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ANDERSON COOPER 360 DEGREES

Auto Bailout Bill Dies in the Senate; The Caylee Anthony Mystery

Aired December 11, 2008 - 23:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ANDERSON COOPER, CNN ANCHOR: Good evening you've just been watching "Planet in Peril," you can catch a special encore edition of "Planet in Peril: Battle Lines" an hour from now.
In this hour though, breaking news that affects millions of Americans who work in and around the auto industry, it threatens to turn U.S. and global markets upside down tomorrow morning. And according to many experts may deepen what's already a terrible recession.

Right now, the Senate is wrapping up voting on a loan package for Detroit car makers, that's a live shot on the senate floor.

CNN's Dana Bash is standing by with the very latest. Dana, what's happening?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: What's happening is you're seeing a vote right now going on, Anderson, where you are actually, probably a few moments from now going to see the death of the bailout for the auto companies here on the senate floor.

This has been an extraordinarily topsy-turvy night. Not to mention two or three weeks with what's been going on with this. But basically what happened this evening is that there was a last-minute effort to find a new compromise to revive a compromise. And there was a meeting just a short while ago, of Senate Republicans that went on for about an hour and a half.

And basically out of that meeting, they decided that they could not go along with what had been negotiated all day. And the fundamental problem here was that people pretty much agreed that they were going to give the auto companies the $14 billion that they wanted for a short term rescue.

But what Republicans and Democrats are trying to agree on is whether or not they would have to be forced to cut wages of U.S. auto workers. And that basically was where things fell apart between Republicans and Democrats.

And so what Harry Reid, the Senate majority leader did once that fell apart is he went to the senate floor and he said we tried, we tried several times but it is very clear that the votes are not there for a compromise at this point. And so we're going to take this test vote, which might be -- might look like they're actually going to do something but everybody is going in there knowing that this is very likely to fail. And Harry Reid, the Senate majority leader was very, very clear, pretty emotional, as a matter of fact, about the consequences that he knows will come from this failed vote. Listen to what he said.

(BEGIN VIDEO CLIP)

SEN. HARRY REID, (D) MAJORITY LEADER: Everyone should understand -- this vote is over tonight. I don't think we're going to get 60 votes, it's over with. I dread, Mr. President, I dread looking at Wall Street tomorrow.

It's not going to be a pleasant sight. Millions of Americans, not only the autoworkers, but people who sell cars, car dealerships, people who work on cars are going to be directly impacted and affected. And as I mentioned earlier today, Christmas is approaching. This is going to be a very, very bad Christmas for a lot of people as a result of what takes place here tonight.

(END VIDEO CLIP)

BASH: So what we saw this week was the White House and Democrats negotiate a deal. The President's very own senate Republicans today saying that they did not agree with what the White House had said was the way to go, which was to have the government really be involved in making sure that these auto companies restructure for the long term and most Republican said that they did not think that the person put in-charge of that would have enough authority to do that.

So then they went back to the table all day long trying to come up with yet another idea. But in the end, it simply did not work. And so they are just basically taking this test vote knowing that it is not going to happen here and it is certainly the end of a very long, very emotional try to get this money out to Detroit.

COOPER: So Dana, what happens next, I mean, for these automakers, for Congress? Do they just wait until the new administration takes over and then try to do it again?

BASH: Here's what's really interesting about this -- you probably remember in the beginning of the discussions about Detroit saying that they needed this money. Democrats said, well, you know what? Why doesn't the White House just take part of the money we've already approved for Wall Street and give them some of that? And the White House said absolutely not. That that was not what the money was for; that if you start giving that money to Detroit, then other industries will want it as well.

We're told by several Republican sources, Anderson, that when the White House is frantically calling to say that they needed to vote for something, what they also indicated to these Congressional Republicans was that if this fails, if this can't happen legislatively, which it looks like it is happening as we speak, then probably the White House is going to have to reverse itself. And they will end up using that money for Wall Street. They're going to end up using it for Detroit. Because bottom line is, over at the White House, there is a real feeling that the President does not want to see the collapse of Detroit on his watch.

And a big part of why this is happening is because he could not get his fellow Republicans onboard with the deal that he and his aides negotiated with Democrats.

COOPER: And this deal is -- this vote is almost over, is that correct, that we're watching the live picture there?

BASH: It is, it is very late at night. So they're trying to get the Senators back here. Senators who are -- many of whom were not here because this is probably the lamest of lame duck sessions that we've seen at this point. And I think they're waiting for the Senators to come back. But we do expect the vote to be done pretty soon. And again, there's was no expectation as you heard from Harry Reid the Senate majority leader that this would pass.

COOPER: All right, Dana thanks for the breaking news.

We'll talk now about the mark out fallout that Dana mentioned. Asian markets already dropping; Japan's Nikkei down about four percent. Let's turn next to Ali Velshi who joins us now by phone.

Ali we just heard Harry Reid talking about the fallout on Wall Street, from this possibly -- from this bailout basically dying. What do you think is going to happen tomorrow morning?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Well, yes as you said Hong Kong is down -- Nikkei down four percent. Hong Kong down close to seven percent. But something that Dana just said is worth considering. And that is that if the White House needs to take control of it, they may not let the whole thing die and that might be why we're not seeing markets down further than they are.

