Return to Transcripts main page

THE SITUATION ROOM

Dow's Record Plunge; Lehman Chief Gets Grilled in Congress; Palin Ties Obama to Terrorism

Aired October 6, 2008 - 17:00   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, breaking news -- a breathtaking plunge for stock markets. The Dow drops by 800 points before making a partial comeback. Investors fearing the credit crisis will reach all the way around the world.
And what about the Wall Street bailout? Will that $700 billion boost do anything for Americans on Main Street? I'll ask Billionaire Donald Trump. He's here in THE SITUATION ROOM.

And Sarah Palin tries to tie Barack Obama to terrorism. She's leading the charge, as the McCain campaign goes into attack mode. But could that backfire with voters?

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Shock waves from the U.S. financial crisis are reverberating around the world and coming back full circle today in a massive Wall Street sell-off that sent the Dow Jones Industrial Average spiraling down to a five year low. The Dow dropped below the 10,000 mark for the first time -- for the first time since October, 2003.

No doubt a bad day. But at one point it was looking disastrous. With the Dow down a record 800 points, recovery did set in during the final hour of trading, and that helped cut losses. But the Dow still closed down almost 370 points.

All this despite Washington's $700 billion Wall Street bailout. And there is bad news at the NASDAQ, as well.

Poppy Harlow of CNNMoney.com is there -- Poppy, what's going on at the NASDAQ?

POPPY HARLOW, CNNMONEY.COM: Well, the time that the Nasdaq is the worst hit of all these averages, today down 4.3 percent. It was down as much as 8 percent this afternoon. It's down more than 30 percent this year. That's because you have a mix of big tech stocks like Oracle and Cisco and Microsoft that have been hit hard. Some analysts say you can't short the financials right now because of that SEC ban. So people are shorting tech companies that rely on those financial institutions for a lot of their business.

Also, a lot of regional banks are traded here, names like Citizens, Republic Bancorp and Zion Bank that were hit very hard today and all this week.

So what you have, Wolf, is a sell-off across the board. And this index hit even harder than the Dow industrials -- Wolf.

BLITZER: The volatility that's enormous -- and it causes heartburn for so many folks who are looking at these numbers. Give us some perspective, Poppy, how this -- what this really means to investors who are watching us right now.

HARLOW: Yes, you might not have heard of this thing before, but it's called the VIC. There's an actual index that tracks the volatility of the market. And that index went nuts today, right?

We saw the Dow go from 800 points to close down 370. We saw the NASDAQ with big swings like that. And this shows the highest reading today since 1989. Why do you care out there?

Because it's showing you that fear and emotion is driving this market. It is no longer based on fundamentals. We haven't seen the volatility index this high in 19 years. You're seeing a reading of over 50 points. Just less than a month ago, in the middle of September, the reading was at 20 points.

So people are betting on the fact that the market is going to go up and down and up and down, but they're betting more so, Wolf, that the market is going to go down. That's what's going on right now -- Wolf.

BLITZER: Poppy is over at the NASDAQ. Stand by.

Even as the financial meltdown continues, Congress has convened its first hearing on the subject. The House Oversight and Government Reform Committee began with the largest bankruptcy in American history, Lehman Brothers, and its top executive.

(BEGIN VIDEO CLIP)

RICHARD FULD, CHAIRMAN & CEO, LEHMAN BROTHERS: Like many other financial institutions, Lehman Brothers got caught in this financial tsunami.

But I want to be very clear. I take full responsibility for the decisions that I made and for the actions that I took. Based on the information that we had at the time, I believed that these decisions and actions were both prudent and appropriate.

(END VIDEO CLIP)

BLITZER: Our Special Investigations Unit correspondent, Abbie Boudreau, just got back from the hearing -- Abbie, you've been doing some digging into this CEO. hat do we know? What are we learning?

ABBIE BOUDREAU, CNN INVESTIGATIVE CORRESPONDENT: Well, Wolf, Richard Fuld is known as "The Gorilla" at Lehman Brothers, where he says he started as an intern 42 years ago. Now, as CEO since 1993, he's overseen more than 28,000 employees in over 28 countries.

(BEGIN VIDEOTAPE) BOUDREAU (voice-over): The 62-year-old Wall Street tycoon rakes in nearly a half billion dollars between 2000 and 2007 according to the Oversight Committee -- in one year alone, earning more than $106 million.

Along with all that money came immense homes -- this estate in Greenwich, Connecticut complete with tennis courts and swimming pool and a $21 million apartment on Park Avenue in New York City and a vacation spread in Juniper Island, Florida, with a postcard perfect view -- not to mention a lavish art collection reportedly worth millions.

Outside the hearing room, I tried to ask him about all of this.

(on camera): Do you think it's fair that you made so much money when your company is actually (INAUDIBLE)?

