This is a rush transcript of "Special Report With Brit Hume" from September 22, 2008. This copy may not be in its final form and may be updated.


HENRY PAULSON, TREASURY SECRETARY: It is very important we move quickly an d stabilize the markets by buying these illiquid loans, these illiquid mortgage loans from the financial institutions which are clogging up the systems.



SEN. HILLARY CLINTON, (D) NEW YORK: I think the administration has to understand that we need to do more than just empower the treasury with $700 billion of taxpayer money to begin buying these illiquid assets.


BRIT HUME, HOST: Which means that Congress is going to have a say, as indeed it was inevitably going to, in how this whole program to buy up these distressed, illiquid assets, which can't be sold because the market for them is frozen and therefore they have been marked down on the balance sheets of all these companies to zero--although they're worth a lot more than zero in most cases--and Congress is going to have a big say in how this whole program is devised, how the money is spent, and what other money may be spent.

Some thoughts on all this now from Fred Barnes, Executive Editor of The Weekly Standard, Mara Liasson, National Correspondent of National Public Radio, and the syndicated columnist Charles Krauthammer, FOX News contributors all.

Well, Fred, here we go. The markets obviously didn't like what they were seeing today. What was it about what the markets saw or didn't see today that caused the rout of 373 points, or whatever it was?

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: Well, I think it was Congress stepping in and saying "We're going to settle the terms of how the Treasury Department acquires these illiquid assets," and they want to set the terms saying--that you know, let's set a cap on executives' pay and say the federal government should get an equity share in some of these companies.

You know we would be in a better situation, or at least the Treasury Secretary Hank Paulson would if this were known as a "rescue" rather than a "bailout." "Bailout" sounds terrible. Who is for a bailout? A lot of people are for a rescue.

But, look, speed is very important here. I wish they would pass something today.

And the question is, who do you trust more to handle this, to buy these illiquid assets, which are -- Merrill Lynch when it became a part of the Bank of America sold its illiquid assets at 22 percent--in other words, 22 pennies on a dollar. That was a cut rate for sure.

I think what we need to do is not have Congress set the terms. Look, the executives of these companies are going to get fired and you want to bring in good people to run them. But if you set the executive pay very low you're not going to get good people.

I think Hank Paulson ought to have as much flexibility as he possibly can--I know there is a lot of money there--but have one thing in particular there. He can't be just unaccountable. He needs an oversight board.

And both Obama and McCain have proposed these, but one that is not just a bunch of absentees, but people who are there on an oversight board that will really be an oversight board.

And, obviously, there are some financial figures who'd be good in doing this from both parties and a lot of walks of life.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: Look, there is a big difference between the kind of oversight and accountability that you demand when taxpayers are essentially bailing out -- that's what they're doing, they're not rescuing them, they're bailing them out, they're taking all these bad loans off the books of these banks, versus adding things to the bill that might make Wall Street nervous.

HUME: One thing they're clearly going to want to add is a stimulus package, which means more spending, right?

LIASSON: They're going to want to add a stimulus package, I think--maybe, although there are differences even among Democrats on that.

There is also talk about some kind of mortgage relief for homeowners, that this has to bail out Main Street as well as Wall Street. The argument that we have to bail out Wall Street or else it's going to affect Main Street is just not selling to Democrats and conservative Republicans in the House, too.

HUME: What would the shape of that be? It's $700 billion to take the distressed assets that are owned by these companies off the market. How many billions more would it be to bail out all these homeowners?

LIASSON: I don't know if they would be bailed out...

HUME: Because if you bail out the homeowners then the assets are not so worthless anymore.

LIASSON: I don't know if it's bailing them out or helping them work out their mortgages, refinance--

BARNES: Congress just passed a bill, $300 billion to do exactly that. I mean why do they need to do more? That's ridiculous.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: The markets tanked because they are worried about two things--one is inflation-- and the other is whether this package is going to be hung up or expanded outrageously in Congress.

The inflation is obvious. The government is spending a trillion dollars buying assets that today are not worth a lot. They may in the future be worth a lot, and the government will recoup its money, but in the meantime--

HUME: Some of its money.

KRAUTHAMMER: Some of its money. Well, in the savings and loan it recouped all of it.

But what's happening today is the government is going to have to spend up to a trillion which it doesn't have, which means it's going to print it. And that's inflation.

That's why oil spiked. That's why commodities spiked today, and that's why the dollar declined, which hurts the market.

But the other aspect of this isn't what Fred and Mara are talking about. The Democrats want to hold the package hostage to a lot of Democratic demands--on executive compensation, on helping homeowners, maybe even a bailout for auto companies.

This is crazy. All of that stuff may be worthy. It can wait. We should have hearings on it and consider it.

