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Report Released on Palin Investigation; Dow's Worst Week Ever

Aired October 10, 2008 - 22:00   ET


ANDERSON COOPER, CNN ANCHOR: Tonight, breaking news on two fronts, stunning financial news. On this day when the stock market was downright scary, with wild swings up and down, the government announced a short time ago it is moving ahead to buy stocks in troubled banks. This is a very big deal. We're going to have extensive coverage in a moment.
But, first, we have breaking news on Sarah Palin. State lawmakers have determined just a short time ago that, as governor, Sarah Palin abused her power in the firing of her former public safety commissioner and violated state ethics law, but -- and this is important -- they also found that she violated no laws.

It's a somewhat confusing report released just a short time ago.

Randi Kaye has been reading it.

Randi, what exactly does it say?

RANDI KAYE, CNN CORRESPONDENT: Hard to make sense of it all, Anderson.

It's about 250 pages or so. But an investigator found that Sarah Palin abused her power as governor and also violated a state ethics law by trying to get her ex-brother-in-law fired. He was an Alaska State Trooper in the midst of a messy divorce from Palin's sister.

Now, the findings show Governor Palin exerted pressure on state employees to fire Trooper Wooten. Public Safety Commissioner Walt Monegan was fired by Palin in July.

And the report found his refusal to fire Trooper Wooten was -- quote -- "likely a contributing factor."

But, now, the report also said Palin was within her rights and did not break the law by firing Monegan, but, again, the report found that she did break the law by pressuring him to fire her ex-brother- in-law. So, she did violate the trust of her office in the end.

Investigators found -- quote -- "Governor Palin knowingly permitted a situation to continue where impermissible pressure was placed on several subordinates in order to advance a personal agenda."

The report concludes Palin's claims of fear about Wooten -- quote -- "were not bona fide and were offered to provide cover for the Palins' real motivation, to get Trooper Wooten for personal family- related reasons." That is how and why the investigators say Palin violated the ethics act.


KAYE (voice-over): This all began three years ago with an ugly divorce with Alaskan state Trooper Mike Wooten and Sarah Palin's sister. The governor says Wooten threatened her family, even suggested he would kill her father.

MIKE WOOTEN, ALASKA STATE TROOPER: I didn't threaten him and I have never threatened anyone, for that matter.

KAYE: The governor says, Public Safety Commissioner Walt Monegan was fired because of budgetary decisions. That and more was repeated in doctors released late Thursday, the McCain campaign's attempt to head off the Legislative Council's findings.

It insists -- quote -- "Monegan's dismissal was as a result of his insubordination and budgetary clashes."


MONEGAN: I believe I was fired bus I did not fire Mike Wooten.


WALTER MONEGAN, FORMER ALASKA PUBLIC SAFETY COMMISSIONER: I believe I was fired because I did not fire Mike Wooten.


KAYE: Monegan told CNN he was never directly told to fire Trooper Wooten. Palin has conceded her staff expressed concern about Wooten to Walt Monegan, she insists, as governor, she did not pressure anyone to fire Wooten.

Palin recently told ABC that her husband, Todd Palin, had met Monegan, but did not pressure him to fire Wooten.


GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL NOMINEE: He did very appropriately, though, bring up those concerns about a trooper who was making threats against the first family.


KAYE: They McCain campaign says, Sarah Palin -- quote -- "did not learn of these contacts by Todd Palin until August of this year," even though Todd Palin met Monegan in her office soon after she became governor.

Is this a political circus, partisan payback, as some Republican lawmakers claim? Whether it is or isn't, it's surely an embarrassing distraction, one the McCain campaign, behind in the polls, could do without this close to Election Day.


COOPER: So, where is the governor's husband, Todd Palin in all this? He was subpoenaed in the investigation.

KAYE: He was. And the report says that Todd Palin, over an extended period of time, endeavored to get Trooper Wooten fired. He just answered investigators' questions this week, Anderson, telling them -- quote -- "The legislation has allocated over $100,000 of public money to harass me and numerous other innocents about the fact that I had legitimate concerns about my family's safety and the public's safety."

What this will mean for Sarah Palin and the McCain campaign is unknown. Will it just be a line on her resume or much more? Lots of folks, of course Anderson, trying to figure all of that out tonight.

COOPER: Well, we're going to talk to our panel in a moment.

Here's what the McCain/Palin campaign said in a statement released just a short time ago. They said -- quote -- "Today's report showed that the governor acted within her proper and lawful authority in the reassignment of Walt Monegan. The report also illustrates what we've known all along: This was a partisan led inquiry run by Obama supporters, and the Palins were completely justified in their concern regarding Trooper Wooten, given his violent and rogue behavior. Lacking evidence to support the original Monegan allegation, the Legislative Council seriously overreached, making a tortured argument to find fault without basis in law or fact. The governor is looking forward to cooperating with the Personnel Board and continuing her conversation with the American people regarding the important issues facing the country."

Let's bring in our political panel on this breaking news, CNN senior political analyst and former presidential adviser David Gergen, CNN senior political contributor and Republican strategist Ed Rollins, and CNN's Joe Johns, who has reported extensively from Alaska.

David, what do you make about this? Is this much ado about nothing?


DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: There's something here for everybody, isn't there?

