JIM LEHRER: Another day in the financial crisis. The day began with an appearance by President Bush. NewsHour correspondent Kwame Holman has our report.
GEORGE W. BUSH, President of the United States: The American people are concerned…
KWAME HOLMAN: The president spoke shortly after the markets opened, having canceled travel to political fundraisers in order to remain in Washington for more talks with his economic team.
GEORGE W. BUSH: In recent weeks, the federal government has taken extraordinary measures to address the challenges confronting our financial markets.
We’ve taken control of Fannie Mae and Freddie Mac, the home finance agencies, to help promote market stability and to ensure they can continue to play a role in helping our housing market recover.
This week, the Federal Reserve acted to prevent the disorderly failure of the insurance company AIG, a development that could have caused a severe disruption in our financial markets and threatened other sectors of the economy.
Yesterday, the Security and Exchange Commission took action to strengthen investor protections and step up its enforcement actions against illegal market manipulation.
Last night, the Federal Reserve, in coordination with central banks around the world, took a substantial step to provide additional liquidity to the U.S. financial system. These actions are necessary and they’re important, and the markets are adjusting to them.
Our financial markets continue to deal with serious challenges. As our recent actions demonstrate, my administration is focused on meeting these challenges. The American people can be sure we will continue to act to strengthen and stabilize our financial markets and improve investor confidence.
KWAME HOLMAN: Last night, the Federal Reserve, along with central banks overseas, flooded currency markets with more than $200 billion in an attempt to spur skittish banks to begin lending again.
It was the latest action in a tumultuous 10 days for world financial markets that’s seen a paralysis in the ready availability of credit.
In just more than a week, one of the storied names of Wall Street, Lehman Brothers, was left for dead, and the government took control of the nation’s largest mortgage and insurance brokers.
Last week, the government took over giant mortgage brokers Fannie Mae and Freddie Mac, a move that puts U.S. taxpayers on the line for up to $200 billion.
Tuesday night, the Federal Reserve made an emergency $85 billion loan to American International Group, or AIG, to save the insurance company from insolvency. The government took a nearly 80 percent stake in the company.
House criticism for the bailout
The breakneck pace, and enormous potential costs, have brought varied reactions on Capitol Hill, ranging from wary acceptance to outrage.
Some Republican House conservatives came down in the latter category. Michele Bachmann of Minnesota.
REP. MICHELE BACHMANN (R), Minnesota: We're all -- our heads are spinning right now with the bailout mania. First, we were told that Bear Stearns was too big to fail. Then we were told that Freddie, Fannie were too big to fail. Then we were told AIG was too big to fail. What's next? Starbucks, too big to fail?
KWAME HOLMAN: Texan Jeb Hensarling.
REP. JEB HENSARLING (R), Texas: Enough is enough. It is time to bail out the American taxpayer. Today, House conservatives are calling upon the Treasury, the Fed, and Congress to end the bailouts.
KWAME HOLMAN: House Speaker Nancy Pelosi placed the blame for the present crisis squarely with the president.
REP. NANCY PELOSI (D-CA), Speaker of the House: What we really need now is confidence, and confidence is hard to come by at a time when there's so much bad news emerging from our financial markets.
What we have now is a manmade disaster, a disaster that sprang -- it comes from the Bush failed policies, the failure of the Bush administration to steward our economy in a responsible way.
KWAME HOLMAN: Pelosi echoed a critique from her Republican counterparts, that the AIG bailout is too costly. She also criticized a lack of consultation with Congress about the measures and the power exercised by the chairman of the Federal Reserve, Ben Bernanke.
REP. NANCY PELOSI: Why does one person, without criteria and transparency, have the ability to grant $85 billion in a bailout without the scrutiny, the transparency that the American people deserve?
And how does this work? I mean, can -- can the private -- this is a private company, a private company. Can they just run wild, again, anything goes, and when they fail, they're too big to fail, and the taxpayer pays the price?
KWAME HOLMAN: As Wall Street trading drew to a close this afternoon, markets soared after reports of a possible new federal intervention to deal with billions of dollars of bad housing debt.
Candidates in battleground states
JIM LEHRER: The presidential candidates also continued to weigh in on the latest Wall Street developments. Judy Woodruff reports.
