GWEN IFILL: Wall Street and Washington entered uncharted territory today: the Federal Reserve's takeover of insurance giant AIG. It was the Fed's deepest move ever into the private sector in exchange for $85 billion in borrowed tax money.
The Bush administration initially opposed a bailout, but today White House press secretary Dana Perino defended it.
DANA PERINO, White House Spokeswoman: Some of these companies were so big that to allow them to fail would have caused even greater harm and damage to the economy. So the goal has been to take action where necessary to promote stability and strength in the marketplace so that we can prevent or limit more damage to the broader economy.
GWEN IFILL: Perino said decisions on other bailout requests, including for the auto industry, would be made on a case-by-case basis.
Another sharp sell-off hit Wall Street today, despite the AIG announcement. Stocks plunged again on fears that still more large firms may be in trouble.
The Dow Jones Industrial Average lost 449 points to close at 10,609. The Nasdaq fell 109 points to close below 2,099. We'll have more on the AIG take-over right after this news summary.
There was more grim news from the housing sector today. The Commerce Department reported construction of new homes and apartments fell more than 6 percent in August. It's now at the lowest point since 1991.
The bailout of AIG was topic A for the presidential candidates today. Republican John McCain said he had opposed a government takeover, but that the Fed was forced to act to protect millions of people.
Democrat Barack Obama said the plan must safeguard working Americans, not AIG shareholders and management. We'll have more on the campaign later in the program tonight.
The death toll from Hurricane Ike climbed to 51 today, as the search for victims wound down. Rescue teams pulled out of Galveston, Texas, after combing the hard-hit island. Last night, the city had to backtrack on letting residents come back to survey the damage.
Still, traffic backed up again today on the only road onto the island. City manager Steve LeBlanc said officials are trying to come up with a new way for people to return.
STEVE LEBLANC, Galveston City Manager: We just had an overwhelming influx of people. And we decided we just simply cannot handle the volumes of people that are coming in. We are working on a new plan that we hope to announce soon so that we can get our citizens in and out in a day and they can start taking care of their house.
GWEN IFILL: Houston, the country's fourth-largest city, was still largely without power today. It's not expected back on for at least a week.
And across the Midwest, close to 500,000 people remained in the dark. Swollen rivers also threatened more flooding. We'll have more on the hurricane's aftermath later in the program tonight.
The hurricane's passage cut into oil supplies this week, and that helped send prices back up today. In New York trading, crude rose more than $6 to close above $97 a barrel. But gasoline prices stabilized for the first time in a week as gulf refineries began to re-open.
The U.S. embassy in Yemen came under attack today. At least 16 people were killed. No Americans were hurt in the assault in San'a. The dead included six attackers, six guards, and four civilians.
The attackers tried to breach the compound's walls with automatic weapons, rocket-propelled grenades, and a suicide car-bomber. It was the fourth such attempt in recent years.
In Washington, President Bush said it sends a message of danger, again.
GEORGE W. BUSH, President of the United States: This attack is a reminder that we are at war with extremists who will murder innocent people to achieve their ideological objectives.
GWEN IFILL: There was no immediate claim of responsibility, but a State Department spokesman said the assault bore, quote, "all the hallmarks of an al-Qaida attack."
An apparent U.S. missile strike killed at least six people in Pakistan today. Pakistani intelligence officials said the target was a militant base in South Waziristan along the Afghan border.
Hours earlier, the chairman of the U.S. Joint Chiefs, Admiral Mike Mullen, promised to respect Pakistan's sovereignty. He met with leaders in Islamabad.
Meanwhile, Defense Secretary Gates was in Afghanistan today. He voiced personal regret for recent air strikes there that killed civilians.
A national health emergency in China intensified today over tainted baby formula. Officials announced the numbers of affected children has risen sharply to nearly 6,200. At least three have died.
We have a report from Lindsey Hilsum of Independent Television News.
LINDSEY HILSUM: All over China, hospitals are full of anxious parents. Today, the government revealed that not one, but 22 companies had been selling milk powder laced with melamine, an industrial chemical which in tests makes the milk look high in protein, but also causes potentially fatal renal failure.
CHINESE CITIZEN (through translator): I learned about the chemical in the milk powder on TV, and we were worried, so I decided to bring the baby for a checkup.
CHINESE CITIZEN (through translator): My baby has been having this milk powder since he was tiny. Now we're worried that he's going to get sick.
LINDSEY HILSUM: The government's offering free checkups.
CHEN ZHU, Chinese Minister for Health (through translator): With the announcement of the result of the nationwide melamine test on the baby formula milk powder, more and more parents will take their children to hospitals for checkups, and we expect a sharp increase in the number of hospital admittances.
LINDSEY HILSUM: Parents are queuing to return milk powder to Sanlu, the first company implicated. Consumers complained about the products as early as March, but the company didn't tell the local authorities until August.
They, in turn, kept quiet until a New Zealand company with a part share told their government, which forced the issue into the open last week.
Nationwide testing this week, however, suggests that this was not an isolated case. Dairy farmers supplying several of China's biggest dairy product manufacturers are alleged to have added melamine. Some have been arrested, while company and government officials have been sacked.
GWEN IFILL: The Chinese government said today it's sending out 5,000 inspectors to monitor the makers of baby formula. Last year, the same chemical, melamine, was blamed for the deaths of some 1,500 dogs and cats in the United States after it turned up in pet food made in China.
The U.S. House voted today to ease gun restrictions in the District of Columbia. It approved a bill to repeal the city's ban on semi-automatic handguns. The measure also overturns a law requiring that firearms in the home be kept locked up and inoperable.
Supporters said they're heeding a U.S. Supreme Court decision that struck down the gun ban. Opponents said the House trampled on home rule. The Senate is not likely to consider the issue this year.