It does point in two different directions. I think Randi Kaye is exactly right. This is an embarrassing distraction. It is not the bombshell some thought it might be, because Republicans can claim here, hey, listen she didn't violate any laws when she fired this commissioner.

But there is also plenty of ammunition for the Democrats, that she did abuse her power, that Todd Palin seemed to be a little out of control on this thing. He had a personal obsession, it appears, from what we know so far.

But, Anderson, overall, in terms of the political impact, don't think it has much impact on the race. It is a setback for the McCain campaign. It really blunts some of their argument about Barack Obama. You know, they have been arguing now for the last several days about Bill Ayers. You know, Barack Obama hasn't been entirely truthful about Bill Ayers. We don't care so much, McCain says, about what actually happened way back in the '60s. It's the fact he wasn't entirely truthful.

Well, now we have a situation where Sarah Palin, you know, by every measure, has not been exactly forthcoming about what really happened here and what's -- what's been discovered by this commission, a bipartisan commission, and what was reported extensively on -- today in "The New York Times."

COOPER: Ed, what about that? I mean, 10 Republicans on this commission, four Democrats. Sarah Palin said she would cooperate early on. And then, once she started running for V.P., suddenly, the...


COOPER: ... the cooperation stopped.

ED ROLLINS, CNN SENIOR POLITICAL CONTRIBUTOR: Well, it certainly became more of a political issue when she became -- I mean, the craziness of this thing -- and there's a line which I want to read to make sure I get it -- "Governor Palin at least engaged in official action by her inaction."

Now, I have spent 25 years in government.


ROLLINS: And that's a whole -- if we're all going indicted...

COOPER: Well, there's another line that says, "Governor Palin knowingly permitted a situation to continue where impermissible pressure was placed on several subordinates in order to advance a personal agenda."

They're essentially saying, Todd Palin was making a lot of calls.

ROLLINS: The bottom line is, her husband did make a lot of calls. The superintendent said, he never asked me to fire him. And the bottom line is, she has a right to fire any member of her Cabinet.

Is it a stupid thing, and, in hindsight, should she probably not have done it? You betcha. It's going to be about the voters in Alaska after this. It's not going to affect this campaign. It will be a day or two distraction. We're back on the economy again on Monday and we're back on a debate in the middle of the week.

COOPER: It does -- as David said, Joe, it's kind of the perfect fodder for the Internet, for bloggers, because you can read into it what you want. For Republicans, you can see it one way. For Democrats, you can see it another way.

And, clearly, the McCain campaign is saying, look, this is a partisan issue all along.

JOE JOHNS, CNN SENIOR CORRESPONDENT: Well, sure, that's exactly what they're saying.

And there's also been a long defense of hers that she said the man she fired essentially was engaged in insubordination. He wouldn't go along with her budget priorities. There were a lot of different reasons why she felt she had to get rid of him.

On the other hand, the McCain campaign has pretty much said all along, this is all about politics. Now, you can question that, if you want to, but we are in a political season. And that is one of those reasons why...

COOPER: Well, it's also this legislative body said that they don't really buy for the reasons she has given for -- or that Todd Palin gave for wanting this guy fired, that they didn't think the threats were as serious as they were -- that, basically, this was kind of a personal thing because of -- of the divorce that he had gone through.

ROLLINS: It wasn't their father being threatened.

And, obviously, this is a bad character. I mean, he's been suspended. He's had drunk driving as a trooper. Maybe Alaska standards are different. Fundamentally, I think the bottom line here is, as a Cabinet officer, you serve at the discretion of the governor. She didn't violate any laws by dismissing him.

Can she control her husband? Listen, I have worked for a lot of presidents, and you -- they didn't control the first ladies, and they certainly interfered in -- and David and I can be witness to that.

So, I think the bottom line here...


GERGEN: Ed, let me ask you this question. Isn't the argument, though, that has been made about Bill Ayers and Barack Obama that Obama hasn't been exactly forthcoming and fully truthful about his relationship, and, therefore, you can't trust him? Isn't that the exact same argument that can now be made about Sarah Palin in this case?

ROLLINS: They will make it.

David, the truth of the matter is, she's a polarizing figure. There's a lot of people out there who love her. They will see this as just political hey being made by the other side. There are those who can't stand her. And they will just add this to the thing that they don't like.

COOPER: Very quickly... (CROSSTALK)

JOHNS: Quickly, she's also a hard-nosed governor. People know that. She tries to get what she wants. She does what she has to. And that's the definition of governor. The only question here is, was it really abuse of power?

COOPER: All right. Well, it's online. People can read it. We will have it linked to it on our Web site as well.

Want to hear your thoughts about all this. Erica and I are going to be blogging throughout the hour, when there's time.

Join the conversation at And also check out Erica's live Webcast during the break.

And just ahead, tonight's other breaking story, the one that's going to affect your pocketbook, new developments in what is now a worldwide economic crisis, as the Dow ends its worst week ever with another white-knuckle day, the government moving to buy shares in troubled banks. We will tell you what that means for you.

Also, John McCain on the trail today in Wisconsin actually defending Barack Obama after a woman in the crowd calls him an Arab.


UNIDENTIFIED FEMALE: I can't trust Obama.


UNIDENTIFIED FEMALE: I have read about him, and he's not -- he's an Arab. He is not...


SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: No, ma'am. No, ma'am. He's a decent family man, citizen, that I just happen to have disagreements with.



COOPER: New developments tonight in what is now a worldwide economic crisis. In Washington, the world's top finance chiefs are teaming up to figure out a solution. That's going to be going on all weekend long.

A short time ago, Henry Paulson, treasury secretary, announced the government is going to be moving to buy shares in troubled banks. Now, that is a very big deal. As we said, it is a dramatic day today, a dramatic end to a dramatic day on Wall Street, a stomach-churning day, it was. In the first 15 minutes of trading, the Dow plunged nearly 700 points. Then, by 10:00 a.m., it had changed course, surged into positive territory -- positive territory. Reaction on the trading floor, first almost giddy. Then it turned queasy, the rest of the day, up and down, roller-coaster ride, wild swings in the Dow, spanning a record- breaking 1,000 points. Look at it go up and down.

The Dow ended the day down 128 points, news that was actually greeted with sighs of relief. That is how bad things have become.

Now, in the last five days, the Dow has fallen more than 1,800 points and 18 percent, the biggest weekly decline in its entire 112- year history.

Now, overseas markets are also plunging -- in a moment, what it means for your wallet, personal financial advice.

But, first, the big picture with senior business correspondent Ali Velshi.

Ali, Secretary Paulson made a stunning announcement. How is this actually going to work, buying shares in troubled banks?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: OK. This is part of the $700 billion bailout program.

They were authorized to do this. And what generally happens here is that the bank will choose -- the treasury will choose certain banks. They will invest in them. They will give them the money those banks need in order to recapitalize and give loans to people and businesses.

But, in exchange, it won't be interest they get. It's actually shares in the companies that they get. And, as a result of that, if those companies do succeed financially, as a result of this infusion of money, the Treasury -- and, hence, us, the U.S. taxpayer -- will be able to get some return on that. It's gamble that actually could have a return.

And the thing is that, when you buy shares in a company, you capitalize it, and that allows the banks to make more loans than even the amount that you have put into it. So, a lot of people are looking at this, saying, this might be a particularly good way to spend this money a way that will get a return for the average investor.

COOPER: I don't think I have over seen a day like this, watching the Dow just go up and down. I mean, break it down for us. What happened?

VELSHI: Oh, we have never seen a day like this. This is incredible.

The bell rings at 9:30 in the morning on the New York Stock Exchange. Within five minutes, the Dow was down 697 points. And then it started to go up. Take a look at how this developed through the course of the day. By 10:12, not 42 minutes into trading, it was in positive territory. It made the whole 697 up, and it was back on top. And that's how it sort of went through the course of the day. It just kept on going higher and lower. And, by the end of the day, it was down 128 points. Now, that makes it -- I mean, you can see this. It was down 595 points at 1:54, then up 322 points at 3:36, at the end of the day, down 128 points.

That brings it to eight days in a row of losses, as you said, the biggest loss in the history of Wall Street. Why is that a positive thing to some people?

Yesterday, Anderson, I told you that there were people who were expecting that the Dow would be somewhere between 8500 and 8000. And that is the band it stayed in all day, which means that maybe -- maybe -- we're exploring where the bottom of this market actually is. And the bottom is where professional investors, the people who -- who buy your 401(k)s, are actually there in, and they're buying stock.

We saw buyers today...

COOPER: There were actually people out...


VELSHI: ... real buyers. There was a lot of volume, and there were people really buying stocks today.

COOPER: All right, Ali, stick around. We're going to have a lot more. We want to dig deeper on this breaking news, how this impacts your bank account, your investments, your 401(k)s. It is all connected.

Plus, rising rage, more verbal outburst at a McCain event today, but McCain fired back and, in one case, got booed for it by his own supporters. We will show you why.

And we are naming names. Who's to blame for this up and down, this financial fiasco? Our top 10 most wanted, the culprits of the collapse, you should know these people's names and their faces. Some says it's not time to point fingers. We strongly disagree -- a new name coming up.


COOPER: Welcome back.

We continue with our breaking story, the worldwide financial crisis that shows no signs yet of winding now -- winding down. Wall Street, as we said, had its worst week ever, despite the government's massive bailout package.

And, just hours ago, the breaking news, Treasury Secretary Henry Paulson announcing the government is going to move ahead its plan to buy stock in American banks. It's a step he has, frankly, been reluctant to take and a clear signal that more medicine is needed to try to keep this patient alive.

Let's shift focus now to Main Street, where there's plenty of fear and anxiety tonight.

Joining me again, CNN senior business correspondent Ali Velshi, CNN's Richard Quest, who is joining us for the international look in London, and Lynnette Khalfani-Cox, a personal finance expert right here in New York.

Lynnette, we're all watching our 401(k)s shrink. It is certainly scary. How bad do you think it's going to get? I mean, Ali talked about some people seeing maybe that we're close to a bottom.


I think we are getting close. I don't think we're there yet, unfortunately. I wouldn't be surprised to see a lot more volatility next week. I think people are waiting to see, what is going to happen globally? Is the G7 going to do something? Are we going to see some kind of coordinated action? The global rate cut did not work. It did not unlock the credit crunch that -- that we're still facing.

COOPER: Ali, what is the impact of the government buying into these banks? And how soon do we see that impact?

