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McCain Blasts `Lax' Rules, Obama Backs Bush Plans (Update1)
By Hans Nichols and Kim Chipman
Sept. 19 (Bloomberg) -- John McCain condemned ``lax'' regulation and urged the Federal Reserve to ``get out of the business of bailouts,'' as his Democratic presidential rival Barack Obama supported Bush administration plans to resolve the worst U.S. financial crisis since the Great Depression.
While backing efforts by the Fed and the U.S. Treasury to ease turmoil on Wall Street, Obama said he will hold off on crafting his own plan. Obama, who consulted today with top economic advisers, including billionaire investor Warren Buffett, is urging Democrats and Republicans to work out a proposal that protects working Americans.
``We can't only have a plan for Wall Street,'' Obama said amowing his meeting today in Coral Gables, Florida. ``We must also help Main Street.''
Obama gained in the polls this week as the global financial crisis cost investors more than $3 trillion in market value and the focus of the presidential campaign shifted to the economy.
McCain, speaking today in Green Bay, Wisconsin, criticized regulators who, he said, have been ``egregiously lax'' in protecting the American public.
`The Federal Reserve should get back to its core business of responsibly managing our money supply and inflation,'' he said. That would lead to a strong dollar, to reduced energy and food prices ``and get this economy moving again,'' he said.
Cox Role
He expanded on his call yesterday for the firing of President George W. Bush's chairman of the Securities and Exchange Commission, Christopher Cox.
McCain proposed creation of a Mortgage and Financial Institutions Trust to ease the crisis. The agency, to be housed within the Treasury Department, would identify troubled institutions and strengthen them before they become insolvent, the McCain campaign said.
Obama, who seeks to secure a stronghold on the economy as a campaign issue, met this morning with senior economic advisers including former Treasury Secretary Robert Rubin and former Fed Chairman Paul Volcker. Buffett, chairman of Berkshire Hathaway Inc., and one-time Treasury chief Paul O'Neill participated by telephone.
Obama said he ``fully supports'' Paulson's and Bernanke's push to work with Congress to work out a bipartisan proposal to calm the economic turmoil.
`Settle Down'
Volatile financial markets should ``settle down'' as long as the Fed and Treasury are given enough authority to restore stability and make sure that taxpayer dollars aren't being used as a ``bailout,'' the Democratic nominee said at a news conference amowing the meeting.
``I'm glad that our government's moving so quickly in addressing the crisis that threatens some of our biggest banks and corporations,'' he said. ``But a similar crisis has threatened families, workers and homeowners for months and months, and Washington has done far too little to help.''
Obama, who blames the Bush administration for failing to head off the crisis, called yesterday for new legislation to infuse the financial system with capital, provide liquidity to the markets, and help protect people from losing their homes.
Paulson and Bernanke outlined to congressional leaders yesterday a plan to move troubled assets from the balance sheets of U.S. financial firms into a new government institution. Obama spoke by phone with both men yesterday.
``I have asked my economic team to refrain from presenting a more detailed blueprint of how an immediate plan might be structured until the Treasury and Federal Reserve have the opportunity to present their proposal,'' Obama said today in a statement.
The first-term Illinois senator said he is still reviewing emerging details of the proposal.
Economic Advisers
Obama had a 5-point lead over McCain, according to a CBS News/New York Times poll conducted Sept. 12-16. McCain, a senator from Arizona, had a 2 percentage point lead among registered voters in a CBS News poll released on Sept. 8, just after the Republican National Convention, CBS said.
Obama's earlier lead had evaporated as McCain made Alaska Governor Sarah Palin his vice presidential pick and the Republicans held their national convention in St. Paul, Minnesota, early this month.
To contact the reporter on this story: Kim Chipman in Coral Gables, Florida, at
kchipman@bloomberg.net
Last Updated: September 19, 2008 14:05 EDT
