Examining the White House Bailout Plan
BETTY NGUYEN, CNN ANCHOR: We will see if that happens for Congressional approval by Friday. That is when Congress is scheduled to adjourn. Now, the price tag for this extraordinary government intervention into the private sector, well over half a trillion dollars. Probably more, says the experts. How bad is it? One senator says the U.S. financial system was just days away from collapse. His words, the president's tone at the White House today, well, it was a sobering reminder as well.</s>BUSH: My first instinct was to let the market work, until I realized upon being briefed by the experts how significant this problem became. So I decided to act and act boldly. It turns out that there is a lot of inner links throughout the financial system. The system had grown to a point where a lot of people were dependant upon each other. The collapse of one part of the system wouldn't just affect a part of the financial markets. It would affect the average citizen.</s>RICHARD LUI, CNN ANCHOR: It's a complicated crisis no doubt. Our correspondents will help us break it down for you on this day. Kate Bolduan watching negotiations on Capitol Hill for us, Poppy Harlow with some of the details on what we will be on the lookout here for he next week. Let's first start with Kate Bolduan. Are negotiators making progress this morning? Kate we normally don't talk about business so much on the weekend but boy, they have a lot to do today.</s>KATE BOLDUAN, CNN CORRESPONDENT: They do have a lot to do today. It's going to be a very busy weekend for them all. It's hard to tell right now if negotiations are making progress right now. I know a lot of people are still just trying to gather and figure out how are they going to move forward and who they need to talk to. But you can guess the lawmakers and their staffs are definitely in discussion over the weekend. And as you mentioned, they have a lot to talk about. This proposal would grant the government a very broad power aimed at taking on the country's financial crisis. But here are the highlights of the proposal as it stands now and what Congress is looking at. The treasury is asking Congress for $700 billion, money to be used to buy up bad mortgages from financial institutions. This authority would expire in two years. Now, all of this is what Congress is looking at right now. We're hearing from staffers that they're definitely talking about it. But it's not up to Congress to act. The ball is in Congress' court because they do need to take legislative action. What we're hearing from Congressional sources is that the treasury at this hour is set to hold a briefing with some Congressional staffers to talk about the plan. We also hear from other sources, republican sources, that house republicans are set to have a conference call around noon. So clearly they're working on it. But the big question remains, and we always talk about this, is can Congress maintain this bi-partisan spirit that we've seen over the past few days? It's a very rare thing to find up here on Capitol Hill, especially during an election year. And the big question is, can they maintain this bi-partisan spirit and move quickly? We'll definitely be watching Richard.</s>LUI: Kate, the question might be deadlines. What's being discussed in terms of next week?</s>BOLDUAN: The fact that the treasury was able to get this proposal overnight over here does get the ball moving earlier than some had even anticipated. We're hearing everything in terms of timing from early next week passage or possibly at the end of next week passage. Leaders have said that they're definitely prepared to stay longer, if need be. Of course the government, the Bush administration, is pushing them to move as quickly as possible. But things do take some time here on Capitol Hill.</s>LUI: That's right, break out the diet coke and donuts there on the capitol. Thanks so much.</s>NGUYEN: You know a lot of comparisons this week between the current financial crisis and the savings and loan debacle of the 80s and early 90s. So is that a reasonable comparison? Poppy Harlow with cnnmoney.com is going to tackle that for us and as we look back to those times and these times, I don't know, is it fair to compare them?</s>POPPY HARLOW, CNNMONEY.COM: You can certainly compare them Betty but if you look at the raw numbers, it's really apples to oranges. So we'll go through this first number for everyone out there. $700 billion, that's what's being proposed. The size of our economy right now, our GDP, that's just about $14 trillion. So this is sizeable but it's not unprecedented. Back in the late 80s, early 90s, we saw huge government intervention during the S and L, the savings and loan crisis. That created something called the resolution trust corporation. They intervened in a different way but it was a massive investment. Take a look though at what the government has done just this month. The $200 billion bailout of Fannie Mae and Freddie Mac. We could see up to $200 billion there. This week alone, $85 billion in a loan to AIG, that insurance giant, to save it. Now, $700 billion proposed to essentially purchase troubled mortgage-related assets from the banks and brokerages in this country, get them off the banks books. And try to liquidate the market a bit more, get the market all oiled up and the economy back on foot. Betty?