VELSHI: Well, the treasury secretary said they will start to make purchases using that $700 billion by the end of October.

And what that does is, it causes the rest of us who are investors in banks, either through our 401(k) or institutions that invest in them, to say, hey, look, maybe some of these banks that were on the brink of danger or disappearing will be safe.

So, what happens, by the government -- it's almost like a matching program, even though it isn't. By the government investing in some of these, it becomes a safer investment for other people. These banks get their money again that they need to -- to -- to loan to you and me and businesses.

COOPER: Richard, you're in London. Foreign markets, in some places, even shut down at points. A lot of us over here are just concerned about what is happening in America. And this may be a stupid question, but why should we care what's happening in other countries as well?

RICHARD QUEST, CNN CORRESPONDENT: Ah, let me give you the Japanese example. That will tell you why you should care.

In Japan the market fell almost 24 percent in one week, not because Japanese banks are bad, but because the Japanese fear that Americans won't be buying their cars and their electronic goods. This is a global economy, Anderson. People like Ali and I have been bashing on and banging on about that for years. And now you're seeing the results.

You just talked a second ago about how the patient was feeling. I can tell you that the arms, the legs, the limbs, the head of this patient are around the world. And, at the moment, major surgery is being conducted on every bit of it.

COOPER: So, Richard, right now, we have these world financial leaders meeting in Washington. What do they want to hear from -- from America?

QUEST: I think what they want to hear from America is an air of seriousness and a willingness to get to grips with it.

The Paulson bailout bill so far, $700 billion, has done very little very slowly. What they're really wanting is what the British government is -- or at least started to do earlier in the week, massive recapitalization of the banks, and get the banks trusting each other again. And there's only one way to do that. That's to guarantee their loans.

Anderson, it's just as if you said to Ali and myself, guys, you two can start lending money to yourself, because I will guarantee your debt. If you did that, we would trust each other again. We would start making loans. The world would be safe.

COOPER: Lynnette, I want to ask you. We have been getting a lot of questions for you and for others on our blog on

I want to read this one we got and see if you can answer it: "Anderson, I have heard that now is a good time for people like me, in their 20s, to invest in the stock market. While this is great news for me and my friends, I have not heard as to what I should be investing in. Can you help?

I mean, is it a time for young people, or, frankly, anyone, to get back into the market?

KHALFANI-COX: I think, for young people, they have got a huge buying opportunity. Again, someone in their 20s, four decades away until retirement, they can definitely ride out all of this volatility that we have seen.

COOPER: If they have got cash, and they don't need that cash in the short term.

KHALFANI-COX: If they have got cash. If they're working, the assumption is, perhaps they have a 401(k) on the job that they can participate in. Their employer can give them a corporate match. They can be in stocks, heavily in stocks, 60, 70 percent-plus, at that age.


KHALFANI-COX: Certainly, a allocation of bonds would be prudent, and a little bit of cash.

But, at that young age, you have got time. You have got the markets really on your side, in terms of the potential on the upside.

COOPER: And the upside is, we saw, as you said before, higher volume today. So, some people are starting to do that.

VELSHI: Yes, Anderson, let's not forget, the professional traders that are in the market are mutual fund managers, who manage the mutual funds that you and I hold in our 401(k)s. So, they're investing on your behalf.

They're not paid to sit around on the sidelines and complain about the market every day. They have to look for buying opportunities. They were looking for opportunities to get in. And they said, don't look at the market. Look at the companies in that market. And those companies look like they're a good value to buy, because they will make money. So, they were in there buying today.

We have seen remarkable ratios between the number of stocks going down vs. the number of stocks going up for the last eight days. Today, there was a lot more balance.

COOPER: Ali Velshi, Lynnette, thank you so much, Khalfani-Cox. Good to have you.

And, Richard Quest, great to have you in London. Thanks.

Tough talk on the campaign trail today. You have heard the angry crowds at McCain/Palin rallies. Well, today, John McCain came to the defense of Barack Obama when a woman called him an Arab right to McCain's face. We're going to show why the crowd -- another crowd booed at some of the things that McCain had to say about Barack Obama.

And our third member of the 10 most wanted culprits of the collapse. Your money is melting out of your 401(k) accounts, while these guys were asleep at the switch or even pocketing big bucks during the boon days. Find out who we are adding to the list tonight.


COOPER: Tonight, new poll numbers showing Barack Obama continuing to pull ahead.

Out this evening, the latest CNN poll polls, which is a survey of several polls, gives him a 49-41 percent over John McCain. That's among likely voters.

Now, in recent days, as you know, as we have been covering, and others have as well, McCain/Palin rallies have become increasingly fiery, with a few frenzied supporters lashing out at Obama. Today, at one stop, McCain try to defuse the anger. And he also made it clear he wasn't going to put up with the rising rhetoric, saying he won't stand for it.

CNN's Dana Bash was there on the trail.


DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): After a week of escalating anti-Obama rhetoric from supporters at his events, John McCain suddenly tried to turn the temperature down. UNIDENTIFIED MALE: We would like you to remain a true American hero. We want you to fight.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: I will fight. But we will be respectful. I admire Senator Obama and his accomplishments. I will respect him. And I want...


MCCAIN: No, no. I want everyone to be respectful.

BASH: Nothing like getting booed at your own event. And it didn't stop there.

