- The Washington Times - Friday, September 19, 2008

UPDATED:

GREEN BAY, Wisc. (AP) — John McCain says the Federal Reserve needs to stop bailing out failed financial institutions.

Addressing a business group in Wisconsin, the Republican presidential hopeful said the Fed should get back to what he called “its core business of responsibly managing our money supply and inflation.”

The Fed engineered an $85 billion takeover of insurance giant AIG this week, one of a series of failures of major financial companies that have rocked Wall Street. The government seized control of housing giants Freddie Mac and Fannie Mae earlier this month.

The Arizona senator reiterated his call to fire SEC chairman Chris Cox, saying there needed to be greater accountability in Washington.

Sen. John McCain on Thursday said that if he were president he would fire the head of the federal Wall Street watchdog agency for failing to head off the financial fiasco, while Sen. Barack Obama said the entire Bush administration should be canned.

Focusing for a fourth straight day on the upheaval in financial markets, the two candidates used campaign stops and a barrage of e-mail statements to lash each other. The Republican presidential nominee took aim at his rival, saying Mr. Obama wants to politicize the Wall Street meltdown and charging that the first-term Illinois senator “didn’t lift a hand to avert this crisis.”

“Senator Obama’s own advisers are saying that the crisis will benefit him politically,” Mr. McCain said in Cedar Rapids, Iowa. “My opponent sees an economic crisis as a political opportunity instead of a time to lead.”

Related analysis/opinion:SEC chairman rebuke distances McCain from Bush

Distancing himself from President Bush, Mr. McCain said Securities and Exchange Chairman Christopher Cox should be held accountable for what he called lax regulation over U.S. stocks and securities.

“The regulators were asleep, my friends,” Mr. McCain said. “The chairman of the SEC serves at the appointment of the president, and in my view has betrayed the public trust. If I were president today, I would fire him.”

The Democratic presidential nominee mocked Mr. McCain’s call to fire the SEC chief as he also blamed the Bush administration.

“In the next 47 days you can fire the whole trickle-down, on-your-own, look-the-other way crowd in Washington who has led us down this disastrous path. Don’t just get rid of one guy. Get rid of this administration. Get rid of this bureaucracy,” Mr. Obama said in New Mexico.

But Mr. McCain said the SEC is to blame for allowing “naked short selling,” which means that traders were selling stock without ever owning it. He called for the creation of a mortgage and financial institutions trust to “work with the private sector and regulators to identify institutions that are weak and take remedies to strengthen them before they become insolvent.”

Mr. Cox, a member of Congress for 17 years, took exception to Mr. McCain’s call.

“While I have great respect for Senator McCain, we have sometimes disagreed, and this is one such occasion,” he said in a statement. “History will judge the quality of our response to this economic crisis, but now is not the time for those of us in the trenches to be distracted by the ebb and flow of the current election campaign.”

The financial crisis dominated the candidates’ time on the trail, with Mr. Obama stopping for an “I-feel-your-pain” visit to a diner in New Mexico and Mr. McCain, along with running mate Gov. Sarah Palin, taking an unscheduled tour of flood-ravaged Iowa.

After a stuttering start - Mr. McCain said Monday that the fundamentals of the economy are strong, but later read off a notecard as he defined what those fundamentals were - the Republican nominee has spent the last two days toughening his rhetoric.

On Thursday, he targeted Congress, although he is the ranking Republican on the Senate Committee on Commerce and a former panel chairman. He also blamed his opponent, a fellow senator, for his inaction.

“Those same congressional leaders who give Senator Obama his marching orders are now saying that this mess isn’t their fault and they aren’t going to take any action on this crisis until after the election,” Mr. McCain said in Cedar Rapids.

“We cannot wait any longer for more failures in our financial system,” he said. “Today we need a plan that doesn’t wait until the system fails. … Senator Obama has never made the kind tough reform we need today. His idea of reform is what his party leaders in Congress order him to do. We tried for bipartisan ethics reform and he walked away from it because his bosses didn’t want real change.”

Stocks on Wall Street have tumbled this week amid the worst financial meltdown in the U.S. since the Great Depression. Investment banker Lehman Brothers filed for bankruptcy, retail broker Merrill Lynch agreed to be sold for half its recent value, and the government agreed to an $85 billion loan to prop up mega-insurer AIG.

Meanwhile, top aides to the Republican said Mr. Obama and his advisers are exploiting Wall Street’s financial problems for political gain. Aide Steve Schmidt, who worked for the Bush-Cheney team in 2004, told reporters Thursday aboard Mr. McCain’s plane that Mr. Obama is “cheerleading this crisis.”

“This is another desperate lie,” said Obama spokesman Tommy Vietor. “The only cheerleading going on is John McCain rooting for George Bush’s economic policies.”

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