JUDY WOODRUFF: With a pair of new polls indicating Barack Obama has erased John McCain's post-convention bounce, both nominees and their running mates took to battleground states today, with all four stressing the issue foremost on voters' minds: the economy.
One survey by the New York Times and CBS News puts Obama ahead by 5 points, 48 percent to 43 percent. Just 10 days ago, the same poll had McCain with a 2-point lead.
A Quinnipiac University survey, meanwhile, has Obama up 4 points, 49 percent to 45 percent.
Democrat Joe Biden campaigned this morning at the Pro Football Hall of Fame in Canton, Ohio.
SEN. JOE BIDEN (D), Delaware: So, folks, John McCain literally stands alone now, even with Bush, stands alone now in saying the economy and the fundamentals are strong. He is totally out of touch.
JUDY WOODRUFF: Earlier, Biden appeared on ABC's "Good Morning America" and contrasted his and Obama's tax plan with John McCain's.
JOE BIDEN: We want to take money and put it back in the pocket of middle-class people.
KATE SNOW, ABC Reporter: Anybody making over $250,000...
JOE BIDEN: Is going to pay more.
KATE SNOW: ... is going to pay more.
JOE BIDEN: You got it. It's time to be patriotic, Kate, time to jump in, time to be part of the deal, time to help get America out of the rut. And the way to do that is -- they're still going to pay less taxes than they paid under Reagan.
McCain, Palin criticize Obama
JUDY WOODRUFF: McCain and Palin jumped on Biden's comment during a rally together in Cedar Rapids, Iowa. Palin went first.
GOV. SARAH PALIN (R), Alaska: Our opponents, they have some strange ideas about raising taxes. To them, raising taxes -- and Joe Biden said it again today -- raising taxes is about patriotism.
To the rest of America, that's not patriotism. Raising taxes is about killing jobs, and hurting small businesses, and making things worse.
This isn't about anyone's patriotism; it's about Barack Obama's poor judgment.
JUDY WOODRUFF: McCain followed.
SEN. JOHN MCCAIN (R), Arizona: Today, Sen. Obama's running mate said that raising taxes is patriotic.
Raising taxes in a tough economy isn't patriotic. It's not a badge of honor; it's just plain dumb.
JUDY WOODRUFF: McCain today called for the creation of a mortgage and financial institutions trust and said, if he were president, he would fire Securities and Exchange Commission Chairman Christopher Cox.
He also slammed Obama's response to the current financial turmoil, including yesterday's bailout of insurance giant AIG.
SEN. JOHN MCCAIN: Senator Obama's own advisers are saying that the crisis will benefit him politically. My friends, that's the kind of "me-first, country-second" politics that are broken in Washington.
My opponent sees an -- my opponent sees an economic crisis as a political opportunity instead of a time to lead. Sen. Obama isn't change; he's part of the problem in Washington.
When AIG was bailed out, I didn't like it, but I understood it needed to be done to protect hard-working Americans with insurance policies and annuities. Sen. Obama didn't take a position. On the biggest issue of the day, he didn't know what to think.
He may not realize it, but you don't get to vote president -- "present" as president of the United States.
Obama announces new plan
JUDY WOODRUFF: Obama responded to the criticism at a rally in Espanola, N.M., saying McCain's change in position on AIG was confusing.
SEN. BARACK OBAMA (D), Illinois: John McCain can't decide whether he's Barry Goldwater or Dennis Kucinich.
He's not clear about what he thinks or what he believes. Well, I have a message for Sen. McCain: You cannot just run away from your long-held views or your life-long record. You can't erase 26 years of support for the very policies and people who's helped to bring in some of the problems that we're seeing. You can't just erase all that with one week worth of rants.
JUDY WOODRUFF: Obama also announced a plan called the Homeowner and Financial Support Act that he said would accomplish three goals.
SEN. BARACK OBAMA: First, we will provide capital to the financial system. Second, we will provide liquidity to enable our financial markets to function.
And, third, we will do what I've been calling for since I supported legislation on it early last spring, which is to get serious about helping struggling families to restructure their mortgages on affordable terms so they can stay in their homes.
JUDY WOODRUFF: Both nominees will campaign in battleground states again tomorrow, Obama in Florida, McCain in Minnesota.