UNIDENTIFIED FEMALE: I can't trust Obama.


UNIDENTIFIED FEMALE: I have read about him, and he's not -- he's an Arab. He is not...


MCCAIN: No, ma'am. No, ma'am. He's a decent family man, citizen, that I just happen to have disagreements with on fundamental issues.

UNIDENTIFIED MALE: We're scared. We're scared of an Obama presidency. I'm concerned about someone that cohorts with domestic terrorists, such as Ayers.

MCCAIN: I want to be president of the United States. And, obviously, I do not want Senator Obama to be.

But, I have to tell you, I have to tell you, he is a decent person, and a person that you do not have to be scared as president of the United States.

BASH: But McCain may be trying to put the genie back in the bottle. Ever since last weekend, when Sarah Palin first accused Barack Obama of palling around with terrorists, referring to 1960s radical William Ayers, rowdy crowds...


BASH: ... have called Obama a liar, terrorist, and worse.

Just today, McCain released this new TV ad on Ayers.


NARRATOR: When convenient, he worked with terrorist Bill Ayers. When discovered, he lied.


BASH: Yet, he doesn't talk about Ayers unless asked, and then insists, it's about Obama's rhetoric vs. reality.

MCCAIN: Senator Obama said that Mr. Ayers was a guy in a neighborhood, when, in reality, Senator Obama's political career was launched in Mr. Ayers' living room.

BASH: And while McCain may now be trying to tamp down on over- the-top rage against Obama, he's still careful not to extinguish enthusiasm he needs to win.

MCCAIN: I don't mean that has to reduce your ferocity.


COOPER: Dana, the woman who called Obama an Arab, you actually went and talked to her afterwards. What did she have to say?

BASH: That's right. I asked her why she asked that question.

And she said, "Well, I believe he's an Arab."

And I said, "Well, he's not."

And she said, "Well, he's a Muslim."

I said. "He's not a Muslim either." I said, "He's a Christian."

And she said, "Well, I don't believe that." And she said, "I don't want him to be president."

You know, that is the kind of notion that we heard from a couple of people here today. But, really, for the most part, Anderson, some of the rage that we heard tonight, just like yesterday, for John McCain was focused primarily on him, basically, and the idea among these supporters that they're very concerned that he is losing to Obama, and they want him to get tougher. You heard some of that here.

But, with regard specifically, Anderson, to Obama, this idea that people are worried that he's a terrorist, that he is a Muslim, things that are absolutely, patently false, the Obama campaign is well aware of that. And they're spending lots and lots of money to try to stop that in small towns, like where I am right now in Minnesota, and all across battleground states.

It's also important to note that this kind of rhetoric, this kind of feeling didn't start right now. It actually started during the Democratic primary, before Obama's opponent was John McCain.

COOPER: How much is -- how much are McCain and Palin actually talking about the economy?

I saw some comments by -- I think it was Rick Davis, campaign manager for McCain, saying, look, we're not CNBC. We're not going to be giving daily updates on the stock market, or some words to that effect.

BASH: Well, I have got tell you, he didn't talk through the stock market, sort of the gyrations of the stock market today, nor did he talk about it yesterday.

However, not here, but this morning at our first event in Wisconsin, he did try to offer sort of the second proposal of the week. You remember, the first one was at his debate, where he talked about the fact that homeowners should get now money from the government to sort of pay off their bad mortgages.

Today, he said, well, I think that people who are nearing retirement, sort of 70 and up, people who are forced now by law to start getting rid of some of their 401(k) and IRA, to start selling it off, he said that that should be suspended for a year.

He mentioned that very briefly, kind of one sentence this morning, Anderson, in Wisconsin, and then he didn't mention it at all here today.

And many of the questions were about what you heard in my piece tonight. Not so much about the economy, a couple. But lot of it about Obama and about the state of the race.

COOPER: All right. Dana Bash, thanks.

Barack Obama is responding to some of these new attacks. We're going to show you how and what impact, in any, it's having. David Gergen, Ed Rollins, Joe Madison, joining us for that in a moment. Candy Crowley gives us her report.

And our rogue's gallery is filling up tonight. We name a new member of "The Ten Most Wanted Culprits of the Collapse." These are the people who are costing you money and crushing our economy. Who makes the list tonight? Find out in a few moments.



SEN. JOHN MCCAIN (R-AK), PRESIDENTIAL NOMINEE: We're the underdogs, and we're going come to from behind, like we have every time in the past. How many times, my friends, have the pundits written off the McCain campaign? We're going to fool them again. We're going fool them one more time.


COOPER: Senator McCain in Wisconsin today, trailing the polls but comfortable coming from behind, as he said. His opponent, Barack Obama, focused on the economy, trying to brush off the attacks on him. Candy Crowley is "On the Trail."


CANDY CROWLEY, CNN CORRESPONDENT (voice-over): aggressive ads questioning his ties with a '60s radical. Hostile McCain voters saying they're afraid of him. Barack Obama can work with that.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: They can run misleading ads and they can pursue the politics of anything goes. It will not work, not this time.

CROWLEY: John McCain is on a one-sided war of words. Obama's strategists see no sign his assault on Obama's character has gotten any traction, so Obama is free to brush it off and throw it back.

OBAMA: It's easy to rile up a crowd. Nothing's easier than riling up a crowd by stoking anger and division. Well, that's not what we need right now in the United States. The times are too serious; the challenges too great.

