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ANDERSON COOPER 360 DEGREES
Economic Rescue and a Bigger Bailout; Gov. Palin Abused Power But Broke No Law; African-Americans for McCain
Aired October 10, 2008 - 23:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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. This 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, also violated that 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 and Public Safety Commissioner Walt Monegan was fired by Palin in July. And a 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 that Palin's claims of fear about Wooten quote, "We're 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.
(BEGIN VIDEOTAPE) KAYE: This all began three years ago with an ugly divorce between Alaska's State Trooper Mike Wooten and Sarah Palin's sister. The Governor says Wooten threatened her family, even suggested he kill her father.
MIKE WOOTEN, ALASKA STATE TROOPER: I didn't threaten him and I've never threatened anyone for that matter.
KAYE: The Governor says Public Safety Commissioner Walt Monegan was fired because of budgetary reasons; that and more was repeated in documents released late Thursday; the McCain campaign's attempt to head-off the legislative counsel's findings. It insists quote, "Monegan's dismissal was as a result of his insubordination and budgetary clashes."
WALT MONEGAN, 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 but 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) VICE PRESIDENTIAL CANDIDATE: He did very appropriately though bring up those concerns about a trooper who was making threats against the first family.
KAYE: The 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.
(END VIDEOTAPE)
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 the investigators' question this week Anderson and telling them quote, "The legislature 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 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 report 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 shows that the Governor acted within her proper and lawful and 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 and law of 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's senior political analyst and former presidential advisor David Gergen; CNN senior political contributor, a Republican strategist, Ed Rollins; and CNN's Joe Johns, who's reported extensively from Alaska.
David, what do you make about this? Is this much ado about nothing?
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST AND FORMER PRESIDENTIAL ADVISOR: 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 seem to be a little a bit 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. They've been arguing now for the last several days about Bill Ayers.
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 by every measure has not been exactly forthcoming about what really happened here and what's been discovered by this commission, bipartisan commission, and what was reported extensively on today in the "New York Times."
COOPER: Ed, what about that? I mean ten Republicans on this commission, four Democrats, Sarah Palin said she would cooperate early on and then when she started running for VP, suddenly the cooperation stops.
ED ROLLINS, CNN SENIOR POLITICAL CONTRIBUTOR, REPUBLICAN STRATEGIST: Certainly she -- when she became I mean I -- 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 spent 25 years in government. If we're all going --
COOPER: 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. Essentially is 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, she should probably not have done it, and you bet you. It's going to be about the voters in Alaska after this, it's not going to affect this campaign, it'll be a day or two distraction; but back on the economy again on Monday and we're back on a debate in the middle of the week.
COOPER: It does -- I mean 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 camp is even saying, look, this is a partisan issue all along.
JOE JOHNS, CNN 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 are 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, that this thing 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: This legislative body said that they don't really buy the reasons she has given for, or that Todd Palin gave for wanting this guy fired. They didn't think the threats were as serious, as they were -- that they basically this was a kind of a personal thing because 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.
But fundamentally, I think the bottom line here is, as 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 worked for a lot of presidents, and they didn't control the first ladies and they certainly interfered. And so David and I can be witness to that.
So I think the bottom line. 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 exactly the 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 and they'll see this as just a political hay being made by the other side and there are those who can't stand her and they'll just add this to the sort of thing that they don't like her.
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, they will have a link to it on our Website as well.
We want to hear your thoughts about all of this. Erica and I are going to be blocking throughout the hour when there's time. Join the conversation at ac360.com 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 pocket books. New developments on what is now a world- wide economic crisis as the DOW ends its worst week ever with another white-knuckled day; the government moving to buy shares in troubled banks.
We'll 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.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I can't trust Obama. I have read about him and he's not -- he's a -- he's an Arab. He is not -- no?
SEN. JOHN MCCAIN, (R) PRESIDENTIAL NOMINEE: No, ma'am. No, ma'am. He's a decent family man, citizen that I just happen to have disagreements with.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
COOPER: New developments tonight in what is now a world-wide 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 turning day it was. In the first 15 minutes of trading the DOW plunged nearly 700 points then by 10:00, it had changed course, surged into positive territory.
The reaction on the trading floor at first almost giddy and it turned queasy the rest of the day, up and down. A roller coaster ride, wild swings and the DOW spending a record breaking 1,000 points, and look it go up and down.
The DOW ended the day down 128 points; news that was actually greeted with sighs of a 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 wallets, personal financial adviser. 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'll 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 a 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 put into it. So a lot of people are looking at this saying this might be a particularly good way to spend this money in a way that it'll get a return for the average investor.
