Posted: March 25, 2008 6:30 PM
McCain Takes Hard Line against Irresponsible Borrowers
Looking to boost his credibility on economic issues, the presumptive Republican presidential nominee, Sen. John McCain of Arizona, spoke Tuesday in Southern California about the ailing U.S. economy and housing crisis, saying government assistance “should never insure loans when the homeowner clearly does not have skin in the game.”
McCain, who has been criticized for admitting a lack of expertise on the economy, said he would remain open to all economic revival ideas as president, but said government bailouts should be used sparingly.
“Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy,” McCain said.
The Arizona senator recently returned from overseas congressional fact-finding trips to Europe and the Middle East, and his speech was aimed at major action by the Federal Reserve in recent days. On Tuesday, the Fed reported an auction of $50 billion in short-term loans to banks struggling to overcome credit debt, totaling about $260 billion in such loans since December, the Associated Press reported.
On Monday, Democratic presidential hopeful Sen. Hillary Clinton of New York spoke in Philadelphia about the housing crunch and recommended convening a high-level panel to evaluate solutions. McCain made similar suggestions of meetings of accounting professionals and mortgage lenders.
“We are witnessing an unprecedented situation as banks and investors try to determine the appropriate value of the assets they are holding and there is widespread concern that this approach is exacerbating the credit crunch,” he said, adding that mortgage lenders, working together, “should pledge to provide maximum support and help to their cash-strapped, but credit worthy customers.”
McCain closed his address on a positive note, saying the “American economy is resilient and diverse. Even as financial troubles weigh upon it other parts of the economy hold up or even continue to grow.”
But Democrats were quick to call McCain’s speech uninformed.
“John McCain today showed that he doesn’t understand the economy, the mortgage crisis or its impact on America’s families and communities,” Democratic National Committee Chairman Howard Dean said in an e-mailed statement, according to Bloomberg.com.