CROWLEY: The Obama campaign thinks McCain's attacks are actually backfiring and helping Obama, providing a contrast between McCain's heat and Obama's cool, making him look presidential.

OBAMA: I know my opponent is worried about his campaign, but that's not what I'm worried about. I'm thinking about Americans who are losing jobs and homes and their life's savings.

CROWLEY: As one Obama advisor put it, the conventional wisdom is that negativity works, but this is not a conventional time.

This is also a political time, and Obama is a steady as she goes. He is widening his lead and sitting on enough money to buy his own show on the broadcast networks. With 25 days left to go, John McCain has to do something, but Barack Obama only needs run out the clock.

Candy Crowley, CNN, Washington.


COOPER: Well, the clock is ticking. Just 25 days to go. Up next, a "Strategy Session" about what's happening on the trail. John McCain today getting booed when he praised Barack Obama. We'll talk about the rhetoric he's using, compared to what he surrogates are out there still saying.

And the breaking news on Sarah Palin. Our political panel weighs in.

Plus, we name another name on our "Ten Most Wanted Culprits of the Collapse." We think you deserve to know who these people are and how much they have cost you.


COOPER: As we reported earlier, an Alaska legislative report has found that Sarah Palin abused her power as Governor. The bipartisan council said Palin violated an ethics law by firing the state's public safety commissioner. But the report also says that firing was a proper and lawful exercise of Palin's authority.

That's not the only news from the campaign trail tonight. John McCain fired back at some of his supporters today when they attacked Barack Obama.

Joining us again for a strategy session, CNN senior political analyst and former presidential advisor, David Gergen; GOP strategist and CNN senior political contributor, Ed Rollins. Also with us, radio talk show host, Joe Madison.

Joe, we just heard McCain call for a respectful campaign, go out of his way to correct a supporter who called Obama an Arab or scary. Is it important for him to calm these crowds?

JOE MADISON, RADIO TALK SHOW HOST: Oh, absolutely. And most important thing is that you don't feed ignorance. And I'm not trying to say that the lady was ignorant. That would be impolite. But she certainly was misinformed, and obviously been listening to too much conservative talk radio.

But I think he has to do that, because he is making Obama -- and I said it here, I think, the other day on your show -- he's making Obama look cool.

COOPER: David, I want to play just that moment. Because I think it just -- it's just such a crystallized moment when this woman says this and McCain reacts. Let's play.


UNIDENTIFIED FEMALE: I can't trust Obama. I have read about him, and he's not -- he's not -- he's an Arab. He is not -- no?

MCCAIN: No, ma'am. No, ma'am. He's a -- he's a decent family man, citizen that I just happen to have disagreements with.


COOPER: What do you make of that moment? I mean, I just find it kind of fascinating to watch.

DAVID GERGEN, CNN POLITICAL ANALYST: It is. Well, of course, she represents, I think, the voice of a lot of people who have either been misled or are blindly try to believe things that aren't true.

But the real story here tonight is good for John McCain. You know, there have been times in his campaign, a lot of us have felt, where did he go? Where was the man that we respected so much in Washington? He reappeared here today, and he deserves praise for trying to cool that crowd down. Being booed in his own crowd, that's very unusual, and yet saying, "Here's where I'm going to stand."

Now, there's still, Anderson, a split, as you suggested earlier, between John McCain and the rest of his campaign. While he is trying to sort of calm down on this Bill Ayers thing, his campaign is running these really tough attacks, some would say vicious.

And Sarah Palin is off, you know -- you know, with her usual ranting about things. And it's -- when she gets out of -- she says many good things. Rant is probably too strong a word. But, still, she has allowed things to happen in her -- in her rallies that have no place in American politics. And she should put a stop to it, just as he should put a stop to what she's allowing to happen. COOPER: Ed, David says good for John McCain. But what does it say about John McCain that, clearly, personally, he doesn't want to engage in some of the more aggressive things that are being said out there. And yet, he does seem to allow folks around him.

ROLLINS: There's been a disconnect between his media team and some of the other people on his campaign and what he's done on the campaign trail.

I agree with David. I obviously was Mike Huckabee's chairman. I watched debate after debate, campaign visit after campaign visit. Everybody had great respect for John McCain. And everybody said, "If we can't win it, I want John McCain to win it."

Something happened to John McCain over the course of the summer or when he got into this battle. And I think part of it is there was a sense of entitlement: I've done this; I deserve it; this is my chance.

COOPER: You believe he has changed?

ROLLINS: I believe that he has changed, and I think the campaign -- at least he's given the campaign to go out and do some things that John McCain would never have allowed in the past. And I think that's worked to his detriment.

COOPER: It's interesting, Joe, because a couple months ago, McCain said that Reverend Wright was basically off-limits. But McCain -- but the campaign made it clear that, you know, Ayers and Obama's character in play. I wonder if there is a temptation -- certainly, there must be a temptation. I mean, Sarah Palin brought it up to Kristol in an article in an op-ed page piece when she talked to William Kristol. I guess -- do you think they're going to bring up Wright?

MADISON: I think they will continue to bring up Wright. I think there's a fine line here. On the one hand, during these economic times, people feel very insecure. So I think there's an attitude, let's play to independents and the undecided who might be looking for familiarity.

