This is a rush transcript from "Hannity & Colmes," September 29, 2008. This copy may not be in its final form and may be updated.
SEAN HANNITY, CO-HOST: And this is a "FOX News Alert." No deal on Capitol Hill today, the bailout legislation pushed by President Bush and House leaders went down to defeat today sending the Dow Jones Industrial Average into a spiral.
Now House Republicans said they lost votes at the last minute because of what they viewed as a highly partisan speech by Nancy Pelosi on the House floor early this morning.
• Watch Sean and Alan's interview
(BEGIN VIDEO CLIP)
NANCY PELOSI, SPEAKER OF THE HOUSE (D): $700 billion. A staggering number. But only a part of the cost of the failed Bush economic policies.
Democrats believe in a free market. We know that it can create jobs, it can create wealth, it create — many good things in our economy. But in this case, in its unbridled form, as encouraged, supported by the Republicans, some in the Republican Party, not all, it has created not just — not jobs, not capital, it has created chaos.
(END VIDEO CLIP)
HANNITY: Now over the weekend the speaker questioned the patriotism of House Republicans, and you know how Democrats always scream bloody murder and accuse Republicans of doing that. Well, she said just that:
(BEGIN VIDEO CLIP)
PELOSI: I thought it was very unpatriotic of them not to show up, not to show up, in some ways, boycott the meetings earlier in the week.
(END VIDEO CLIP)
HANNITY: Now meanwhile House Democrats blame today's vote squarely on House Republicans, but 95 Democrats also voted against the bill. Now since the Speaker needed only about a dozen more votes for this bill to pass, well, how come she couldn't get more Democrats to vote for it?
Now could it be because Democrats hold a big share of the blame for everything that has happened?
Now take a look at this video from 2004 where House Democrats proclaimed that there was nothing wrong with Fannie Mae and Freddie Mac:
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Through nearly a dozen hearings where, frankly, we were trying to fix something that wasn't broke.
Mr. Chairman, we do not have a crisis at Freddie Mac and in particularly at Fannie Mae under the outstanding leadership of Mr. Frank Raines.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: There's been nothing that was indicated that's wrong, you know, with Fannie Mae. Freddie Mac has come up on its own, and the question that then presents is the competence that — your agency has with reference to deciding and regulating these GSEs.
And so I wish I could sit here and say that I am not upset with you, but I am very upset because, you know, what you do is you give — you know, maybe giving a reason to as Mr. Gonzales said to give someone a heart surgery when they don't really need it.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
REP. BARNEY FRANK (D - MASS.) But I have seen nothing in here that suggests that the safety and soundness of the issue, and I think it serves us badly to raise safety and sounded as kind of a general shape of it when it does not seem to be an issue.
(END VIDEO CLIP)
HANNITY: Now what happens next is still a mystery. Nobody knows, and joining us tonight former presidential candidate, FOX News contributor, and host of "Huckabee," Mike Huckabee is with us.
Thank you, Governor, for being with us. Appreciate your time. We just showed the Democrats. Now I also have a tape, but it would take too long to play, of every Republican in that hearing warning of the consequences to the economy, to the taxpayer, to financial institutions if, in fact, they don't fix Fannie and Freddie.
Why isn't this discussed in the mainstream media?
MIKE HUCKABEE, FOX NEWS CONTRIBUTOR: Because they don't want to tell the truth. The truth is that Democrats have controlled the ability to fix this. It was their harsh regulation under the Community Reinvestment Act that started this ball rolling down the hill.
And when you start loaning money to people who can't buy it back and then you regulate and force banks to continue that ridiculously stupid regulatory practice and predatory loan practice, the result ultimately is going to catch up with you.
HANNITY: So just to explain, so they forced a regulation, banks to make bad loans. They were bought up by Freddie and Fannie.
HANNITY: . whose chief executives are advisors for Barack Obama. In the case of Franklin Raines, he made $90 million in under six years. And they bought this up, they cooked the books, and they ended up getting big bonuses for themselves while doing it, the taxpayers, you know, held — you know holding the bag. We were warning — warned about it by the Republicans in 2004, and now the Democrats blame the Republicans.
