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``The candidates don't seem to know what to make of this situation'' said independent analyst Charlie Cook, publisher of the Washington-based Cook Political Report.'
Clinton, McCain, Obama Tiptoe Around Financial CrisisBy Matthew Benjamin and Lorraine Woellert
March 19, 2008 (Update1)
SourceMarch 19 (Bloomberg) -- The three U.S. presidential candidates, after a weekend in which a Wall Street firm almost collapsed and the Federal Reserve took measures to stem a panic, tiptoed around the credit crisis and avoided any criticism of the central bank.
They reiterated previous positions and, in the case of the Democrats, assailed President George W. Bush and his stewardship of the economy, while stopping short of any new proposals to shore up the financial system.
Among Democrats, Illinois Senator Barack Obama renewed a call for middle-class tax cuts while Senator Hillary Clinton of New York stressed her plan for a moratorium on foreclosures. Arizona Senator John McCain, the presumptive Republican nominee, expressed confidence in the Fed.
``The candidates don't seem to know what to make of this situation'' said independent analyst Charlie Cook, publisher of the Washington-based Cook Political Report.
To be sure, there were unusual circumstances. McCain, who had departed over the weekend for Iraq and the Middle East to emphasize his foreign-policy credentials, found that his trip was overshadowed by the financial crisis.
Iraq, Race
Clinton went ahead March 17 with a long-planned speech commemorating the fifth anniversary of the invasion of Iraq. Obama, 46, was forced yesterday to deliver what his aides billed as a major address on race in Philadelphia to defuse a mounting controversy about comments made by his former pastor, Reverend Jeremiah Wright Jr.
Discussing the Fed's actions over the weekend, which included helping JPMorgan Chase & Co. buy embattled Bear Stearns Cos. and cutting the interest rate on direct loans to banks, Obama called for balance between government bailouts and risking a ``domino effect'' in the financial sector.
Clinton, 60, stressed the need for ``more urgency'' on the economy, though she refused to second-guess Federal Reserve Chairman Ben S. Bernanke and his colleagues. A top campaign official said yesterday that she plans to deliver a major economic speech as early as today.
Both Democrats laid blame for the crisis at Bush's feet. ``Part of the reason we're in the very difficult economic situation we find ourselves is because of the fiscal irresponsibility of the Bush administration,'' Clinton said March 17 in Philadelphia.
Special Interests
Obama said the White House was out of touch with ordinary Americans and beholden to special interests that blocked oversight of the financial sector.
``It's a policy so divorced from the reality facing the American people and the American economy that it would be laughable if it weren't so frightening,'' he said in a statement.
In a statement, McCain's senior adviser, Doug Holtz-Eakin, said the Arizona senator ``understands the federal government's responsibility to ensure the stability of the U.S. financial system.'' He didn't mention Bush.
McCain yesterday was more than 5,000 miles away, visiting Jordan and Israel. He heads to Paris later this week to meet with French President Nicolas Sarkozy.
The Democrats, both of whom made campaign stops this week in Pennsylvania, the site of the next primary, fell back on existing proposals to stem the panic and restart sagging economic growth.
`Structural Problems'
``I don't want us to lose sight of the long-term structural problems that we have, how we got here,'' Obama said at a rally in Monaca, Pennsylvania, on March 17.
He had little to say about the current credit crunch and potential run on banks.
``We've just got to monitor the situation very closely,'' he said, and endorsed legislation proposed by Democratic Senator Chris Dodd of Connecticut and House Financial Services Committee Chairman Barney Frank of Massachusetts, to let the government insure distressed mortgages.
Clinton, too, expressed support for the Frank-Dodd plan, while she hedged on giving advice to the Fed and Treasury. She called the Fed's action to prevent Bear Stearns from failing a ``really serious piece of business'' and said she would seek ``advice and counsel from a broad range of economic advisers.''
Oil Prices
She also called for a release of oil from the federal government's strategic reserve ``as a signal to OPEC that we're not going to stand idly by'' as the price per barrel hovers above $105.
Clinton said March 17 that she had spoken about Bear Stearns that morning to Treasury Secretary Henry Paulson and New York Fed President Timothy Geithner. Treasury spokeswoman Brookly McLaughlin confirmed the call and said the conversation was about financial markets and housing. New York Fed spokesman Calvin Mitchell confirmed it has regular conversations with New York senators.
Asked whom he consulted, Obama said he had spoken to executives at Wall Street banks ``to get a sense of where they see this going.'' Neither he nor his campaign would provide specifics.
Clinton and Obama, while knocking Bush, didn't echo the criticism that some financial experts and political activists have leveled against the Fed.
``The financial institutions that created the crisis are being bailed out, while the people who are the victims are being left behind,'' civil-rights leader Jesse Jackson said in a statement.
``The Federal Reserve continues to bail out major financial institutions without imposing meaningful conditions to improve their conduct and performance,'' said Peter Morici, an economist at the University of Maryland in College Park.
To contact the reporters on this story: Matthew Benjamin in Washington; Lorraine Woellert in Philadelphia at
lwoellert@bloomberg.net.
Last Updated: March 19, 2008 04:57 EDT