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LOU DOBBS MONEYLINE

America's New War: Dow Declines 92.58 to 8,567.39; Nasdaq Dives 37.60 to 1,464.04

Aired September 26, 2001 - 18:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, CNN ANCHOR: Good evening, everyone. The public focus of America's new war remains the money. The call, going out for an economic war against terrorists, the world looking for ways to choke off funding to terrorist groups around the globe.

Tonight we'll tell you about links discovered between Osama bin Laden and some of the world's largest banks. We'll also have a live report for you from Vienna, where OPEC is meeting. Oil prices are crumbling around the world, but OPEC can't raise prices without sparking a global recession.

Delta Airlines is cutting back. Executives cutting their own salaries and there will be fewer flights, fewer passengers and a lot fewer workers.

And the weight of all that news raising fears on Wall Street and pressuring prices. After two days of gains, investors selling today, concerned about the possibility of recession.

But first, here are the latest developments in America's new war. Saudi Arabia has agreed to join the U.S.-led coalition against terrorism, saying it is the duty of all of us to stand against the perpetrators of the abhorrent acts. CNN has learned that President Bush will propose placing armed federal marshals on almost all U.S. commercial flights, and improving airport and cockpit security.

The FBI has begun the mammoth task of checking the records of all truck drivers licensed to carry hazardous materials. And police are stepping up the inspections of vehicles entering Manhattan. Beginning tomorrow, commuter vehicles will be forced to carry more than one passenger.

British police have arrested three people in central England in connection with planned attacks against on U.S. targets in France. And Spanish police have arrested six Algerians. They are believed to have links to Osama bin Laden.

And earlier today, Mr. Bush visited the CIA headquarters to offer his unqualified support for Director George Tenet and the CIA.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: In order to make sure that we're able to conduct a winning victory, we have to have the best intelligence we can possibly have. And my report to the nation is we have got the best intelligence we can possibly have, thanks to men and women of the CIA.

(END VIDEO CLIP)

DOBBS: And overseas, the already-abandoned U.S. embassy in Afghanistan's capital set on fire today by thousands of protesters.

Osama bin Laden's financial activities were brought to light during a Senate finance committee hearing today. New information suggesting previous efforts to shut down bin Laden's money may have actually caused him to go into business for himself.

Allan Dodds Frank has the report.

(BEGIN VIDEOTAPE)

ALLAN DODDS FRANK, CNN CORRESPONDENT (voice-over): At a Senate banking committee hearing, revelations that after the closure of a notorious money laundering bank hurt Osama bin Laden, he started his own bank. Senator John Kerry investigated the Bank of Credit and Commerce International a decade ago, and says Osama bin Laden had a number of accounts there.

SEN. JOHN KERRY (D), MASSACHUSETTS: We've learned since, through law enforcement and intelligence, that when we shut it down we dealt him a very serious economic blow.

FRANK: Senator Carl Levin highlighted reported relationships between western banks and the Al Shamal Islamic bank, a bank in Sudan believed to have been established by Osama bin Laden with $50 million in 1991.

SEN. CARL LEVIN (D), MICHIGAN: As of today, the Web site of that Sudanese bank shows that they still have correspondent banking relations with Western banks, including American banks. Now, we think the American bank accounts are either closed or no longer operative.

FRANK: The correspondent banks, 15 in all, operate in financial centers ranging from Germany, France and England to Indonesia, South Africa and China. Senator Phil Gramm, who last year blocked some tougher legislation, cautioned against laws that would allow treasury to freeze assets indiscriminately.

SEN. PHIL GRAMM (R), TEXAS: If a guy named Bobby bin Loden from Iran, Texas, has his assets frozen, then he has an opportunity on a timely basis to come forward and say, "I'm from Iran, Texas, my name's Loden. You made a mistake here."

