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Dow Plunges Amid Fears of New Global Recession; House to Vote on Spending Bill; SeaWorld Death

Aired September 22, 2011 - 20:00   ET



We begin with breaking news. A brutal day on Wall Street. Your 401(k) and stock portfolio likely took a beating today. The Dow closing down nearly 400 points after plunging more than 500 points earlier in the day. While the S&P and Nasdaq each posted double-digit losses.

Fears of another global recession fueling the sell-off. Some key international markets opening right now. All eyes on them as everyone is wondering if this bad day turns into an all-out international downward spiral.

Investors spooked by the messages from the Federal Reserve on Wednesday warning of, quote, "significant downside risks to the economic outlook including strains in the global financial markets."

Joining us for more insight is Erin Burnett, host of the new upcoming CNN program, "OUTFRONT." Plus Stephen Moore, senior economy writer at the "Wall Street Journal," and senior political analyst, David Gergen.

So what is behind the sell-off, Erin?

ERIN BURNETT, ANCHOR, "ERIN BURNETT OUTFRONT": You know it's pretty amazing. I was talking to a -- a few investors today. And what Ben Bernanke said yesterday, Anderson, was exactly what the market expected him to say. We know -- we know things are weak, we know Europe is a very severe issue.

But him saying it, even though they knew he was going to say it, just makes people even more worried. People are kind of looking for something to hold on to, maybe for a little bit of hope. So that's why you see this.

But most people are saying this is a rather dramatic sell-off and you might see a little bit of stabilization. That isn't the same thing, though, as saying we aren't in a real economic problem.

COOPER: Right.

BURNETT: We know that we are.

COOPER: And Stephen, it seems like the markets were also underwhelmed by the Feds' latest moves to try to kick start the economy. Is there anything at this point that policy makers can do to raise expectations?

STEPHEN MOORE, SENIOR ECONOMY WRITER, "WALL STREET JOURNAL", AUTHOR, "THE END OF PROSPERITY": Certainly not the Fed -- Anderson, certainly the Fed. I mean the Fed has been deluging the economy with money for the last three years. And the idea of more purchases, of government bonds by the Fed, which is what Ben Bernanke announced yesterday, I'm not so sure they had a very calming effect.

I think Erin is right.

I also think the president's message this week wasn't very helpful. As you know, Anderson, on Monday, the president announced there would be this $1.5 trillion tax increase starting in 2013. That's only 14, 15 months away. And I think that was just a very bearish, dreary message in an economy that's already hobbled.

COOPER: David, do all roads even this one lead back to the president?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: No, not all roads. There is great fear in the markets right now about what's going on in Europe and the eurozone, with the European banks. There's also some fear now that the U.S. banks are getting a little shaky. I know three of them had their credit downgraded in the last 48 hours.

There's concern about China and manufacturing. You know the Chinese stock market is down 20 percent year-to-date. So there are other concerns. But a part of this, we have been the number one economy. We have been the driving force. You know, we're supposed to be the locomotive to help other nations to get out of this and we're exactly the opposite, we're the caboose in many ways.

And yes, it does involve politics. Typically it's economics that change our political scene. In this case, it's the deterioration of our politics that's dampening the economy. And I do think -- to follow up on Steve's point -- there is a growing sense in the industrial community and financial community -- I've been talking to both here in the last few days -- that both a jobs bill and the deficit bill, prospect for doing anything are seen to be slipping.

COOPER: So, Erin, do you agree with that, the political gridlock is playing a role?

BURNETT: I think it's a huge role, Anderson, because the Fed -- Fed chief Ben Bernanke, he's a patriotic man, he's a respected man. Whether you think he's been doing the right thing or not, he has been doing everything he can. The Fed is doing everything it can.

The problem is, is that Washington and Capitol Hill are not doing anything. So yes, gridlock is a big issue. I mean you look at the root of the whole problem and what really could fix all of this -- I know this is a little bit of oversimplification, but I think it's a fair point to make. It's U.S. housing prices, still up 30 percent from their highs, and they're still dropping we found out yesterday. As long as that's the case, our economy won't get better, the world economy won't get better. And the Fed cannot fix that. They have rates so low, right? Mortgage can't go lower.

COOPER: Right.

BURNETT: People can't buy homes. That is something only Congress can do something about right now. And it looks like there's nothing that they're going to do.

COOPER: Stephen --

MOORE: You know, Erin -- I agree with what Erin just said, Anderson.

But, you know, Erin, I don't think the problem is gridlock right now. It's -- I think the problem is at the top. I mean I think there's a leadership problem when you've got this kind of schizophrenic message from the president.

Remember, about 10, 12 days ago, the president said we're going to do this big tax cut to help businesses grow. I think there were some good ideas in that plan. Then a week later, he says, oh by the way, we're going to have $1.5 trillion tax increase on top of that.

Right now, the parties are so polarized, the president has not really put anything on the table that Republicans and Congress are going to buy into. And I think that's a big problem because this economy does need a stimulus, but it needs the right kind of stimulus, not another $800 billion spending program.

COOPER: David, Steve is clearly putting the blame on the president. Are there Republicans to blame at all for this, too?

GERGEN: Sure, they bear some of the responsibility. Everybody's fingerprints are all over this. You know we wouldn't have had the kind of debt fight that we did had Republicans not pushed that right to the limit. And that -- you know, we have the biggest drop in consumer confidence as a result of the debt fight that we've had in years.