COOPER: I don't think I've ever seen a day like this watching the DOW just go up and down. I mean break it down for us what happened?
VELSHI: We've 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. 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 8,500 and 8,000. And that's the band it stayed in all day, which means that maybe, and maybe we're exploring where the bottom of this market actually is and the bottom is where professional investors, the people who buy your 401(k)s are actually in there and they're buying stock. We saw buyers today.
COOPER: There were actually people are real buyers?
VELSI: Real buyers. There was a lot of volume and there were people really buying stocks today.
COOPER: 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, and your 401(k)s. It is all connected.
Plus, rising rage; more verbal outburst in the McCain events and today, well McCain fired back and in one case got booed for it, by his own supporters. We'll show you why.
And we are naming names, who's to blame for this up and down, this financial fiasco. "Our Top Ten Most Wanted: The Culprits of the Collapse," you should know these peoples names and their faces. Some say it's not time to point fingers. We strongly disagree. A new name coming up.
(COMMERCIAL BREAK)
COOPER: Welcome back.
We continue with our "Breaking Story," the world-wide financial crisis that shows no signs yet of 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 announced that the government is going to move ahead with this plan to buy stock in American banks, it's a step he has frankly had been reluctant to take and a clear signal that more medicine is needed to try to keep this patient alive.
Let's shift folks now to Main Street where there's plenty of fear and anxiety tonight. Joining me again, CNN senior business correspondent Ali Velshi and 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 that maybe we're -- they we're close to a bottom.
LYNNETTE KHALFANI-COX, PERSONAL FINANCE EXPERT: Right, 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's going to happen globally? Is the G7 going to do something, are we going to see some kind of coordinated actions? The global rate cut did not work; it did not unlock the credit crunch 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 invested 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 is by the government -- it's almost like a matching program even though it isn't -- by the government investing in some these, it becomes a safer investment for other people. These banks get their money again that they need to loan to you and me and businesses.
COOPER: Richard, you're in London and foreign markets and some places even shut down. Of course a lot of us over here are just concern about what's 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 INTERNATIONAL CORRESPONDENT: 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 fears 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've got these world financial leaders meeting in Washington. What do they want to hear from America?
QUEST: I think what they want to hear from America is an air of seriousness and the 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 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'll guarantee your debt. If you did that, we'd trust each other again, we'd start making loans; the world would be safe.
COOPER: Lynette, I want to ask you, we've been getting a lot of questions for you and for others on our blog on ac360.com and I want to read this one we got and see if you can answer it.
"Anderson, I've heard that now is a good time for people like me in they're 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 time for young people and frankly anyone to get back into the market?
KHALFANI-COX: I think for young people, they've 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've seen.
COOPER: If they've got cash and they don't need that cash in the short term.
KHALFANI-COX: 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 to 70 percent plus at that age, and certainly allocation of bonds will be prudent and a little bit of cash.
But at that young age, you've got time and you've got the markets really on your side in terms of the potential on the upside.
COOPER: And the upside, as you said before, a higher volume today and some people are starting to do that.
VELSHI: Yes, Anderson, and let's not forget, professional traders are in the market are mutual fund managers who manage the mutual funds that you and I hold on 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 everyday. They have to look for buying opportunities. They were looking for an opportunity to get in. And they said, don't look at the market, look at the companies in that market and those companies looked like they are 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 versus 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 it's good to have you and Richard Quest, great to have you in London. Thanks.
Tough talk on the campaign trail today, you've 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. And we're going to show you 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 "Ten 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're adding to the list tonight.
(COMMERCIAL BREAK)
COOPER: Tonight, new poll numbers showing Barack Obama continuing to pull ahead. Out this evening the latest CNN's poll of polls which is a survey of several polls, gives him a 49 to 41 percent lead over John McCain that's among likely voters.
Now, in recent days as you know as we've 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 tried 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."
(BEGIN VIDEOTAPE)
DANA BASH, CNN CORRESPONDENT: After a week of escalating anti-Obama rhetoric from supporters at his event, 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.
MCCAIN: I will fight, but we will be respectful. I admire Senator Obama and his accomplishments. I will respect him and I want -- 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. I have read about him and he's not -- he's a -- he's an Arab. He is not -- no?
MCAIN: 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 have called Obama a liar, terrorist and worse.
Just today, McCain released this new TV ad on Ayers.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: When convenient, he worked with terrorist Bill Ayers and when discovered, he lied.
(END VIDEO CLIP)
BASH: Yet he doesn't talk about Ayers unless asked and then insists it's about Obama's rhetoric versus reality.
MCCAIN: Senator Obama said that Mr. Ayers was a guy in the neighborhood when in reality Senator Obama's political career was launched in Mr. Ayer's 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 extinguish enthusiasm he needs to win.