HUCKABEE: Well, and even worse, if you look at the campaign contributions, and one of the rules of thumb, follow the money. When all else fails, follow the money. Look how much money went to Chris Dodd, to Barack Obama.
HUCKABEE: And, look, there's some dirty Republican hands in this. I want to be fair. There's plenty of blame in terms of...
HANNITY: All right, but wait a minute. But this is important.
HUCKABEE: ...of relationship. But the point about the regulation, that's a Democrat deal. They forced the banks to give money.
HANNITY: All right.
HUCKABEE: ...out to people who could not pay it back. And it's a disaster.
HANNITY: And then they benefited, and then there was a kick-back because there was no regulatory oversight, and the people of America that are going to pay millions — billions of dollars here, they need to know that the reason there wasn't regulatory oversight of Fannie and Freddie is because these Democratic fat cats were kicking back money to people like Chris Dodd and Barack Obama, the second largest recipient in a nine-year period, he'd only been there three years.
And then Nancy Pelosi goes out, and we just played the comments of her saying Republicans are unpatriotic.
HUCKABEE: Nancy Pelosi's comments are totally over the top. I mean this is a lady that doesn't know the difference between the punch bowl and the toilet bowl. She's trying to get people...
ALAN COLMES, CO-HOST: What?!
HUCKABEE: ...to come to the party and get everybody around the table, and instead she flushes the toilet bowl on top of the Republicans.
HUCKABEE: You can't do that and expect people to say oh, thank you, Mrs. Pelosi, that's what we wanted to be called, unpatriotic.
COLMES: Hey, Governor, sorry, we don't have a band played here tonight like on your show. Sorry about that.
HUCKABEE: Do you play anything, Alan?
COLMES: Not much. You know, I'm really — I don't have a lot of cash right now, anyway, to get a band. Look, this is ridiculous. You want to blame the Democrats for this. I think the American people — and I think I'll speak for at least some of them who are tired of this blame game, this pointing fingers back and forth.
Republicans wanted to deregulate, Phil Gramm, the chief deregulator, that led to the savings and loan scandal. He's chief economic adviser — has been— to John McCain.
You want to blame Democrats for this when John McCain has been an ardent deregulator, day after day, week after week, year after year?
HUCKABEE: Alan, you had your head phones on when I said a while ago there are dirty Republican hands on this as well, but on the point of regulation, it was not deregulation that brought this about. It was overregulation, forcing banks into a situation on the Community Reinvestment Act and the market to market kind of accounting methods which created devaluing of companies' portfolios.
Now that's a complicated issue, but if you look at what that did, it caused a lot of companies' values and assets to be lowered, and that's part of what created the mess.
But look, here's one of the things that, I think, we've got to remember. Here's a situation that is just outrageous, and I want to say Neil Cavuto of this network and of the FOX Business Channel, has really, I think, been on target. He's called it right.
People in American are fed up and the very people who burned the Thanksgiving turkey are now asking us to let them cook Christmas dinner, and there's a whole lot of us who are saying "no, thanks." You guys messed it up to begin with, and the last thing we want is for you guys to act like you're going to fix it.
COLMES: The Community Reinvestment Act has been around since 1977. The people — you're asking Democrats to bail out Bush, it was Paulson and Bush's plan. You're blaming Democrats for not passing something that the Republican leadership couldn't get votes on their own side, and because they — their feelings were hurt by something Nancy Pelosi said which is why 12 Congresspeople didn't vote for it?
HUCKABEE: Apparently there were a lot of Democrats whose feelings were hurt because 94 of them wouldn't go with their own leader. I mean if the Democrats have wanted to pass this, they have the votes. They have the majority.
Look, this thing smelled up in the Capitol. And there were a lot of people who had the courage to recognize it and they weren't going to be held at gunpoint and forced to vote for a lousy piece of legislation on the spot, because somebody told them they had to.