(END VIDEOTAPE)

FRANK: Senator Gramm notwithstanding, the mood on Capitol Hill almost certainly means a broad package of legislation governing banks, brokerages, money exchanges and other financial institutions will be passed soon -- Lou. DOBBS: Allan, we're over two weeks into this now, and this fight against terrorist money and its flow going on. Any sign of progress today?

FRANK: Well, the Senate was told that more and more nations are joining the coalition to try to fight this money laundering and unearth the links to Osama bin Laden. But so far there haven't been any concrete evidence that's at least been made public of the progress in this investigation, Lou.

They even talked about the short-selling, and no further thing. Just, "we're still on it, on top of it."

DOBBS: OK, Allan, thanks. Allan Dodds Frank from Washington tonight.

Joining me now with some insight into the political and economic implications of America's new war is Steve Forbes.

Steve, it is good to have you with us.

STEVE FORBES, CHAIRMAN & CEO, FORBES: Good to be with you.

DOBBS: Let's talk about Afghanistan first. I know your thoughts are there, in terms of the history of the place, that it's a complex undertaking. What do you think of what the administration has done so far?

FORBES: I think they're doing to right thing, which is to go after specific cells, specific campsites, and over throw the Taliban. Most of the members of the Taliban aren't even Afghans, they're leftover warriors from the war against the Soviet Union. So in terms of popular support, I think we will have popular support.

DOBBS: The Pakistani foreign minister made much today of the support for the Northern Alliance by the United States -- which, it appears that we're putting some considerable resources into -- and cautioned strongly that we should not do that. Your thoughts?

FORBES: Well, the fact that he's cautioning means that it's a possible good ally, and so I think we should move ahead with it. And one thing that should be done, Lou, after we get rid of the Taliban, is for U.S. diplomacy to try to make Afghanistan truly neutral so the Indians, the Russians, the Pakistanis, the Iranians, leave the country alone.

DOBBS: And in terms of the American response, what do you think it should be here?

FORBES: Well, I think we have to move forward, not only against the cells in Afghanistan, but also in Iraq. The president was right. This war is just beginning.

DOBBS: And protecting passengers, establishing greater airport security, airline security. Do you think the steps that are being recommended here are appropriate? That is, arming, perhaps, pilots, war air marshals, tightening measurably the security at airports?

FORBES: Well, I think pilots of the arming men would probably be a mistake. Having air marshals on would be good. Training flight attendants to use mace or some other kind of spray would be good thing.

DOBBS: Why would it be a mistake to arm pilots?

FORBES: Well, again, who is a pilot? Many of those, apparently, those terrorists were -- some of them were actually certified pilots, apparently. And in terms...

DOBBS: I'm talking about, obviously, the pilots in the cockpit.

FORBES: Right. Well, in terms of the cockpit, you want them to remain in the cockpit. You don't want them to go outside the cockpit. The Israelis have been a good model on that.

Another thing we should do is on technology, there is a new technology element scanner that we should be using, and I hope we will, in the next few months.

DOBBS: And in terms of the economy -- a shock to economy, without question. But it appears the markets are regaining equilibrium rather quickly. What is your judgment?

FORBES: Clearly, Lou, the economy was in deep trouble even before the horrible events of September 11th, and quite truthfully, I don't know what Greenspan and Rubin were smoking yesterday when they told the finance committee that we don't need to take action now. I think the Fed has got to do real easing, not just lowering interest rates, which they have done, but pump in real liquidity in the economy. And we should make these tax cuts that are now spread over 500 years, make them effective immediately. We need the stimulus now.

DOBBS: And with the expenses that apparently are on the way, that would create deficit spending, something I know you're not a great fan of. So how do we handle that?

FORBES: Well, the only way you get rid of deficit is have a strong economy. The only way to wage a successful war is with a strong economy, as Reagan demonstrated. In the 1980s deficits went up, but the American economy wealth grew at 10 times the rate of the deficits. That's a good trade-off.