There's one issue that is of concern right now, Anderson, while the markets may reflect this overnight in Asia, and in Europe, and in the morning here in New York, the concern goes much deeper than the market.

It cuts right to the core of this recession. And that is the question of how many more jobs will be lost if either Chrysler and or more frighteningly, General Motors would have failed. Both of these companies have indicated that they are fast running out of cash.

Chrysler said it can go until spring but General Motors, which is much larger, said it could run out of cash by the end of the year, Anderson. And people who opposed the bailout loan package say why not let them go into bankruptcy, if they run out of money and reorganize their business and renegotiate their contract.

But both General Motors and Chrysler have made the case that in this economic climate, healthy companies are having trouble getting financing. So it's not likely that troubled companies like those will be able to attract lenders.

And they say that people who are already skittish about buying cars are not going to buy cars from a company that might not be in business. And you and I have talked about this before Anderson. It's not like buying a ticket on a bankrupt airline where the only thing you might lose is that flight.

GM has made the case that if they were to go into Chapter 11 bankruptcy protection which they might do by the end of the year, that could very well end up as chapter seven, liquidation which means the companies could just disappear, Anderson.

COOPER: Majority of Americans though, if you believe the polls do not support this bailout. Is there something the public is not getting?

VELSHI: Well, I think there's a combination of things, I think there's bailout fatigue. The fact that we have good evidence that some of the money from the $700 billion financial bailout wasn't spent in the way that many Americans thought it would be. And they were told the same thing. That it'll be Armageddon if this doesn't happen.

Then there's years of pent-up frustration with the U.S. auto industry, Anderson. It was seen as bloated, and outdated, and disconnected. But there really have been great strides in the last year -- the last few years in the auto industry.

2008 has just been so destructive to the U.S. auto industry, but to everybody who makes cars, Nissan, Honda, Toyota, they're all suffering. Because two things are happening, people are losing their jobs or they were hit by the energy crisis or they were hit by the downturn in homes and didn't have the money to buy new cars. And those that did often couldn't get the credit; they just couldn't get the loans to buy them.

But I think we've got some news going on here. That's what we're trying to follow.

COOPER: We should tell you, it just failed. Let's bring back in Dana Bash. Dana, what just happen?

BASH: What just happened is that this test vote that the senate just took as expected just officially failed. The vote was 52 to 35. And technically, this was actually a vote on the package that the President and the President's aides -- I should say -- and Congressional Democrats negotiated. This was to give the Detroit, the auto company, $14 billion and with strings attached.

But again the bottom line is, that the President's fellow Republicans said that those strings were not long enough, they were not tough enough, and they wanted a very different kind of bill, many of them. Some of them didn't want anything at all.

As Ali was just pointing out, some of the Republican Senators that we talked to who are very vocal said absolutely there was no need to do this all and they should just file bankruptcy.

I think Harry Reid is talking. Let's listen.

REID: Consider using the TARP money to help the auto industry and the workers of this country. Any conditions that were proposed by all Senators, Senator Corker, Senator Dodd, anything that they want in there, they could do anything they wanted. And I would hope that they would consider that and do it as early as tomorrow.

UNIDENTIFIED FEMALE: The senator from Connecticut is recognized.

COOPER: After listening to Harry Reid. Let's go back to Dana Bash. So Dana again, just to reiterate, it is possible, though, the White House now may choose to take some of the money out of the $700 billion that they have --

BASH: Exactly.

COOPER: They may use some of that money toward bailing out the auto companies?

BASH: It is entirely possible.

And, again, and talking to Republican sources here who spoke all day long with the White House because they were being lobbied all day long from the White House, it seemed entirely clear actually, to them, at least, that if this happened, if Congress couldn't do something for lots of different reasons, then the White House would have to use its authority.

And it does have authority if you listen to a lot of experts that they could use that $700 billion that is there for Wall Street. And that has been a big part of the debate going back several weeks.

Democrats think why don't you use that from the beginning? We're definitely going to have to wait and see if the White House does that. I just got an e-mail from somebody inside the administration saying no decision has been made on that.

But, again, talking to Republicans, they say President Bush and his aides -- they don't think that they want to see the collapse of a major company like GM in the waning days of his administration.

COOPER: All right, we're going to talk more about this throughout the hour. David Gergen is going to join us as well as others.

Let us know what you think, join the live chat happening now at AC360.com. Also you can check out Erica Hill's live web cast during the commercial breaks.

The auto industry on the brink, we're talking "Politics" in the fallout with David Gergen and Jeffrey Toobin also and Joe Johns are going to join us live next.

Also ahead tonight, the latest on Illinois governor -- on the Illinois governor; what some of his own colleagues are saying about his state of mind, including one who says he is literally insane.

And later, a little girl has been missing since June. Her mother is charged with murder. And now, what could be a pivotal discovery in the case of Caylee Anthony.

(COMMERCIAL BREAK)

COOPER: More now on our breaking news the failure in the Senate of a loan package for the big three car companies; it is dead.