And I want to say I'm grateful for the 94 Democrats and for the over 200 Republicans who listened to the people who sent them to Washington. What a rare thought. What an unusual idea. Actually representing the people who elected you.
Gosh, if we keep that up, we'll have a country one day.
HANNITY: All right, Governor, stay right there. Governor Huckabee with us, but first, joining us on our phone is Indiana Republican Congressman Mike Pence. Now he was on the House floor when the bailout bill was, in fact, defeated.
Congressman, thanks for being with us.
REP. MIKE PENCE (R-INDIANA): You bet, Sean.
HANNITY: All right, first of all, there's a myth, and the myth is, is that Republicans were the ones that defeated this. Now, for example, there were 95 Democrats that voted against this. Barney Frank himself complained about the vote. Let's roll that tape.
(BEGIN VIDEO CLIP)
REP. BARNEY FRANK (D-MASS.): We don't believe they have the votes, and I think they are covering up the embarrassment of not having the votes, but think about this.
Somebody hurt my feelings so I will punish the country. I mean that's hardly plausible, and there were 12 Republican members who were ready to stand up for the economic interests of America but not if anybody suddenly — I'll make an offer.
Give me those 12 people's names, and I will go talk uncharacteristically nicely to them. And tell them what wonderful people they are, and maybe they'll now think about the country.
(END VIDEO CLIP)
HANNITY: All right, now, Congressman, let me just point out for the rest of the country, now he is, in fact, the head of the House Financial Services Committee. 12 of the 37 Democrats on Frank's own committee voted against this bill.
So who was he to lecture Republicans about not having the votes, Congressman?
PENCE: Well, I think that's right. You know, let me say, this is a very serious crisis, and I want to take issue with something that's been the underpinning of your discussion.
Look, I — today Congress took a stand for the American taxpayer and for free markets, and it wasn't a speech by Speaker Pelosi, it wasn't a blame game, it was the American people rejected this corporate bailout, and today the people's House did likewise.
I mean I really do believe — I had a reporter ask me the other day, they said, well, has the administration — what's been wrong with their communication? I said it's been just fine. The American people understand the administration thinks we should nationalize every bad mortgage in America.
The American people inundated the Capitol with telephone calls and e- mails not to do it, and a majority of Republicans, and many Democrats, sided with the American taxpayer.
HANNITY: Well, you know, what do you make of, for example, Nancy Pelosi's comments? She gives this speech, and, you know, we've been lectured a lot about not being able to call or suggest Democrats that say the war is lost, the surge has failed, and that disarm our own troops that are fighting in Iraq, Barack Obama saying our troops air raid villages and bomb civilians.
You're not allowed to question people's patriotism. Nancy Pelosi does it. She politicizes in the speech. And it's acceptable now in the Democratic world, 30 some odd days before an election.
PENCE: Yes, but you know, to be honest with you. You know, welcome to the NFL. I mean in — this has been a very heavy-handed Democrat imperial majority where the Democrats have used hot rhetoric and closed rules to move legislation.
And — I really don't believe what the speaker said today was very different than most speeches she gives in which she denounces the administration and denounces Republicans.
I am — I'm going to go against the stream here and tell you it may have had some impact on some members, but I think what really happened here is the American people rejected this corporate bailout and the people's House did likewise.
COLMES: Congressman, it's Alan Colmes. Thanks for doing our show tonight.
COLMES: You're a free marketer, you've been against this plan from day one.
COLMES: This is not because of Nancy Pelosi it failed, it's not because of Democrats, it's because the American, as you say, people called Congress — we couldn't get through to book Congress people in some cases — because the lines were busy all day.
People were calling your offices and saying we don't want this. That was the revolt that was going on here, right?
PENCE: It — really is. I mean a lot of times it is an inside the building political game, but I've got to be honest with you. The American people rose up with one voice and said we need you to fix this problem, the crisis is real, the Paulson plan is not the answer.
But let me be clear on this, if I can. Republicans have an alternative that would make Wall Street pay for the recovery instead of Main Street. Republicans have an alternative that would release the power of the American economy rather than releasing the resources of the treasury.