So yes, the Republicans bear some responsibility. But I think what -- it's this -- the sense, Anderson, that one finds out in the job creation community is that we're looking for something that would help up get out of this, and what we see in Washington is we don't see any help -- coming. Indeed what looks like, it looks like is that everybody has gotten into campaign mode.

They're all thinking about 2012. I do think that the president's plans, (INAUDIBLE), I think for good reason in one sense that they were political documents, not governing documents. And there's a real sense in the country, can't you guys spend three to six months helping to fix the economy in serious ways, like tax reform and get off the trail for a while? COOPER: Erin, do you think we're already in a recession or heading back that way?

BURNETT: You know, it's interesting, I mean, I think most people would say, yes, right? The experience that people have, the 25 million unemployed Americans and more underemployed would be that a lot of people would say it's shocking that we're a couple of years out of a recession. They would disagree with that.

Technically speaking a lot of the data that we've had recently have not shown that we're falling into another recession. But I will say there's some very influential people --

COOPER: Right. George Soros yesterday said he thought we're already back in one.

BURNETT: That's right. And George Soros said that, and you had Mohamed El-Erian, who is one of the most influential bond managers in the country so they own a lot of U.S. debt out of PIMCO, he also thinks that we could have another financial crisis. So I think the jury is out on that but one thing that really could turn the tide outside the U.S. and all these gridlock issues we're talking about really would be resolution of the European problem.

If you had real resolutions there, I think that would be significant. That would turn around people's sentiment and sentiment really and trust and confidence is what this is all about. So that really could prevent a recession.

COOPER: Australian markets are down.


MOORE: You know the problem, Erin -- I was just going to say, the problem, Erin, if we do hit a double-dip recession, I pray that that doesn't happen because American finances are just kind of clawing out of the last financial meltdown that we had with the housing crisis.

And you know if we had a double-dip recession right now, we could see this budget deficit go from 1.3 to 1.4 to 1.8, $2 trillion and put us in an even bigger hole.


MOORE: And the problem is, we borrowed so much money in the last three years, we're kind of not in any position right now to deal with the double-dip. So it's a very scary situation.


MOORE: Especially after those census numbers came out last week that showed declining family income, rising poverty levels, and of course 9 percent unemployment.

COOPER: Yes. It's a -- GERGEN: Anderson?


GERGEN: I just want -- there's a parallel between Europe and the United States. In both, we're suffering from weak political leadership.


MOORE: Right.

COOPER: Depressing note, David.

MOORE: I agree.

COOPER: But we've got to end it there.

David Gergen, Stephen Moore, Erin Burnett, appreciate it. Thank you.

We've got something at the end of the program to make you smile and laugh. So stick around for that. It's not all depressing tonight.

A reminder, Erin's new show here at CNN, "ERIN BURNETT OUTFRONT." Debuts Monday, October 3rd at 7:00 p.m. Very excited for that.

And Erin, thanks very much.

BURNETT: That's right. Please watch so we can give you a good lead, Anderson.

COOPER: Well, you know --

BURNETT: Is that word --


COOPER: Let us know what you think. We're on Facebook. Follow me on Twitter, @Andersoncooper. I'll be tweeting tonight as well.

Up next, breaking news on a shutdown showdown on Capitol Hill. That's right. We're back here again talking about a shutdown waiting for a new vote in the House to keep the government running after September 30th. The measure failed yesterday when Republican lawmakers wanted more spending cuts to pay for disaster relief aid.

What's going on? We're "Keeping Them Honest."

Also tonight we continue our special series, "Ungodly Discipline." New allegations of child abuse at a fundamentalist Baptist school in Indiana. Some former students are saying they were hit and humiliated by staff members to the point that some students considered suicide.


UNIDENTIFIED FEMALE: We constantly lived in fear of looking the wrong way, doing the wrong thing.

UNIDENTIFIED MALE: We're brainwashed, our parents were brainwash, and you followed what Roger (INAUDIBLE) said.


COOPER: We'll have more on that later.

Coming up also, let's check in right now with Isha Sesay -- Isha.

ISHA SESAY, CNN ANCHOR: Anderson, a dramatic testimony today at a federal hearing looking into whether SeaWorld should be charged in the death of an animal trainer who worked with killer whales. That and much more when 360 continues.


COOPER: More breaking news tonight, and "Keeping Them Honest."

Here we go again on the brink of a possible government shutdown. All that talk of compromise. Well, maybe just that. Talk. The do- nothing Congress could be living up to the nickname tonight once again.

We're waiting for a crucial vote in the House on a bill to fund the government beyond September 30th, and even if it passes, it would only fund the government for seven more weeks. And that's a big if.

The vote on the GOP measure failed in the House last night, 230 to 195, 48 Republicans defected, voted against their party's own measure, and only six Democrats sided with Republicans. Now the failed vote, some say, has proved to why Congress has just 12 percent approval rating in the latest poll conducted by CBS and the "New York Times."

Conservative Republicans voted against the CR, Continuing Resolution, because they said there weren't enough spending cuts to offset the $3.6 billion in disaster relief money. Now you can decide for yourself if you think funds for disaster relief for agencies like FEMA should only be available if they're offset by spending cuts elsewhere.

