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Can Presidential Candidates Deliver on Campaign Promises?; FBI Investigates Mortgage Fraud

Aired September 23, 2008 - 22:00   ET


We begin with the breaking news about the crisis on Wall Street. We know it's bad. We know it's costly, but is it criminal? Just a short time ago, we learned the FBI is now investigating Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, not just the companies, but also their executives, part of a board look into possible mortgage fraud involving subprime lenders.

Joining me now, John Fund of "The Wall Street Journal." He's also the author of "Stealing elections." And CNN senior financial correspondent Ali Velshi.

Ali, what do we know about this investigation?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: There are now 26 companies under investigation, starting with Country Financial.

COOPER: Twenty-six?

VELSHI: Twenty-six companies under FBI investigation, and they are looking into these companies for possible fraud, misrepresentation.

Did these companies know there was more wrong or more going on that was incorrect and didn't share that with the public or with shareholders?

Now, the good thing, Anderson, is, ever since the scandals of 2000 and 2001, it has now become very easy to detect if there was fraud. If the FBI is investigating this in association with the Securities and Exchange Commission, if there was wrongdoing -- and we don't know that there is, and we don't know what specifically they're looking for -- they will find it.

COOPER: John, how big a deal is this?

JOHN FUND, COLUMNIST, "THE WALL STREET JOURNAL": I think it's a very big deal because it may explain how got largely into this mess.

COOPER: You think there's criminality?

FUND: Well, I have written on Fannie Mae and Freddie Mac, which were government-chartered corporations that made private profits, but dumped the risk on the public, because they had an implicit government guarantee, for 12 years now. I have heard over and over again from sources that Fannie Mae and Freddie Mac were covering up things. They were the public sector Enron, so to speak...


FUND: ... except that Enron went out of business in 2002, when the fraud was revealed. In 2004 and 2005, as Ali knows, we learned Fannie Mae and Freddie Mac were cooking their accounting books. Instead, they kept making more mortgages. So, this is a question -- this is private companies partnering with these quasi-public companies and engaging in the financial scandal of the century.

COOPER: Wasn't there a federal agency whose sole job was to oversee Fannie Mae and Freddie Mac?

FUND: Yes, accept that Fannie Mae and Freddie Mac were very clever. They distributed campaign contributions to 348 of the 435 House members...

COOPER: Unbelievable.

FUND: ... most of the Senate members. They also were very charitable.

I mean, you were in a Washington and you were a charity, you probably got a donation from Fannie Mae/Freddie Mac. They were a great corporate citizens, except they were a bizarre form of corporate citizen. They made private profits. They paid huge private sector salaries to people who were appointed effectively by -- as government officials...



FUND: ... and the risk went to the taxpayer, you and I.

COOPER: As far as stopping this bleeding, though, I mean, where does the investigation stand? I mean, there's -- yes, people want more investigation, but is that going to slow down this bailout?


VELSHI: They can go on parallel tracks. The FBI can continue to investigate that, as well they should be. This -- that does not affect the fact that this package needs to move ahead in some form. It can be adjusted. Things can happen.

But what I think the average person doesn't understand is, while we're debating whether this is a Wall Street or a Main Street bailout, the credit system in this country is coming to a halt. It is next to impossible for companies to get money if they need it.

And, Anderson, you know where this affects Main Street? It's not just more expensive home loans and car loans and student loans. It's the fact that there are some companies that borrow money to make payroll in this country. If this continues, there could be major corporations that just have to grind to a halt, because they can't raise money.

FUND: We had a preview of this 20 years ago during the savings and loan crisis.

COOPER: Right.

FUND: And the government raised the loan guarantees on savings and loan deposits. The savings and loans then invested in windmills before they were popular and bull semen farms and all kinds of marginal investments. And then we got holding -- caught holding the bag of the bag investments.

That's why this current resolution trust corporation that they're trying to set up is very similar to what we set up with the savings and loan. The difference, as Ali mentions is, this is much bigger in scope, and it's freezing up the credit markets.


COOPER: So, an investigation like this, though, how long could it a take?

FUND: Oh, this will take a couple of years, and people will go to prison.

COOPER: You think there's no doubt people will go to prison?

FUND: I can almost guarantee it.


COOPER: The CEOs, people involved in these companies?

FUND: Well, we know that people cooked the books at Fannie Mae and Freddie Mac and they were covering up the extent to which they were taking undue risks.

We also know that members of Congress were involved in making sure that nobody touched Fannie Mae and Freddie Mac, that there was not proper oversight. We know that some people in the private companies, AIG and Lehman and others, were probably in cahoots with Fannie Mae and Freddie Mac in expanding the mortgage pay pie, so everybody could make money.


COOPER: What are the chances the FBI might investigate members of Congress in this?

FUND: Oh, I think it's inevitable.

You know, I will pinpoint the day I which thought this was really going bad. In March 2005, Anderson, Fannie Mae and HUD, the Bush administration, backed by Congress, announced they were going to introduce something new in American life, the zero-down payment mortgage. This was a mistake, because people who can't afford even one penny for a down payment probably might not be eligible for a mortgage.

COOPER: A lot of people got loans who should not have.

John Fund, thanks very much.

Ali, we're going to talk to you in a moment.

The White House pressuring Congress for a bill by the end of this week, if not sooner.

In the Senate hearings today, if you watched them, lawmakers are pushing back hard, grilling Treasury Secretary Paulson about the unprecedented power the plan would give him. Paulson will faces House lawmakers tomorrow.

