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McCain Reverses Stance, Supports Bailout

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Los Angeles Times

Published: September 18, 2008

LAKE ORION, Mich. - A day after he dismissed a federal bailout for American International Group, Republican John McCain announced Wednesday that circumstances had forced him to shift his position and that he supported the proposed $85 billion rescue of the insurance giant.

McCain, who in recent days has slammed what he called Wall Street greed and corruption for causing the latest downward spiral of the stock market, said he had to change his position on AIG to protect millions of Americans who could be hurt if the company was forced to seek bankruptcy protection.

"The government was forced to commit $85 billion," McCain said in a statement. "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."

"The focus of any such action should be to protect the millions of Americans who hold insurance policies, retirement plans and other accounts with AIG," he said. "We must not bail out the management and speculators who created this mess."

In a campaign stop in Elko, Nev., Democrat Barack Obama was also insistent that any federal action must not bail out the shareholders and management of AIG. He also said the week's economic news was troubling, but he insisted that most people already knew the economy was in difficulty.

Then Obama attacked McCain, emphasizing the themes Democrats have consistently put forward.

"It's been an interesting week for John McCain. It's been really interesting to watch him respond to this economic news. His first reaction to this crisis on Monday was to stand up and repeat the line he's said over and over and over again throughout this campaign - quote - 'the fundamentals of our economy are strong,'" Obama said.

"Now, his campaign must've realized that probably wasn't a smart thing to say on the day of a financial meltdown, so they sent him back out a few hours later to clean up his remarks," Obama said.

"But it sounds like he got a little carried away because yesterday, John McCain actually said that if he's president, he'll take on the - quote - 'old boys network' in Washington. I am not making this up. This is someone who's been in Congress for 26 years, who put seven of the most powerful Washington lobbyists in charge of his campaign, and now he tells us that he's the one who will take on the old boy network.

"The old boy network? In the McCain campaign, that's called a staff meeting," Obama said.

Throughout the week, the economy has reasserted its role as the top issue in the campaign. The U.S. stock market has gyrated, losing more than 500 points on Monday, bouncing back by 140 points on Tuesday but falling sharply again Wednesday, down about 450 points.

. Both candidates have called for regulatory reform to prevent further difficulties in the capital markets. Both have upped their populist rhetoric while insisting to voters that their opponent lacks the leadership to make substantial changes.

But the financial tailspin represents a special problem for McCain, the candidate of the GOP, which generally favors open, unregulated markets and generally opposes federal loan guarantees and bailouts.

On Tuesday, during a spate of interviews on early morning television, McCain opposed the idea of an AIG bailout. "We cannot have the taxpayers bail out AIG or anybody else," McCain said on NBC's "Today" show.

But the campaign was forced to reconsider, said senior advisor Matt McDonald, who toured a General Motors auto plant with McCain on Wednesday in Michigan.

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