This country is in some pretty tough strait for sure, but this is the first time ever, ever, that funding for people affected by things like tornadoes, floods, hurricanes, fires, you name it, have been used as a political edge.

And right now, that aid is in limbo until this bill gets passed.

"Keeping Them Honest," just last week, House Majority Leader Eric Cantor said he wouldn't hold up disaster relief. We found this on



REP. ERIC CANTOR (R), MAJORITY LEADER: No one is holding any money hostage. I also think we can do so responsibly.


COOPER: He says no one is holding any money hostage. But they are tonight, even though Cantor pointed out his district needs the aid. His district in Virginia was hit by Hurricane Irene and an earthquake last month.

House Speaker Boehner seemed caught off guard by last night's vote. He desperately tried to get his party on board and failed but today at a news conference he dismissed there was any chaos in the ranks and insisted they're going to reach a deal.


REP. JOHN BOEHNER (R), HOUSE SPEAKER: The founders gave us a committee which is now 535 individuals. And trying to get 535 people to come to agreement on anything around here is difficult.

But that's -- we've known that going in. We'll work our way through this. I have always been confident that we'll be able to come to an agreement and we will.


COOPER: That's Speaker Boehner earlier today. At this hour, again, we're waiting for a new vote on the measure. It's expected any moment. We'll see if Republicans did in fact reach an agreement as Mr. Boehner said they would.

Republican sources tell us that House GOP leaders have in fact unveiled a new proposal to offset the cash wanted for disaster relief by cutting roughly $100 million from a government loan program that granted a $535 million loan guarantee to the now bankrupt and highly controversial Solyndra solar company.

The question tonight, will this get the bill pass and avoid a government shutdown. Let's talk about it with CNN political analysts David Gergen and Gloria Borger.

David, what do you make of this? When you hear Congressman Cantor and other Republicans say that they're not playing politics with disaster relief funding, especially as the possibility of a government shutdown looms, do you buy that?

GERGEN: Anderson, I think both sides are going to try to make points. Democrats are going to try to do that over in the Senate, Gloria has been reporting on some of that, to the make points off the FEMA thing.

But I have to tell you. I do think they're going to get something passed. I don't think there's going to be a government shutdown. The amount of money at issue here is actually modest.

But what this has done, it was one of the things, it was a backdrop to the markets going down so much today. The investors looking, and saying, my god, those people in Washington, they haven't made peace, they can't even agree on this little tiny -- little bit of business.

And it is -- it is fueling the sense that they're not going to be able to get a real bargain on -- big bargain on the deficits.


GERGEN: They may not be able to live up to the agreement they cut on the debt ceiling back in August.

BORGER: Well, you know, Anderson, that's the whole problem. When they cut this deal on the debt ceiling, they said, when we pass a bill to keep the government running, known as a Continuing Resolution, it's going to be clean. Then you had these disasters, as you pointed out, and the Republicans in the House say we need to pay for those disasters.

And I just got off the phone with the Senate Democratic leadership aide who said to me that if the House bill passes tonight, with more offsets, spending cuts for disaster relief, the Senate will reject it. That Senate Democrats will reject it.

And what they eventually will do is pass a clean Continuing Resolution to fund the government with FEMA funding separately and deal with that -- don't forget the FEMA money for these -- for disaster relief expires early next week. So we will move from one crisis to another crisis.

COOPER: Is this the way business is just going to be done now, David? I mean especially between now and the election? Can anything major get done between now and this presidential election?

GERGEN: Anderson, one held out hope for that, I think, a few months ago, that they could actually make some real progress, get some more breakthroughs before the election. I think that hope has diminished sharply in the last few weeks.

Everybody here has now gotten into campaign mode. And by the way, this is something President Obama foresaw some months ago. He -- this is the very reason he wanted to get a bigger deal in August because he thought, as we got closer in, it was going to be hard.

But now the White House has gotten into politics, too. I mean everybody is playing the game. And I think that there's a growing feeling that big breakthroughs are going to have to wait the next administration, the next president, this president, whoever it is.

BORGER: And here's --

GERGEN: And the next Congress. BORGER: And here's what complicates all of this. What really complicates it, you have a Republican primary going on. Don't forget, those Republican presidential candidates were all out there, most of them, saying, you cannot even pass an extension of the debt ceiling.

You have congressional leaders who may -- Republicans -- who may feel they want to get something done as I think John Boehner felt early on in this process. But they have to try and be on the same page with their presidential candidates.

The presidential candidates are appealing to a Republican primary electorate, which is very, very conservative. And so I think gridlock is in the offing because Republicans' hands are tied by this primary.

COOPER: But even -- I mean what's so frustrating about that is that -- I mean we're seeing today the markets reacting in part to this gridlock.

BORGER: Of course.

COOPER: I mean this is costing people -- this is costing people their 401(k)s, this is costing people money.

GERGEN: Exactly.

BORGER: And it could cost people their disaster relief, by the way, Anderson.

COOPER: Right.

BORGER: If that doesn't go through.

GERGEN: That's exactly right, Anderson. A lot of people's 401(k)s are -- you can measure that through the S&P 500. That's where a lot of the mutual funds are, for example. S&P 500 is down 7 percent over the last two days. And you know so people are losing, not only their housing value but their -- now their 401(k) again taking hits.