Barack Obama is strange. You know, we've never had a president -- we've had Clintons and Washingtons and Jeffersons, but an Obama? And so -- so you have to bring out the difference. But at the same time, you can't cross that line to the point that you're disrespectful of the diversity that this nation has gone through. So he's walking a fine line, and I think there's a lots of duplicity in this campaign on one hand, the ads run. On the other hand, you have McCain say, "Oh, no, cool down." So there's a mixed message here.

COOPER: Ed Rollins, would you call it duplicity?

ROLLINS: I wouldn't call it duplicity. I'd call it a campaign that's out of control with multi-bull heads. I think John's out doing his thing. I think Sarah Palin. And that's always bad, and that happens in many campaigns. But David and I have both worked in campaigns together. And you have an obligation to the person you work for. We worked for Ronald Reagan. We would never put an ad on that Ronald Reagan wouldn't want. And we're very careful about his signature, very careful about him. I don't think they have been as careful about John McCain.

COOPER: David, I want to ask you about something which you -- I think you sort of intimated at last night on this program. But I actually saw you talking about it on "The Colbert Report" last night, and I've never actually quoted "The Colbert Report."

But -- but you said something really -- you said something really interesting about -- that the final months of a campaign are the beginning of the way someone rules. And if so, what does that say about the way John McCain is going to or can rule?

GERGEN: I think that, if he manages to win this, and that's still possible -- I know Ed doesn't think that -- but if he does manage to win this, I think these months are really casting a shadow over his presidency.

I think that the months leading into the election really are the ramp up to your presidency. And so that, you know, people form impressions during those months that -- that have great weight after you become president. And you have to -- first of all, you have to win a mandate and say what you're for.

The McCain campaign has been themeless. You know, it's lunched from one idea to another. The Obama campaign at least has been about a theme on a consistent basis.

But I also think that this -- this issue of the sort of campaign that sort of like -- the McCain campaign is flailing and floundering now, I think will -- if he does manage to pull this out, is going to have people -- you know, there's going to be a narrative in people's heads about what kind of leader he is. And they're going to be -- and they're going to be a lot less certain and positive about him.

So I think -- I think it would hurt him. I think his campaign would hurt him as president. I think Obama's campaign is ramping up about the way he wants it.

COOPER: David Gergen, Ed Rollins, Joe Madison, good to have you here. Thanks.

Finally, a bit of good economic news to tell you about, just a little bit, a small silver lining to this crisis: why filling up at the gas pump won't be so painful anymore.

Also ahead, we're naming names. A new one joins the list of our "The Ten Most Wanted Culprits of the Collapse." You need to know who these folks are, because they are costing you money. Be right back.


COOPER: Two nights ago, we began naming the names of the "Ten Most Wanted," the "Culprits of the Collapse." So far, Joe Cassano from AIG and Richard Fuld of Lehman are at the top of our roster. Tonight, we're adding one more.

We repeatedly heard the politicians telling us that now is not the time to point fingers or blame over this financial fiasco. But we think just the opposite is true. Now is exactly the time. You need to know these people: their names, their faces, what they're accused of doing and how much it is costing you.

So tonight, the newest member of our "Ten Most Wanted Culprits of the Collapse" is Chris Cox, the chairman of the Securities and Exchange Commission. His leadership, or lack of it, as you're about to see, is why he deserves to be on this list.

Joe Johns explains.


JOE JOHNS, CNN CORRESPONDENT (voice-over): Chris Cox was supposed to be the sheriff of the stock exchange. But even John McCain has demanded his badge.

MCCAIN: The chairman of the SEC serves at the appointment of the president and, in my view, has betrayed the public trust. If I were president today, I would fire him.

JOHNS: Democrats are gunning for Chris Cox, too.

REP. DIANE WATSON (D), CALIFORNIA: SEC is under funded, under staffed and led by a chairman who either was unable or unwilling to enforce even the basic laws on the books.

JOHNS: So should Cox have known there was big problem and that the worst financial crisis since the Great Depression was about to happen on his watch? The main charge, that under Cox, the SEC ignored warnings signs about the financial health of the major institutions that are now bringing down the economy. Cox says he just didn't have the authority to police that part of the market, and now he wants Congress to give the SEC more power?

CHRISTOPHER COX, CHAIRMAN, SEC: The SEC, for its part, does not have legal authority over the entire investment banking firm.

PROFESSOR JOHN COFFEE, COLUMBIA UNIVERSITY: Unfortunately, that's locking the barn door after the horse has been stolen because all of those investment banks are now either defunct or regulated by the Federal Reserve.

JOHNS: Then there are the warning signs. Back in 2004, the SEC ruled that a handful of huge institutions could borrow far more money than we now know they were able to repay.

Cox inherited that rule, but as chairman, when things started going downhill, the SEC had no answers. The SEC says it had no way of knowing that the collateral the companies were putting up to cover the loans wouldn't be trusted.

COFFEE: From 2007 on, the problem was there, and no one at the SEC took any firm or authoritative action with any of the major investment banks, despite a series of red flags.

JOHNS: OK, granted, Washington has been in love for years with free market hands-off deregulation. But come on. How did Cox get it so wrong? We requested an interview with the chairman but haven't gotten an answer yet. But a look at how the SEC is staffed provides some clues.