A new CNN/Opinion Research poll I want to tell you about shows that Americans are as worried about bailing out Wall Street as they are about not bailing it out. Take a look. Seventy-nine percent said they're worried that the economy is going to get worse if the government doesn't take action. Twenty-one percent are not worried.

An almost equal number, 77 percent, are worried that the people responsible for this whole mess will benefit from the bailout plan. Twenty-three percent are not worried.

John McCain and Barack Obama both have said the bailout plan needs to include help for struggling homeowners, more oversight and other protections for taxpayers who are going to foot the bill.

Here's what they said today in rare news conferences.


SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: My plan is about keeping American people in their homes, and safeguarding the life savings of all Americans by protecting our financial system and capital markets.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: After the economy recovers, we should institute a financial stability fee on the entire financial services industry to repay any losses to the American people, and make sure we are never asked again to foot the bill for Wall Street's mistakes.


COOPER: On the Senate Banking Committee today, the tone was just as tough, the lawmakers keenly aware it is tied to your money and your vote.

Here's Tom Foreman.


TOM FOREMAN, CNN CORRESPONDENT (voice-over): The treasury printed more than $700 million this day, just like everyday, while, at the Capitol, lawmakers put the head of the Treasury, Henry Paulson, squarely in their sights over the bailout that will cost 1,000 times as much.

SEN. SHERROD BROWN (D), OHIO: I don't think a single call to my office on this proposal has been positive.

SEN. JIM BUNNING (R), KENTUCKY: It's financial socialism and it's un-American.

FOREMAN: Paulson nonetheless told senators, the bailout money is needed now and with few strings to buy bad debts from companies in danger of collapsing and taking the whole economy with them.

HENRY PAULSON, U.S. TREASURY SECRETARY: I am convinced that this bold approach will cost American families far less than the alternative, a continuing series of financial institution failures and frozen credit markets unable to fund everyday needs and economic expansion.

FOREMAN: That is the White House's position: Fix the fundamental weakness of too many bad home loans first. Get to the fine-tuning later.

REP. JOHN BOEHNER (R-OH), HOUSE MINORITY LEADER: It's about saving our economy. It's about protecting Americans' jobs, protecting their retirement security, their savings, their college loans, and, frankly, their way of life.

FOREMAN: But many Democrats fear, if market reforms are not attached to the money, they may never come.

SEN. CHRISTOPHER DODD (D), CONNECTICUT: I understand speed is important. But I'm far more interested in whether or not we get this right.

FOREMAN: So, Dems continue pressing for strict oversight of how the money is spent, shares in the companies that benefit, protection from homeowners facing default, and a guarantee that CEOs won't walk away with fortunes funded by taxpayers.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: The party is over for this, no-regulation, no-supervision, anything-goes so-called free market, which has taken us to this place.

FOREMAN: Some Republicans are joining the Dems, and others are saying, hold onto the whole process.

REP. MIKE PENCE (R), INDIANA: I must tell you, there are those in the public debate who have said that we must act now. The last time I heard that, I was on a used car lot. FOREMAN (on camera): Still, most lawmakers are predicting some kind of deal soon, even though the biggest question remains unanswered: Once all that money is spent to restart the economy, will it really run?

Tom Foreman, CNN, Washington.


COOPER: Well, a taxpayer-funded bailout of Wall Street is a political time bomb, by definition. With the presidential election just six weeks away, it is a ticking time bomb.

Just ahead, our political panel weighs in.

Also, blogging throughout the hour. Join the conversation. I'm about to go online. is the site.

And check out Erica Hill's live program during some of our commercial breaks. Again, go to and click on the link for that.

Also ahead tonight, what the massive rescue plan means for the candidates' promised tax cuts and all those other programs they talked about. Will they even be able to deliver on any of them, all those campaign promises? We will check out that.

And Sarah Palin's big day at the United Nations -- did she hold her own with world leaders, including Hamid Karzai and Henry Kissinger? Would we know? Because we couldn't hear any of it. Reporters are allowed in the room only for photo-ops.

This is 360. Stay tuned.


COOPER: Seven hundred billion dollars is not the kind of expense you want to wake up to overnight, but that is pretty much what has happened with the bailout plan now before Congress. Whoever wins the White House in November is going to inherit all that debt.

Both candidates have made an awful lot of promises to voters, health care, improvements, cutting taxes. The obvious question now, how will they possibly be able to deliver on those promises, in light of the bailout?

Here's what Barack Obama told NBC's Matt Lauer.


OBAMA: Does that mean that I can do everything that I have called for in this campaign...


OBAMA: ... right away? Probably not. I think we are going to have to phase it in. And a lot of it is going to depend on what our tax revenues look like.


COOPER: As for John McCain, he told "60 Minutes" he would find the money to pay for his tax cuts by cutting the budget.


SCOTT PELLEY, CBS REPORTER: But how do you cut the budget...

MCCAIN: Oh, easy.

PELLEY: ... that much?

MCCAIN: Look, if you were able to increase the budget and the size of government by 40 percent, don't you think you could cut some of it?

PELLEY: What are you going to cut?

MCCAIN: I think we'll frankly, you can eliminate so many agencies of government that are outmoded. Obviously I would scrub Defense spending. Obviously, we would look at every institution of government. I would stop these protectionist tariffs. I would stop subsidizing sugar.

PELLEY: Did I just hear you say you're going to cut the Defense budget?

MCCAIN: I think there's areas in Defense where we can save a lot of money in cost overruns.


COOPER: As always, it's your money, your vote. It's our job to separate the facts from the spin.

CNN senior business correspondent Ali Velshi joins me again.

So, how do McCain's and Obama's tax plans play out for people?

