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Candidates Differ on Terms of Financial Sector Rescue

September 19, 2008 at 6:30 PM EDT
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Presidential contenders Barack Obama and John McCain offered differing views Friday on proposals for a sweeping government bailout of the weakened financial sector. Judy Woodruff reports on their latest reactions to the Wall Street crisis.

JIM LEHRER: And now, how the presidential candidates responded today to the financial crisis. Judy Woodruff reports.

JUDY WOODRUFF: The presidential nominees reacted differently to the latest steps to address the financial crisis. Republican John McCain was in attack mode when he spoke in Green Bay, Wisconsin, before the president and Treasury Secretary Paulson.

McCain said there are certainly plenty of places to point fingers.

SEN. JOHN MCCAIN (R), Arizona: The financial crisis that we’re living through today started with the corruption and manipulation of our home mortgage system. At the center of the problem were the lobbyists, politicians, and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac.

JUDY WOODRUFF: McCain then criticized the federal government’s moves to address the financial meltdown.

SEN. JOHN MCCAIN: The Federal Reserve should get back to its core business of responsibly managing our money supply and inflation. It needs to get out of the business of bailouts. The Fed needs to return to protecting the purchasing power of the dollar. A strong dollar…a strong dollar will reduce energy and food prices. It will stimulate sustainable economic growth and get this economy moving again.

JUDY WOODRUFF: Barack Obama followed two hours later, after the president and Mr. Paulson, and backed the government’s decision to intervene in the crisis.

Obama urges joint party efforts

SEN. BARACK OBAMA (D), Illinois: Today, I fully support the efforts of Secretary Paulson and Federal Reserve Chairman Bernanke to work in a bipartisan spirit with Congress to find a solution of this sort.

What we're looking at right now is to provide the Treasury and the Federal Reserve with as broad authority as is necessary to stabilize markets and to maintain credit.

We also need a more institutional response to create a system that can manage some of the underlying problems with bad mortgages, help homeowners stay in their homes, protect the retirement and savings of working Americans.

I think it's critical at this point that the markets and the public have confidence that their work will be unimpeded by partisan wrangling and that leaders in both parties work in concert to solve the problem at hand.

JUDY WOODRUFF: Obama stressed the urgency of putting the country's capital markets on sound footing first so there will be stability, and changes can be made to financial regulations later.

SEN. BARACK OBAMA: We're going to have to take some critical steps, and I think the next administration has to be committed to upgrading those financial regulations.

But right now, what we have to do is make sure that the capital markets are working, so that people, small businesses, folks who are waking up in the morning, they know that their money market funds are protected, they know that they can make payroll, and that as much as possible we are able to ensure that on Main Street, some of the pain is limited.

And I think what has to be clear is, is that whatever is set up is not bailing out shareholders and CEOs. They need to take their losses, because they were enjoying the upside when times were good.

McCain jabs Obama on judgment

JUDY WOODRUFF: McCain did not comment on the steps announced by the administration when he appeared at a rally this afternoon in Minnesota. Instead, he tried to tie Obama to the housing crisis, by citing contributions the Democrat has received from Fannie and Freddie employees.

SEN. JOHN MCCAIN: We've heard a lot of words from Sen. Obama over the course of this campaign. But maybe just this once he could spare us the lectures and admit to his own poor judgment in contributing to these problems.

The crisis on Wall Street, my friends, started in the Washington culture of lobbying and influence-peddling, and he was right square in the middle of it.

JUDY WOODRUFF: McCain did not mention that his presidential campaign has received $169,000 from directors, officers, and lobbyists of Fannie and Freddie, more than 10 times what Obama has received from them, this according to the Federal Election Commission.