FULD: I'm sorry. I'm on my way to a...

BOUDREAU: Some of your critics have said that you have had a chance to save your company and you haven't.

Is it greed?

I mean do you have anything to say to the people that are -- that are watching this right now, that are wondering, you know, why this happened?

You have nothing to say?

FULD: Are you going to be in the testimony?

BOUDREAU: Absolutely.

FULD: Good.

BOUDREAU (voice-over): I also asked him about all of his real estate holdings.

(on camera): How do you rationalize that when the rest of the country is in turmoil?

(voice-over): At the hearing, Congressman Henry Waxman asked Fuld if he deserved all the money he's made at Lehman.

REP. HENRY WAXMAN (D), CALIFORNIA: Do you think it's fair and do you have any recommendations on fundamental reforms that would bring a new approach to executive compensation?

FULD: Mr. Chairman, we had a compensation committee that spent a tremendous amount of time making sure that the interests of the executives and the employees were aligned with shareholders.

(END VIDEOTAPE)

BOUDREAU: Now, he chose not to the answer that very direct question. Congressman Waxman twice asked him that again, but never got a clear answer -- Wolf.

BLITZER: Abbie, thanks for that. Abbie Boudreau working the story.

The McCain campaign has seemingly moved on from the economy and gone into attack mode. Leading the offensive, the running mate, Sarah Palin.

Let's go to Ed Henry. He's in Florida working this story for us. Governor Palin's trying to tie, since Saturday morning, Barack Obama to terrorism. Explain what she's suggesting.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: That's right, Wolf.

The McCain camp insists they can do both -- they can talk about the economy and also raise questions about Barack Obama's fitness for office. What's really interesting is Sarah Palin is in the middle of this. Last week, we saw her trying to show her down to earth style in the debate. This week, a much more traditional role of a vice presidential candidate -- Palin as pit bull.

(BEGIN VIDEOTAPE)

HENRY (voice-over): Say it isn't so Sarah -- after admonishing Democrats to stop looking backwards about the Bush years during last week's vice presidential debate...

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: Say it ain't so, Joe. There you go again, pointing backwards again.

HENRY: Sarah Palin is now using a story from four decades ago to attack Barack Obama.

PALIN: This is about the truthfulness and the judgment needed in our next. President John McCain has it. Barack Obama doesn't have it.

HENRY: For the third straight day, Palin targeted Obama over his ties to Bill Ayers -- a radical who led nonfatal bombings at the Pentagon and Capitol Hill to protest the Vietnam War in the 1960s. Ayers held a 1995 coffee introducing Obama to Chicago's political establishment. Though chief adviser, David Axelrod, now tells CNN the candidate did not know Ayers' background at the time.

(BEGIN VIDEO CLIP)

ROBERT GIBBS, OBAMA COMMUNICATIONS DIRECTOR: Look, if that's what David said, that is true. Look, again, this is a relationship that Barack Obama has -- has condemned the actions of Bill Ayers.

HENRY: On the stump in the key state of Florida, Palin pounced.

PALIN: Today they're saying for the first time that Barack Obama didn't know back then about Ayers' radical background.

(BOOS) PALIN: Wait a minute. He didn't know a few months ago that he had launched his political career in the living room of a domestic terrorist?

HENRY: Obama aides insist this is just a diversion, because the financial crisis is sinking John McCain in battleground states.

(BEGIN VIDEO CLIP)

GIBBS: What this is, is a classic smear campaign to distract the voters away from talking about the economy, just as they previewed in this weekend's papers. They were going to turn the page on the economy and get to character assassination.

(END VIDEOTAPE)

HENRY: But there could be a down side for the Republican ticket from these attacks.

Take a look at the latest CNN/Opinion Research Corporation poll and how Sarah Palin is viewed by the public. Fifty-two percent view her favorably. But look at the unfavorable numbers. They've been climbing ever since the Convention. Twenty-one percent unfavorable around the GOP Convention, 27 percent in early September, up to 35 percent in late September. The latest numbers now 40 percent.

So she may be scoring points, but they have to be careful that this could backfire and turn off Independent voters -- Wolf.

BLITZER: Especially, as you point out, those Independent voters.

Ed Henry working the story for us. Thank you.

Barack Obama makes it clear he won't sit back and take any abuse hurled by the other side. Listen to what he told a radio interview today.

(BEGIN AUDIO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: And one of the things that we've done throughout this campaign, we don't throw the first punch. But we'll throw the last.

(END AUDIO CLIP)

BLITZER: The Obama campaign is already counterpunching, unveiling a new Web video about John McCain's involvement in the so- called Keating Five scandal two decades ago. Back then, McCain participated in meetings with banking regulators on behalf of an Arizona savings and loan owner who was convicted of securities fraud. The Senate Ethics Committee later cleared McCain of wrongdoing, but said he showed poor judgment.