VELSHI: Well, let me show you the existing tax plan before this bailout.

The Tax Policy Center -- Policy Center has broken it down by income category. So, take a look at this. Starting from the bottom, $38,000 to $66,000, all the way up to the $161,000 to $227,000 category, under Barack Obama, up until about $227,000, you're getting tax breaks all along the way.

With John McCain, you're getting bigger tax breaks, and, as you get above $227,000, you start paying taxes, extra taxes, under Barack Obama, and you get bigger tax cuts under John McCain. That was the before picture.

Take a look at the after picture now. Right now, we have a national debt that stands at about $10 trillion. OK? So, look it, under both of their plans -- $12.1 trillion -- I'm sorry -- $12.1 trillion, that's where we stand right now.

Add Barack Obama and John McCain's proposals right now, their campaign proposals, budget for those. It takes the debt up to $15.6 trillion with Barack Obama, $17.1 trillion -- $17.1 trillion with John McCain. Now you add this unexpected bailout plan, because it has got to come from somewhere. Our debt goes to $16.6 trillion under Barack Obama, $18.1 trillion under John McCain.

And you know what happens when your debt goes up? your dollar goes down. Your interest rates go up. Your productivity of your economy goes down. Your jobless rate goes up. So, you either keep that high debt, or you cut -- you don't cut your taxes.

So, you don't count your middle tax -- tax cut before it hatches at this point.

COOPER: And you don't hear any of these folks talking about the actual debt.

What other plans may go away, besides these tax cuts?

VELSHI: Well, the expensive ones are the health care proposals. They're looking at health care. They're looking at infrastructure changes. They're looking at alternative energy, building either nuclear plants, in John McCain's case, or a green economy -- green energy economy, as Barack Obama says. These are all things that are on the hook.

And we also talk about entitlements, but I have to tell you, total entitlements are about $20 billion, not even a drop in the bucket right now. So, this is a big deal. They are going to have to find some big places to cut. And John McCain is talking about cutting defense. That's a little tough when you have got a war going.

COOPER: Yes, huge deficit.

All right, Ali, thanks.

Still ahead: the latest from the campaign trail, how both candidates are trying to be seen responding to the crisis and how all of it may play in the debate this coming Friday.

Sarah Palin in New York hoping to polish her foreign policy credentials. Today did not go as planned, because the media and the media had a -- pulled a full-on meltdown. We will take you inside the confrontation that would have prevented anyone from seeing Sarah Palin.

Also, Palin's road to nowhere. And Joe Biden, well, he likes to talk about Alaska's bridge to nowhere, but he has his own record to account for. We're "Keeping Them Honest" tonight.



MCCAIN: There must be a path for taxpayers to recover the money that is put into this fund, the taxpayers' dollars. One trillion dollars is an unprecedented sum. And that money can't simply go into a black hole of bad debt, with no means of recovering any of the funds.

OBAMA: We can ask taxpayers to make an investment in the stability of our economy, but we cannot ask them to hand their money over to Wall Street, without some expectation of being made whole.


COOPER: And you see the breaking news banner there, FBI now investigating, well, a lot of folks, AIG, Lehman Brothers, Fannie and Freddie.

Senators Obama and McCain today each demanding oversight, accountability, transparency. Both are still promising to cut taxes. As Ali just showed us, it's hard to see how we can have it all.

Let's talk strategy with CNN senior political analyst David Gergen, David Brancaccio, host of "NOW" on PBS, and CNN senior political correspondent Candy Crowley.

David Gergen, let's start with you.

It seems like the proposals for these bailouts -- I mean, the days of having all these policies that they have been promising us, that seems out the window. Have they recalibrated?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: They haven't yet, but they are going to be forced to. And the interesting question is when.

Even before this, as Ali was showing, their plans for the two candidates don't add up. They add more deficits to the national debt. And the national debt -- and we're -- we're learning this now -- the unfunded liabilities for the government, what is out -- way out ahead of us, at least $53 trillion and counting.

And, in many ways, serious analysts now believe, Anderson -- David Walker, for example, who used to run the Government Accounting Office, believes that what is happening in Washington is not unlike what's happening in the financial markets. We're getting way, way out of -- over our heads in debt, and it will happen -- you know, we will have a crisis in Washington one day in government if we don't clean it up.

So, I think it's going to put a lot of pressure on the candidates to get much more serious. I think they are going to have to pair back, if not drop many of their major proposals, or at least postpone the implementation. They are not going to be able do them right off the bat.

The next president is going to be mired in this issue of debt and trying to work our way out. And he's going to have to, I think, pay much more attention to that, and probably postpone for a year or two the agenda that they're trying to get elected on.

COOPER: David Brancaccio, you have been out in Washington today talking to folks on the left and the right. I mean, they're -- everyone seems to agree that they don't like this plan. Increasingly, we're hearing that from Capitol Hill, but the clock is ticking.

DAVID BRANCACCIO, HOST, "NOW": Well, it's fascinating.

On the far right, you have people who say, I don't think I'm so inclined to pass this thing. You have people on the far left, also, do we really need this? There's even been some voices today saying, things seemed to have calmed down just a bit on the markets. Do we really need this right now?

And, of course, you also have economists arguing, yes, because of the possibility of the big bailout. It's fascinating. I was also talking to voters in recent days. And it's beginning to sink in. I actually had somebody say to me, well, I'm less interested in Wall Street. I'm interested in global warming. Or someone else said, I'm interested in health care reform.

And I have to explain things, just as David was saying here, which is all of this has to do with all the big issues that we're going to have to pay for. We may not have money to invest quite as quickly into green energy.