And that's what's so frustrating about this. But I have to say, it's not just that the Republican candidates are tying their people up and asking for loyalty. Look at Norm Dicks, a Democrat, who was going to vote for this Continuing Resolution. He said he publicly was going to vote for it.

Very independent, fine congressman, he came under pressure from his caucus on the Democratic side to vote against this Continuing Resolution, to stop things, because, you know, they're playing their political game, too.

BORGER: Absolutely. I mean they're playing it on both sides.

GERGEN: Right.

BORGER: Why do you think the Democrats want to separate out the money for FEMA?

GERGEN: Right.

BORGER: Because then they can say that the Republicans don't want to fund disaster relief.

COOPER: Right. It's just games. I mean back and forth.

BORGER: Terrible.

GERGEN: Just games.


COOPER: Yes. David Gergen and Gloria Borger, appreciate it. Thank you.

Just ahead tonight, a busy day in the lead up to the trial of the Dr. Conrad Murray who's charged in the death of Michael Jackson. And the battle is on to choose a jury. Will they get the job done by tomorrow? We'll look at that tonight.

Also had a new and disturbing report on our "Ungodly Discipline" series. Some pretty stunning allegations of child abuse in a fundamentalist Baptist school in Indiana. We're going to hear from former students and the pastor who runs the school, ahead.


COOPER: "Up Close" tonight, dramatic testimony in a federal hearing looking into whether SeaWorld Orlando should be charged in the death of an employee, one of its animal trainers. Her name was Dawn Brancheau. She was drowned by a 12,000 pound killer whale name Tilikum last year. You may remember it wasn't the first time that Tilikum had showed signs of aggression.

David Kirby has been in the courtroom for the hearing. He's the author of "Death at SeaWorld." David Kirby joins us now live from Orlando.

So, David, during today's hearing, Dawn Brancheau's spotter testified about the way he remembered seeing this whale, Tilikum, pulled Dawn into the water before ultimately killing her. What did he say?

DAVID KIRBY, AUTHOR, "DEATH AT SEAWORLD": His story was a little bit different today than what he told the Orange County Sheriff's Office and of course this story keeps evolving over time.

Initially she fell in and drowned, then we are told that she was pulled in by her ponytail. Today, his story changed a little bit. He said that Dawn was lying on her back in the water doing what's called a lay-out with Tilikum where Tilikum also gets on his back, and they were laying on their back together, then he said Dawn got up on her knees and then he said the next thing he saw was Dawn pulling at her ponytail.

While under cross-examination from John Black, the OSHA attorney, Jan admitted that Dawn was lying in the opposite direction so he couldn't actually see her hair. He just assumed that it went into Tilikum's mouth. And of course his testimony completely contradicts what other people have said including a sworn witness earlier this week, a former NYPD officer, who said that Dawn was pulled in by her arm. He said it looked like she was giving a left-hand turn signal as she went in.

Now Jan works for the FBI so he's a credible witness as well.

COOPER: So what's the significance of all of this? I mean why do the details matter so much?

KIRBY: Well, the initial belief was that SeaWorld is going to try to blame this on Dawn and say that she never should have been in that position and never should have let her ponytail flow into Tilikum's mouth. We have now had four witnesses, SeaWorld employees, testify that Dawn did nothing wrong, that where she was and what she was doing was completely approved by SeaWorld.

If SeaWorld wants to still stick with what's called the ponytail defense, OSHA has now countered that, too, because there was another event where a woman was pulled in by her clothing, and it was decided that they needed to desensitize the whales to not just clothing but also hair and other objects.

So even if it was a ponytail, SeaWorld never desensitized Tilikum to hair, so I don't think SeaWorld gets off the hook.

COOPER: There was also emotional testimony today from the trainer who tried to rescue Dawn from the attack. She spoke of another incident back in 2006 where a killer whale showed aggressive behavior. What did she say happen?

KIRBY: She was at the slide-out area when this young whale named Ike, that's his nickname, grabbed her leg and I believe, you know, wounded her. She gave Ike a signal to open his mouth and fortunately he did. She got out of the pool. A medic was called. She was treated on site. I think the injuries were fairly minor.

She sat down with her supervisor and they listed the incident on the incident report. And today in court, it was presented that that incident report never made it into the incident log.

COOPER: Wow, that's interesting.

KIRBY: So when SeaWorld says they've only had 99 incidents, we've now heard of maybe five, six, seven, 10 more incidents that happened but never got put into the log.

COOPER: And I guess the bottom -- the question underlying all of this is should these whales even be in captivity like this and is there something about being in these small pens -- because in the wild they go for miles in straight lines -- and are just swimming round and round for their entire lives stuck in these pens, does that make them more aggressive? And I guess that's the underlying question here. KIRBY: I have spoken to scientists who have told me they do believe it does. That there are signs these animals are stressed out. Today, the governor -- the government's witness, Dr. David (INAUDIBLE) from British Columbia, he had a slightly different take. It was very interesting.

He said, first of all, aggression is part of being a predator. And these are top predators. They evolve successfully because they are aggressive and he also said it wasn't necessarily the stress of captivity. It was the sheer proximity to these whales that was so unpredictable.

COOPER: Right.

KIRBY: In the wild we don't get up close with killer whales, it only happens at SeaWorld.

COOPER: David Kirby, good to talk to you again tonight. Thank you very much.

Coming up --

KIRBY: Thank you, Anderson.

