Candidates Seek Changes In Wall Street Rescue Plan
Monday, September 22, 2008
SCRANTON, Pa., Sept. 21 -- Both presidential candidates called Sunday for speedy, bipartisan consideration of the Bush administration's $700 billion economic rescue proposal. But Republican John McCain complained that the plan gives too much power to the Treasury secretary, and Democrat Barack Obama cautioned that any final deal must offer protection to taxpayers and homeowners as well as to Wall Street.
McCain is concerned that the White House plan does not contain enough oversight of Treasury Secretary Henry M. Paulson Jr., or of his eventual successor. Even so, McCain did not say he would oppose it.
"Senator McCain has great respect for Secretary Paulson, but he's greatly concerned that the plan gives a single individual the unprecedented power to spend $1 trillion on the basis of not much more than 'trust me,' " McCain press secretary Brooke Buchanan told reporters Sunday night.
She said McCain would have more to say on the proposal Monday. She added that he believes "we need a high-level oversight board to impose real criteria for who gets help and who does not, and to ensure that we have a careful steward of the taxpayer's dollars."
As examples of the kind of people he would like to see on an oversight board, McCain suggested Warren E. Buffett, the chief executive of Berkshire Hathaway and an Obama supporter; former Massachusetts governor Mitt Romney, McCain's rival for the GOP nomination and a co-founder of a private equity firm; and New York Mayor Michael R. Bloomberg, a Wall Street veteran who created a financial news service.
Obama, campaigning in Charlotte, said, "As of now, the Bush administration has only offered a concept with a staggering price tag, not a plan." He added that "in return for their support, the American people must be assured that the deal reflects the basic principles of transparency and fairness and reform."
Obama said a combination of greed and unfettered free markets had brought the country to "a perilous moment . . . a financial crisis as profound as any we've seen since the Great Depression."
Both men offered a set of principles -- strikingly similar -- that the final agreement should contain.
At the top of that list, Obama said, is the concept that there is "no blank check," given the size of the potential exposure to the federal government. "Taxpayers," he said, "should be protected and should be able to recoup some of this investment."
In a later statement, Obama's campaign said that, given the potentially unprecedented grant of authority to the Treasury Department, there should be provisions for accountability and independent oversight to protect taxpayers. He restated his opposition to allowing executives at financial institutions to walk away from the wreckage with big bonuses or golden parachutes financed by the government.
Likewise, McCain said there must be limits on executive pay for firms that receive help. "We cannot have taxpayers footing the bill for bloated golden parachutes, like we see in the Lehman Brothers bankruptcy, where the top executives are looking at $2.5 billion in bonuses after they ran the company into the ground," McCain said in a memo of principles he will outline Monday.
Obama also said the final package should help make it possible for homeowners facing foreclosure to stay in their homes. If financial institutions imperiled by the mortgage crisis are protected, the campaign statement noted, then imperiled homeowners should benefit from similar protections.
"We cannot have a plan for Wall Street banks that does not help homeowners stay in their homes and help distressed communities," his campaign statement said. Obama also called for new regulations to oversee the financial system, but the campaign statement noted that it will not be possible to do so in the next few weeks. He also reiterated his call for a second stimulus package to be in the bailout plan.
Spokeswoman Linda Douglass said Obama has consulted with key Democrats and administration officials in the past couple of days about the package. She said the group included Paulson, House Speaker Nancy Pelosi (D-Calif.), Senate Majority Leader Harry M. Reid (D-Nev.), Sen. Christopher J. Dodd (D-Conn.), Sen. Charles E. Schumer (D-N.Y.), Rep. Barney Frank (D-Mass.), former president Bill Clinton and Sen. Hillary Rodham Clinton (D-N.Y.).
McCain also talked with Paulson several times over the weekend, Buchanan said.
Balz reported from Charlotte.