Some of the stories we're working on this hour here in THE SITUATION ROOM. Fallout from the nation's financial meltdown -- impact on the race for the White House. And we're going to be talking about both of those subjects with Donald Trump. He's standing by like. Stand by for that.

Also, only hours left to register to vote in one critical battleground state -- the frantic effort to sign up young people.

Plus, long after the next president is gone, his influence will live on in the United States Supreme Court -- two, maybe three seats at stake. We're looking at what's at stake with those seats.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Stocks continue to tumble despite a massive government bailout, with huge implications for these, the final weeks of the presidential campaign.

Joining us now on the phone is Donald Trump. He's watching all of this unfold with us. Were you getting a little heartburn watching the market collapse today, down at one point, 800 points, Donald, and then recovering, what closing almost down 370?

DONALD TRUMP, CHAIRMAN & PRESIDENT, THE TRUMP ORGANIZATION: Well, it's a very sad point in this country's history, Wolf. There's no question about it.

BLITZER: What should people who are watching this unfold before their eyes right now, what should they be doing given your background, your advice?

TRUMP: All they can do is dream, Wolf. They can dream. They can dream about things getting better. And they will get better. Eventually, things are going to get better. This is like a cleansing action. It's being cleaned out. And, honestly, they have to start looking for opportunity, because there is more opportunity now than there was two years ago -- Wolf.

BLITZER: So talk a little bit about that opportunity. But before you do that, when you say eventually things will get better, I've heard experts -- some say we're talking at least a year or two of a deep recession right now. Others saying we could be in trouble for four or five years. What do you think?

TRUMP: Well, I never defined what eventually meant. It could be two or three years. It could be a long period of time. It could be shorter than that, but it could be a long period of time.

We are very, very much in deep trouble. If you look at oil prices, they're still way, way too high. I mean they're artificially set by OPEC and they're still way too high. The good news about this -- probably the only good news -- is that oil is going to drop like a rock, which, if you'll remember, I told you that last time.

BLITZER: Right. It's down below $90 a barrel right now, which is a lot less than it was only a few months ago. Because people are saying you know what, I'm going to take my money out of the stock market right now, I'm going to wait until it hits rock bottom and that will be a great time to start buying some bargains out there on the New York Stock Exchange.

TRUMP: Well, I don't really recommend that too much. They've gone down a long way. Some of these folks have been in for a long time and they've taken a very horrible ride. And this isn't really the right time to be taking your money out. That doesn't mean it's not going to go lower. But it just doesn't seem to me to make sense.

If you have a particularly bad stock or whatever, maybe you do that. But it doesn't seem to be the right time, for me, to take money out of the stock market. So I wouldn't recommend that.

BLITZER: The real estate market -- the experts say the mortgage -- the funny mortgages that were out there, that's the cause of this financial meltdown. But there's got to be huge bargains out there, if you know what you're doing, in real estate.

TRUMP: Well, I don't think it's the only cause. I think a lot has to do with the price of oil, because I've always said that oil is the lifeblood of this country in terms of its economics. And when have you oil going for $150, it's -- that's just preposterous.

And I have a very, very smart friend who said anytime oil goes over $50 -- $50 -- you're going to have a depression. Not a recession a depression.

BLITZER: Well, you think we're on the...

TRUMP: Well, guess what?

We hit $150.

BLITZER: Are we on the eve of depression or just a deep recession?

TRUMP: Well, time will tell. And time will tell whether or not the $750 billion bailout is going to work, if it's going to have any effect. Some people think it makes things worse because you don't get that full cleansing.

And when it happens, it'll happen -- it'll delay it, but it will be a lot steeper.

So, we'll see what happens. You know, to a certain extent, it is trial and error. And that's a pretty bad situation for this country.

BLITZER: How has President Bush handled this economic crisis?

TRUMP: Well, look, it's not a favorite person of mine. Between the war and between all of the problems we have that he's gotten us into, you're not talking about my favorite person. How has he handled it? He's tried. I think he's probably working harder than he usually would. But, you know, we'll have to see whether or not it works. But the bottom line is we are in a very, very deep recession, at least.

BLITZER: How about you personally? How are you doing?

TRUMP: Well, I'm doing well. I got a little lucky. I sold something for a lot of money to a Russian buyer. And now I see the Russian stock market is collapsing, also.

BLITZER: I hope you got your money.

TRUMP: I got my money.

BLITZER: That's...

TRUMP: It closed two weeks ago. Crazy, right?

BLITZER: You're lucky you did that. But all the other buildings -- all the Trump buildings that are going up, not only in the United States, but around the world -- because we see the world markets out there in deep trouble right now. I know you're building in Dubai and elsewhere. How are they doing?

