen here to what they had to say.

(BEGIN VIDEO CLIP)

MCCAIN: I know what it's like when an army is defeated, the war I was in where we had an army that wasn't through any fault of their own, but they were defeated. And I know how hard it is to -- for that -- for an army and a military to recover from that. We did, and we will win this one and we won't come home in defeat and dishonor and probably have to go back if we fail.

OBAMA: The point that I originally made is that we took our eye off Afghanistan. We took our eye off the folks who perpetrated 9/11. They are still sending out videotapes, and Senator McCain, nobody's talking about defeat in Iraq. But, I have to say that we are having enormous problems in Afghanistan because of that decision.

And it is not true that you have consistently been concerned about what happened in Afghanistan.

MCCAIN: You might think that with that kind of concern that Senator Obama would have gone to Afghanistan, particularly given his responsibilities as the subcommittee chairman. By the way, when I'm subcommittee chairman, we take up the issues under my subcommittee.

But the important thing is -- the important thing is I visited Afghanistan and I've traveled to Waziristan and I've traveled to these places and I know what our security requirements are and I know what our needs are. And so the point is that we will prevail in Afghanistan, but we need the new strategy and we need it to succeed.

(END VIDEO CLIP)

HOLMES: All right. So there you hear from those two.

Tell us, Obama last night, did he do what he needed to do? Did he say what he needed to say and get his point across about Iraq and about Afghanistan which is, hey, I was against the Iraq war but I'm telling you what needs to happen in Afghanistan?

MALVEAUX: Right. Well, there are a couple of things that the team was really trying to do. First of all, it's pivot from the surge topic to the original decision about going to the war in Iraq.

The second thing is they were really trying to make sure that he was concise, that he was strong. He's talked about this before, so going into debate prepped, it was clear that was what they were doing.

So, one of the moments that really stood out for me is when he said, you know, you went in there, you said we were going to be greeted as liberators. You were wrong. You talked about Saddam Hussein. You were wrong. You thought this was going to be easy. You were wrong. He just kept hitting him on that point. It seemed as if that was what really stuck.

Even the CNN poll showing that people believed he would handle Iraq better than McCain. That is something that they wanted to hit hard. That's one of the reasons the Obama team believes this was McCain's home turf, yet he did very, very well.

HOLMES: And you talked about wanting to pivot away from the surge. No doubt McCain wanted to talk about that surge. This was the one they're saying, he said repeatedly, "I was putting my political fortunes on the line here by favoring this thing that wasn't very popular at the time."

BASH: Absolutely. That's his mantra on the campaign trail. That was absolutely the message that he wanted to get across at this debate.

But the most interesting thing, I thought, in terms of the strategy that McCain and his team had was the thing that you heard seven times, we actually counted seven times, what Senator Obama doesn't understand.

He said it with regard to Iraq, with regard to Pakistan, with regard to Afghanistan. What he was trying to get across not so subtly by saying over and over is that Senator Obama doesn't understand, he doesn't get it, he doesn't have the experience, he doesn't have the judgment.

He doesn't know what I know. He's not ready to be commander-in- chief and represent all of you and this country on the world stage.

HOLMES: Did that work or did it come across as a little talking down to him, a little condescending like, young man, you don't know what you're talking about?

BASH: I think part of the goal was to get under Obama's skin. So he didn't seem to get under Obama's skin so if that is part of the goal then it probably didn't work very well. But, you know, what Senator McCain and what his team has to do, because they really -- this is his biggest asset is present himself as somebody who was experience.

That's why you heard him not just say that but also talk about the places he went and you heard that in that sound bite, the things he's done over, you know, his decades and decades.

HOLMES: Go ahead.

MALVEAUX: I can tell you, it didn't get under Obama's skin but it get under some people who were e-mailing me and texting me during this debate thing. He's got to hit him harder. He's got to hit him back. Why is he letting him paint him in this way as being naive in some way?

One of the moments that didn't necessarily work for Obama is when he went to McCain and said you threatened the extinction of North Korea, you joked about bombing Iran. It was an opportunity for McCain to come back and say, look, I have a record when it comes to making tough decisions on foreign policy; Somalia, Lebanon, this type of thing. It was an opening for him to really use that to his advantage. That was a particularly vulnerable moment.

HOLMES: And real quick, go ahead.

BASH: I was going to say one thing the senator speaks to, one thing we definitely did see with regard to foreign policy is their difference; there are big differences in terms of how they would approach dealing with foreign leaders, with regard to Pakistan. Forget about the semantics of preconditions or whatever. But they definitely have very different philosophies. Voters now have that to choose from.

HOLMES: We want to talk more. I want to get you all back again, about the issue of sitting down with Ahmadinejad. That was a moment last night as well. Talking about what are you going to say? So, several moments.

Certainly McCain found his stride, and got a little more animated when he started talking about foreign policy.

Thank you both. You're going to be with us every hour talking about this stuff. Thank you again.

You all give me a hard time for you all being up so early this morning, but thank you. We'll see you again here shortly.