According to an SEC inspector general's report, seven people at the SEC were assigned to watch over the voluntary program, but it turns out the staff had not completed any inspections in the 18 months since March 2007.

Bottom line: Chris Cox may have inherited a flawed system, but in a time of serious crisis, critics say he didn't do enough. And that's why Chris Cox makes it onto our "Ten Most Wanted Culprits of the Collapse."


COOPER: So Joe, what happens to Chris Cox now?

JOHNS: He sticks around, arguing essentially that he does not have the tools to do the kind of job that was needed to prevent this situation.

By the way, it's not clear at all whether the president of the United States can fire the SEC chief except for cause. But what is clear tonight is that a guy like John McCain, who's a presidential candidate, certainly cannot.

COOPER: You know, it's amazing to me that everyone is just pointing fingers at other people. No one has taken, that I've seen -- any politician or any executive -- has taken any personal blame. No one has stood up and said, "You know what? I did play a role. Listen, I apologize."

I think people would forgive them. It's just very frustrating that everyone just seems to be pointing fingers at other people.

JOHNS: That's true. It's a big mess.

COOPER: All right. We're going to make it official. We're adding Chris Cox to our "Ten Most Wanted Culprits of the Collapse," which we began two nights ago with Joe Cassano from AIG, followed by Richard Fuld from Lehman Brothers. So every night, we are filling in a new name and, if the list gets full, well, maybe we'll just start up another list. This -- there are an awful lot of culprits in this thing.

Lots more ahead tonight. A soldier's welcome home from Iraq that -- there aren't words, just a mighty love. That's our "Shot of the Day." And at the top of the hour, breaking news, a long-awaited investigation in Alaska concluding that Governor Sarah Palin abused her power in pressuring others to fire her former brother-in-law, a state trooper. The campaign cries foul.


COOPER: Well, we've got a welcome home story that's guaranteed to melt your heart. It involves two dogs and a soldier returning from Iraq. That's our "Shot" tonight.

First, Erica Hill joins us with a "360 News and Business Bulletin" -- Erica.

ERICA HILL, CNN ANCHOR: Such a great "Shot," Anderson.

But first, Anderson, the "New York Times" is reporting General Motors is in preliminary talks with Chrysler about a possible merger. Two people close to the process told the "Times" the chances of a successful deal were 50/50.

Oil prices sinking even lower to a 13-month low today. They're just under $78 a barrel. Talk about good news. It's also a stunning drop from the high of $150 as barrel. It hit that over the summer. And welcome news, of course, for consumers. You should see that reflected at the pump.

A 4-3 vote by the Connecticut Supreme Court legalizing gay marriage today. And this makes Connecticut the third state, after Massachusetts and California, to allow same-sex couples to wed. That ruling takes effect at the end of this month.

And a new twist on an equitable split of marital assets from rural Cambodia. I couldn't resist this one today. A divorcing couple there actually sawed their wooded house in half. Look, there's the half that's left. "Very strange. But this is what my husband wanted," says his ex-wife, adding that his relatives helped to hack apart the house and then helped him to carry away each little morsel.


HILL: Yes.

COOPER: That's an interesting solution there.

HILL: It is, and very involved, too.

COOPER: All right. Time for our "Beat 360" winners, our daily challenge to viewers to come up with a caption better than the one we could come up with for a photo that we put on our blog.

So tonight, the picture is Barack Obama in a battleground state, placing his order at the Fireside Restaurant. It's a restaurant in Georgetown, Ohio.

Sean won it from our staff. His caption: "What would I like to order? A November victory, please."


COOPER: Our viewer winner is Ayesha from Illinois, who won with this: "Could I have two slices of humble pie sent to those two mavericks up at table five?"

HILL: Ooh.


COOPER: Ayesha, your "Beat 360" T-shirt is on the way. You can check out all the entries we received on, and that's where you can play along, as well.

So tonight's "Shot" comes from the Web. We pulled it from (ph). A soldier returning home from Iraq after 14 months, greeted by two old friends. The music was on the tape when we found it. Take a look.





HILL: Look at that.

COOPER: We don't know the name of that soldier or his dogs, so we'll let them be a special kind of symbol for all those waiting and wondering, with their hearts on hold. And I know you have a dog, Erica. Anyone who has a dog knows that moment when you come home. But after being away for 14 months...

HILL: I can't imagine.


Just ahead, breaking news out of Alaska, where lawmakers have determined that Governor Sarah Palin abused her power when she fired the public safety commissioner and also violated a state ethics law. They also found she didn't break another law in question. It is confusing. Does it hurt or help the McCain ticket? Well, we'll talk about that, ahead.

And the latest developments in the worldwide financial crisis. That's what it is now, worldwide. Including the Dow's roller-coaster day, the treasury secretary's new plan to help banks and what it all means for your wallet. Stay tuned.


COOPER: Tonight, breaking news on two fronts. Stunning financial news on this day when the stock market was downright scary, with wild swings up and down. The government announced a short time ago it is moving ahead to buy stocks in troubled banks. This is a very big deal. We're going to have extensive coverage in a moment, but first we have breaking news on Sarah Palin.

State lawmakers have determined just a short time ago that, as governor, Sarah Palin abused her power in the firing of her former public safety commissioner and violated state ethics law.