Let's talk "Strategy" with CNN's senior political analyst, David Gergen; correspondent Joe Johns and CNN's senior legal analyst, Jeffrey Toobin.

David Gergen, I supposed not that huge a surprise, but still kind of shocking to hear it at this late hour. What do you think?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, it is a surprise, Anderson. Just like we have in the $700 billion bailout, we're seeing tonight not only a collapse of this automobile package but the final collapse of political leadership in this Congress.

They wandered around on that $700 billion bailout. They never quite put the package together right. The Republicans blocked it once. There had to be another rescue effort.

And here, the Republican White House negotiated a deal with the Democrats in Congress. They got it past the House by a fairly large margin. It was the Senate Republicans, not the House Republicans, who basically blocked this deal. And if the automobile industry goes down, there is going be a lot of blame attached to this failure tonight.

There maybe a way to do this through having the White House reverse itself on TARP but what are the conditions going to be for the automobile industry if they go to the TARP money? And how is this going to be set up as really ensuring the viability. Is there going to be a car czar?

All those questions I think are up in the air tonight. Yes, the White House needs to act promptly. But I cannot tell you just from someone who's watched politics from Washington for a long time, how utterly disappointing it is to see time after time a Congress is unable to get its act together and deal responsibly with the nation's problems.

COOPER: Jeff Toobin, what do you make of them? I mean, is this the Republicans just making a stand on principle, is it a strategy, is it politics, is it economics? What is it?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, I think the White House has no influence over anyone at this point. And that's the first lesson.

The second point is I don't understand the White House's strategy. Because on the one hand they say, if you vote this down, it's a total calamity. But if you vote this down, we're going to use the $700 billion. So don't worry about it that much.

That doesn't seem like a very effective way to negotiate. And so this turned into a cost-free way for the Republicans to say we don't like this deal.

COOPER: Joe Johns, is there also politics involve in terms of Republican in the Senate and elsewhere? We've heard from Mitt Romney, Huckabee, others, talking about their opposition to some of this bailouts, is this aimed to 2012, is this aimed at an election two years from now for congressmen?

JOE JOHNS, CNN CORRESPONDENT: Well yes, it's also just pretty simple. A lot of people don't like the deal. I mean, if you look at Republicans around the country who have said they support fiscal responsibility and then they have to go out time and again and give the taxpayer money to various large entities that were supposed to support themselves, a lot of the constituents that they represent just don't like the idea.

So what you're really talking about here is philosophy in a lot of ways. Also, the other thing I think is, you have to say is the leadership certainly is not very good.

But you have to realize during a lame duck session of Congress, a lot of times the allegiances are just not the same. It's hard to pull people together; even when they absolutely have to do the right thing.

Final point, very possible there are a lot of people right there in Congress just like Dana said, who were thinking why should we take this tough vote and anger our constituents when the President has money sitting there and he can do something? Let the White House do it.

COOPER: More to talk about with our panel coming up. Joe, David, Jeff, stick around.

I want to talk about the other big story tonight. President- elect Obama answering some tough questions about his relationship with Illinois' politically toxic governor. A break first; this is "360."

(COMMERCIAL BREAK)

COOPER: Tough questions for President-elect Obama about his and his staff's relationship with Illinois' allegedly corrupt and politically radioactive governor. According to a federal criminal complaint, Rod Blagojevich is on tape complaining that the Obama forces weren't playing ball, cursing Obama because they would not pony up with the campaign cash or government job in exchange for the governor naming an Obama protege to the President-elect's old senate seat.

Offering said the governor nothing more than their appreciation so quote, "F" em. He also refers to Obama by a two-word hyphenated term beginning with the word "Mother."

Today, Mr. Obama addressed the scandal for a second time after critics called his first response vague. Was today any different?

Jessica Yellin has the facts, so you can decide for yourself.

(BEGIN VIDEOTAPE)

JESSICA YELLIN, CNN CORRESPONDENT: After 48 hours of speculation and unanswered questions, the President-elect revealed what he knows about the Blagojevich scandal -- sort of.

SEN. BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES: What I'm absolutely certain about is that our office had no involvement in any deal-making around my Senate seat.

YELLIN: And he underscored what he said the day the scandal broke.

OBAMA: I had no contact with the governor's office. I did not speak to the governor about these issues. That I know for certain.

YELLIN: But still, he leaves a slew of unanswered questions; the most glaring, were any of his aides in contact with the governor's office?

OBAMA: I've asked my team to gather the facts of any contacts with the governor's office about this vacancy so that we can share them with you over the next few days.

YELLIN: And so we wait and wonder. Did Obama's closest advisors, like Valerie Jarrett, Rahm Emmanuel, or David Axelrod know about Blagojevich's scheming? If so, what did they do about it?

Obama left open the possibility his people were in touch with the authorities. Notice how he first says "I" and changes to say "we."

OBAMA: I have not been contacted by any federal officials. And we have not been interviewed by them.

YELLIN: Perhaps Obama is saying as much as he can. One crisis communications expert explains he now has to gather all the facts before he says more.

LANNY DAVIS, FORMER SPECIAL COUNSEL TO PRESIDENT CLINTON: It was the best he could do. They have to now investigate every single transition person who has any conversations with anybody in the governor's office over the last several weeks or more.