COOPER: In the program tonight, "Ungodly Discipline," beating kids in the name of god to practice. We started looking more than a month ago at a boarding school. In one case it resulted in a tragic death of a 7-year-old girl, not at the boarding school but in a family.

Now Gary Tuchman has uncovered allegations of abuse at a another school, a religious school, in Indiana. First, though, Isha Sesay joins us with the other stories in the "360 Bulletin" -- Isha.

SESAY: Anderson, a disturbing discovery in southern Libya. Anti-Gadhafi forces took a CNN crew to warehouses containing barrels and bags of yellow powder marked "radioactive." It's not confirmed that the material is in fact radioactive, but international authorities do say Libya under Moammar Gadhafi was stockpiling yellow cake, a form of uranium that can be used for nuclear purposes.

In a speech at the United Nations, Iran's president who has denied his country is developing nuclear weapons blamed the United States for many of the world's problems. Mahmoud Ahmadinejad also made disparaging remarks about the holocaust. Delegates from France, Germany, the UK and the U.S. all walked out.

One of the lawyers representing Dr. Conrad Murray who's charged in the death of Michael Jackson says he thinks a jury for the trial will be seated by tomorrow afternoon. Opening statements are set for next Tuesday.

And that satellite expected to fall to earth tomorrow afternoon, well, the Federal Aviation Administration today issued warning for pilots calling it a potential hazard. NASA has said it poses minimal risks though they also said, Anderson, they're not quite sure where the pieces will land. Those that do re-enter. Yes.

COOPER: All right. I'll be looking up.

Isha, time now for "The Shot." We found this on YouTube under Jedi cats. Why we were looking under Jedi cats, I'm not sure. That was enough to make a (INAUDIBLE) guess.

OK, it's kind of hokey, maybe even a little nerdy, but also hard to resist. Also some pretty impressive editing. May the force be with you. Little Jedi kitties. Watch. I like that.

SESAY: That's pretty cool. I have to say.

COOPER: Yes. Jedi Kitten. There you go.

SESAY: Yes. I get it. That's a little much.

COOPER: That's right.

SESAY: Or, as you know, Trekkies would say at that point in time, they would go -- it goes on, they go, live long and prosper.

COOPER: You're a Trekkie, aren't you?

SESAY: I -- I'm picking up an attitude or a tone.

COOPER: No. No. I say that with nothing but admiration and respect. Curiosity.

SESAY: From the guy who kept a snake as a kid.

COOPER: Yes. By the way, that was "Star Wars," not "Star Trek."

SESAY: I know that was "Star Wars." I'm just saying while we're getting all nerdy, you said --

COOPER: Do you even know what "Star Wars" and "Star Trek" are? Do they have that wherever it is you group in Britain?


SESAY: Yes. Where I grew up.



COOPER: Did they dub it?

SESAY: So that they said --

COOPER: To the king's English?

SESAY: Darth Vader. You are scary.

COOPER: Darth Vader. All right. Isha, much more serious stuff ahead.

We've been telling you about the 14-year-old boy who killed himself on Sunday. His family said he was bullied to death. An update reports, a criminal investigation has been opened to see whether the kids who bullied him may be charged with harassment or hate crimes. The latest on that.

Also ahead, our continuing series on "Ungodly Discipline," new allegation of child abuse at a fundamentalist Baptist school in Indiana. Some former students were saying they were hit and humiliated by staff members.


UNIDENTIFIED MALE: He basically told me to bend over and he said, pull down your pants. I kind of hesitated because it doesn't sound right, even to a kid.



COOPER: Tonight, a new part in our continuing series "Ungodly Discipline." When religion is sometimes used an excuse to mistreat kids. We started looking into this disturbing phenomenon more than a month ago.

Gary Tuchman spoke with Michael and Debbie Pearl, authors of a controversial book called "To Train Up A Child," a manual that says God wants parents to spank kids with belts and switches and even wooden spoon.

And that for it to be effective, the spanking must cause pain. Michael Pearl gave Gary demonstration this kind of punishment, which he says is guided by teachings in the bible. Take a look.


UNIDENTIFIED MALE: Rubbing the spaghetti all over your head, you shouldn't have done that at 7 years of age.

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT: OK. That hurts. I'm 50. You know, I mean, I --

UNIDENTIFIED MALE: No, there aren't any marks on you?

TUCHMAN: You would hit a 5-year-old like that?



COOPER: The Pearl's book was found in a fundamentalist home in California, where authorities say a couple in the name of God, beat their kids regularly, and so brutally they beat their 7-year-old adopted daughter to death. They're both serving prison sentences. What we found looking at cases like this is that child abuse in the name of religion is not isolated but happens in private homes and sometimes schools as well as.

Gary Tuchman reports now on a school in Indiana that's facing allegations that, well, are hard to comprehend.


TUCHMAN (voice-over): Roger Voegtlin is a powerful man, extremely influential in fundamentalist Baptist circles.

UNIDENTIFIED MALE: We believe the bible this is word of God.

TUCHMAN: His Indiana church is called Fair Haven Baptist. On the well manicured grounds, there is also the Fair Haven Baptist Academy for children and Fair Haven College. Pastor Voegtlin has led thousands of children and their families for four decades.

(on camera): You said children are born depraved. They're born liars. They have to be trained to be good. Do you still believe that?