DOBBS: How soon do you expect, as we now perceive both fiscal and monetary policy to be constructed, going forward, how long before you see this economy regaining growth?

FORBES: Well, if they move on monetary policy and do something constructive on taxes, Lou, I think you could see growth by the second half of next year. Good growth, not just nominal growth.

DOBBS: And now the administration is in line with your forecast, and you in line with its.

FORBES: Now, that should make us both cautious.

(LAUGHTER)

DOBBS: Steve, thank you very much.

FORBES: Thank you.

DOBBS: Still ahead here on MONEYLINE, Delta Airlines is cutting jobs, it's cutting flights. We'll have the latest for you on efforts of several carriers simply to remain in business, not just return to the skies. And it's not only airlines being hurt, of course, by the slowdown in travel. Car rental companies will be the focus of our report tonight.

A big loss on the Nasdaq today, giving back half of the week's gains in one day. I'll be talking with the Nasdaq's former chairman about the future of the Nasdaq and his own.

(COMMERCIAL BREAK)

DOBBS: The Dow Jones industrials dropping 92 points today, a quarter of its gains over the past two days. Christine Romans is at the New York Stock Exchange, where she followed the day's trading activity -- Christine?

CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, the bulls say they would have liked to have see three in a row, but it could have been worse. Take a look at the Dow. It started solid, but then trended lower much of the day, closing down 92 points and below the 8,600 mark.

A lot of story stocks here were negative stories. AES -- look at this one -- down 12 bucks, almost half of its price, cut after a drastic earnings warning because of the Brazilian Real and a weak UK electricity market. IBM getting hurt after Goldman Sachs and Merrill issued downbeat calls on Big Blue. Micron Technology lost more money than expected in the fourth quarter, and investors sold the stock, especially the institutional players today.

And look at this one. Textron, down more that 10 bucks. It makes Cessnas and helicopters, golf carts, lawn mowers. It warned on its second half it's cutting 2,500 jobs. Now, look at the brokerage sector, as well. Some mixed stock reaction here, but we're starting to get these broker earnings in, for the most part, steep profit declines, lower investment banking fees and trading revenues, but Bear Stearns actually edging higher, as did Lehman Brothers. Lehman reported on Tuesday. Goldman and Bear Stearns reporting today --- pretty much a mixed reaction overall -- Lou.

DOBBS: Mixed reaction, but those two brokerages reporting sharply lower earnings, but still better than what Wall Street had been expecting.

ROMANS: Absolutely.

DOBBS: So we're back in the expectations game. ROMANS: Yep.

DOBBS: Christine, thanks. Christine Romans.

Well, the Nasdaq, as I said, dropping 37 points on the day. Concerns about particularly the chip stocks. Adding to the market's concerns, Greg Clarkin, with the story at the marketsite -- Greg.

GREG CLARKIN, CNN CORRESPONDENT: And, Lou, in the words of one trader today, it was a day that Wall Street got back to reality, and that reality includes what's expected to be an overwhelming lousy third quarter for the majority of technology companies. We saw, as Christine mentioned, a rash of analyst reports this morning, mostly negative, on tech companies, as well as some corporate news that was decidedly negative.

All that drove the Nasdaq down 2.5 percent. The loss, 37 points. Now, the big names today, they were all sharply lower. Dell Computer is down about 5 percent, Cisco, down almost 3 percent. Microsoft and Oracle also losing ground.

The chip stocks, the hardware stocks, especially hard-hit. Intel is down 78 cents. That, after Goldman Sachs slashed their earnings estimates for the chip giant. Xilinx Communications chip company lost a big amount, it was down 325. Sun Microsystems, Goldman also raising some concerns about Sun, that stock losing a quarter. And Apple Computer down 39 cents.

So the hardware stocks and the chip stocks really taking it on the chin today, Lou. Very disappointing day. No momentum built on those first two up days of the week -- Lou.

DOBBS: OK, Greg, thank you very much. Greg Clarkin from the Nasdaq marketsite.