It's important to get the facts out. But it's also important to get them all out, not just a few so that a few more dribble on. The objective is to get the story over with.

YELLIN: But Obama has to walk a fine line between full disclosure and saying too much; there's always the danger of damaging the case against Blagojevich.

KENDALL COFFEY, FORMER U.S. ATTORNEY: Well, from the standpoint of federal prosecutors and investigators, it is always their preference if folks that are potential witnesses or even victims of an extortion scheme like this are not talking about it publicly.

YELLIN: If the President-elect is worried about being taint by his association with the governor who he greeted at political gathering just last week -- he's not showing it, instead, making light of the sleazy name the governor used to refer to him.

OBAMA: Yes, I won't quote back some of the things that were said about me. So -- this is a family program I know.

(END VIDEOTAPE)

COOPER: All right, let's talk "Strategy" again, with -- oh I'm sorry with Jessica. So Jessica I mean, what are you hearing from the Obama people? What's going on now, are they all meeting, trying to compare who actually may have talked to this guy, if anyone?

YELLIN: Well, they're describing it as sort of more informal processing, Anderson. They point out that it's really a small group of people who could possibly have information. So there's not a wide ranging investigation going on inside Obama's transition headquarters.

COOPER: So with such a small group of people; it's been 48 hours, you would think they would have been able to already kind get their ducks in a row.

YELLIN: Right. Excellent point and it's hard to believe that Barack Obama himself doesn't at least know if someone in his group did make contact. One of the points that's been made to me is he has to have all of the facts before he starts leaking out little bits of details.

What they're trying to do is really get the entire picture of everybody, anyone who could have possibly had any kind of contact, have as many answers to the questions they're likely to get and then try to go out and take one more bite at the story, answer everything at once. That could enable them, they think, hopefully to move on.

COOPER: Jessica Yellin, appreciate it. Thanks.

Let's talk "Strategy" again with David Gergen, Jeffrey Toobin and Joe Johns.

David, yesterday you said that Obama was kind slow off the mark in his response. Did it speed up at all today?

GERGEN: Well, he did something important. We talked about it last night too, Anderson. That was the need for him to publish openly the -- all contacts between his staff and the staff around the governor and the governor himself. He did promise that today. Good for him. That lives up to the standard of transparency.

What still seems odd is they're not responding to it with vigor. They were a little slow off the mark in responding to that altogether and that they didn't have that list today. I think it's imperative for them to get it out tomorrow.

This is, as you say, not hard. You get your general counsel in there and you interview everybody and you get whatever statements you need from them and you put it out. Yes, you want to be careful as Lanny Davis just said in one of your interviews, but you need to move promptly. He needs to get this behind him by the weekend.

COOPER: Joe, he essentially said to the press today I'll get back to you over the next couple of days.

JOHNS: Yes, that's one of those deals where -- this guy is a good lawyer, he's also sort of a Chicago street fighter type. But he knows, you go out and you shoot off your mouth and you say something you didn't know everything about; next thing you know, you're wrong. You have to take it back, and your credibility suffers. That's what he's up against.

On the other hand, we'd love to know. Is there somebody working over there that's gotten lawyered up? Maybe he knows. Maybe nothing's happened at all. Once they have that stuff written down, then they can come out and make a statement because at the very beginning of an administration like this, the first thing you don't want to do is go out and put your foot in your mouth.

COOPER: Jeff, if anyone on Obama's team was approached about a deal to appoint Valerie Jarrett, for instance, in the senate, did they have a legal obligation to report that to law enforcement?

TOOBIN: Not really, as far as I can tell. There's no obligation, legal obligation, to report what may be a crime taking place. You should, but there is certainly no legal obligation to do that.

The question is, the distinction that has to be drawn here -- and I think it may not be that easy to draw this distinction -- is what were contacts, political discussions between the governor's office and Senator Obama's office, then Senator Obama's office about this vacancy? It would be natural if there were some contacts.

What is inappropriate is if there was any discussion of a quid pro quo. That's what we have to learn whether there was any evidence of that. Now, so far, certainly based on the transcripts that were released, there was no evidence that there was a quid pro quo. That's the thing that the lawyers who interviewed these witnesses are going to be looking for.

And frankly, I disagree with David a little. I don't think it's all that urgent that this needs to be done by Friday. I think it's more important -- take as much time as you need. Get all of the facts out, if it's the middle of next week, if it's the end of next week, fine.

COOPER: Really, because I mean, this is kind of festering, especially among some Republicans and on a lot of conservative radio and stuff. This is building. And the longer this goes on with unanswered questions, doesn't that just continue to build?

TOOBIN: If Barack Obama is worried about keeping Rush Limbaugh happy, nothing is going to work. I just don't think it's festering that much. I think it is fine to wait until next week to do this. This is not a crisis. It is not a reason to react precipitously. Better to get all of the facts together; if it takes a week, fine. I don't think there's any crisis.

COOPER: David Gergen, I'll give you the final word.

GERGEN: Well OK, two things -- one is, there are only a small number of players involved here. This should not take much time. The longer this goes on, the more he gets entangled in it. They need to cut themselves off from this quickly.

