WASHINGTON — The Democratic and Republican presidential candidates reacted to Monday's stock market plunge by calling for more federal regulation and criticizing Wall Street, the Bush administration — and one another.
Republican John McCain, campaigning in Florida, initially sought to calm investors, saying, "I think, still, the fundamentals of our economy are strong."
But he soon sounded a harsher tone against his own party, saying that Lehman Brothers' bankruptcy, the cheap sale of Merrill Lynch and reverberations on Wall Street are "a failure of government" and "a failure of regulatory agencies."
Democrat Barack Obama, campaigning in Colorado, said that while he doesn't fault McCain personally for the financial crisis, "I do fault the economic philosophy he subscribes to."
Obama said that President Bush and his Republican Party had insufficiently regulated the lending industry and put too much emphasis on protecting the fortunes of the wealthy.
"Instead of prosperity trickling down, the pain has trickled up," Obama said.
McCain pledged that, along with running mate Sarah Palin, "We will never put America in this position again. We will clean up Wall Street." He did not offer much detail.
"We have a regulatory system in Washington today that was designed in the 1930s, and there's an alphabet soup of different agencies and they have to be streamlined, they have to be consolidated and they have to be effective," McCain said. "And those regulators have been asleep at the switch, and we've got to fix it."
McCain's campaign Web site contains no proposal outlining regulatory reform for Wall Street. However, in an e-mail, McCain campaign officials provided a broad outline of McCain's plan, which includes strengthening disclosure in the lending process so borrowers know exactly what they are getting into and complete disclosure of all cash and non-cash compensation of corporate CEOs.
Obama, for his part, proposed a six-point plan in March to reform the regulatory system, and it's on his campaign Web site. His plan includes:
- Giving the Federal Reserve basic supervisory authority over all institutions to which it might later be asked to extend credit.
- Strengthening capital and disclosure requirements of financial institutions and management of liquidity risk, and more investigation of rating agencies.
- Creating a financial market oversight commission to anticipate crises and report to the government.
- Streamlining competing regulatory agencies.
McCain told the Florida crowd that he, not Obama, is better able to achieve change on Wall Street because he has a record of taking on entrenched interests and Obama doesn't.
"I fought corruption in Washington, as you know, whether they've been Democrat or Republican, it doesn't matter," he said. "Senator Obama has never taken on his party."
Obama's running mate, Sen. Joe Biden, campaigning in Michigan, ramped up his rhetoric in an anti-McCain speech scripted even before Monday's turmoil on Wall Street.
"The crisis you've been facing on Main Street is now hitting Wall Street, taking down Lehman Brothers and threatening other financial institutions," Biden told voters. He said that despite McCain's talk, the longtime Arizona senator's record shows that he's poised to continue President Bush's legacy.
"The sequel is always worse than the original," Biden said.
As the crisis unfolded over the weekend, Obama and McCain took some similar stances.
Advisers to both said they did not want a government bailout for Lehman Brothers.
Obama on Monday praised the government's decision not to allow payments of "golden parachutes" to departing Fannie Mae and Freddie Mac executives. McCain, too, said Monday that he also opposes multimillion-dollar severance payouts to CEOs "who have broken the public trust."
Obama advisers shot back that McCain adviser and former Hewlett Packard chairwoman and chief executive Carly Fiorina got severance compensation worth between $21 million and $42 million, including options and holdings after she was forced out in 2005.
ON THE WEB
More about Obama's plans for regulatory revisions: http://www.barackobama.com/2008/03/27/remarks_of_senator_barack_obam_54.php
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