We want to know your thoughts as well about the debate, all of you out there. Which candidate really talked to you, made the best impressions on you and why? E-mail us your thoughts at weekends@cnn.com. We'll be bringing you some of those responses, those comments throughout the morning this morning.

Also, we are just weeks away, 38 days specifically, until the Election. Still don't know who you want to vote for? Many of you do not.

Learn about the candidates' plans from the contenders themselves. Check out our Ballot Bowl, it's back today, 2:00 Eastern, right here and only on CNN -- Betty.

NGUYEN: All right. Thank you, T.J.

Here's some political news as well. Massachusetts Senator Ted Kennedy back home this morning after a mild seizure sent him to the hospital yesterday. According to his office, doctors believe it was caused by a change in medication. Kennedy spent several hours at Cape Cod Hospital making it home in time, though, to watch last night's presidential debate; didn't want to miss that. Kennedy had surgery, as you recall, for a malignant brain tumor, back in June.

Well, Galveston Island, Texas, was hit hard by hurricane Ike. Some storm victims, though, are making some hard decisions now. Should they stay or should they go? And what does the future hold?

(COMMERCIAL BREAK)

HOLMES: We have a story to tell you about out of Syria this morning. There was a car there that was booby-trapped with explosives, plowed into a crowded street in Damascus. This blast left 17 people dead; wounded about a dozen others. Syria's Interior Minister is calling the attacks in his words, a terrorist act. So a lot more details to come about that story as they begin to come in to us.

Again, hello to you all. T.J. Holmes here on the campus of Ole Miss in Oxford, Mississippi, where last night's debate was held. We'll be talking much more about that debate, both debate coverage and analysis coming up.

We're starting to get a little light here, supposed to be a beautiful day here in Oxford but a lot of other weather to talk about this morning -- Betty.

NGUYEN: All right. Speaking of that though, it has been such a stormy week for the Eastern Seaboard, an unnamed storm stretching from the Carolinas to New England that has smacked the area with speeding winds and buckets of rain.

Just look at this video. It even caused some minor flooding along the way. This video was shot by one of our I-reporters at the beach in North Carolina. Look at that flooding.

Reynolds has been watching this. We talk about these storms; we just can't seem to catch a break. I know it's the hurricane season. It's not over yet. When is it going to be over? Any time soon?

WOLF: It was actually kind of slow. After Ike, we had about a week or so to catch our breath, but as you mentioned, we are still in the middle of hurricane season. We've got through the rest of November.

During some hurricane seasons, namely in 2004 and 2005, you'll go past November. Not unusual to see that happen occasionally. It could happen again this year. You never know.

Right now, very quickly, let's talk about the area Betty was referring to, the northeast. They've just been pummeled by many storms, the storm, we had an unnamed one moving up the Eastern Seaboard, is going to really soak a lot of the northeast, including parts of Maine, back into New Hampshire, Vermont, back into Massachusetts, even into Connecticut, Rhode Island and New York.

At the same time, yet another storm is going to be moving right along the coastline. That one, of course, is tropical storm Kyle. Kyle really in bad shape at this time in terms of its symmetry, kind of a -- not in a textbook form you notice, but it is still a strong storm, one to be reckoned with; winds of 70 gusting to 85. Storm expected to zip its way right along the Eastern Seaboard.

There is still that possibility the storm could veer a little bit more to the west, possibly making landfall, say, in Massachusetts, maybe even into Maine as we get into Sunday and Monday, certainly something worth watching.

I'll tell you, it looks, at least according to the latest path we have at the National Hurricane Center, the storm making landfall just near the Maine border with maximum sustained winds around 70 miles an hour.

That would make it a very strong tropical storm, not a hurricane but a tropical storm, but we would not be surprised to see a little bit of that fluctuation, maybe still making landfall as a weak hurricane so in that possibility.

That's the latest we've got for you; certainly a whole lot more to talk about throughout the rest of the day. And of course for more updates, keep it here, CNN, your hurricane headquarters -- Betty.

NGUYEN: Absolutely. Thank you Reynolds.

WOLF: You bet.

NGUYEN: Today does mark two weeks -- can you believe it -- since Ike slammed ashore.

WOLF: Hard to believe.

NGUYEN: It really is. Some of the hurricane victims though on Galveston Island, they are trying to salvage what they can, while others are simply moving on.

We get more now from KTRK reporter Andy Sirota.

(BEGIN VIDEOTAPE)

ANDY SIROTA, KTRK REPORTER: Marisol Martinez is packing up and moving out of Galveston, leaving behind 14 years of memories.

MARISOL MARTINEZ, LEAVING GALVESTON: It seems like, well, there's a hurricane season every year, so I don't have -- I don't want to be through all of this every year.

SIROTA: Ike's aftermath may have taken its toll on the island and its inhabitants, yet for some the future has never been brighter.

CHRISTINE HOPKINS, HOTEL GALVEZ: Opening the Hotel Galvez again, it's going to be wonderful for Galveston Island. SIROTA: Built in 1911, the island's oldest historic hotel sustained minimal damage during hurricane Ike and is set to re-open for business in one month.