The second is if there is someone in the Obama team -- and I hope this is not the case -- but if someone knew that there was this finagling or this request by the governor for money or something and did not report it, they may not have a legal problem as Jeffrey points out, but they have a political problem because to sit on that information and given the culture of Illinois and Chicago would be unacceptable politically to most Americans.

So I think they do need to find out what happened. I think they need to be very thorough in that. But I also think they need to be prompt.

COOPER: All right, we'll leave it there. David Gergen, Joe Johns, Jeffrey Toobin, thank you for staying up late tonight. Appreciate it.

Next on "360" breaking news from Florida; the gruesome discovery in the search of Caylee Anthony. The bones of a child are found. After missing for months, have police actually found her? The latest ahead.

And later exclusive video of the fighter jet crash taken just moments after it crashed into a San Diego neighborhood.

(COMMERCIAL BREAK)

COOPER: Breaking news out of Florida tonight where the long, heartbreaking search for little Caylee Anthony may have come to a very sad and horrific end. Today, a utility worker found the skeletal remains of a young child near the home of Caylee's grandparents. One volunteer says investigators believe they appear to be that of Caylee.

Caylee's mother, Casey denied she's harmed her daughter, insisting the daughter was kidnapped. She has also changed her story numerous times and lied to the police numerous times. The police are convinced she murdered Caylee. They don't have a motive. Today, they may have finally found the victim.

"360's" Randi Kaye has the latest developments on this breaking story.

(BEGIN VIDEOTAPE)

RANDI KAYE, CNN CORRESPONDENT: A utility worker made the gruesome discovery; a plastic bag with a human skull inside. The skull fell out when he picked up bag. The sheriff says it's from a small child.

SHERIFF KEVIN BEAHY, ORANGE COUNTY, FLORIDA: This is a very active crime scene still; we're going be here all night.

KAYE: Investigators want to know if the remains belong to two- year-old Caylee Anthony. How will they figure it out? The remains will be analyzed at the FBI's lab in Quantico, Virginia.

LAWRENCE KOBILINSKY, FORENSIC SCIENTIST: The FBI lab will be taking some of the skeletal remains, extracting DNA from the bone, the code of DNA and they will be able to tell if the skeleton is consistent with Caylee.

The FBI lab must have a known specimen from Caylee to make the comparison.

KAYE: The match could take days. Caylee disappeared in June, but her mother didn't report her missing for a month. Now Casey Anthony is in jail charged with first degree murder in her daughter's death.

The discovery was made just about a half mile from the home where Caylee lives with her mom and grandparents. Now police plan to search the home again. Cadaver dogs had picked up the scent of death here months ago.

What will they be looking for this time? Possibly plastic bags to try to match the bag holding the remains.

ASHLEY BANFIELD, TRU TV ANCHOR: Just the striations in the manufacture of a garbage bag can be linked to the lot that they came out of. They can link a garbage bag to what's in your home like that.

KAYE: Police may also be on the hunt for tape, possibly used to secure the bag. Months ago, investigators searched the very same woods where the remains were found. But at the time, the area was flooded; the remains may have been underwater.

KOBILINSKY: Evidence may be found on the bag, inside the bag, in the bag itself. But the fact that it was submerged in water could have interfered with the ability to detect trace evidence.

KAYE: In this mystery, answers are slow in coming. Casey originally told police she dropped her daughter off with a babysitter. But it turned out the apartment she directed them to was vacant and the alleged babysitter says she never met Casey.

Police later discovered Casey had borrowed a shovel from a neighbor. An air quality test on the trunk of the car Casey was driving showed evidence of decomposition and chloroform. Investigators say Casey had visited web sites about chloroform before Caylee disappeared.

Casey's defense attorney refused to comment on how she reacted to the discovery of a child's remains.

UNIDENTIFIED MALE: Excuse me, excuse me. You guys are crossing the line.

KAYE: Could the remains be from another child? Not that we know of, the sheriff says, adding, that's always a possibility.

Randy Kaye, CNN, New York.

(END VIDEOTAPE)

COOPER: So what is next for police and for Casey? Could this be potentially a death penalty case?

Let's dig deeper. Joining me now is attorney and "In Session" anchor, Lisa Bloom. What does come next? Police say they're going to be working this scene all night.

LISA BLOOM, "IN SESSION" ANCHOR: They sure are. This is what they're going to be looking for inside the home. Matches to what they've now found at the scene. Assuming that this is Caylee's body, we've got a trash bag, we've got duct tape.

COOPER: I had no idea trash bags are actually kind of identifiable to lot numbers.

BLOOM: Yes. Lot numbers by the manufacturer, not just color, not just brand, by lot numbers. So you'll be surprised a bag, a trash bag that you might have in your home under your sink would be very, very different if I even have the same brand and the style under my sink. So they really can be matched.

It's the same with duct tape. It can be matched. And also there's a question of the shovel. The police found a shovel that Casey had used. Does that shovel have perhaps dirt or soil on it that would match dirt or soil at the scene?

There've been a lot of changes because the area where this child's body was found today has been under water for a period of months. The water has receded. That's why this body wasn't found in prior searches. That may make these kinds of matches more difficult but that's what they're looking for.