COOPER: Yes, it's like the world has changed in the last two weeks, and we're not hearing that represented on the campaign trail.

Candy, both candidates announcing conditions that they want included in the bailout. But would either really risk at this point voting against the bailout, if their terms are not met? I mean, I saw John McCain's press conference. He was asked that point-blank and he basically kind of didn't answer it.


And Barack Obama kicked it down the street as well, saying, let's -- I -- Obama, in particular, said, well, I go back to Secretary Paulson and say, let's work.

But neither one of them would say that they would flat-out go ahead and support it, even if it didn't have these principles, which generally run along the same lines of limiting CEO buyout pay, of making sure that there's something in there for people whose mortgages, whose homes are being foreclosed, that kind of thing. So, they don't -- you know, the problem here is, it's very hard to say, here are my four principles, but I would go ahead and sign it anyway even if they weren't in there.

So, they're kind of stuck in a real political morass here, because what they have are these economists are saying: This is serious. You need to do something about this. And, on the other hand, they have Main Street saying, well, wait a second. You know, what about my house? What about these gas prices?

COOPER: Yes, it seems...

CROWLEY: So, they're caught between, you know, what they may have to do and, really, the voters.

COOPER: It's interesting.

David Gergen, the push to have individuals compensated or bailed out is coming from politicians. You don't hear it as much from -- from economists.

GERGEN: Well, that's right.

I think, look, Anderson, they are going to pass a bill in Congress. They have no choice. They know they're on the brink. They know that, last Wednesday, we came very close to going over the brink. And people on Wall Street will tell you that.

COOPER: Do you think it will happen this week?

GERGEN: I think it will happen in the next few days. I'm not sure if it will be Friday, Saturday, or early next week, but they are going to pass a bill in time.

Warren Buffet just came in with $5 billion today that he is investing in Goldman Sachs...

COOPER: Goldman Sachs.

GERGEN: ... which was a really positive signal to a lot of people. Yes, I think it's going to happen.

But what is interesting -- and, David, you have got a good handle on this -- is the rising anger one feels now in the public at large. At first, there was shock and fear, but now people are really getting angry, because they think they're getting hard-pushed to bail out a lot of people who don't deserve this, and while they can't pay their mortgages or can't pay their bills.

And I don't know how that is going to be expressed in our politics....

COOPER: Right.

GERGEN: ... because it's going to lash out, and...


COOPER: And both candidates are trying to harness that anger, to some degree. I mean, they're both pushing sort of populist positions, saying that they feel -- feel our pain.

BRANCACCIO: Because they recognize that people voters, are beginning to do the math.

I was in California just the other day talking to some struggling people who may have to in fact walk away from their homes, because their mortgage is shooting up. And, you know, they can do some basic math -- $700 billion works out to be about $2,300 for every man, woman and child in America.

Now, I have three kids, five people in my family -- $11,500 is kind of what my family -- what this would cost. I did some math. That's 55 gallons of gasolines per week at $4 a gallon. That's big, big money. And people are saying, why aren't -- why isn't the government using this kind of money perhaps to help me with my mortgage?

There is going to have be, it looks like, movement on helping regular families.

COOPER: It also makes people angry, David, because, suddenly, they can come up with $700 billion for this...


COOPER: ... but, you know, for years, they have talked about health care. For years, they have talked about crumbling infrastructure. For years, they have talked about a crisis in education. But there's no money for it. But, all of a sudden, there's $700 billion for something that, oh, we can't do without.

GERGEN: It seemed for -- to a lot of people at a grassroots level, this is $700 billion for rich people, to bail them out for their mistakes and to help them through things.

In fact, these toxic assets are there in part because there was some misdeeds. And I think that, yes, but we have also got to be careful how we describe it. I think we have to make -- not make this just about villains.

The truth is, one of the reasons we got into this is that incomes in this country have been going sideways and down, and a lot of people couldn't afford houses. they couldn't afford the down payments on homes.

COOPER: Right.

GERGEN: And, so, they were in trouble. And the real issue is, how do you restore good jobs in this country, good jobs, at the grassroots level, so middle-income Americans can in fact afford homing -- homes again?

That is -- that is as much the villain here as anything else. So, I don't think it benefits us to say it's simply a bunch of scalawags or crooks who got us into this trouble. I think it's a much deeper, more pervasive problem than that.

COOPER: Candy, at this point, this debate on Friday, it's supposed to be on foreign policy. Is there any chance it's not going to be on foreign policy and they're just going to talk the economy? I mean, it seems odd to be focusing on foreign policy when you're in the midst of this nightmare.

CROWLEY: Oh, there are many ways to get around to the state of the U.S. economy.

If you're Barack Obama, don't you look at it and say, well, look how much we have paid for this war that has gone on for nearly six years, and how we could be using this at home. Look at what's happening in the global marketplace because of our problems here at home.

I don't think there's any way, because the world is so interconnected, that you don't talk about that at some level.

COOPER: We are going to have to leave it there.

Candy Crowley.

David Brancaccio, great to have you on the program. We would love to have you on again. I'm a big fan.

David Gergen, as always, I'm a big fan of yours as well.



COOPER: Ahead on 360: Governor Sarah Palin speaking to foreign leaders today. Nothing quite worked out like the McCain campaign had hoped, at least their P.R. folks had hopes. Their battle with the media -- coming up.

And, later, lifting a decades-long ban, today's major development involving offshore drilling.

I will be right back.



UNIDENTIFIED MALE: Will this become the no-talk express?