PASTOR ROGER VOEGTLIN, FAIRHAVEN BAPTIST CHURCH: Yes. The bible says all have sinned and come short of the glory of God.

TUCHMAN (voice-over): The bible also says he who spareth the rod hateth his son.

VOEGTLIN: My philosophy is three swats. It should sting, but not hurt.

TUCHMAN: It's not considered an unusual philosophy among some in the fundamentalist Baptist community and corporal punishment does remain legal in many of the nation's schools. But these former students are now speaking out saying what they endured was beyond, way beyond anything taught in the bible.

(on camera): How many of you have had suicidal thoughts? It's every one of you.

ALISON LAVERY, FORMER FAIRHAVEN BAPTIST ACADEMY STUDENT: We constantly lived in fear of looking the wrong way and doing the wrong thing.

DAVID GONZALEZ, FORMER FAIRHAVEN BAPTIST ACADEMY STUDENT: We were brainwashed, our parents were brainwashed and you followed what Roger Voegtlin says.

TUCHMAN (voice-over): These former students say Pastor Voegtlin did some of the hitting, but most of it was done by a staff. Alison Lavery was in grade school. When she says the principal came to the class to paddle her.

LAVERY: He would call you to the front and pull a chair out, bend over, look at that lunch pail and pull the paddle up. He was so tall it practically touched the ceiling and he would swing it really a hard. Hard enough for you to move forward, he'd move the whole chair forward.

TUCHMAN (on camera): This is in front of the whole class?


TUCHMAN (voice-over): Jeremiah Souza was in the 7th grade when he encountered a school administrator.

JEREMIAH SOUZA, FORMER FAIRHAVEN BAPTIST ACADEMY STUDENT: He spanked me, and the paddle split down the middle and started back over holding the paddle together so when he hit me, it would pinch the skin on my bottom, bruised and bleeding.

TUCHMAN: Samuel Bain also was in grade school when he says he got it from a church maintenance man.

SAMUEL BAIN, FORMER FAIRHAVEN BAPTIST ACADEMY STUDENT: He basically told me to bend over and he said pull down your pants. I kind of hesitated because to me it doesn't sound right even to a kid. You know, we were taught not to question people.

TUCHMAN (on camera): Then he did what?

BAIN: He lit into me.

TUCHMAN: They said not only were they hit when they were here, but it was done with great effort to humiliate them in front of the whole class, bent them over a chair. Is that still done today and do you think that's humiliation?

VOEGTLIN: Yes, it is still done today. I suppose it is humiliation. But again, humiliation is not the big thing.

TUCHMAN: But what I'm saying to you is God doesn't say anything about humiliation in the bible.


TUCHMAN: He does talk about sparing the rod. That is mentioned in the bible.


TUCHMAN: So why the humiliation? Why is that necessary?


UNIDENTIFIED MALE: I'm a minister. I'm a preacher. I speak to youth. I speak to teenagers.

TUCHMAN (voice-over): Darcel McCoy is a proud Baptist who now lives in Alabama. He says during a mission trip to Mexico 15 years ago, he was forced by a Fairhaven administrator to keep drinking liquids after he urinated in a shower.

DARCEL MCCOY, FORMER FAIRHAVEN BAPTIST ACADEMY STUDENT: My stomach is literally out to about here and I'm puking just over and over and just puking. One man come out to me, don't you puke again, you better not puke.

I'm just puking everywhere, all over my clothes, all over people's stuff. They put one of the older kids, one of the senior boys, put his stuff at my feet and said if you puke again, this boy is going to beat the snot out of you.

So I'm trying hard not to puke. They made me do that until I peed on myself.

VOEGTLIN: I never heard that story. Darcel was a lot of trouble when he was in school, but I'm not saying he was totally lying about it because I don't know, I wasn't there.

TUCHMAN (on camera): Is that something you will investigate?

VOEGTLIN: Yes, I will.

TUCHMAN: It was a long time ago, but it's probably worth investigating.

VOEGTLIN: Yes, I will.

TUCHMAN (voice-over): Jeremiah Souza says he was tormented by faculty members.

SOUZA: I was secretly taking piano lessons and they found out and called me in front of the youth group and called me a fag, queer.

TUCHMAN: And it got much worse, Souza he was repeatedly raped by a fellow student. He told no one at the church until many years later.

SOUZA: I was raped for three years straight there and I was told it was my fault. And I went and told the pastor and asked if I was giving money to the church at that time and said because I wasn't giving money that I was violated.

VOEGTLIN: Plain lying. That did not happen. If it happened, I would be the first one to drag the person to the police station.

TUCHMAN: And then, there's Lois Crosby. She started at Fairhaven more than three decades ago. She says the brutality was too much for her.

LOIS CROSBY, FORMER FAIRHAVEN BAPTIST ACADEMY STUDENT: I've actually overdosed twice. The second time, I overdosed, even the doctors don't know how I'm alive.

TUCHMAN (on camera): All seven of your former students said they either thought or tried to commit suicide. A, do you think they lying to me and B, how does that make you feel? VOEGTLIN: It makes me feel bad, but I really don't believe it has anything to do with us.

TUCHMAN (voice-over): But there are also these two former students. Tell me your name?


UNIDENTIFIED FEMALE: Catherine Voegtlin Selter.

TUCHMAN: Catherine and Frank Voegtlin, two of the Pastor Voegtlin's children, he and his wife adopted when they were young.