TRUMP: Well, they've been doing really well. Outside of the United States, in particular, they've been doing really, really well. In the United States, for the most part, the buildings were completed two years ago. So they really have been tremendously successful and I'm very happy about it.

BLITZER: All right. The last time we spoke, you told us you're going to vote for John McCain. Are you still going to do that?

TRUMP: Well, I know him very well. He's a really good man. He's a tough man and he's a smart man. And that's what we need.

BLITZER: And you think he's different than Bush?

TRUMP: I do think he's different. He's different in a lot of ways, including his demeanor.

BLITZER: So you're with McCain and Sarah Palin?

Do you think she's ready to be president, God forbid, one of these days...

TRUMP: Well, she certainly has made impact...

BLITZER: ...if something were to happen to the president?

TRUMP: ...there's no doubt about that.

BLITZER: She's what?

TRUMP: She's made a lot of impact.

BLITZER: But do you think she's ready for that?

TRUMP: I think she's very smart and I think she did very, very well in the debate. And I think Biden did very well in the debate, also. I thought they both did very, very well. And they can be proud of each other. The fact is, it was an interesting evening.

BLITZER: It was a fascinating -- 70 million Americans watched and tens of millions more around the world. Donald Trump, thanks very much for joining us.

TRUMP: Thank you very much, Wolf.

BLITZER: We'll speak to you soon.

TRUMP: OK.

BLITZER: America's financial crisis -- as you know, it's sending financial shock waves around the world. We're watching global markets. We'll get a live update from London. Stand by for that.

And meet the man in charge of saving Wall Street, overseeing the $700 billion bailout. Guess what? He's 35 years old.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's check in with Susan Roesgen.

She's monitoring some other important stories incoming into THE SITUATION ROOM right now.

What's going on -- Susan?

SUSAN ROESGEN, CNN GULF COAST CORRESPONDENT: Well, across the world, Wolf, China is retaliating for proposed U.S. arms sales to Taiwan. Beijing has called off upcoming senior level military visits to the U.S. and also called off visits by Chinese ships and other military and diplomatic contacts. China, of course, which considers Taiwan part of its territory, plans to officially protest the proposed weapons sale.

And eBay is slashing jobs as revenue slows for that company. The online auction site is cutting 1,000 employees and several hundred temporary workers. And that's about 10 percent of its workforce. EBay, however, also announced that it is buying online payment survey, Bill Me Later, for $945 million. That company gives users the option of deferred payments.

And the global financial meltdown sent oil prices plummeting today. The price of crude fell more than $5, to below $90 a barrel. That's on concern that the demand for energy is slowing. And that is the lowest the price of oil has been in nearly 10 months -- Wolf.

BLITZER: Yes. It's a little silver lining for all the other bad economic news that's out there. Susan, thanks very much. Only 35 years old and now he's in charge of that $700 billion Wall Street bailout. So what makes him qualified? We're investigating.

Plus, a deadline looming in a must-win state, where young voters may make the difference.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, less than seven hours left to register to vote in one crucial battleground state. We're there live following the frantic effort to recruit young voters. Stand by.

Also, the very young man in charge of administering that $700 billion Wall Street bailout -- what makes him so qualified for the tremendous task?

Plus, the lasting impact of the coming election on the U.S. Supreme Court -- one vote with an impact potentially lasting generations.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

The Dow isn't suffering alone. Take a look what stocks are doing around the world. Hong Kong's Hang Seng Index down almost five percent. Japan's Nikkei losing 4.5 -- 4.25 percent, that is. Germany's Dax off more than seven percent. And the British FTSE plunging almost eight percent.

For more now on the worldwide sell-off, what's going on, let's go to Richard Quest in London.

He's watching the story for us. This is just the latest evidence -- you're at Number 10 Downing Street in London, Richard -- that this economic crisis in the United States is spreading around the world.

RICHARD QUEST, CNN CORRESPONDENT: We have talked about globalization on so many occasions, Wolf. Guess what? You're seeing it in action.

What happens in New York is followed in London, to Frankfurt, to Munich, to Russia, right the way around the world, through Asia.

There is literally nowhere where banks, where investors can hide. Perhaps gold, maybe. That's always been the oldest investment of them all. But when it comes to the markets, they are global. They don't like what they see. And there is a lack of confidence from one side of the globe to the other -- Wolf.

BLITZER: And, Richard, the rules in Europe are different. The European community simply can't bail out a lot of these banks the way the federal government often does here. Is that right?

QUEST: Basically, it's as if -- imagine each state insured and guaranteed each individual bank in the U.S. That's what you've got in Europe, where maybe a European Union, but national governments -- the British, the German, the French -- they all actually take care of and supervise their individual banks. So what we are seeing -- and it is serious, indeed -- is in Britain and in Germany, we are seeing banks that have failed and that are failing.