UNIDENTIFIED FEMALE: Are you going to support the bailout plan? Are you thinking about supporting it?


COOPER: Reporters yelling out at John McCain. That's about as close as they can get to asking questions to the candidate.

Both candidates have been very careful in talking to reporters the last couple weeks, though, today, both finally gave news conferences. The candidate who has been virtually cut off from reporters and everyday citizens, of course, is Sarah Palin. She's given two interviews and had one town hall meeting with John McCain.

Governor Palin is now in New York to meet with and, perhaps as importantly, to have her picture taken meeting with foreign leaders. The McCain camp is hoping the publicity around those meetings is going to boost her foreign policy credentials.

But, as you will see, the day did not go as planned for the McCain campaign, as the iron curtain between the candidate and the media reached a new level.

Ed Henry has the "Raw Politics."


ED HENRY, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Sarah Palin seems to be enjoying her foreign policy studies, especially after a sit-down with Henry Kissinger, where she sought his tutelage on last month's crisis in Georgia.

HENRY KISSINGER, FORMER U.S. SECRETARY OF STATE: I am going to give him a lot of credit for what he did in Georgia.


UNIDENTIFIED MALE: OK, guys, thank you.

PALIN: Can you give me more insight on that, also?

HENRY: The carefully choreographed photo-ops were largely a substance-free zone, including the one-on-one with Afghan President Hamid Karzai.

The only drama, Palin tapping her heart as she learned about the president's relatively new baby boy.

What is his name?


PALIN: Mirwais. Very good.

KARZAI: Mirwais, which means the light of the house.

PALIN: How nice.

HENRY: Low risk for Palin, and, yet, the McCain campaign had tried to make the meetings no risk, at first refusing to allow reporters to join cameras in the Karzai meeting.

Then, the five U.S. television networks, including CNN, said they would not air the video if a reporter could not be there. So, the McCain camp backed down. PAUL BEGALA, CNN POLITICAL ANALYST: If your purpose is to show that Governor Palin can hold her own in a meeting with major international figures, then let her hold her own. Don't exclude the press. Don't keep questions from being asked. Don't -- don't coddle her.

HENRY: Republicans say Palin is coming across as poised and capable, not coddled.

KEVIN MADDEN, REPUBLICAN STRATEGIST: The enduring image that the McCain campaign wants left with voters is somebody who can close the stature gap, somebody who's going to stand there with world leaders and -- and essentially fill in that void in her resume.

BEGALA: It will take more than a couple of days, however, to change her image on the late-night talk shows.

DAVID LETTERMAN, HOST, CBS'S "LATE SHOW WITH DAVID LETTERMAN": John McCain is introducing his running mate, Sarah Palin, to the world leaders over at the U.N. And it was nice. It looked like Bring Your Daughter to Work Day.

HENRY: A reminder of why Palin is meeting with heads of state in the first place: to prove she's ready for primetime.


COOPER: Ed Henry joins us now. I find this remarkable. But just -- I mean, how common is this? How unusual is it to have reporters shut out to such an extent to a presidential candidate?

HENRY: We're covering the White House overseas. President Bush oftentimes, we have to face with the White House and push back. They want to let cameras in when he meets with foreign leaders and not allow an editorial presence. The bottom line is, we push back and we say we won't show the video, so then they allow reporters in.

The bottom line is, most Americans probably couldn't care less if the media is going to get shut out. It would probably win Sarah Palin votes if they kept the media out, because we're not very popular.

But she's running for vice president, and ultimately, she has to start answering questions. She hasn't had a full-pledged press conference yet. Neither has Joe Biden on the other side. Because both parties realize that, at this late stage in the game, you don't want a lot of risk. You don't want to make some...

COOPER: Don't they risk making her look -- it makes them look like they're afraid of her abilities, that she's going to say something. I mean, if she's capable enough to meet with world leaders, not all of whom are going to be as friendly, frankly, as a bunch of reporters are...

HENRY: Absolutely.

COOPER: ... doesn't it make her look bad? I mean, Campbell Brown earlier tonight said she thought it was sexist for the McCain campaign to be treating her differently.

HENRY: The point is that, in fairness, both sides are trying to shut out reporters and keep them at arm's length. But in the case of the McCain camp, they're trying to, at the same time, roll out Sarah Palin and say she is ready for primetime. She does have the experience.

So if you want to roll her out, you're ultimately going to have to let her face that scrutiny. Because, for example, in a couple of weeks when she faces Joe Biden one-on-one in that debate, you're not going to have any safety nets. It's going to be her, one-on-one. So if you keep her in a cocoon, that could be dangerous.

COOPER: Although they have now rigged the rules for this -- for the vice-presidential debate to make exchanges between them much more difficult, unlike the presidential debate.

HENRY: Absolutely.

COOPER: So that again -- it appears they are trying to protect her from something which I don't quite understand, because she appears very capable.

HENRY: And her allies say, "Look, let's -- let's get her out there. Because she looks strong. She looks poised right now." Conservatives are fired up to have her. And they say why hold her back? Let her out there.

COOPER: Interesting.

Ed Henry, thanks. Fascinating day.

Still ahead, remember the Bridge to Nowhere that Palin wants people to think she never supported? Well, tonight the story takes even another turn on Alaska's Road to Nowhere. We have a special investigation report.

We'll also look at Joe Biden's record on the Bridge to Nowhere. You might be surprised about he voted on that.

But first, a school shooting in Finland that left 10 people dead. The killer -- you see him there -- made his own YouTube videos. And now there's a bizarre twist report about the suspected killer when 360 continues.