COOPER: Do we know anything about the condition of the remains that that were found? I don't know -- they say the skull? I assume --

BLOOM: Skeletal remains, that's what police are saying. And by the way, we have to be careful with what we're reporting today because sometimes the police will intentionally release false information when they're in the middle of a search or they'll release partial information because they may go back to Casey and ask her additional questions or they may try to match things up with things that she's already said. It's still an active investigation.

COOPER: Matching things up with what this woman has said is virtually -- is a very difficult task because she has said just about everything under the sun, including that she used to work -- that she was working in a place where she didn't work and she even led police to an office and then right at the last second turned around and said actually I don't work here. BLOOM: Well, that's why this is such a compelling story. Not only has she lied repeatedly, she took a month before she told anybody her daughter was missing. She never reported her missing and she sent police off on false searches.

Here's one of the things she did say though that we've seen on earlier tapes, "I know in my heart she's not far." She said that about her daughter a couple of months ago. If indeed this is Caylee, she was right; only about a third of a mile away.

COOPER: I want to play a sound byte from a jail conversation between Casey Anthony and her brother that took place in July. Let's listen.

(BEGIN AUDIO CLIP)

LEE ANTHONY, CASEY ANTHONY'S BROTHER: Do you think Caylee is okay right now?

CASEY ANTHONY: My gut feeling? As mom asked me yesterday and they asked me last night and the psychologist asked me this morning that I met with through the court, in my gut she is still OK and it still feels like she's close to home.

(END AUDIO CLIP)

COOPER: I mean, this is just -- I don't understand this. I just find this whole story bizarre to say the least.

BLOOM: It's very disturbing. The question is does she have some kind of mental defect because keep in mind, she's charged with murder. That's the premeditated killing of a human being. Not an accidental killing of a human being.

Did she for example accidentally kill her with chloroform as the state alleges was the form of murder. Did she try to chloroform her daughter merely to keep her quiet, to sedate her? Of course, not a good idea, but that would not be premeditated murder if she did that and the child died. Was there a conspirator?

One of the important things in looking at this body, if it is Caylee's, is time of death. Certainly if this child was killed at the time when Casey was incarcerated, that's going to exonerate her. If she's decomposed to the point of being six months, the time of death was six months ago, that can be very helpful to the state.

COOPER: The grandparents, they were on "Larry King" last night, they're going to be on "Larry King" again apparently tomorrow night. They believe that this little girl is alive. They were talking about people who have seen this little girl and spotted her around the country, incredible reports they claim.

What is going on with them? Are they still supporting their daughter?

BLOOM: They are supporting her now. Initially they were not supporting her. It was Cindy who called the police and reported Caylee missing many months ago. And it was George Anthony, the grandfather who testified before the grand jury.

COOPER: He was a former police officer.

BLOOM: Former police officer testified against his daughter at the grand jury which is what led to her indictment. But now they have rallied around her.

Look at it this way, Anderson. They are the only family that Casey Anthony has. She's the only family that they have. And so family members do typically stand by somebody accused of a crime. That's all that they're doing. I want to emphasize they're not accused of being accomplices or accessories after the fact, they're merely supporting their daughter.

COOPER: It is just a startling case and one that just seems to have taken a turn today.

BLOOM: I think the DNA testing will take a couple of days.

COOPER: A couple of days. All right.

Lisa Bloom, appreciate it. Thanks.

COOPER: Still ahead on the program, the latest on the failed auto bailout deal. Breaking news tonight: why the deal went bust and what happens next? We'll try to figure that one out.

Plus dramatic new video shots just moments after a fighter jet slammed into a crowded neighborhood in San Diego, killing every one inside the house which took a direct hit.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. BARBARA BOXER, (D) CALIFORNIA: We played Russian roulette tonight. We don't know what's going to happen. But we do know that Hank Paulson can save these jobs.

(END VIDEO CLIP)

COOPER: Senator Barbara Boxer, Democrat of California, part of the breaking news out of Washington tonight. Happened basically at the top of this hour; the bailout bill for Detroit car makers dying on a procedural vote on the senate floor.

Dana Bash has continued to work her sources all throughout this program tonight. She joins us now with more. Dana, what are you hearing?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, what we're hearing is that there are definitely some hard feelings on all sides of this, Anderson, because what we have seen, particularly over the past 24 to 48 hours has been quite remarkable when you think about the politics of this.

First, you see the White House and Congressional Democrats which, not too long ago was kind of unheard of on something like this. They came together and they agreed that yes, they will give Detroit a short-term loan package, $14 billion under a few conditions.

But the Republicans in the United States Senate said, no, that's not good enough. We don't think that the rules in that particular piece of legislation were strict enough in terms of making sure that these car companies are viable for the long term. That's what we heard over and over and over again particularly from these Republicans. They wanted it to be a lot more strict.

So basically, we had a lot of negotiations going on back and forth over another idea from a Republican Senator Bob Corker, but in the end, for various reasons, after a very intense closed door meeting late tonight with all Senate Republicans, that didn't fly.

So what happened was Harry Reid, the senate majority leader went on the senate floor and made clear that they were going to take a vote they knew was going to fail and also made clear he knew what the consequences would be.