But as yet, Wolf, we are not seeing that coordinated governmental response that perhaps would give a bailout of the size and scale that you saw in the United States.

BLITZER: Richard Quest in London for us. We're going to stay in touch with you.

Only days ago, the candidates were focused on the economic meltdown. Now the McCain campaign has moved also into an attack mode. And the Obama campaign is hurrying to try to catch up on that front, as well.

Let's discuss this with our CNN political contributor, Hilary Rosen. She's editor-at-large at the HuffingtonPost.com. And Republican strategist John Feehery. Both of them here in THE SITUATION ROOM.

Was the McCain campaign counting on the $700 billion bailout vote alleviating this crisis somewhat so they could move on and change the subject, if will you?

JOHN FEEHERY, BLOGS FOR THEFEEHERYTHEORY: Everyone knew it was going to take a long time to get this all settled out and worked out. I mean for the McCain campaign, they've got to get out an economic message. The economic message for them is Barack Obama has a plan to raise taxes on investors and small business owners and they've got to hammer that time and time again. People have to understand John McCain has a better plan to get us out of this mess than Barack Obama does.

BLITZER: What do you think? Because the argument is at least the Obama campaign makes it repeatedly that if you like the economic policies of Bush, just get ready for more of the same under McCain.

HILARY ROSEN, FORMER CHAIRWOMAN AND CEO OF THE RECORDING INDUSTRY ASSOCIATION OF AMERICA: And I think that that message is resonating. People know that's what the McCain plan does is essentially continue Bush tax cuts for corporations and companies that don't wealthy individuals that don't need a tax cut right now. They're not growing jobs. And Barack Obama's going to put tax cuts where it's needed to people making less than $250,000 a year and small businesses earning less than $250,000 a year.

BLITZER: Because the economic news is bad enough for the McCain campaign. We've seen movement not only nationally but in battleground states. In the new CNN Opinion Research Corporation poll, Bush is now at Nixon numbers; only 24 percent approve of the way he's handling his job as president. 74 percent disapprove. He's a Republican. McCain is a Republican. And a lot of Americans are going to say you know what? We need somebody else in charge.

FEEHERY: That's why it's very important for the McCain campaign to keep on offense with Obama. Right now, the McCain campaign is a little bit on the run. They've got to get Obama on the run.

BLITZER: That's why Sarah Palin is doing what she's doing, raising the whole William Ayers the terrorist issue three days in a row?

FEEHERY: I'm not sure how effective that's going to be. They need to say this Chicago politician Barack Obama doesn't have a plan that's going to help you with your 401(k)s and need to get on the message as soon as possible.

BLITZER: Here's what Obama said today. I want to play this little clip in this radio interview he did with Roland Martin on the Tom Joyner show. Listen to this.

(BEGIN AUDIO CLIP)

OBAMA: One of the things we've done throughout this campaign, we don't throw the first punch but we'll throw the last.

(END AUDIO CLIP)

BLITZER: We don't throw the first punch but we'll throw the last. He's learned lessons I assume from earlier Democratic presidential candidates whether it's John Kerry or Michael Dukakis where they sort of turned the other cheek.

ROSEN: I'll tell you, Democrats just listen to that and smile, with relief. Because John McCain has decided he is willing to throw his dignity and his honor, whatever is left of it away by throwing the kitchen sink of nasty charges at Barack Obama. This campaign is not going to take it. Because they know that people want to talk about the economy and not just tax cuts. But how investment in alternative energies, investments in education, how bringing a close to the war which is costing us $10 billion a month, how all of those things are going to put this country back on the right track.

BLITZER: Because it's interesting Sarah Palin three days in a Rojas been raising the William Ayers/Barack Obama relationship. Senator McCain delivered a touch speech and was very critical of Obama today but he didn't there, he didn't go to that William Ayers issue.

FEEHERY: That's the beauty of a vice presidential candidate. They can do that stuff. That's what her role is. That's what vice presidential roles are supposed to be, go after the other guy. He's got to stay on a positive message on trying to fix this economy and focusing Barack Obama's message on tax hikes.

BLITZER: Would he have been better off, this is a question that you hear nowadays, especially in today's continued drop of the stock market, opposing the $700 billion bailout and citing the earmarks in it and saying I can't support this?

FEEHERY: If the package had gone down a second time and if the economy had really tanked which it seems to be doing anyway, I think it would be worse. Had he no choice but to support this bailout because it's the responsible thing to do. Barack Obama all the responsible leaders say do this. Terry Jeffries said he ought to oppose it, I'm not sure it would help.