UNIDENTIFIED MALE: I haven't spoken to him in 25 years. He won't speak to me.

TUCHMAN: Frank said his father once got mad when he wouldn't finish a 10-mile run.

FRANK VOEGTLIN, ADOPTED SON OF PASTOR VOEGTLIN: He stripped me down. He got his belt out and he spank until, you know, he couldn't move his arm anymore and I was black and blue from my lower back to the bottom of legs. As punishment, I had to wear a dress in day camp for the entire day to show what a sissy I was.

TUCHMAN (on camera): You ran cross-country and came in second place in the race. He said what?

CATHERINE VOEGTLIN SELTER, ADOPTED DAUGHTER OF PASTOR VOEGTLIN: He told me I was never ever to lose a race ever and took me down stairs, lifted my skirt up and beat me with a belt.

VOEGTLIN: We did nothing, but to try and help Frank and his sister. We hadn't planned to adopt anybody.

TUCHMAN: But you did and what I'm wondering is, is that true what they're saying?

VOEGTLIN: No. We spanked Frank, but as far as you said sending him to school in a dress, no.

TUCHMAN (voice-over): Pastor Voegtlin feels his children and these former Fairhaven children are malcontents who are embellishing. He says almost all Fairhaven students are happy, but these former students say Pastor Voegtlin leads a church that has ruined many lives.

VOEGTLIN: I don't know what love is. I don't know how to love somebody.

TUCHMAN (on camera): Before we left, people who work at the church gave us a souvenir. A souvenir they say they're proud to hand out to all visitors.

It's one of the paddles they use to strike the children. It comes complete with words from the bible. It says Fairhaven paddle and then this versus from the book of Proverbs. He who that loveth his son, chasteneth him.

Do you ever have any doubt in your mind that you're not faithfully and accurately following the spirit of God's word in the bible?



COOPER: Gary Tuchman joins us. Now, Gary, it's really fascinating to hear both the pastor's perspective and the polar opposite of these kids, and his own kids, the two kids who he had adopted. Are authorities investigating any of these allegations?

TUCHMAN: On the state law, Anderson, Indiana is not allowed to oversee religious schools. So it's very hard to have any kind of investigations at religious schools. So we don't know if there's any investigation. We don't think there is.

We can tell you in the 1970s, the pastor and the head master at the school were both arrested. They both went to court. The head master was charged with aggravated assault and battery of a child. Pastor Voegtlin was charged with conspiracy.

The conspiracy charge against the pastor was dropped. The jury found the head master not guilty of aggravated assault, but the jurors later said when they were interviewed they would have found them guilty of a lesser charge of child abuse, nevertheless the church considered that a victory.

COOPER: The pastor says almost all the students are happy. Do we know? Is there any truth to that?

TUCHMAN: Well, there are certainly a lot of happy students. We can't characterize the percentage. There are also a lot of loyal students and ex-students who have been the targets of a targeted e- mail campaign not to run the story.

But we can tell you that these 10 people we talked are the only unhappy one. We know of scores of people we got in touch with who are very unhappy and who are terrorized of that school. We didn't have time to put most of them on TV.

Other ones are afraid to talk on television. But I can tell you, Anderson, if we included every story from every former student we talked with, it would take the entire night on CNN to tell all those stories.

COOPER: And it's fascinating he hasn't talked to the two kids he had adopted.

TUCHMAN: You know, that's a horrifying story for everybody to be honest with you. I mean, by all means, you think you love those children. The children loved him, but they haven't talked to them in a quarter century.

COOPER: Gary Tuchman, fascinating report. Appreciate it.

An update now on different kind of child abuse, teenage bullying. It's a story we've been following all week. The 14-year-old Jamie Rodemeyer, Buffalo, New York took his own life Sunday after online bullying and slurs against his sexuality his parents say.

Now, ABC News has learned the police have opened a criminal investigation into Jamie's suicide to see if three students in particular should be charged with cyber-harassment or hate crimes. New York State does have anti anti-bullying law that took effect last year. We'll continue to follow this issue here on 360.

We recently teamed up with the Cartoon Network Facebook to get this from all angles. There is now an app on Facebook where you can to pledge and do everything you can to stop bullying. Go to

And join us for a special series reports we're doing bullying it stops here. That's staring October 9th right here on CNN. Up next, Jaycee Dugard held captive for 18 years, robbed of her childhood. She's now filing a lawsuit against the U.S. government. We'll have details ahead.


COOPER: "The Ridiculist" is coming up. This year marks the fifth anniversary of "CNN Heroes," remarkable stories of everyday people changing the world.

Today, we unveiled the top 10 CNN Heroes of 2011. Recently we caught up with the top 10 hero from last year. Magnus Macfarlane- Barrow, former Scottsman and actor, George Butler introduced him at last year's tribute show.

He's battling one of the biggest humanitarian crisis on the planet through his organization, Mary's Meals. He's feeding thousands of starving kids in drought stricken Somalia.


MAGNUS MACFARLANE-BARROW, FEEDING SOMALIA'S CHILDREN: Sometimes I wonder myself (inaudible) from Scotland is doing here in Mogadishu. Most people when you see a situation like this, and you see hungry children, children on the brink of starvation.

I think the first desire of all of us is to give those children something to eat, to keep them alive. People don't normally believe us when we first tell them one meal costs 6 cents. The meal we provide is porridge, a very nutritious.