Frank Zarb retiring from his post as chairman of the Nasdaq and the National Association of Securities dealer, and he joins me now. And we're going to ask him for his take on his tenure, as well as prospects for the market, the Nasdaq and this economy.

Frank, good to have you with us.

FRANK ZARB, CHAIRMAN, NASDAQ: Nice to see you, Lou.

DOBBS: Congratulations on a terrific tour of duty, if you will.

ZARB: Thank you

DOBBS: It was sort of interesting, Greg Clarkin, there, in front of the marketsite. That, obviously built under your watch, as was the strength of the Nasdaq itself. Much of that market cap ripped out over the course of the past year and a half, obviously.

What do you judge the prospects to be for the Nasdaq?

ZARB: Well, just Like the economy: quite good going forward. Like everyone else, it's had a market cap reduction, as the rest of the globe has. But the companies of the Nasdaq are the companies that make the tools for the new world, the so-called new economy. These are the companies that are going to define how we live, from everything from banking to military. These are the companies that get it done.

So the prospects for the future are great, but the short-term volatility is going to be with us for a while.

DOBBS: And in that volatility, one of the issuer, the number of stocks of those companies that you mentioned that have declined and fallen below a dollar a share, which has been one of the requirements for listing -- are you changing that?

ZARB: Short answer to your question is yes. You can't be inflexible when very good companies, because of a moment of volatility that's going to pass, just fall below our rules. That rule is going to be changed, and it will be more flexible to deal with high-quality companies that drop below our threshold price level.

DOBBS: You -- as a public service and business and Wall Street and running the Nasdaq -- you've shown yourself to be a pretty good prognosticator and seer of the prospects. What are the prospects for this economy? Give us your best judgment on the markets and the economy.

ZARB: I heard Steve just a few moments ago, and he's quite right. The stimulus will come. I'm not sure what form it will come in, that will be determined in Washington. But the president has done a really good job of gaining confidence on the terrorist military problem. Washington now must do the same thing, with respect to how we're going to deal with the economy. What are we going to do with respect to tax cuts? What are the policies, with respect to liquidity?

When people get a feeling that that has been determined, and certainty is pretty much removed, they'll have confidence, not only in leadership, but in the result. So the economy has a really good chance in the second half of next year of coming back very, very strong.

DOBBS: Well, in terms of leadership, yours, obviously stellar at the Nasdaq, it's ending. Where does all of this take Frank Zarb, for the next act?

ZARB: Well, for the first time in my life, I'm going to be momentarily unemployed. And since I still have another career ahead of me, I'll be looking and listening.

DOBBS: OK, and we'll be watching with interest. Frank, thanks a lot.

ZARB: Nice to be with you.

DOBBS: And congratulations.

ZARB: Thank you.

DOBBS: Frank Zarb.

Well, Treasury Secretary Paul O'Neill met with business leaders here in New York City today. Kathleen Hays joins us now and has a closer look at what the business community wants the government to do -- Kathleen?

KATHLEEN HAYS, CNN CORRESPONDENT: You know, people are getting impatient, aren't they? Steve Forbes saying, come on, do something already. This drumbeat is growing louder. People like John Dillon of International Paper, who is head of the business roundtable which met with Paul O'Neill today, Phil Condit of Boeing -- they're basically saying let's get going already.

They say the economy was already weak when the attacks occurred. We need a fiscal stimulus package. We need to spur business and consumer confidence to come back. Action must be quick, immediate. They say we have to send a positive signal to the markets here and around the world. More and more people saying, hey, cut taxes.

(BEGIN VIDEO CLIP)

SANFORD WEILL, CHAIRMAN & CEO, CITIGROUP: I personally think that cutting the corporate tax rate would be a very good thing. I think it would be much better than cutting capital gains taxes, as far as getting companies' performance to be better, how it would be viewed in the marketplace. And when you talk about cutting corporate tax rates, most corporations are small, little corporations, not the big ones that you think about all the time. And I think that would be very beneficial.