BLITZER: A clip from Senator McCain. He went after Senator Obama in strong words. Listen to this.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: What has this man ever actually accomplished in government? What does he plan for America? In short, who is -- who is the real Barack Obama? But my friends, you ask such questions, and all you get in response is another angry barrage of insults.

(END VIDEO CLIP)

BLITZER: All right. Strong words from Senator McCain, basically raising questions about his ability or his qualifications to be president of the United States.

ROSEN: The McCain campaign strategy for the next week has been laid out here. Sarah Palin throws the mud and John McCain tries to establish the riskiness of an Obama presidency.

BLITZER: It's worked in the past for Republicans.

ROSEN: But that worked before Americans saw Barack Obama be smart and cool and thoughtful during an economic crisis. And then before they saw him in a debate going toe to toe with John McCain on really complicated foreign policy issues.

BLITZER: It worked.

ROSEN: Those two things I think people came around and saw that --

BLITZER: It never worked against Bill Clinton in '92 and in '96 because he would respond in kind.

FEEHERY: You know, Bill Clinton was a pretty good candidate and I think that will McCain has to learn from the mistakes of the dole campaign and the first George Bush campaign and stick on positive issues going after the economy, talking about his Atlantic experience, Barack Obama's lack of experience and his record on raising taxes. That's one of the top issues for John McCain going in because in a recession people understand if you raise taxes on small businesses, it's going to be bad for jobs and people get that.

BLITZER: It's already pretty bad for jobs right now. Guys, thanks very much for coming in.

They're scared for the first time in their lives.

UNIDENTIFIED FEMALE: It's hard to even get essentials like bread and milk has increased to a point it's almost ridiculous to buy.

BLITZER: We're talking to young voters very worried right now about the economy as they try to step out into the world. And a stunning drop for stock marketed. How low can they go? CNN's Ali Velshi standing by with the latest on Wall Street's slide and what it means for you.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: A rather disturbing global stock sell off today underscoring just how much is riding on the government's Wall Street bailout. We now know who's in charge of it, a 35-year-old protege of the treasury secretary Henry Paulson. Susan Roesgen is back with us. She's working the story for us.

So what do we know about this 35-year-old, Susan?

ROESGEN: He's apparently very smart and Wolf, get this before he got into investment banking he was in research and development for NASA. Apparently a pretty sophisticated guy, really smart guy his name is Neal Kashkari. Like several top administration officials he is a former executive from the same top Wall Street firm.

(BEGIN VIDEOTAPE)

ROESGEN: He's armed with a $700 billion line of credit. His mission, to start buying bad debt. Treasury official Neal Kashkari has been named to spearhead the Wall Street rescue plan. Kashkari is a 35-year-old who has been working over the last year on mortgage and foreclosure issues including contingency planning if banks are crippled by bad mortgages. He is a former vice president of Goldman Sachs. That makes him the third top administration official to come from that will firm. Alongside his boss Treasury Secretary Henry Paulson and White House chief of staff Josh Bolten. While some analysts say the number of Goldman alums involved raises the possibility of a conflict of interest, a White House spokesman says secretary Paulson is trying to bring in the best talent he can. And others say the bailout team will need people with Wall Street experience.

STEPHEN POPE, CANTOR FITZGERALD: They have to be people that understand what is the heart and soul of the instruments concerned and secondly, are they able to try and imply a value the market might think is acceptable upon each instrument.

ROESGEN: And the treasury department won't handle all the buying itself. Private firms will also play a role.

HENRY PAULSON, TREASURY SECRETARY: We're looking at a number of asset managers with good experience, very good experience and expertise from the private sector.

ROESGEN: Now, Kashkari is an interim appointment for three months till the new president is inaugurated. Whoever that is can decide whether to keep him or choose be else.

(END VIDEOTAPE) BLITZER: What about the potential for some firms hired for a conflict of interest out there?

ROESGEN: Even the treasury department itself in the announcement today said there could be a conflict of interest. They're sort of making up the rules as they go. One thing they talk about is the private firms that will manage other private firms' bad debt might not be told everything about those companies to try to limit the amount of information that each firm knows so nobody gets too cozy.

BLITZER: This is a whole new territory for a lot of folks. They're looking for the best and brightest. Hopefully they'll find him. Thanks very much for that.

Many young voters are excited about making their voices heard in this election and deeply concerned about the financial meltdown and what it means as they begin to step out into the world. Let's gets to Mary Snow. She's working this story for us in Columbus, Ohio, one of those battleground states.

Mary, what's on their minds? What are you hearing and seeing?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, clearly the election but also the economy, whether it comes to student loans or even just making day-to-day expenses. We talked to several young voters here today who say the decisions about the economy are really shaping how they're going to cast their vote.