MCCAIN: I don't mean that has to reduce your ferocity.
(END VIDEOTAPE)
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 Muslim. I said he's not a Muslim either, I said he's Christian.
And she said, I don't believe that and she said I don't want him to be president.
That is the kind of notion 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. With regard specifically Anderson, to Obama, this idea that people are worried that he's a terrorist, that he is a Muslim, things 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 know this kind of rhetoric, this kind of feeling, didn't start now, it actually started during the Democratic primary before Obama's opponent was John McCain.
ANDERSON COOPER, CNN ANCHOR: How much are McCain and Palin actually talking about the economy? I just saw some comments by, I think, it was Rick Davis, the campaign manager for McCain saying, we're not CNBC, we're not going to be giving daily updates on the stock market or some words to that effect.
BASH: I've got to tell you, he didn't talk about the stock market through the gyrations of the stock market today nor did he talk about it yesterday. However, not here but this morning in that first event in Wisconsin, he did try to offer some of the second proposal of the week.
Remember, the first one was at his debate where he talked about the fact that homeowners should get now money from the government to pay off their bad mortgages.
Today, he said, I think that people who nearing retirement, who are 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. Many of the questions were about what you heard in my piece tonight. Not so much about the economy, a couple; but a lot of it about Obama and about the state of the race.
COOPER: All right. Dana Bash thanks.
Barack Obama's responding to some of these new attacks. We're going to show you how and what impact, if any it's having. David Gergen, Ed Rollins, Joe Madison join 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 people who are costing you money and crushing our economy. Who makes the list tonight? Find out in a few moments.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN, (R) PRESIDENTIAL NOMINEE: We're the underdogs and we're going to come 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.
(END VIDEO CLIP)
COOPER: Senator McCain in Wisconsin today, trailing in the polls but comfortable coming from behind as he said. His opponent Barack Obama's focused on the economy, trying to brush off the attacks against him.
Candy Crowley is "On the Trail."
(BEGIN VIDEOTAPE)
CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: 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) PRESIDENTIAL NOMINEE: They can run misleading ads and pursue the politics of anything goes; it will not work, not this time.
CROWLEY: John McCain is in 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. That's not what we need right now in the United States. The times are too serious, 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 the Americans who are losing jobs and homes and their life savings.
CROWLEY: As one Obama advisor put it the conventional wisdom is that negativity works. But this is not a conventional time. This is a political time and Obama is a steady as he 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 to run out the clock.
Candy Crowley, CNN, Washington.
(END VIDEOTAPE)
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 his 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.
(COMMERCIAL BREAK)
COOPER: As we reported earlier, in Alaska a legislative report has found Sarah Palin abused her power as governor. The bipartisan council said Sarah Palin violated an ethics law by firing the states public safety commission but the report also says the 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: 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 and go out of his way to correct a supporter who called Barack Obama an Arab or scary. Is it important for him to calm these crowds?
JOE MADISON, RADIO TALK SHOW HOST: Oh, absolutely. And the 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 have been listening to too much conservative talk radio. I think, he has to do that because he is making Obama, and I said it here the other day on your show, he's making Obama look cool.
COOPER: David, I want to play just that moment. It's just such a crystallized moment when this woman says this and McCain reacts. Let's play.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I can't trust Obama. I have read about him and he's not -- he's a -- he's an Arab. He is not -- no?
MCCAIN: No, ma'am. No, ma'am. He's a decent family man, citizen that I just happen to have disagreements with.
(END VIDEO CLIP)
COOPER: What do you make of that moment? I just find it kind of fascinating to watch.
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: It is. Well, of course, she represents, I think the voice of a lot of people who have either been misled or blindly try to believe things that aren't true.
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. Here's where I'm going to stand. There's still, Anderson, a split, as you suggested earlier between John McCain and the rest of his campaign.
While he is trying to calm down on this Bill Ayers thing, his campaign is running these really tough attacks, some would say vicious. And Sarah Palin is off with her usual ranting about things. 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 rallies that have no place in American politics. And she should put a stop to it and just as he should put a stop to what she's allowing to happen.
COOPER: Ed, David says good for John McCain. 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 the folks around him.
ED ROLLINS, REPUBLICAN STRATEGIST: 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. 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 the permission to go out and do 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 the campaign has made it clear that 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 piece when she talked to William Kristol.
Do you think they're going to bring up Wright?
MADISON: I think they will continue to bring up Wright. I think is there a fine line here. On one hand during these economic times, people feel very insecure.
So I think there's an attitude, let's play to independents and undecided who might be looking for familiarity. Barack Obama is strange. We've never had a president, we've had Clintons and Washingtons and Jeffersons, but an Obama? So you have to bring out the difference.