COOPER: All right. So by now, of course, you've all heard about the Bridge to Nowhere, the whole "thanks, but no thanks." But the question is, have you seen the Road to Nowhere? Talk about a pork project. And guess what? You paid for it. We'll have that.

But first Erica Hill joins us with a "360 News and Business Bulletin" -- Ms. Hill.

ERICA HILL, CNN ANCHOR: Mr. Cooper, we start off with a story that was really disturbing for a lot of people to wake up to this morning. A college student in Finland killed 10 people and then himself just one day after being questioned by police.

The 22-year-old was interviewed after he posted videos of YouTube. One showed him firing a pistol at a shooting range. Another included a video tribute to the Columbine High School shooters.

The embattled ban on offshore drilling coming to an end after all, it turns out. After months of debates, House Democrats decided to allow that 25-year ban to expire at the end of the month.

And Google jumping into the mobile phone market, providing the power for a new T-Mobile model. It's set to challenge Anderson's favorite device, the Apple iPhone.

The new G1 runs on Google's Android operating system. It will make its debut next month, priced at $179. It's about 20 bucks cheaper than the iPhone.

COOPER: I was just wondering if it's easier to type on. Because that's my problem. The iPhone, I find it hard to type on.

HILL: You know, it's a fingerprint factor on the iPhone. But I know people who love it.

COOPER: People -- people swear by it. I don't know. They say you get used to the thing. I don't know.

HILL: We're Crackberry addicts.

COOPER: Exactly. I'm old school.

Here's tonight's "Beat 360" photo: Sarah Palin shaking hands with former secretary of state, Henry Kissinger after the meeting in New York today that we've been talking about.

So here's the caption from our staff winner, Alyssa: "Levitra? No, Mr. Kissinger, I said, nice to meet ya."


HILL: I love it.

COOPER: Get it? I thought it was funny.

HILL: I thought -- comes in the in-box today. I wasn't sure it would get on the air.

COOPER: Levitra? No, I said nice to meet ya.

Anyway, if you think you can do any better, go to Click on the "Beat 360" link. Give it your best shot. We'll announce the winner at the end of the program, and the winner gets a "Beat 360" T-shirt.

HILL: Coveted T-shirt. COOPER: Coveted. Yes.

Up next, the politics of finger-pointing. The Bridge to Nowhere was never built, but the Road to Nowhere sure was. Look at it. It just ends. Twenty-six million of federal earmarked money. You paid for it. The question is why.

And Joe Biden likes to call on his Republican counterparts for the Bridge to Nowhere on the campaign trail? But guess what? Biden has his own earmark trail in Washington and his own votes about the Bridge to Nowhere to answer for. We're "Keeping Them Honest."



GOV. SARAH PALIN (R-AK), VICE-PRESIDENTIAL CANDIDATE: I championed reform to end the abuses of earmark spending by Congress. In fact, I told Congress -- I told Congress thanks, but no thanks on that Bridge to Nowhere.


COOPER: As far as we can tell, Sarah Palin has actually seemed to have stopped making that claim in her most recent stump speeches. We're going to watch it, though, as the weeks go on. After weeks of reporters pointing out that she actually said, "Yes, please" to the bridge before she said "thanks, but no thanks" and even then she still took the earmark money.

So in a moment we're going to look at why Obama and Biden actually voted to allow the Bridge to Nowhere. But first, I want to show you another project that Palin had no problem using taxpayer money for: Road to -- the Road to Nowhere. Special investigations unit correspondent Abbie Boudreau "Keeping Them Honest."


ABBIE BOUDREAU, CNN CORRESPONDENT (voice-over): Take a look down there. That's the city of Ketchikan. And over there, across the Tongass Narrows, that's Gravina Island, and that's where the local airport sits.

To get there from Ketchikan, you have to take the ferry. It takes about ten minutes. So that brings us, first, to the plans for the notorious expensive Bridge to Nowhere. It would have crossed the narrows here. But to get to the airport, they needed a road.

But here's what happened. When the political outcry about the bridge got so loud and they killed it, well, it was too late. They'd already signed a contract for the road project. So they built it.

(on camera) This is Gravina Island Highway. It runs about three miles long at $8 million per mile, paid for by your tax dollars. But there's no one on this road. Many locals call it the Road to Nowhere.

(voice-over) The Democratic mayor of Ketchikan calls it Governor Palin's Road to Nowhere.

MAYOR BOB WEINSTEIN (D), KETCHIKAN, ALASKA: She's been saying, "I told Congress thanks, but no thanks. I stopped that Bridge to Nowhere project."

In fact, she didn't tell Congress "thanks, but no thanks" and spent $26 million out of a federal earmark for the Gravina access, a.k.a. Bridge to Nowhere project, on this road that will not go to a bridge.

BOUDREAU: Weinstein said of course the road would have made sense if a bridge had been built, considering how now locals and tourists have to take a ferry to the airport.

When we were on the road, we met P.J. Murphy, who works on the island.

P.J. MURPHY, RESIDENT: Not many people are coming out yet.

BOUDREAU: No. Why did you come?

MURPHY: Well, I'm the toll collector down there, and I wanted to see where it went and what it looked like.

BOUDREAU: What do you think?

MURPHY: It's nice road. It's a nice road. It's a lot better than the road I drive on to go home.

BOUDREAU: And what do you think about where it ends?

MURPHY: Well, the Bridge to Nowhere. I mean, come on.

BOUDREAU (voice-over): Mayor Weinstein came with us to see the road, too.

(on camera) Who's using this road, since we've been here?

WEINSTEIN: Well, currently, you and I are using the road.