(BEGIN VIDEOTAPE)

SNOW: Call it Main Street 2.0, you don't have to look far at Ohio State University's campus to see signs students are worried about the economy. Keiran Johnson is worried what kind of job market he'll face.

KEIRAN JOHNSON, STUDENT: Graduating hoping I can get something better. That's what we're told to go to school and have a better life. We don't know if that's true.

SNOW: For Amanda Kulcar, the concerns are more immediate like the price of gasoline.

AMANDA KULCAR, STUDENT: Even groceries increasing. It's hard to get bread and mull can has increased to a point it's almost ridiculous to buy.

PROF. PAUL BECK, OHIO STATE UNIVERSITY: You're scared and they're scared maybe for the first time in their lives. This has been a several decade period of unusual prosperity.

SNOW: Political science professor Paul Beck says while these young voters may be scared, they're also enthusiastic about this election. Seizing on that enthusiasm, volunteers saturated the campus to get students to register and vote early and to see how coveted the youth vote, consider that just a stone's throw from the nation's largest university of nearly 53,000 students is an Obama campaign office. Team Obama is offering students rides to polling places. Bruce Springsteen even performed at OSU on Sunday to try and drive turnout.

BRUCE SPRINGSTEEN, SINGER: We're also here four years ago. This time we're winning.

SNOW: In 2004, Democrat John Kerry lost Ohio to George Bush by a slim margin. Students for Obama say they believe they'll make the difference for Democrats in this state. On the Republican side, no McCain office on campus, just a couple of table setups. The college Republicans here say Sarah Palin has lit a fire for them.

JONATHAN SNYDER, OHIO COLLEGE REPUBLICANS FED.: Anytime you watch anything, it's all about Obama and the youth vote and how he's got it locked down. That's simply not the case.

(END VIDEOTAPE)

SNOW: And Wolf, volunteers have spanned this campus today leading up to tonight's deadline to register to vote. And also here in Ohio for the last six days, people have been able to register and vote on the same day. And the campaigns are certainly hoping that will help get young voters to the polls since in the past, they haven't always been reliable showing up on Election Day although they have been eager to register.

BLITZER: People vote in much bigger percentages the older they get. Let's see if that changes this time around. Mary, thanks very much.

Ohio, by the way, isn't the only state with a registration deadline. Today the cutoff in at least 16 states plus the District of Columbia. Among them such key battle grounds as Pennsylvania, Virginia, and Florida. Florida has signed up more than half a million voters this year. V has registered more than 300,000. Several other states have deadlines later this week.

The U.S. Supreme Court begins its new term a month before Election Day. Why the justices are on the minds of so many voters right now.

That $700 billion bailout doesn't stop the stock markets from taking a sickening plunge. Lou Dobbs will weigh in on the wall streets nosedive coming up. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The first Monday in October means the start of a new term for the U.S. Supreme Court. The first Tuesday in November is Election Day. And the court certainly will be on the minds of a lot of voters. Let's go to CNN's justice correspondent Kelli Arena -- Kelli?

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Wolf, with issues like the economy dominating the campaign, you haven't heard much about the Supreme Court. But don't let that fool you. It's all some voters care about.

(BEGIN VIDEOTAPE)

ARENA: Make no mistake. The Supreme Court is very much on the ballot.

WENDY LONG, JUDICIAL CONFIRMATION NETWORK: This is the American citizen's last chance to choose the man who's going to be picking at least probably several justices and shaping the court for most of this century.

ARENA: From abortion to the war on terror, the court will play a vital role.

KATHRYN KOLBERT, PRES. PEOPLE FOR THE AMERICAN WAY: I am petrified about what's at stake here.

ARENA: And activists from both parties are making sure the rest of the electorate knows it.

MCCAIN: We have not done enough.

UNIDENTIFIED FEMALE: No, senator, McCain have you not. Count on McCain to support judge who's support our rights.

UNIDENTIFIED MALE: Choosing the right justices is critical to America. We don't know who Barack Obama would choose but know this. He chose as one of his financial backers a slumlord now convicted on 16 counts of corruption.

ARENA: The face of the court could go through some radical changes. Observers speculate 88-year-old justice John Paul Stevens may retire. Justice Ruth Bader Ginsberg in her late 70s has had health issues. And friends of Justice David Suitor say that he might like to go back to New Hampshire. All three lean left.

EDWARD LAZARUS, AUTHOR, "CLOSE CHAMBGERS": If Barack Obama becomes president, it is almost certain that the court will stay roughly the way it is. If Senator McCain were to win the presidency, he would be replacing liberal justices, presumably, with justices far more conservative.

ARENA: Both candidates have made no secret about the types of justices they'd pick or avoid.

OBAMA: I would not have nominated Clarence Thomas.

MCCAIN: Justices Alito and Roberts are two of my most recent favorites, by the way.

