McCain supports limited federal aid

Sen. John McCain yesterday promised a do-no-harm approach to current economic problems, calling for lenders to help out homeowners but refusing to promise concrete government help, saying he wouldn’t politicize the issue.

In a speech that seemed aimed at establishing his conservative credentials, Mr. McCain cautioned against a quick-fix government-spending approach and spent more time talking about government’s limited role than he did proposing concrete steps.

“Any assistance must be temporary and must not reward people who were irresponsible at the expense of those who weren’t,” he said. “In this crisis, as in all I may face in the future, I will not allow dogma to override common sense.”

Mr. McCain, traveling in California yesterday, also received the endorsement of Nancy Reagan, a longtime friend.

Mr. McCain’s economics speech was well-received by fiscal conservatives, who said the senator is showing an understanding of conservative economics.

“It’s reassuring that he has not gone down the road that certainly Hillary Clinton has, and even to a significant degree Barack Obama has,” said Pat Toomey, president of the Club for Growth.

In his speech, Mr. McCain said the housing bubble was the start of the poor economic news, but that was “made worse by a series of complex, interconnected financial bets” in the finance markets.

Mr. McCain blamed a lack of transparency for the problems in the finance markets, and said he would be open to federal solutions if necessary to shore up parts of the system, such as the Federal Reserve’s aid to Bear Stearns. He said accounting experts should meet in the short term to establish new rules.

He called for lenders to find ways to help borrowers, saying it was in both parties’ interests.

His campaign said he will talk about challenges of the broader economy next month.

Mrs. Clinton, one of his potential Democratic opponents in November, said Mr. McCain sounded “remarkably like Herbert Hoover” by taking a government hands-off approach.

“The government has a number of tools at its disposal that are well-suited for just this situation. I think that inaction has contributed to the problems we face today and I believe further inaction would exacerbate those problems,” she said.

She has suggested a federal buyback of mortgages.

Democratic leaders in Congress have promised to take immediate action when they return from their vacation next week.