Presidential Debate Transcript (9-26-08)

Read the full transcript (NYTimes; also includes full video) of the first presidential debate held at the University of Mississippi.

LEHRER: All right, let's go back to my question. How do you all stand on the recovery plan? And talk to each other about it. We've got five minutes. We can negotiate a deal right here.

But, I mean, are you -- do you favor this plan, Senator Obama, and you, Senator McCain? Do you -- are you in favor of this plan?

OBAMA: We haven't seen the language yet. And I do think that there's constructive work being done out there. So, for the viewers who are watching, I am optimistic about the capacity of us to come together with a plan.

The question, I think, that we have to ask ourselves is, how did we get into this situation in the first place?

Two years ago, I warned that, because of the subprime lending mess, because of the lax regulation, that we were potentially going to have a problem and tried to stop some of the abuses in mortgages that were taking place at the time.

Last year, I wrote to the secretary of the Treasury to make sure that he understood the magnitude of this problem and to call on him to bring all the stakeholders together to try to deal with it.

So -- so the question, I think, that we've got to ask ourselves is, yes, we've got to solve this problem short term. And we are going to have to intervene; there's no doubt about that.

But we're also going to have to look at, how is it that we shredded so many regulations? We did not set up a 21st-century regulatory framework to deal with these problems. And that in part has to do with an economic philosophy that says that regulation is always bad.

LEHRER: Are you going to vote for the plan, Senator McCain?

MCCAIN: I -- I hope so. And I...

LEHRER: As a United States senator...

MCCAIN: Sure.

LEHRER: ... you're going to vote for the plan?

MCCAIN: Sure. But -- but let me -- let me point out, I also warned about Fannie Mae and Freddie Mac and warned about corporate greed and excess, and CEO pay, and all that. A lot of us saw this train wreck coming.

But there's also the issue of responsibility. You've mentioned President Dwight David Eisenhower. President Eisenhower, on the night before the Normandy invasion, went into his room, and he wrote out two letters.

One of them was a letter congratulating the great members of the military and allies that had conducted and succeeded in the greatest invasion in history, still to this day, and forever.

And he wrote out another letter, and that was a letter of resignation from the United States Army for the failure of the landings at Normandy.

Somehow we've lost that accountability. I've been heavily criticized because I called for the resignation of the chairman of the Securities and Exchange Commission. We've got to start also holding people accountable, and we've got to reward people who succeed.

But somehow in Washington today -- and I'm afraid on Wall Street -- greed is rewarded, excess is rewarded, and corruption -- or certainly failure to carry out our responsibility is rewarded.

As president of the United States, people are going to be held accountable in my administration. And I promise you that that will happen.

LEHRER: Do you have something directly to say, Senator Obama, to Senator McCain about what he just said?

OBAMA: Well, I think Senator McCain's absolutely right that we need more responsibility, but we need it not just when there's a crisis. I mean, we've had years in which the reigning economic ideology has been what's good for Wall Street, but not what's good for Main Street.

And there are folks out there who've been struggling before this crisis took place. And that's why it's so important, as we solve this short-term problem, that we look at some of the underlying issues that have led to wages and incomes for ordinary Americans to go down, the -- a health care system that is broken, energy policies that are not working, because, you know, 10 days ago, John said that the fundamentals of the economy are sound.

LEHRER: Say it directly to him.

OBAMA: I do not think that they are.

LEHRER: Say it directly to him.

OBAMA: Well, the -- John, 10 days ago, you said that the fundamentals of the economy are sound. And...

MCCAIN: Are you afraid I couldn't hear him?

LEHRER: I'm just determined to get you all to talk to each other. I'm going to try.

OBAMA: The -- and I just fundamentally disagree. And unless we are holding ourselves accountable day in, day out, not just when there's a crisis for folks who have power and influence and can hire lobbyists, but for the nurse, the teacher, the police officer, who, frankly, at the end of each month, they've got a little financial crisis going on.

They're having to take out extra debt just to make their mortgage payments. We haven't been paying attention to them. And if you look at our tax policies, it's a classic example.

