McCain, Obama Blame Regulators; McCain Shifts on AIG

McCain, Obama Blame Regulators; McCain Shifts on AIG (Update1) By Kristin Jensen and Kim Chipman Sept. 17 (Bloomberg) -- Republican presidential candidate John McCain, shifting his position, suggested the government's $85 billion takeover of American International Group Inc. was unavoidable as both he and rival Barack Obama blamed regulators. ``On the bailout itself, I didn't want to do that,'' the Republican presidential nominee said on ABC's ``Good Morning America'' program today. ``But there were literally millions of people whose retirement, whose investments, whose insurance were at risk here, and they were going to have their lives destroyed because of the greed and excess and corruption.'' Twenty-four hours earlier, McCain said that he didn't want taxpayers to be ``on the hook'' for AIG. ``We cannot have the taxpayers bail out AIG or anybody else,'' McCain said yesterday on NBC's ``Today'' show. Obama, the Democratic nominee, blamed policies pursued under President George W. Bush and said the takeover must not result in a bailout for AIG corporate officers or investors. ``The Federal Reserve must ensure that the plan protects the families that count on insurance,'' Obama said at a campaign event in Elko, Nevada. ``It must not bail out the shareholders or management of AIG that are making big profits when times are good. They shouldn't be bailed out when times are bad.'' `Stark Reminder' Earlier in the day Obama issued a statement calling the crisis ``a stark reminder of the failures of crony capitalism and an economic philosophy that sees any regulation at all as unwise and unnecessary.'' McCain, an Arizona senator, said regulatory agencies were ``asleep at the switch'' and said in his own statement that the takeover must not assist people ``who created this mess.'' During a later event at a General Motors Corp. assembly plant in Lake Orion, Michigan, McCain pledged to fight ``greed and irresponsibility on Wall Street,'' saying he has a record of taking on special interests. ``I am here to send a message to Washington and to Wall Street,'' McCain said. ``We're not going to leave the workers here in Michigan hung out to dry while we give billions in taxpayers' dollars to Wall Street.'' As the crisis in the financial markets dominated the presidential campaign, Obama released a new two-minute television ad that stressed his proposed solutions for a troubled economy. The issue, he said, is ``how we get America back on track.'' Campaigns Today In Elko, Obama continued to argue that McCain is a longtime supporter of the same policies that brought on the financial ``meltdown.'' The Illinois senator mocked McCain's pledge to take on the ``old boys' network,'' pointing out that some of McCain's top advisers have worked as corporate lobbyists. ``The old boys network? In the McCain campaign that's called a staff meeting,'' Obama told the crowd of more than 1,500 people. Obama next holds a rally in Las Vegas; his running mate, Delaware Senator Joe Biden, is campaigning in Ohio today. McCain started his day in Ohio before moving onto Michigan. Later today he will host his first joint town hall meeting with his running mate, Alaska Governor Sarah Palin. She is expected to take questions from the audience at the event. As polls show the race between McCain and Obama a dead heat nationally, both are emphasizing their prescriptions for the economy and dealing with the financial market turmoil. Fed's Move The Federal Reserve announced yesterday it will provide a two-year loan to AIG, the U.S.'s biggest insurer, and take over 80 percent of the New York-based company's stock. The Fed also will replace the company's management. The action follows the collapse of Lehman Brothers Holdings Inc. at the start of the week, the bailout of Bear Stearns Cos. in March, and the takeover of Fannie Mae and Freddie Mac earlier this month. Stocks in the U.S. tumbled today with the S&P 500 losing 4.7 percent and the Dow Jones Industrial Average declining 4.1 percent. About $4.4 trillion of market value was erased from global stocks since Lehman's bankruptcy. McCain's campaign has ties to AIG. Harvard economics professor Martin Feldstein, whose advice has been sought by McCain, is on the board of directors. One of McCain's top fundraisers, Wayne Berman, is registered to lobby for AIG, federal records show. AIG paid Berman's firm, Ogilvy Government Relations, $100,000 during the first six months of the year. McCain's congressional liaison, John Green, formerly lobbied for AIG at Ogilvy. He has taken a leave of absence from the firm to work on the McCain campaign. Corporate Ties McCain has criticized Obama for his corporate ties, saying his message of change conflicted with the fact that he ranked second among members of Congress in donations from employees of Fannie Mae and Freddie Mac. McCain also reminded supporters that Obama originally put former Fannie Mae Chairman James Johnson in charge of the search for his running mate. Employees of New York-based Lehman, the fourth-largest U.S. investment bank, have been among the most generous donors to both candidates. They have given $370,524 to Obama through July 31, making those workers and their families his 10th biggest source of campaign cash; they were the 15th largest contributors to McCain's campaign, with $117,500. To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net; Kim Chipman in Nevada at kchipman@bloomberg.net; Last Updated: September 17, 2008 16:34 EDT