(BEGIN VIDEO CLIP)

SEN. HARRY REID, (D) MAJORITY LEADER: Everyone should understand this vote is over tonight. I don't think we're going to get 60 votes. It's over with. I dread, Mr. President, I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight.

Millions of Americans, not only autoworkers, but people who sell cars, car dealerships, people who work on cars, are going to be directly impacted and affected. And as I mentioned earlier today, Christmas is approaching. This may be a very, very bad Christmas for a lot of people as a result of what takes place here tonight.

(END VIDEO CLIP)

BASH: So people out there watching might be wondering what does this mean? We've been hearing some of the companies, at least, maybe even GM, is going to collapse by the end of the year if they don't get money.

Well, it is not necessarily over, it is over in terms of Congress, but, you know, the White House does still have an option, potentially, to use the money that Congress already approved, that the president already signed into law, controversial money, for Wall Street. That's $700 billion that's known as TARP. There is a possible that the White House, the president could take some of that money after all and give it to Detroit -- Anderson.

COOPER: Dana Bash, appreciate it. Thank you very much, Dana.

Continuing to check with her sources throughout; we are the only cable news program live right now covering this.

We're following several other stories tonight. Erica Hill joins us live in a "360 Bulletin" -- Erica.

ERICA HILL, CNN CORRESPONDENT: Anderson, Bank of America today saying it will slash as many as 35,000 jobs over the next three years as it absorbs Merrill-Lynch amid a deepening recession. Now the bank says those cuts are going to come from both companies, both Merrill and B of A and that will affect all lines of business.

This exclusive video you're seeing obtained by CNN was shot just moments after a military jet crashed into a San Diego neighborhood on Monday killing two adults and two young children. The pilot ejected safely after both of the jet's engines lost power.

And Betty Page, the legendary 1950's pin-up queen with the killer curves and coal black bangs died today of pneumonia after suffering a heart attack last week. She was 85, Anderson.

COOPER: That's sad.

Just ahead, Ali Velshi with more on market reaction to the vote.

Next, Washington pumped tens of billions into AIG. You all paid for it. But are they actually still giving huge bonuses to their employees? The answer may not surprise you next.

(COMMERCIAL BREAK)

COOPER: As we have been reporting tonight, the Senate just killed the bailout deal to save the auto industry. The fall out could be far-reaching especially on Wall Street. Asian markets already reacting sharply; in Japan the Nikkei last I saw was down 7 percent. We'll see what happens here tomorrow.

Washington is lending lifelines to others in need, of course, like AIG but the insurance company is under fire allegedly for turning taxpayer cash, your money, into bonuses for employees -- big bonuses. They say it's just good business but a lot of people are saying they just don't get it.

Joe Johns investigates.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CORRESPONDENT: A Wall Street riddle -- when is a bonus not a bonus at all? Answer -- when it's something called a retention payment. Insurance giant AIG which just helped itself to a $150 billion bailout from the government promised not to pay bonuses to its top 60 executives because taxpayer money is on the line.

But then the company turned around and offered 168 of its top people huge payout if they promise to stick around for a year.

REP. ELIJAH CUMMINGS, (D) MARYLAND: I don't know what this is --

JOHNS: Congressman Elijah Cummings says it sure looks like bonuses to him. CUMMINGS: And then for people who are now earning between $92,500, and -- get this -- and $3 million. The bonuses range from $160,000 to $1 million. Imagine that -- somebody already making $3 million and then get $1 million bonus and they're basically government employees because we own 80 percent of AIG.

JOHNS: A cynic would call it the ultimate no lose proposition.

When business is great, the executives of AIG win big, bonuses all around. When business is lousy and the company is staving out bankruptcy, AIG executives win big because they get paid for not abandoning ship.

AIG sees it differently. They say they need to keep their best people on board so they can sell parts of the business, scale down, return to profitability, and give the taxpayers their money back.

NICHOLAS ASHOOH, AIG: There's a real risk of losing people; we have lost some, even some senior executives. There's a real risk of losing their talent and their business relationships and losing value in the business, seeing the business deteriorate.

We're not going to hold a fire sale but we do want to move along expeditiously and sell these businesses and get the best value we can so we'll have the money to repay the government.

JOHNS: Cummings isn't buying it --

CUMMINGS: They point is that these people are fortunate to have a job.

JOHNS: What's the bottom line? No matter what you think of the way AIG is doing business here, people who loan money don't like surprises, and finding out a $1 billion bailout recipient like AIG is doling out millions to its executives might come as a surprise to some taxpayers.

NATHAN VARDI, FORBES MAGAZINE: The treasury and the Federal Reserve has put $150 billion in AIG. There are officials within those government institutions who know what's happening with a lot of that money. We, the public, really don't know a lot about where that money is going after it's being spent and used to prop up AIG.

JOHNS: Begging the question, if bonuses aren't bonuses at all when they're called retention payments, what else is being done with your money; hundreds of billions of dollars that you don't know about?

Joe Johns, CNN, Washington.

