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Politics & Government

On stump, Obama and McCain speak to new reality

David Lightman, Beth Reinhard and Marc Caputo - McClatchy Newspapers

September 19, 2008 01:40 PM

MIAMI — The presidential candidates scrambled Friday to show voters how they'd deal with the nation's financial turmoil. John McCain said the Federal Reserve should "get out of the business of bailouts" and Barack Obama stressed help for Main Street as well as Wall Street.

"The Federal Reserve should get back to its core business of responsibly managing our money supply and inflation," McCain said as he offered a relief plan that included creating an entity to help manage troubled institutions.

The Fed agreed earlier this week to provide $85 billion in loans to failing insurer American International Group. Earlier this month, the government took control of mortgage giants Fannie Mae and Freddie Mac.

McCain charged that in recent years, as the financial crisis worsened, "Congress did nothing. The administration did nothing."

The centerpiece of McCain's plan is a Mortgage and Financial Institutions Trust, a new entity whose purpose, he said, is "to keep people in their homes and safeguard the life savings of all Americans by protecting our financial system and capital markets."

The trust would work with private-sector interests and regulators to spot weak institutions. An "early intervention program" then would aim to help those firms avoid bankruptcy and bailouts.

"This will get the Treasury and other financial regulatory authorities in a proactive position instead of reacting in a crisis mode to one situation after another," McCain said.

The new trust would be part of the Treasury Department and managed by a board consisting of the Treasury secretary, the Fed chairman, the chairman of the Federal Deposit Insurance Corp. and two public members.

McCain also had other ideas: Make it easier for consumers to see financial companies' data, streamline the regulatory system and have it protect consumers more aggressively, and tighten the rules on bailouts.

"In cases where failing companies seek taxpayer bailouts," the Arizona senator said, "the Treasury Department will follow consistent policies in deciding whether to guarantee loans. It must have well-developed remedies for a financial crisis."

Obama was less specific.

"I'm glad that our government is moving so quickly in addressing the crisis that threatens some of our biggest banks and corporations," he said. "But a similar crisis has threatened families, workers and homeowners for months and months, and Washington has done far too little to help."

The Illinois senator spoke in Miami. McCain addressed a rally in Green Bay, Wis. Texts were made available in Washington.

Neither commented specifically on the government's evolving plan to stabilize the nation's financial system.

"In the coming days, I will more closely examine the details of the Treasury and Fed proposal," Obama said, and try to ensure that it incorporates what he called "basic principles" he wants addressed.

Among them: "We cannot only have a plan for Wall Street. We must also help Main Street."

Obama's visit Friday is pivotal to swaying public opinion just as the first absentee ballots are mailed. He brings his campaign and its hope-and-change theme to Florida, one of the states hit hardest hit by the economic crisis.

At best, he is tied — but gaining ground — in Florida polls with Republican John McCain. A national Gallup Poll, showing Thursday that Obama has opened up a 4-percentage-point lead nationwide, suggests that his stock with voters is improving as the stock market tanks.

''The days are ticking down, and I believe this campaign visit is very, very important,'' said Terrie Brady, president of the teachers union in Jacksonville. "If he stays on message, it will be a home run. Like Bill Clinton said, 'It's the economy, stupid.'''

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