My hope is in the next several days while we respect the very important Jewish holiday that you will see the American people have an opportunity to unpack what is a pro-free market, pro- taxpayer Republican alternative.
We can bring that to the floor, we can pass that, and along with the kind of reforms that Governor Huckabee just described in mark-to-market, I really believe that we can steer our way confidently through this crisis.
COLMES: Congressman, can you tell us exactly what — we only have a moment here, but basically what does that look like? How do you get the bailout to come not from taxpayers but from corporations where the people responsible for this mess in the first place?
PENCE: Yes, well, you ever heard of the FDIC?
PENCE: It's not a new organization. I mean we basically would set up — this is the part a conservative like me didn't like but I'd vote for it. You set up a government insurance program like the FDIC, you make the Wall Street firms that are holding this bad paper pay an insurance premium.
We'll provide them a back stop premium, and then you deal with liquidity by a couple of fast-acting tax policies like a holiday on the repatriation tax that would bring hundreds of billions of dollars into the economy.
PENCE: You change mark-to-market as well, and I guarantee you, guys, that would release an enormous amount of energy into this economy. We can do this without asking taxpayers to fork over $700 billion to nationalize every bad mortgage in America.
HANNITY: All right, Congressman Mike Pence, thanks for being with us.
We continue now with Governor Mike Huckabee who is with us.
Governor, the timing of this cannot be ignored. We're only five or so weeks now outside of this election. So timing is very, very important here, and my question is, in many ways, as I'm observing this, Barack Obama has been missing in action.
It's sort of the modern day — his modern day equivalent of voting "present." He said, well, if you need me, call me, you know, I'll be there in a hurry, no matter where you are, and what he has allowed to happen, he has allowed all his Democratic allies, all his political supporters to viciously and personally attack John McCain because that's where their attacks have been.
They even went as far, Friday night, which I think people need to know, or early Friday afternoon to say we have a deal because Senator McCain had not arrived yet, and they didn't want him to appear to be even a part of the negotiations to make this successful.
If you're Senator McCain, how do you counter this?
HUCKABEE: I think Senator McCain needs to do two things. First of all, he needs to just squarely look at the camera and tell the American people that the heart of this is greed, that it's the result of people who wanted to make a fast buck, and often do it off the backs of poor people, and it's unacceptable, and he's going to fight it.
I think also he's got to explain specifically that we can get our way out of this in the free market way just like Mike Pence said, and God bless Mike Pence and the Republicans like him.
Cut the capital gains tax, create insurance instead of buyouts on this bad paper, change the mark-to-market rules. There are ways in which this can be done, and it doesn't have to necessarily mean let's just see how deep we can reach into a welfare state.
Sean, one thing I want to point out, Republicans were the ones who ended welfare for people...
HUCKABEE: ...who wouldn't work back in 1995. Now we're about to be asked to engage in corporate welfare for people who didn't work very smartly but told us they were the smartest guys in the land.
COLMES: Now, hold on a second. If we're going to talk about this politically, isn't this John McCain galloping into D.C., thinks he's going to save anything, gums up the works, then ahead of time takes credit for a deal which never happened anyway.
It's got to hurt John McCain terribly here.
HUCKABEE: Well, what hurt was the fact that the Democrats said where is John McCain, he needs to get back here, he needs to show up. And he did, and the moment he did, they said John McCain's just really mucked this up, he needs to get out of there.
They can't have it both ways.
COLMES: They didn't ask him to come back. He wanted to come back to have a meeting with the president. It didn't amount to anything.
HUCKABEE: They said he needed to come back, and then they asked him to leave.
COLMES: All right, Governor, thanks for being with us.
HUCKABEE: Great to be back.
Watch "Hannity & Colmes" weeknights at 9 p.m. ET!
Content and Programming Copyright 2008 FOX News Network, Inc. ALL RIGHTS RESERVED. Transcription Copyright 2008 ASC LLC (www.ascllc.net), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon FOX News Network, Inc.'s and Voxant Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.