But at the same time, you can't cross that line to the point that you are disrespectful of the diversity that this nation has gone through. So he's walking a fine line and I think there's a lot of duplicity in this campaign.
On the one hand, the ads run and the other hand, you have McCain say, oh, no, cool down. 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 -- that's always bad and that happens in many campaigns.
David and I have both worked in campaigns together. 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. We're very careful about his signature, very careful about him. I don't think they've been as careful about John McCain.
COOPER: David, I want to ask you about something which you -- I think you sort of intimated that last night in this program. But I actually saw you talking about it on the Colbert Report last night, I never actually quoted the Colbert Report but you said something really interesting about that the final months of a campaign are the beginning of the way someone rules.
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, that's still possible -- I know Ed doesn't think that -- if he does manage to win this, I think these months are casting a shadow over his presidency.
I think that the months leading into the election really are the ramp up to your presidency. So that people form impressions during those months that have great weight after you become president.
You have to first of all, you have to win a mandate and say what you're for; the McCain campaign has been themeless. It's lunch -- lurched from one idea to another. The Obama campaign at least has been about a theme on a consistent basis.
I also think that this issue of the campaign 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 -- there's going to be a narrative in people's heads about what kind of leader he is. They're going to -- they're going to be a lot less certain and positive about him.
So I think it would hurt him and 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 on.
Finally, good economic news to tell you about, just a little bit, small silver lining to this crisis, why filling up the gas pump won't be so painful anymore.
Also ahead, we're naming names and a new one joins the list of our "Ten Most Wanted Culprits of the Collapse." You need to know who these folks are because they are costing you money.
We'll be right back.
(COMMERCIAL BREAK)
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've 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.
(BEGIN VIDEOTAPE)
JOE JOHNS, CNN CORRESPONDENT: 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 underfunded, understaffed 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, SECURITIES AND EXCHANGE COMMISSION: 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 respect 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."
(END VIDEOTAPE)
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: We're "Uncovering America" tonight. Coming up, John McCain's support among African-Americans when "360" continues.
(COMMERCIAL BREAK)
COOPER: We want to bring you all sides of this historic presidential race. Tonight we're "Uncovering America" and looking at African- Americans who are supporting John McCain.
CNN's Rick Sanchez talked with three voters who are backing the GOP, Rufus Montgomery (ph), Michael McNealy (ph), and Austin Kane (ph).
(BEGIN VIDEOTAPE)
RICK SANCHEZ, CNN ANCHOR, "LEAGUE OF FIRST TIME VOTERS": And you think John McCain is better prepared to lead our country than Barack Obama?
UNIDENTIFIED MALE: I know he's better prepared to lead.
UNIDENTIFIED MALE: Principles matter. Lower taxes, strong national defense, traditional marriage, free market solutions; those types of things. That's what we believe in the Republican Party.
SANCHEZ: Austin, you agree?
AUSTIN KANE, MCCAIN SUPPORTER: Barack is a good candidate, but I think he talks a lot. I don't think he can get everything he talks about necessarily done. I feel like he's a motivational speaker sometimes, but I really think that being a Republican is the way to go.
SANCHEZ: Does that mean you support the policies of George Bush?
UNIDENTIFIED MALE: I want to vote for someone who is only going to side with the people that are presumably in power. John McCain has a proven record of working across the aisle to the extent that it's caused some angst amongst Republicans. SANCHEZ: But given the economic situation -- the dire economic situation -- you can hear Henry Paulson and others describe it that way, wouldn't you tend to want to lean with the guy who doesn't represent or is most distant from the party at hand right now, which is the George W. Bush/Dick Cheney party?
UNIDENTIFIED MALE: Change for us is not looking to the government to be our savior. We are individuals. This nation is great because of individuals who have risen up and taken on the challenges of the country.
SANCHEZ: Is there a chance that come that Tuesday you might actually pull the ballot for Barack Obama, or are you pretty much set on John McCain?
KANE: There is a chance, especially me as a young voter. I'm only 19. I'm hearing most the debates. I really never voted before, just class elections at school. I'm just really trying to hear everybody out, trying to get everybody's opinion.
UNIDENTIFIED MALE: Although we're seeing some times of trouble in our economy, we know that we can see it through and the Republican Party has the best answers.
UNIDENTIFIED MALE: I actually get to vote twice this year. I'm a presidential elector and I will cast a vote for John McCain in it November and also do the same in December.
(END VIDEOTAPE)
COOPER: That does it for this edition of "360." Thanks for watching.
"Larry King" starts right now.
Have a great weekend.
