Monday, Sept 8, 2008
In March, Sen. John McCain (R-AZ) took a hard line against government economic intervention, saying that it is “not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.”
In what may be the “largest financial bailout” in U.S. history, the federal government is now set to take over Fannie Mae and Freddie Mac, two government-sponsored enterprises that “own or guarantee almost half of the country’s $12 trillion in outstanding home mortgage debt.”
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Despite McCain’s supposed opposition to bailing out “those who act irresponsibly,” Senior Policy Adviser Douglas Holtz-Eakin has issued a statement supporting the bailout:
John McCain supports the steps needed to keep the financial troubles at Fannie Mae and Freddie Mac from further squeezing American families and endorses the idea that management and shareholders should not benefit from government backing. While details are not yet available, the actions taken today are consistent with those objectives. Fannie and Freddie have been the poster children for a lack of transparency and accountability, and remind us of the needed reforms to financial markets in general.
Organizations such as Fannie Mae and Freddie Mac are too important to allow to fail. McCain and the Bush administration are willing to throw away their hard-line ideologies when it comes to powerful corporations, but not when it comes to struggling homeowners who also need government intervention. As Center for American Progress Senior Fellow David Abromowitz noted:
There are many good reasons, of course, to act to avert a [financial corporation’s] bankruptcy. … But the reasons are no less compelling when the devastation hits individual Americans directly—home by home, block by block, neighborhood by neighborhood—instead of mainly in the boardroom circles in which F. Scott Fitzgerald traveled, and which have changed so little since the Roaring Twenties.
This is now the second major government bailout McCain has backed this year. In March, he supported the Federal Reserve’s $30 billion credit line to finance the takeover of Bear Stearns by JP Morgan.
This article was posted: Monday, September 8, 2008 at 12:22 pm