In 2002, we were doing emergency feeding and I met a family in one of the villages. Her mother was dying. I started talking to her oldest son sitting beside her, 14 years old. I said to Edward at one point, maybe like you would say to any young person, what are your hopes and ambitions in life? He said, I'd like to have enough food to eat and like to go to school one day. That encounter with Edward and hearing his life story and his desire is one of the things that sparked a simple concept of Mary's Meals, one meal every day for impoverished children and a place of education.

The "CNN Heroes" thing in some ways was a bit weird for me. This isn't about me. There are thousands of people all over the world involved in Mary's Meals. More than anything, it's a grassroots movement. So to be recognized personally in that way, I find it embarrassing, but a wonderful opportunity to tell people about Mary's Meals.

It's been wonderful for us in terms of growth of support for Mary's Meals around the world. So a huge extra number of children are being fed and a large part of that is the response of that. So observe you hear it's not possible to get the food to the people that need it in Somalia. You see it certainly is possible.


COOPER: He's a remarkable man. You can meet the amazing people selected as this year's top 10 heroes by going to All 10 are going to be honored at CNN Heroes, The All Star Tribute.

I'm going to be hosting the live show Sunday, December 11tth. But only one person will be named CNN Hero of the Year. You get to decide who that person is going to be.

Vote for the top 10 hero who inspires you the most online and on your mobile device at You have 10 to select from, vote for the -- who should be hero of the year.

Isha Sesay is back with the "360 Bulletin." Isha --

SESAY: Anderson, in Somalia where the CNN hero we just heard from is doing such important work. Tonight, there's word of a potentially devastating health crisis, a surge in cases of cholera, and diarrhea. In Mogadishu, at one hospital alone, more than 6,000 cases have been reported since January. Children face the greatest risk.

A lawsuit seeking an undisclosed amount blasts the federal government for failing to monitor a convicted sex offender, Philip Garido. The suit was filed by Jaycee Dugard who was 11 years old when she was kidnapped by Garido and his wife and held captive for 18 years in a hidden backyard compound. Garido was on parole at that time.

And Prince William's wife, Kate Middleton is off to princess school. Of course, that's not precisely what the royal press office is calling it. They say the duchess is using the next few months to get to know a number of charitable causes and institutions related to national life to make well informed decisions about her future role or in some posh accent, Anderson.

COOPER: Very good. Isha, thank you. Let's take a look, what do we have coming up? The Ridiculist or Piers? We'll do the ridiculous. Coming up, some of us are really broken up about it. "The Ridiculist" is next.


COOPER: Time now for "The Ridiculist." Tonight, it is with heavy hearts that we have to add one of the greatest bands of all times because after 31 years and 15 albums, R.E.M. has broken up. Bob Seager and the Silver Bullet band, meanwhile still touring. I'm just saying.

So I wanted to spare you the, it's the end of the world as we know it reference, but for legions of fans, it actually feels that way. It certainly the end of an era. R.E.M. posted a message on their web site yesterday. It has taken a day to process this. We were in denial all day yesterday.

The message said that as life-long friends and co-conspirators they've decided to end the band. Quote, "We walk away with a great sense of gratitude and finality and the astonishment at all we accomplished by anyone who's ever felt touched by our music, our deepest thanks for listening."

And just like that with sincerity, humility and appreciation, R.E.M. just basically dumped us on a post-it note. Now I got to say R.E.M., this kind of seems like it came out of nowhere. Speaking for the fans, couldn't you have given us a chance to change your mind?

Radio Free Europe, 1983, bassist Mike Mills writes on a website, there hasn't been any falling out among the band members, the time just feels right to say good-bye. So basically it's not you, it's me speech. Look, I get it.

My most beautiful from "Up" 1998. Guitarist, Peter Buck writes it's been an unbelievable gift being part of fans' lives and he'll be seeing us again. They still want to be friends with us. That's great. But we can work this out, go to counseling or something maybe.

Orange Crush, R.E.M. live 2005. Michael writes a wise man's once said the skill in attending a party is knowing when it's time to leave, which, yes, I supposed it's their prerogative after giving us such great music for more than three decades.

But no farewell tour? Not even one last show. Maybe if we call them a whole bunch of times late at night and leave a whole bunch of tearful, pleading, increasingly desperate sounding messages on their answering machine, maybe they'll come back. I think that's probably the best way to handle this.

Automatic for the people in 1992, we're only allowed to play a little of each song. Remember, if we coiled have done it, this whole "Ridiculist" would be played with the sound of certain "360" staff members who shall go unnamed weeping in the background.

R.E.M. started in Athens, Georgia back in 1980 before the Youtube and before the ITunes, before the auto-tunes, they earned their fans the old fashion way making great music, constantly writing and honing their sound and getting in a van and hitting the road.

Some credited the band with creating college rock, creating alternative music. But to the fans, R.E.M. has been nothing short of soundtrack to life starting their formative years and continuing all the way into middle age.

Thankfully that sound track leaves us with a whole pile of songs to help us to get through this. Thanks for the awesome break up tape, R.E.M. Thanks for everything actually and let us know when there's a reunion tour. There will be a reunion tour, right?

That does it for 360. Thanks for watching. We'll see you again at 10 p.m. Eastern tonight. "PIERS MORGAN TONIGHT" starts now.