HOPKINS: It's significant because it showed our resilience after the 1900 storm. And again here we're 97 years later, and it's still standing strong.

SIROTA: The Hotel Galvez which has electricity and water is already housing its employees and is booked solid for the Lone Star Biker Rally planned for late October. City leaders hope the event will once again set the island's tourism industry in motion.

STEVE LEBLANC, GALVESTON CITY MANAGER: We're working on that, and we're working -- I know that the hotel/motel association is working on keeping the -- as many of the conventions and tourist- related events here.

SIROTA: As confident as city leaders are about the island's future, it's a future Marisol Martinez says she can't afford to wait for.

MARISOL MARTINEZ: It doesn't seem to be any improvement in here as far as to leave so we're just going to get out.

(END VIDEOTAPE)

NGUYEN: Many national and local organizations, they are stepping in to help those affected by hurricane Ike. If you need their services or would like to get involved, please visit our impactyourworld page where you can find more details on all of that at cnn.com/impact.

(COMMERCIAL BREAK)

HOLMES: Washington Mutual, WAMU, went way up, belly-up, that is. It's the biggest bank failure in U.S. history. Now, if you had money in Washington Mutual, here's what you need to know.

JP Morgan Chase bought the savings and loan bank after federal regulators seized operations. Now according to JP Morgan Chase, it's business as usual at all of the branches. Customers can access their accounts and the money if FDIC-insured. The money should be there.

Other banking news now, investors close watching Wachovia, stocks of that bank now plummeted 30 percent yesterday after "The New York Times" reported a possible merger with Citigroup.

Well, work hard, save your money, enjoy retirement. That's how it's supposed to be sounds easy enough. But even if you never took out a sub-prime mortgage and never made a risky investment, you, too, can lose big in the current financial meltdown.

CNN's Chris Lawrence has a case in point.

(BEGIN VIDEOTAPE) CHRIS LAWRENCE, CNN CORRESPONDENT: Debbie Ingham is out $20,000 after her bank went belly-up.

DEBBIE INGHAM, LOST SAVINGS: But it's okay to bail out these corporations that made bad business decisions? For billions of dollars?

LAWRENCE: Nevada's Silver State was the 11th bank to fail this year.

INGHAM: I was like, oh, my god, I had everything there.

LAWRENCE: Everything, minus that 20,000.

INGHAM: I don't even -- I barely make that in a year, in my -- in my job. I mean, that's how important that money is to me.

INGHAM: Debbie's a school bus aide and it's taken 27 years of marriage to save $120,000. When her husband had his identity stolen, she put their money in her name, divided into two accounts. When the bank failed, the FDIC added those accounts and chopped up everything over 100,000.

Where do you put your money now?

INGHAM: I feel like taking the money out and putting it under the mattress. I don't think anything's safe anymore.

LAWRENCE: Financial planners say couples should open a joint account or keep individual accounts at several banks.

LEONARD GOODALL, CERTIFIED FINANCIAL PLANNER: You can go down the street and have another bank or a third bank, each of those will be separate. If you had accounts in each of them up to $100,000, each of them would be guaranteed.

LAWRENCE: The FDIC told Debbie she could get a percentage if Silver State's assets are sold.

INGHAM: That's if. That's if they sell anything. When it could take years.

LAWRENCE: Debbie's money is part of $20 million in uninsured deposits but it could have been worse. Customers withdrew a quarter of a billion dollars in the two months before Silver State failed.

LAWRENCE: The bank did have somewhat famous ties. Senator John McCain's son served on the Board of Directors for Silver State Bank. He was part of the auditing committee that would oversee the books. But Andrew McCain resigned from that position for personal reasons just two months before the bank collapsed.

Chris Lawrence, CNN, Las Vegas.

(END VIDEOTAPE)

HOLMES: Many of you out there, of course, are concerned about your finances and rightly so.

Coming up next hour, CNN personal finance editor Gerri Willis has more on how to protect your savings. You need to hear from her this morning.

Also, taking a jet to France, the jet is on his back. Airman crosses the English Channel.

(COMMERCIAL BREAK)

NGUYEN: You've got to see this one. It's a bird, a plane, no, it's fusion man. Yes, that's what he calls himself. Crossing the English Channel with a homemade jet pack, the guy's real name is Yves Rossy and he flew into the history books yesterday, becoming the first person to fly solo across the channel, literally. The whole mission took about 15 minutes.

I tell you what T.J., I can use one of those in traffic.

HOLMES: What is wrong with people? I would love to see you flying across Atlanta, Betty. That would be a great shot for me to have.

We will continue, though, with our team coverage of last night's big presidential debate, plus will the bailout for the instant - or will the bailout be an instant fix for Wall Street? We will be talking about all of that stuff the rest of the morning.

NGUYEN: Before that though, we have a look at some health issues for you today. "HOUSE CALL" with Dr. Sanjay Gupta starts right now.