LEHRER: So, Senator McCain, do you agree with what Senator Obama just said? And, if you don't, tell him what you disagree with.

MCCAIN: No, I -- look, we've got to fix the system. We've got fundamental problems in the system. And Main Street is paying a penalty for the excesses and greed in Washington, D.C., and on Wall Street.

So there's no doubt that we have a long way to go. And, obviously, stricter interpretation and consolidation of the various regulatory agencies that weren't doing their job, that has brought on this crisis.

But I have a fundamental belief in the goodness and strength of the American worker. And the American worker is the most productive, the most innovative. America is still the greatest producer, exporter and importer.

But we've got to get through these times, but I have a fundamental belief in the United States of America. And I still believe, under the right leadership, our best days are ahead of us.

- Related Links:

• Poll Results for First Presidential Debate
• Poll: Obama won presidential debate - UPI.com
• CBS Poll: Obama Boosted Most By Debate
• Who Won The Debate? Reviews Go To Obama
• Why Voters Thought Obama Won (And Why the Pundits Didn't Get It)

Russia Offers Hugo Chavez $1 Billion for Weapons

Could this lead to a new missile crisis in the next Obama administration.

Russia will loan Venezuela $1 billion for arms purchases and military development, a Kremlin spokesman said Friday, the second day of a visit here by President Hugo Chávez aimed at tightening a relationship that has caused increasing discomfort in the West.

Mr. Chávez , who is on his second visit to Russia in two months, met with Prime Minister Vladimir V. Putin on Thursday, and on Friday traveled to the southern city of Orenburg near the border with Kazakhstan to meet with President Dmitri A. Medvedev.

A Kremlin statement released Thursday night said Mr. Putin and Mr. Chávez had spoken on enhancing economic cooperation and trade in commercial goods as well as military technologies.

The $1 billion loan will help finance programs related to military-technical cooperation, the statement said. The Kremlin spokesman, who spoke anonymously under normal diplomatic ground rules, would not elaborate on the details of the deal.

Between 2005 and 2007 Venezuela has signed 12 contracts for weapons purchases from Russia for a total of more than $4.4 billion, the Kremlin statement said.

The move is the latest gesture of military friendship between Russia and Venezuela, two counties that have increasingly positioned themselves as mavericks vis-à-vis the West. The Kremlin says its economic and political stability have allowed it to broaden the scope of its military and economic cooperation beyond what it calls its traditional sphere of influence.

Moscow is also frustrated with what it considers aggressive military posturing from the West, particularly the United States. Washington’s plans to deploy elements of a missile defense system in Poland and the Czech Republic, as well as its support of NATO membership for Georgia and Ukraine, have set Russia on edge.

In turn, Russia has sought to expand its military footprint in recent years, inching closer and closer to American shores. Russian bombers have flown sorties close to Alaska and its naval vessels have been pushing deeper into the Atlantic.

Latin America, and Venezuela in particular, has become has become a major theater for this expansion.

Earlier this month a pair of Russian Tu-160 long-range bombers capable of carrying nuclear weapons received a warm welcome when they landed in Venezuela. Russia has also dispatched a squadron from its North Sea Fleet to the Caribbean to take part in joint naval exercises with the Venezuelan Navy sometime in November.

WAMU: Largest Bank Failure in American History

The crisis continues regardless of what the politicians are doing.

Washington Mutual, the giant lender that came to symbolize the excesses of the mortgage boom, was seized by federal regulators on Thursday night in what is by far the largest bank failure in American history.

Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual to J.P. Morgan Chase. The remainder of WaMu, the nation's largest savings and loan, will be operated by the government. Shareholders and some bondholders will be wiped out. WaMu depositors are guaranteed by the Federal Deposit Insurance Corp. up to the $100,000 per account limit. WaMu customers are unlikely to be affected.

J.P. Morgan Chase is to take control Friday of all of WaMu's 2,300 branches, which stretch from New York to California, and will oversee its big portfolio of mortgage and credit card loans. It will also acquire all of WaMu's deposits with the sale.