(END VIDEOTAPE)

ARENA: For now, the court remains tightly divided. Most decisions have come down to a 5-4 vote, which is far too close for true believers from both parties. Wolf?

BLITZER: Kelli, thanks very much. A critical issue in this election.

The Supreme Court, by the way, dismissed hundreds of appeals that piled up over the summer before hearing arguments. Today, early indications that the justices might side with big tobacco in a case over deceptive advertising, three Maine residents sued the makers of light and low tar cigarettes as they're called saying the company knew for decades that they're just as dangerous as regular cigarettes. In court today, several justices were skeptical that state laws against fraudulent advertising could be used as grounds for a suit.

Another high-profile case, the FCC versus Fox TV. The FCC wants tougher penalties against TV stations but network executives argue that it's a violation of free speech.

And in yet another free speech case, a small religious group wants to build a monument in a public park, the same park where a monument of the Ten Commandments stands. Officials in Grove City, Utah say the proposal monument doesn't fit in.

The problems on Wall Street have plenty of people afraid and calls are pouring in from investors. We're talking to the experts about what you should be doing right now.

Plus, Barack Obama one-on-one with our own Roland Martin. That interview coming up.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: As the McCain campaign goes on the offensive, Barack Obama is fighting back. He was on the Tom Joyner radio show today, interviewed by CNN's Roland Martin. Listen to this.

(BEGIN AUDIO CLIP)

OBAMA: I think the American people deserve better. I think they deserve a last four weeks of talks about the economic crisis, about the 159 jobs that were lost, the 159,000 jobs that were lost just last week, last month. But if John McCain wants to have a character debate, then I'm happy to have that debate because Mr. McCain's record, despite him calling himself a maverick, actually shows that he is continually somebody who relies on lobbyists for big oil and big corporations and that he makes decisions oftentimes based on what these lobbyists tell him to do.

ROLAND MARTIN, CNN CONTRIBUTOR: The campaign is launching this website, keatingeconomicing.com. Charles Keating was an economics guy out of Arizona. That failure cost American taxpayers $2.3 billion. Doesn't this put you in the position of going negative, taking away your message of running a different kind of campaign?

OBAMA: Well, look. One of the things we've done throughout this campaign, we don't throw the first punch. But we'll throw the last. Because if the American people don't get the information that's relevant about these candidates and instead in the last four weeks all they're hearing about are smears and swift boat tactics, that can have an impact on the election. We've seen it before. And this election is too important to be sitting on the sidelines. If Senator McCain wants to focus on the issues, then that's what we focus on, but if he wants to have a character debate, that's one that we're willing to have.

MARTIN: Senator, Senator McCain jumped into this deal, trying to push a deal forward. You stayed more behind the scenes. Is that an example of the contrast in leadership styles whereas you allowed the negotiators to work rather than broker a deal yourself?

OBAMA: There's no doubt about it. The fact is that, you know, if you are out there trying to politicize the situation, get in front of cameras, take a lot of credit in delicate negotiations in Washington, in the middle of a presidential campaign, then you can be counterproductive. And what we decided was that for me to simply be in constant communications with the secretary of the treasury, to talk to congressional leaders, to let them do their work, to step in where necessary but not be worried about getting the credit on it, that that was going to be the most productive approach.

(END AUDIO CLIP)

BLITZER: Senator Obama speaking with Roland Martin earlier today on the Tom Joyner Radio Show.

That $700 billion bailout didn't stop the stock markets, as you know, from taking another breath-taking plunge today. Lou Dobbs has been watching this together with all of us.

Lou, give us your analysis. What happened today?

LOU DOBBS, CNN ANCHOR: Well, what happened today is what we've been seeing happen for some time now. Over the past two weeks, the president of the United States, the speaker of the House, Nancy Pelosi, Senator Harry Reid, the Senate majority leader, Henry Paulson, have been talking down the American economy, the stock markets, the credit markets. And what would anybody expect to be the result? A sell-off. That's exactly what we've seen.

It started with the passage of that ignorant bailout. And don't let anybody kid you. That bailout was an absolute atrocity and an insult to the American people, laden with an additional $150 billion in pork just to get it through. While the same people, the same leaders, so-called, were saying it was critically important in the national interest, but they had to add $150 billion. What these markets are saying now is to the United States, to the American people, your leaders don't deserve confidence, don't deserve in any way respect.

These markets are going to continue to go down until we get an intelligent response to the crisis. That means instead of handing out money to Hank Paulson's buddies on Wall Street, it means that we start dealing with the issue of solvency. If we don't do that, we're going to be in very big trouble.

BLITZER: Lou is going to have a lot more on this in an hour. We'll see you then, Lou.

DOBBS: Absolutely

BLITZER: Thank you.

And to our veiwers, you're in THE SITUATION ROOM