BOUDREAU (voice-over): He can joke about it now, wearing a "Nowhere, Alaska" T-shirt, but he says that earmark money could have been used to fix roads and sidewalks in town that people actually use.

(on camera) Simply put, what could Governor Palin have done if she says she's against earmarks? What could Governor Palin have done in this case?

WEINSTEIN: Governor Palin could have stopped construction of this road.

BOUDREAU (voice-over): Back up in the helicopter, another reality check.

(on camera) There's a road, and then it just stops. That's where the bridge was supposed to pick up, right there. (voice-over) We tried to find someone in town who supported the road. So we contacted Palin's former campaign coordinator, an avid Palin supporter, but even he had a hard time backing the project.

(on camera) Do you think it's waste of taxpayer money?



ELERDING: Without the bridge, yes. Yes.

BOUDREAU (voice-over): Meg Stapleton, a McCain-Palin spokesperson, tells us the Governor had no choice and that's why the project moved forward.

(on camera) It's hard to imagine the Governor wouldn't think that that's a waste of money, taxpayer money.

MEGHAN STAPLETON, MCCAIN-PALIN CAMPAIGN SPOKESWOMAN: The Governor could that change that earmark. That earmark was given. That earmark was dictated. That had to be spent on the Gravina Road and nothing else. And so the Governor had no options.

BOUDREAU: Could she have stopped construction?

STAPLETON: My understanding is that -- you know, I'd have to look into that for you. I don't know.

BOUDREAU (voice-over): Stapleton did get back to you. And she says, under ordinary circumstance, Governor Palin would not have allowed the Gravina Road project to move forward.

But given the federal earmark and, because the contract for the road was already signed before she got into office, the Governor was left no viable alternative. So the road that no one seems to use to the non-existent bridge was built.

MURPHY: It would be nice to see them put something over here, now that they have the road: a park, picnic benches, something to get people out here. I mean, it's pretty here.


COOPER: Will there ever be a bridge that connects to this road?

BOUDREAU: Well, there are like eight or nine bridge options right now. But no one knows. There's been no final decision made on this. So maybe but maybe not.

COOPER: Am I to understand that woman is the toll collector on that road? Does she actually collect any tolls?

BOUDREAU: Yes. She collected our toll when we got off the ferry and went over to Gravina Island. Yes, she is the toll collector, probably one of the few toll collectors. But yes, she was there. I met up with her.

COOPER: A lonely job, no doubt. Abbie Boudreau, thanks.

Joe Biden has blasted Palin on the Bridge to Nowhere. But what he fails to mention is that he actually voted to let Alaska have it. We'll explain that ahead. "Keeping Them Honest" tonight, we examine Joe Biden's record on earmarks and some bridges of his own.

And the FBI launches multiple criminal probes targeting firms central to the financial meltdown. That's right: Lehman Brothers, AIG, Fannie and Freddie. It's a breaking news story. We'll have the latest.



SEN. JOE BIDEN (D-DE), VICE-PRESIDENTIAL CANDIDATE: That's what I call a Bridge to Nowhere, an absolute Bridge to Nowhere. That is a bridge too far.


COOPER: So Senator Biden, understandably, likes to bring up Alaska's Bridge to Nowhere almost as much as his opponent, Sarah Palin, although for different reasons.

Biden has some other bridges of his own that he has to account for, however. Special investigations unit correspondent Drew Griffin is also Keeping Them Honest.


DREW GRIFFIN, CNN CORRESPONDENT (voice-over): Last week, it became part of his stump speech. If you believe Senator McCain and Governor Palin are good for America's road to recovery, Joe Biden says you'd better check their road map.

BIDEN: I've got also a bridge I've got to sell you. And guess what? It's in Alaska, and it goes to nowhere.

GRIFFIN: Perhaps Biden believes the Bridge to Nowhere is the symbolic bridge to cross into the White House.

BIDEN: John McCain's answers for the economy -- and we're in such desperate shape -- is the ultimate Bridge to Nowhere. It's nowhere, it takes you nowhere.

GRIFFIN: But hold on, Senator Biden. Keeping him honest, we decided to check on 116 reasons in Delaware that one Bridge to Nowhere in Alaska may not be such a good Democratic talking point. Because 116 is this number of earmarks Senator Biden asked for this year alone. The total bill to taxpayers, more than $342 million.

He told our "AMERICAN MORNING" they're all justified. BIDEN: Every one has seen them. And we have no Walter -- you know, we have no Lawrence Welk Museum. We have no bridges to nowhere in Delaware. It's all straight up.

GRIFFIN: Straight up? We went to Delaware to see for ourselves. True, there is no Lawrence Welk museum. But Biden does want a million dollars for a children's museum. Another million dollars for opera- house renovations. Hundreds of thousands for this tiny waterfront park.

(on camera) and believe it or not, there is also a bridge, maybe not to nowhere. But after the tourists have gone at this time of year, the Indian River Inlet Bridge can seem like a bridge between two nowheres.

CAROL EVERHART, REHOBOTH BEACH-DEWEY BEACH CHAMBER OF COMMERCE: We need a new bridge. And we are so fortunate that this is finally at a place where it's going to happen.

GRIFFIN: Carol Everhart, with the local chamber of commerce, says the Indian River Inlet Bridge is a vital link in the tourist trade, connecting the vacations towns of Dewey Beach and Bethany Beach.

Without this bridge, she says 30,000 summer vacationers a day would have to drive an extra 35 minutes. The bridge has some erosion problems, and if it ever collapsed, it would cause economic disaster here, Everhart says.

EVERHART: The bridge, as it is, is currently safe.