(END VIDEOTAPE)

COOPER: Some late news, very strange and troubling news out of Wall Street tonight. Former Nasdaq stock exchange chairman Bernard Madoff out on $10 million bond tonight; there he is. He was charged today with securities fraud. Now, the federal complaint accusing him of conning clients in his investment firm out of billions of dollars; what's more, the complaint alleges that yesterday Mr. Madoff told senior employees that the company was, quote, all just one big lie." And, quote, "basically, a giant Ponzi scheme." No immediate comment from him or his attorneys.

Up next, the bailout bust and the fallout expected on Wall Street in just a couple of hours; Asian markets down sharply right now. We'll check in with Ali Velshi in a moment.

Also ahead, my free dive in blood-filled water full of great white sharks. It is our "Shot" coming up.

(COMMERCIAL BREAK)

COOPER: The Senate has gone home tonight after failing to approve a bailout for Detroit that both senate Democrats and the president wanted. Asian markets already dropping in reaction; Japan's Nikkei down 7 percent, the Hang Seng also down sharply.

The big question now -- what happens tomorrow morning when Wall Street opens? Let's turn next to Ali Velshi who joins us by phone. What kind of fallout do you think we're going to see tomorrow in the U.S. markets, Ali?

VELSHI: That all depends, Anderson. If the view is that this bailout is done, the way the world is going to see this is that that means that one or two automakers could fail and as a result of that, there could be not thousands, not tens of thousands, but possibly hundreds of thousands more people out of work in the United States. And those are all people who are not buying anything, both American- made things or foreign made things so as a result the worldwide recession could deepen.

The other way to look at this, and this is something that Dana Bash said earlier, is that there is still an option of coming back with another deal or being able to tap money from TARP, the original $700 billion bailout. Remember we're talking about what was going to be in the end $14 billion.

So if the White House feels that this is very serious, they may direct the treasury to do that. If the feeling overnight develops that there might be hope that that money will come from the $700 billion bailout, you may see markets overnight start to level off. Europe not do so badly and maybe not a bad morning but it could go either way at this point depending on where the sentiment is, Anderson.

COOPER: So the president wanted this. Senate Democrats wanted this. Does Wall Street want this? I mean --

VELSHI: Yes. Yes, absolutely. Wall Street's been on the side of all the bailouts at this point because there were some bad bets that were made generally and the only way to guarantee the survival of these companies, particularly General Motors which is a publicly traded company which many of our viewers will have if they own a diversified portfolio of mutual funds. General Motors affect everybody that way, so Wall Street would very much like these companies to survive for the next few months and be able to recreate themselves, if possible.

So there will generally be negative feeling about this. But remember, and David Gergen made the point earlier, $700 billion bailout failed in the House, as well. All avenues may not have been exhausted yet.

COOPER: We heard Barbara Boxer, Democrat of course from California, the senator saying that voting against this bailout was playing what she said was Russian roulette with the recession. Is she right?

VELSHI: Yes. I think it is. I think there's a lot of fatigue with bail outs. There's a sense of pushing back and saying, you know, we keep being told it's going to be a catastrophe if we don't bail these companies out but isn't that what bankruptcy is for? Why not let these companies go bankrupt and reorganize?

But I think Anderson, there might be a bit of a lack of understanding in that bankruptcy protection allows you to restructure your debt, renegotiate, trying to find other lenders. There's nobody lending money in this environment. We're better off than we were in late September and October but fundamentally, healthy companies are having trouble borrowing money.

More than half the companies on the S&P 500 are considered now high risk. Their bonds are rated as junk. These kinds of companies with this kind of problem, there's not much chance of raising money, so going into bankruptcy could cause the collapse of Chrysler and/or GM.

COOPER: Ali Velshi, I think it's going to be an earning morning for you tomorrow. We'll let you get to bed. Thank you Ali, appreciate it.

Up next, what kind of crazy person goes swimming in blood-filled water with a bunch of great white sharks? Who would be a fool like that? Oh, wait, it was me. It's our "Shot," coming up.

(COMMERCIAL BREAK)

COOPER: Time for the shot, Erica. My cage-less dive with great white sharks from our "Planet in Peril" report that ran earlier tonight on CNN. If you missed it we are re-airing it in just a couple of minutes -- about three minutes from now -- right after this program.

This is off the coast of South Africa, off Capetown and with Mike Rudson (ph) who takes tourists on cage dives with great white sharks. But also free dives with them; he believes that to understand these giant predators which are very -- very little is actually known about them. You have to see them in their natural state without any barrier. He took me diving with them and it was among the most remarkable experiences of my life, I will say. When I stepped into the water which was filled with blood and chum fish parts, I asked for advice and he said, project confidence.

HILL: Yes.

COOPER: So yes.

HILL: That's almost like you said, what's my motivation here? Your motivation is confidence.

COOPER: Of course as soon as I entered the water, my weight belt falls off because I don't really know what I'm doing and I spend the first five minutes struggling with that which is not what you want to do with sharks --

HILL: You know we never would have known.

COOPER: Yes, exactly.

HILL: Would you do it again?

COOPER: I would actually. I thought it was an amazing experience.

Erica, thanks.

That does it for this edition of "360." Thanks for watching.

"Planet in Peril: Battle Lines" starts right now.