(END VIDEO CLIP)

HAYS: That's an interesting point that Sandy Weill makes. You know, we think of big corporations when we talk about corporate America, but the small business is really the backbone that drives this country. Not surprising, the National Association of Manufacturers also calling for action, also calling for tax relief today. They want the speed up income tax cuts, phase them in right now, 2002, not 2004. They want to cut the corporate tax rate and eliminate the alternative minimum tax.

Jerry Jasinowski, who's head of that association, says, "The U.S. can't afford a wait-and-see attitude." The economy was already on the brink of recession when the attacks occurred, and it's sinking fast.

Contrast that to Paul O'Neill, Bob Rubin, former Treasury Secretary, now working for Sandy Weill, Alan Greenspan, head of Federal Reserve -- saying we can't go too fast, we have to be cautious.

DOBBS: Well, it's a little easier to call for action than to be the person responsible, in terms of public policy, for pulling the trigger. But I do find it amazing that these leaders who, typically, are very concerned about federal budget deficits, are suddenly screaming for stimulus and wanting to take action here. It tells you the depth of the problem.

HAYS: Absolutely. I thought that was very interesting when you put that question to Steve Forbes, because I think (UNINTELLIGIBLE) going back to a different point of view in this emergency.

DOBBS: Terrific. Kathleen, as always, thank you very much. Kathleen Hays.

Well, with fewer air travels and what is turning out to be a global economic slowdown, OPEC is facing numerous challenges. For a while today, crude oil prices were below $20 a barrel -- that would be a two-year low. By day's end, however, light sweet crude managed a small gain. OPEC would like to boost those prices, but that could well spark a global recession.

The oil ministers decided against cutting production in their meeting in Vienna. Charles Hodson at that meeting, he joins us now live, from Vienna -- Charles.

CHARLES HODSON, CNN CORRESPONDENT: Lou, the ministers in fact, rather surprised a lot of observers, including, I have to admit it, myself, because what was meant to be a fairly quick and easy meeting, which should have concluded this afternoon, local time, it has been put off until tomorrow. We're unlikely to hear, probably for another 12 hours or more what exactly has been decided.

However, as you said, there's really not too much doubt about the outcome. It is pretty clear that the current production limits of 23.2 million barrels a day by OPEC countries is what will go forward. But OPEC is very much wedged in here. It's wedged in. It wants to keep its $25 a barrel price target if it can, but that's totally impossible, in view of what's been going on in the markets, the slides that you mentioned, there.

And also, on the political front, OPEC is slightly worried about fundamentalists within its own population. On the other hand, it is very concerned indeed to make sure that it is not the one that is seemed to be undermining the war against terrorism, in which many OPEC members, of course, have the same interests as the United States.

We'll see what happens tomorrow. Back to you, Lou.

DOBBS: Charles, thank you very much. Charles Hodson from Vienna

Well, the airline industry, struggling in the wake of the September 11th terrorist attacks. Delta Airlines today, announcing 13,000 job cuts. Delta's CEO, Leo Mullin, giving up his pay for the remainder of the year. But Mullin says even government aid may not be enough to keep his company in business.

Kitty Pilgrim has the story.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): The No. 3 U.S. carrier joined the ranks of others, and announced it was cutting 13,000 jobs by the end of December.

LEO MULLIN, CHAIRMAN & CEO, DELTA AIRLINES: We had a four-day shutdown in which no revenue was obtained, followed by low traffic and revenue. The revenue passenger miles are running at only 60 percent of expectations.

PILGRIM: Even though U.S. airlines have received a $15 billion bailout from the government, not enough people are flying to justify keeping so many planes in the air.

Atlanta-based Delta is cutting its flight schedule by 15 percent, and trimming its work force by 16 percent, bringing industry layoffs to more than 100,000, a number that seemed far-fetched just a week ago.