GRIFFIN: So why is Senator Biden asking for $13 million for this bridge now? That's what Bill Allison of the watchdog group, the Sunlight Foundation, wants to know.

BILL ALLISON, SUNLIGHT FOUNDATION: Essentially what Senator Biden is doing is say that, while my state's bridge gets the priority dollars, even though it's not a priority project.

GRIFFIN (on camera): Now the real twist in this story. Senator Biden must really like bridges, because not only does he want you to help pay to replace this bridge here in Delaware, despite what he's been saying on the campaign trail, he actually voted for Alaska's Bridge to Nowhere, twice.

(voice-over) That's right. He and Senator Barack Obama were among the 93 senators who voted for the massive 2005 transportation bill funding the Alaskan Bridge to Nowhere and thousands of other projects across the country.

And when another senator tried to divert the Bridge to Nowhere money to fix a bridge to New Orleans damaged by Katrina, senators Biden and Obama and 80 other senators present voted against the amendment.

ALLISON: Yes. They had a chance to vote specifically against the Bridge to Nowhere in Alaska, to redirect the money, and they chose not to.

GRIFFIN: John McCain, who always opposed earmarks, was not in the Senate that day and did not cast a vote. Sarah Palin wasn't even the governor yet.


COOPER: So what does Biden say about his votes on the Bridge to Nowhere and his earmarks to replace the safe bridge in Delaware?

GRIFFIN: Well, of course, Anderson, we wanted to ask him directly. But as Ed Henry said, these candidates are somewhat in hiding. The campaign just never got back us to on when or if we could sit down and talk with Senator Biden.

COOPER: We've always, on this program -- you've been the one who's driving this -- made a big distinction between those who try to hide their earmarks and those who at least are public and open about them. Has Senator Biden been open about his earmarks?

GRIFFIN: According to the Sunlight Foundation, this is the first year, Anderson, the first year in his 36-year Senate career, that he's actually released his earmark requests in advance.

Remember last year we asked everybody in Congress about their earmarks and whether they'd show them with us? Well, our summer interns did. Remember that?


GRIFFIN: Well, Senator Biden never got back us to then either. So this is the first time we're actually seeing his earmark requests in advance.

COOPER: Drew Griffin, "Keeping Them Honest." Drew, thanks.

Up next, tonight's "Shot": magician David Blaine hung out to dry? Find out why Blaine's latest stunt, well, according to some, may not be all it's cracked up to be. Or should we just give the guy a break? You decide for yourself.

And the candidates and the bailout. Can either McCain or Obama deliver on their promised tax cuts and health-care proposals and all that, given all of what's going on now?

Plus, breaking news. The FBI investigating the financial firms linked to the meltdown. That's when 360 continues.


COOPER: Time now for "The Shot." As I mentioned last night, I'm not a big fan of uber-cool street magician David Blaine. It's nothing personal. I wish him success and happiness. But I don't get the whole shtick, you know, the sitting in the ice, being buried alive, having all the blood drained from his body and replaced with the blood of a small animal, all those things he's done in the past. HILL: Did he really do the blood replacement? No.

COOPER: I made that one up.


COOPER: I thought that might be, actually, kind of cool. His latest stunt has him hanging...

HILL: He totally gets some street cred with you for that one.

COOPER: Right. If he had all the blood drained from his body and replaced by the blood of an animal. He latest stunt has him hanging upside-down -- now, that would impress me.

HILL: And here's a good way to do it.

COOPER: All right. So this is his stunt. He's hanging upside- down for three days and two nights above Central Park.

So it turns out, though, he's only kind of doing that. A number of Web sites today apparently posted pictures of him standing upright on a platform. Another had him stretching his body horizontally. I guess there he is.

HILL: There's even one with him resting -- he was resting his head. It's like a little sling for his head.

COOPER: Really?

HILL: Just kind of hanging out.

COOPER: Apparently, we reached out to Blaine's reps, and the statement his PR firm said, in part, and I quote, "There's been no claim that David was going to hang upside-down for 60 hours without a break. Enjoy the spectacle. It's free, and give the guy a break."

HILL: Right. It's funny. Because from everything I saw initially, that's really how they made it sound: 60 hours upside-down, blood rushing to his head. He could die.

COOPER: He's no, you know, Doug Henning. Do we have Doug Henning's picture?

HILL: I think we do. There he is.

COOPER: The world of illusion, Doug Henning, ladies and gentlemen.

HILL: Maybe if he put a unicorn.

COOPER: Did you see? He had a unicorn on his shirt.

HILL: We talked about that last night. You missed it.

COOPER: I missed that. He actually has a unicorn on his thing. And he's wearing, like, a leotard, too.

HILL: He's magical; of course he does.

COOPER: Why not? It was the '70s.

Time now for "Beat 360," your daily chance to come up with a caption better than the one we can come up with.

There's the picture: Henry Kissinger with Sarah Palin. And we just have to keep scrolling through it. Right. Keep going. Let's go to the captions that our staff...

HILL: Not going to run it?

COOPER: Alyssa: "Levitra? No, Mr. Kissinger, I said nice to meet ya."


HILL: Zing!

COOPER: Our viewer winner is Nancy from Apple Valley, Minnesota. Her caption: "Just remember, Sarah, the power is in the glasses!"



COOPER: Yes. Nasty -- Nancy, your "Beat 360" T-shirt is on the way.

Ahead, breaking news: the FBI, the market meltdown. The criminal probe now. It's a criminal probe behind the historic collapse. We'll tell you who's being investigated. The latest on the breaking story, coming up.