The bailout has to happen now. All this other stuff doesn't have to happen now.

HUME: You say "now." Do you mean within a week's time, two week's time, a month, what?

KRAUTHAMMER: Within a few days. Every day that we wait the market is going to be down and people are going to get scared and panicked. You don't want to have a "run." That's what happened last week. And the way to stop it is to act now.

HUME: And let the inflation worries do whatever they're going to do.

KRAUTHAMMER: It's going to happen anyway. But what you don't want to have is uncertainty added onto all of this with Democrats holding the package hostage for a sweetener here and there.

BARNES: If we had a national referendum on whether people want Congress to set the terms or Hank Paulson, I think Paulson would win.

HUME: We'll discuss what the presidential candidates are saying about all this next.



SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: Let's be clear. When it comes to regulatory reform, Senator McCain has fought time and time again against the commonsense rules of the road that could have prevented this crisis.



SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: Senator Obama has declined to put forth a plan of his own, and in a time of crisis when leadership is needed, Senator Obama has simply not provided it.

And the truth is that we don't have time to wait for Senator Obama's input for our nation to act.


HUME: Let's take Senator Obama's assertion about John McCain first, that he has fought time and time again against commonsense rules of road that could have prevented this crisis. Fred, true or false?

BARNES: That's false. The one thing that McCain fought for and Obama opposed and nearly the entire Democratic Party opposed, at least in the Senate, was some reform of Fannie Mae and Freddie Mac, which are really at the root of this whole problem of bad loans, subprime loans that people shouldn't have gotten in the first place.

And remember there was a bailout, I think it was in 2005, and the Democrats killed it. It would have established a really aggressive person to reform a quasi-government agency --

HUME: A world-class regulator?

BARNES: A world-class regulator, and McCain was strongly for it, Obama and the Democrats were strongly against it. So at least as far as that goes--and since those two outfits, Fannie Mae and Freddie Mac are really at the heart of the whole subprime problem, I think you have to give McCain some credit and say that Obama's not right about that.

LIASSON: You know, it's funny, because McCain, who famously said in a Wall Street Journal article that he's at heart a deregulator, and Obama has pounced on that, he has a pretty long history of regulating things-- like tobacco, campaign finance system. He has been pretty willing to regulate certain parts of the economy.

McCain had this thing to say about Obama where we don't have to wait for Obama to come forward with a plan to act. Well, that's true and we don't have to wait for McCain's plan either.

These two candidates are pretty irrelevant right now in terms of what actually is happening between Congress and the Treasury Department to work this out.

They're certainly using it as a cudgel to--

HUME: It's an interesting point, because McCain was a little bit all over the place last week and Barack Obama jumped all over him for it. But in the end McCain at least has a proposal. Does it make any political difference that McCain has a proposal and Obama doesn't?

LIASSON: I don't think so. I think that McCain is trying to-- both of them are trying to use this crisis to bolster their own credentials. McCain is saying "I'm a man of action, and in a crisis I act. And, look, I came up with this plan," which actually in some ways resembles what the Treasury is going to do.

Obama is very cautious and careful. He surrounded himself with all sorts of wise heads like Paul Volcker and Robert Rubin, and is studying this carefully.

But when you look at what both of them want to do, they both want to do very similar things. They don't want to give Hank Paulson a blank check. They want some oversight and accountability. Well, I think that probably every member of Congress would agree with them.

HUME: Yes. Charles?

KRAUTHAMMER: I agree. The details of a plan, even having a plan, is irrelevant. It's not going to have any influence on the outcome.

HUME: But what about influence on the campaign?

KRAUTHAMMER: On the campaign, I think it's minimal, because people understand, a, neither of the plans are going to have any influence, and, b, who understands any of these details anyway? I don't, and the candidates don't. There are maybe eight people in the world who do, and I think they're actually working on that tonight.

What I think is important is how--is the style. And over the last week what you have seen is how they react in a crisis.

And Obama has played it cool and collected. He didn't have a comment on this until he saw--until he saw details on AIG, and I thought he conducted himself in a way that a newcomer would as a way to show that he doesn't get rattled.

And McCain has gone--to Obama's cool, he's gone hot, very hot. He's gone hyper-populist. He reminds me of that story of the mayor of New York, La Guardia, who, in a crisis, began screaming, "Everybody remain calm!"

And McCain is going after the corruption. It's all about--

HUME: Yeah, what corruption?

HUME: --corruption and greed and unbridled stuff. He hasn't named an instance of corruption, but it's always about honor in McCain's case. So I think he's gone a little over the top.

It may have helped him. After all, he's the incumbent party so he wants to actually act as the populist. But I think a lot of heat in a situation like this doesn't inspire a lot of confidence.

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