• With: Ben Stein, Dagen McDowell, Charlie Gasparino, Charles Payne, Chris Hahn

    DISCLAIMER: THE FOLLOWING "Cost of Freedom Recap" CONTAINS STRONG OPINIONS WHICH ARE NOT A REFLECTION OF THE OPINIONS OF FOX NEWS AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE WHEN MAKING PERSONAL INVESTMENT DECISIONS. IT IS FOX NEWS' POLICY THAT CONTRIBUTORS DISCLOSE POSITIONS THEY HOLD IN STOCKS THEY DISCUSS, THOUGH POSITIONS MAY CHANGE. READERS OF "Cost of Freedom Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.

    REPORTS OF A DEPARTMENT OF JUSTICE PROBE OF S&P IN WAKE THE U.S. DEBT DOWNGRADE

    CHARLES PAYNE: Well, you know what they say. If they bring a knife, you bring a gun. That's the Chicago way. It's obvious that this was political payback. We know that S&P failed. We know they blew it. So did Moody's. So did Fitch. So did everyone else. Why did the noise come up on this? They're trying to discredit them more, as if they needed to be discredited, to discredit the downgrade. But it seems purely political to me.

    CHARLIE GASPARINO: This has been going on for three years. They still haven't finished the Lehman Brothers investigation. Obviously, the leak is curious. It's not coincidental. They were shooting back at S&P. I believe Fitch and Moody's are involved in this too. I believe they're all in it together. I will say this, if anyone deserves to be investigated out of the 2008 financial crisis, it's S&P, Moody's and Fitch. I've always said that it was a government-inspired crisis. These guys put triple-A ratings on some of the worst junk in the world. They might have caused the financial crisis.

    Dagen McDowell: It is payback and it is headlines. But, frankly, you have to have your head examined if you buy anything based on what Standard and Poor's says-going back to Enron, WorldCom and the mortgage securities. They downgraded the U.S.'s triple-A rating and what happens? Our treasury bonds rally. They go through the roof. They are just dead wrong all the time. But they're getting payback because they did what they did.

    BEN STEIN: It reminds me of the dear dead days beyond recall when I worked for Nixon and people were very mad at Nixon for suggesting that the IRS audit his political enemies. But, this is the exact same thing. The S&P caused Mr. Obama a lot of political embarrassment and political headaches, so the government is after them and is hitting them with a sledgehammer as hard as they can. Obviously, S&P has screwed up for a very long time. They are human beings. They are going to screw up. By the way, since I'm the oldest one on the panel I can remember they gave pretty good ratings to the Drexel milk and junk bonds.

    CHRIS HAHN: I think S&P saw this coming. I think they had a heads-up that this was coming and I think they downgraded us because this was coming because they are corrupt. And they really do need to be investigated. They are absolutely corrupt.

    FEARS OF A EUROPEAN BANKING MELTDOWN SPREADING TO AMERICA

    CHARLIE GASPARINO: I don't think we're in a 2008 area right now. I think our banks are much better capitalized. We don't have triple-A mortgage-backed securities that are considered capital on our banks' balance sheets. The problem is, if you have a big French bank that goes down, I'm sure we hold some of that paper here. Could a big French bank go down? Yes. If France gets downgraded its bonds will get downgraded and guess what. People won't be buying French bonds unlike U.S. bonds. And those banks get hammered. And that could be a problem for our economy. People talk about us falling into a double dip recession if Europe has a real major, banking crisis.

    DAGEN MCDOWELL: What triggered our financial crisis was the collapse of Lehman. Are people prepared for another incident if something really bad happens with those European banks? Federal Reserve would surely step in, but that is very bad for this economy.

    CHARLES PAYNE: I'm very worried about U.S. banks. The action in these stocks alone tells you something is wrong. They keep talking about the relationship between European and American banks. But when Bank of America is laying off 10,000 people and Goldman is laying off a lot of people and the stocks are down 50 percent, something is wrong. In April 2009, we changed accounting standards again for banks. It was great. The bank stocks rebounded, our stock market rebounded, but they still have that smoldering stuff. We don't know what's in some of these banks.

    CHRIS HAHN: We couldn't bail them out again. There's just no political will in this country to bail out banks anymore. So, we'll have a real problem. There will be another round of quantitative easing, I think. You think this Congress will let the president bail them out? This Congress won't let the president spend money on anything.

    BEN STEIN: I'm not worried in the slightest for another meltdown of U.S. banks. U.S. banks, in the measurement that is commonly accepted by accountants, are extremely well capitalized. Their standards are much stricter than they were in late 2008. We have a very solid banking system now and it doesn't require any kind of congressional action for the banks to be bailed out in the unlikely event they did require a bailout. The Federal Reserve can bail them out. There's no chance of another big bank failure. Our banks are very soundly capitalized. And by the way, the French banks are more soundly capitalized than you might think. France runs a fast, loose situation with the banks, but the government is super tight with the banks. They won't let the banks fail over there either. This situation, I think, is a bit overblown. But as to U.S. banks, they're fine.

    NUMBER OF "RICH" PLUMMETS AMID CALLS TO TAX THEM MORE

    BEN STEIN: There are still plenty of rich people. We desperately need government revenue. Where else do we get it from except rich people? If they have the money to buy Bentleys, if they have the money to buy jet airplanes, then they have the money to pay a little bit more taxes.

    CHRIS HAHN: You'd have to take away half of their [the 50 percent of Americans who don't pay any income taxes] net worth to get just what the Bush tax cuts took away from the richest one percent of Americans.

    CHARLES PAYNE: They throw around the word 'fair' all the time. Realistically, it's nuts. This is all a smoke screen. Obama wants to go after households making $250,000 a year. No one considers that rich. We're talking about small businesses. We're talking about people who contribute to society. And, you know, it's great if someone buys a Bentley or jets because someone has to work on it, park it, and put gas in those things. I'm talking about creating commerce, not giving the money to government where it's going to be wasted or redistributed to political allies of this administration.

    DAGEN MCDOWELL: You talk about millionaires and billionaires - that's not who Obama wants to raise taxes on. 90 percent of the people who will pay more taxes under the Obama plan with $200,000 or more are not millionaires. That's wrong.

    CHARLIE GASPARINO: You know what's absurd here? We're getting all bent out of shape over what Warren Buffett is saying. Now, Warren Buffett may be a great investor, but what does he know about fiscal policy? He knows how to pick companies, but he knows about as much as anyone here [about fiscal policy].

    CHARLES' REBOUND PICKS

    Cliffs Natural Resources (CLF)

    Clean Harbors (CLH)

    McDonalds (MCD)