Delta CEO Leo Mullin promised to make as many of the cuts by early retirement and voluntary layoffs, with options for employees to return if business picks up. Mullin is also giving up his own salary for the rest of the year, predicting revenue declines well into next year.

(END VIDEOTAPE)

PILGRIM: It's too early to see how soon passengers will come back. The best guess is that we won't get anything close to normal until the second half of the year. And most analysts don't expect to see anything until then --- Lou.

DOBBS: Approaching profitability, at least.

PILGRIM: That's right.

DOBBS: OK. The travel projections and reports we're getting are really all over the map. It's from the dire, with a few people on a plane, to 30 percent, as Leo Mullin was saying.

PILGRIM: It's anecdotal now. There's no real load capacity figures that are out after September 11th. But the anecdotal evidence is not good, and it's considerably less than a third. That's what we're hearing.

DOBBS: OK, Kitty. Thank you very much. Kitty Pilgrim.

Well, another industry deeply affected by the falloff in air travel is the car rental business. With fewer people flying, obviously fewer people are renting cars.

Fred Katayama, with that story.

(BEGIN VIDEOTAPE)

FRED KATAYAMA, CNN CORRESPONDENT (voice-over): The day the terrorist attacked, stranded airline passengers drove cars off rental lots across the country. But a few days later, rentals tanked. No lines at Newark Airport Wednesday morning. Some customers at Dollar, but barren at Budget. JOSEPH CAPPY, CHAIRMAN & CEO, DOLLAR THRIFTY: After that initial surge, business really dropped off, somewhere between 40 to 60 percent, in the immediate aftermath of the tragedy. And we have seen that kind of come back, and it kind of bounced at around 38 percent down, and it has improved since then.

KATAYAMA: But fewer air travelers mean fewer car renters. They're 90 percent of the business, for some firms. Already, two companies have warned that fallout from the attack will dent their earnings. Dollar Thrifty, which runs the Dollar and Thrifty brands, and ANC Rental, which owns Alamo and National.

Rental car stocks, such as Budget and Dollar Thrifty, have fallen since the attack. ANC nose-dived 86 percent, to 50 cents.

HENRY DIAMOND, CREDIT SUISSE FIRST BOSTON: There is a possibility that the company could face a liquidity crisis in the first half of next year.

KATAYAMA: Hertz, the nation's largest, has already cut staff, but wouldn't say how many. It's considering shrinking its fleet. So is ANC.

(on camera): Dollar Thrifty says it is cutting its fleet by roughly 25 percent. These moves deal another blow to the auto makers, since the fleet business accounts for up to one-fifth of their sales. DaimlerChrysler, Dollar's chief supplier, says it is adjusting its production schedules.

Fred Katayama, CNN Financial News, Newark, New Jersey.

(END VIDEOTAPE)

DOBBS: Well, we'll have more MONEYLINE in just a moment. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The insurance industry will not ask the government to help pay claims resulting from the September 11th terrorist attacks. Speaking on Capitol Hill today, industry executives said they can absorb those losses, but they did ask lawmakers to consider last- resort help for any possible large claims in the future. The insurance industry stands to lose more than $30 billion from the September 11th attacks. That is the largest insured loss ever.

Cantor Fitzgerald will close its offices for memorial services Monday. Cantor Fitzgerald lost 700 of it's 1,000 New York employees in the September 11th attacks. Four days later, Cantor Fitzgerald cut off paychecks to those employees' families. Cantor Fitzgerald chairman Howard Lutnick called his decision "difficult," but he says it's necessary to restore his company's business.

Many other Wall Street firms, however, including Keefe Bruyette & Woods and Sandler O'Neill, will continue to pay benefits as well as wages to families for the foreseeable future. For tonight, that is MONEYLINE. We thank you for being with us. I'm Lou Dobbs. Good night from New York. "CROSSFIRE" coming up next.

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