For weeks, the Federal Reserve and the Treasury Department had been nervous about the fate of WaMu, among the worst-hit by the housing crisis, and pressed hard for the bank to sell itself. As panic gripped financial markets last week following the collapse of Lehman Brothers, the government stepped up its efforts, working behind the scenes, and at points going behind WaMu's back to work privately with potential bidders on a deal.

The seizure and the deal with J.P. Morgan came as a shock to Washington Mutual's board, which was kept in the dark: the company's newly-minted chief executive, Alan C. Fishman, was in flying from New York to Seattle at the time the deal was finally brokered, according to these people.

The action removes one of America's most troubled banks from the financial landscape, and helps to avoid sticking taxpayers with a huge bill for the rescue of another failing institution.

As with Lehman Bros., the government allowed Washington Mutual to fail because it was less entangled with the rest of the financial system than a behemoth like American International Group Inc., which the government spent $85 billion to take over last week while it faced collapse. On Sunday, the government approved emergency measures to help stabilize Goldman Sachs and Morgan Stanley.

Federal regulators had been trying to broker a deal for Washington Mutual because a takeover by the Federal Deposit Insurance Corp. would have dealt a crushing blow to the federal government's deposit insurance fund. The fund, which stood at 45.2 billion at the end of June, has been severely depleted from the sudden collapse of IndyMac Bank. Analysts say that a failure of Washington Mutual would cost the fund upwards of $20 or $30 billion.

There are other major banks facing crisis.

Global bank HSBC Holdings (HSBA.L) is cutting 1,100 jobs in its investment banking operation, or 4 percent of the unit's total, as it weathers the global financial crisis.

[...]The cuts add to more than 80,000 job losses across the banking landscape in the past 18 months as the worst financial crisis since the Great Depression deepens. It has caused unprecedented change on Wall Street and the demise of venerable firms such as Bear Stearns and Lehman Brothers (LEHMQ.PK).

[...]In August, the bank posted a 28 percent fall in first-half pretax profit to $10.2 billion as it took a $14 billion hit from bad debts on U.S. home loans and asset writedowns.

Meanwhile the politicians fiddle.

What began as high-stakes negotiations over the proposed $700 billion bailout of the nation's financial system dissolved into bickering, begging and a roiling battle between parties Thursday night.

One day after President Bush said the nation's economy is at grave risk, lawmakers argued over competing counterproposals and wound up without any apparent financial bailout deal on the table.

Even Treasury Secretary Henry Paulson got down on one knee to half-jokingly beg Speaker Nancy Pelosi and other Democratic leaders not to go to the television cameras and blast the failed negotiations, according to two senior Democratic aides.

Sens. John McCain and Barack Obama left a White House meeting, described as at times "contentious," having made no progress toward a resolution.

Obama, appearing on CNN's "The Situation Room" afterward, said there "has to be a sense of urgency on the part of everybody. ... We've got to move rapidly."

Obama said a deal will come eventually, but there is still work to do, including reaching a consensus among Bush, Paulson and House Republicans.

Shortly after 10 p.m., Rep. Barney Frank, D-Mass., the lead House Democrat on the issue who had been in close talks with Paulson for days, accused Republicans of refusing to negotiate, CNNMoney.com reported.

"At this point, we have absolutely no participation or cooperation from House Republicans," Frank said.

McCain told ABC News on Thursday night that Republicans "have legit concerns. Some of those have already been satisfied, such as accountability and oversight board and CEO executive pay. Members are aware of the crisis situation that we are in."

However, McCain said, "They do have concerns, which I think when you're talking about $700 billion to a trillion dollars, that need to be addressed."

Obama, who spent Thursday night in Washington, once again railed against infusing presidential politics into the negotiations over the $700 billion economic bailout. McCain's campaign said he also stayed in the Washington area for the night.

"One of the concerns I've had over the last several days is that when you start injecting presidential politics into delicate negotiations," Obama said, "then you can actually create more problems rather than less."

Democratic sources said that House Minority Leader John Boehner, R-Ohio, threw a wrench into the meeting when he brought up issues from conservative Republicans that negotiators thought had been settled.