</s>NGUYEN: As they are working on this big plan to the tune of $700 billion, a lot of investors are looking toward this next week. What should we be keeping our eyes on?</s>HARLOW: It's interesting because a lot of the experts will say almost everyone says the root of this problem is the housing crisis. That's at the heart of all of what's going on now. Coming up on next week on Wednesday and Thursday, we're going to get two really key August home sales reports. That will give us a look at how our housing market stands now. Then, Ben Bernanke, the fed chief, he is going to appear on the hill three times next week. That is huge, we'll have to hear what he says. Then on Friday, to wrap up the week, we'll get a look at consumer sentiment, a reading by the University of Michigan on how people feel our economy is right now. Those are all going to play in here as well, Betty. That's going to be key coming up next week.</s>NGUYEN: It's going to be a big week on many fronts. Poppy Harlow joining us live with cnnmoney.com, thank you.</s>LUI: That's right, a lot of folks just watching the news here on this issue of the financial crisis and for many ordinary U.S. citizens, the bailout involves an incomprehensible amount of money and complicated legislation as well. We'll help you see through the muddle today. Brad Aarons writes a personal finance column for "The Wall Street Journal," he'll be along in the next half hour with some very good advice. Listen to this, what should you be doing right now to protect your finances? We'll have that. Also tonight, a special "Your Money" emergency edition, two hours beginning at 6:00 p.m. eastern, CNN's money team, Ali Velshi and Christine Romans digging into the week's financial turmoil, no two better at it. All the information you need to feel more secure. Plus, then, at 7:00 p.m., they will be taking your phone calls live. Get the answers on this two-hour special, "YOUR MONEY", emergency edition, it starts tonight at 6:00 p.m.</s>NGUYEN: Let's check in on what the presidential candidates are doing today. We want to give you some live pictures right now from Daytona Beach, Florida, where we understand Senator Barack Obama will be holding a rally. In fact, is holding a rally. Polls show the race between him and John McCain are tightening in that state. Meanwhile though, Senator McCain doesn't have anything scheduled for today but yesterday, he did campaign in Minnesota where the race is also very close. And, whoever wins the presidency will have to deal with this country's financial crisis, no doubt. CNN's Mary Snow looks at what the next president inherits.</s>MARY SNOW, CNN CORRESPONDENT (voice-over): The administration is hoping its rescue plan will be the end game to solving the current financial crisis. Its price tag isn't fully known.</s>HENRY PAULSON, TREASURY SECRETARY: We are talking hundreds of billions.</s>SNOW: For the next occupant of the White House, whether it's John McCain or Barack Obama, it means limits.</s>ANNE MATHIAS, STANFORD GROUP: Certainly, larger federal budget deficits and the need to focus on financial sector regulation is going to make just time and attention and money available for other programs a little bit tighter.</s>SNOW: In fact, it could put the squeeze on the signature issues. One tax and budget expert says the costliest part of Senator McCain's plan is his tax cutting proposals.</s>LEONARD BURMAN, URBAN-BROOKINGS TAX POLICY CENTER: I have no doubt that Senator McCain intends to make big cuts in spending, but if you believe what he says on the stump, he would have to cut back spending to its level in the 1950s before we had a national highway system, Medicare or Medicaid.</s>SNOW: For Barack Obama, experts consider his health care proposal the costliest of his plans and expect the realities of</s>MATHIAS: From a realistic standpoint in terms of Barack Obama's health care programs, we don't expect to see a major change in the U.S. health care system in the first couple of years of his presidency. That prediction I think becomes even more firm given the amount of tumult that's going on right now.</s>SNOW (on camera): Some experts say that the government's rescue plan may in the end actually make money. And if that happens, that could actually help the next administration. But right now, no one is counting on any rosy scenario. Mary Snow, CNN, New York.</s>NGUYEN: You can hear more from the candidates on CNN's "Ballot Bowl." Extended excerpts from the campaign trail, the candidates unfiltered in their own words, "Ballot Bowl" starting at 2:00 p.m. eastern today only on</s>CNN. LUI: Breaking news for you this morning coming out of Pakistan, a key ally on the war on terror in the United States. A large explosion has ripped through downtown Islamabad. Police saying a car bomb killed at least 20 people and wounded 25 more at least. The blast has caused a natural gas leak as well that set the Marriott hotel on fire where many westerners stay. The blast came just hours after Pakistan's new president promised a joint session of parliament that he would root out terrorism in the end there. Getting supplies to those in need, you'll see how far some victims of Ike have to go to get help.