Candidates Duel Over Wall Street Probe
With the housing market in free fall, the stock market plunging and the government spending tens of billions to bail out a giant insurer and a Wall Street bank, the presidential candidates have sharply different takes on how to deal with the nation's economic crisis.
Republican John McCain again today called for a 9/11-style commission to look into what went wrong on Wall Street: "You need to get the best minds in America together," he told Good Morning America (transcript ). Democrat Obama ridiculed that idea and is seeking to link McCain to what he called the lax regulatory environment of the Bush administration. The Obama camp reiterated its proposal to regulate investment banks, mortgage brokers and hedge funds much as commercial banks are.
McCain called specifically today for an investigation into whether there was malfeasance on the part of AIG executives after the government agreed to pay $85 billion to bail out the country's largest insurance company.
A day earlier McCain rejected the idea of an AIG bailout. He said today the government was forced into it. "These actions stem from failed regulation, reckless management, and a casino culture on Wall Street that has crippled one of the most important companies in America," McCain said in a statement.
McCain has been a proponent of some financial deregulation in the past, as The Post's Michael Shear points out today.
Democrat Barack Obama dismissed McCain's call for a blue-ribbon commission as "the oldest Washington stunt in the book." "This isn't 9/11. We know how we got into this mess. What we need now is leadership that gets us out," Obama told a rally in Colorado yesterday.
Obama said in a statement that McCain has not acted to strengthen regulatory agencies: "Despite his eleventh-hour conversion to the language of reform, Senator McCain has subscribed to this philosophy for 26 years in Washington and the events of this week have rendered it a colossal failure."
In a speech in March after the Fed helped bail out Bear Stearns, Obama said the Fed should have supervisory authority over any institution with access to its funds, and that regulators should set standards for how much liquidity financial institutions have, not just how much capital. He proposed a financial risk oversight body to identify situations and lending practices that could threaten the entire financial system before they grow serious.
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