Democrats slam GOP for 'manmade' economic disaster

McClatchy NewspapersSeptember 18, 2008 

WASHINGTON — If there had ever been a pretense of bipartisanship in the face of a crisis, it was gone on Thursday as Democrats launched withering blasts at President Bush, John McCain and Republicans for mismanaging the nation's financial meltdown.

"What we have now is a manmade disaster, a disaster that comes from the Bush failed policies, the failure of the Bush administration to steward our economy in a responsible way," House Speaker Nancy Pelosi told a news conference.

Pelosi's remarks, echoed throughout the day by Democratic presidential nominee Barack Obama and other Democrats in Congress, were extraordinary coming at a time when financial markets were trying to recover from a week of shocks.

Obama mocked McCain for calling for government reform of financial markets after a long career of standing for deregulation.

"John McCain can't decide whether he's Barry Goldwater or Dennis Kucinich," Obama said, referring to the conservative icon and the liberal Rep. Kucinich. "Well, I have a message for Senator McCain: You can't just run away from your long-held views or your lifelong record.

"You can't erase 26 years of support for the very policies and people who helped bring on this disaster with one week of rants."

McCain on Thursday proposed the firing of Christopher Cox, the chairman of the Securities and Exchange Commission, and outlined other proposals including setting up a new government entity to help troubled banks and mortgage lenders get healthy. Details, however, were skimpy.

Democrats dismissed the plans as too little, too late.

Pelosi criticized Tuesday's $85 billion Federal Reserve loan to failing insurer American International Group.

"Where is that money coming from?" she demanded. "What is its impact on our deficit?"

Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, said there was no answer. "Who knows, and who knows how much it will cost," he said. "All we can do is pray."

Pelosi fired off other questions: "How does this work? I mean, a private company, can they just run wild again, anything goes?"

White House Press Secretary Dana Perino replied.

"I don't think that the reaction of finger-pointing from Democrats to the White House is anything new," she said. "I would ask you to go back and look and ask Speaker Pelosi or any of the other Democrats who are pointing fingers, what specific regulation did they want that we blocked? What specific regulation did we eliminate?"

Until Democrats regained control of Congress in January 2007, however, Republicans had controlled both houses for 12 years, except for an 18-month period from 2001 to 2003 when Democrats held a one-vote Senate majority.

Federal regulators of banks, savings and loans and credit unions warned of lax lending standards and risky loans as early as 2003 but didn't push for more power to regulate mortgage brokers or non-bank lenders.

Nor did Congress or the White House make much of a push. Republicans were eager to let free markets work. Democrats liked the expansion of affordable housing to middle- and lower-income buyers.

"You have to go back at least 10 years and realize both Republicans and Democrats were in charge for different periods of time," said Sen. John Thune, a South Dakota Republican who's on the Senate Commerce Committee.

Thursday, the presidential candidates worked to show that they'd act boldly to ease the crisis.

McCain, slipping in polls this week as the economy emerged as the dominant issue, said he would fire Cox, a former Republican congressman from California who became SEC chairman in 2005.

"The chairman of the SEC serves at the appointment of the president and, in my view, has betrayed the public's trust. If I were president today, I'd fire him," McCain said.

The SEC isn't responsible for regulating insurers such as AIG or mortgage financiers such as Freddie Mac or Fannie Mae. Its mission is to protect investors in securities. Though it's been criticized for allowing credit-rating agencies to paint rosy pictures of the mortgage bonds at the root of today's financial turmoil, the SEC until recently didn't have the power to police them.

Douglas Holtz-Eakin, McCain's chief economic adviser, said that McCain would unveil a plan Friday to set up a new government entity to help companies maintain liquidity during troubled times. He wouldn't say how much the initiative would cost, who'd eligible or how it would be managed.

Obama said he too would unveil a three-part relief plan Friday.

"It will provide capital to the financial system," he said, and "will provide liquidity to enable our financial markets to function." Obama also pledged to "get serious about helping struggling families to re-structure their mortgages on more affordable terms so they can stay in their homes."

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