Financial Collapse Perilous For Candidates

CBSNews.com Reports: Obama, McCain Seek To Take Ownership Of Economic Message In Wake Of Lehman, Merrill Meltdown

(CBS)  This story was written by CBSNews.com political reporter Brian Montopoli.

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With 50 days left until Election Day, the battle for the presidency may have finally settled on a defining issue. And it has nothing to do with lipstick.

The collapse of financial industry titans Lehman Brothers and Merrill Lynch and subsequent stock market crash, just the latest pieces of bad economic news in a year that has been dotted with grim headlines, have forced the campaigns of Barack Obama and John McCain to put aside some of the more trivial aspects of the campaign and try to cast their candidate as most prepared to properly guide the economy.

"The issue is fraught with peril for both of them," said CBS News consultant and political strategist Joe Trippi. "Particularly with financial markets, you don't score points by creating panic. That's not what a presidential candidate does."

"You can make an alarmist statement and trigger an even bigger fall than is occurring," he continued. "Or you can go the way McCain did, which is try to help calm the markets, and be accused of not understanding how perilous the times are."

On Monday, McCain, who once famously acknowledged that economic issues are not his strong suit, said that "the fundamentals of our economy are strong." The Arizona senator also stressed that "these are very, very difficult times" and released an ad stating flatly that the economy is in crisis. But McCain's characterization of the underlying fundamentals as "strong" immediately became fodder for an Obama campaign eager to cast the Republican nominee as out of touch.

"Today of all days, John McCain's stubborn insistence that the 'fundamentals of the economy are strong' shows that he is disturbingly out of touch with what's going in the lives of ordinary Americans," Obama spokesman Bill Burton said in a statement. "Even as his own ads try to convince him that the economy is in crisis, apparently his 26 years in Washington have left him incapable of understanding that the policies he supports have created an historic economic crisis."

"He says that we’ve made great progress economically, in the Bush years," Democratic vice presidential nominee Joe Biden added in Michigan on Monday. "Ladies and gentlemen, I could walk from here to Lansing, and I wouldn’t run into a single person who thought our economy was doing well, unless I ran into John McCain.”

Tuesday morning, the Obama campaign released an ad called "Fundamentals" hammering home the point.

In an email to reporters, the McCain camp noted that New York mayor and former Wall Street businessman Michael Bloomberg agrees with McCain. Bloomberg told Politico that "fundamentally America has an economy that is strong," adding, "I'd rather play America's hand than any other country."

Obama cast the news in dire terms Monday, calling the situation "the most serious financial crisis since the Great Depression." In an effort to link the Wall Street turmoil to the problems of average Americans, he suggested it hampered the economy's "ability to create good-paying jobs and help working Americans pay their bills, save for their future, and make their mortgage payments."

Most voters likely do not understand the specifics of what, exactly, led to Wall Street's woes. "Just understanding the problem just about requires a PhD in finance," Republican strategist Whit Ayers said.

But they are undeniably pessimistic about the state of the economy. In a CBS News poll released last month, 83 percent of respondents said the economy is in bad shape. The issue is hitting home: Asked to identify the issue most important to them, 40 percent of respondents in an August poll pointed to the economy and jobs, far more than any other topic.

Both candidates are calling for greater regulation and transparency of the markets as well as consolidation of regulatory oversight boards, and both opposed a government bailout of Lehman Brothers. But according to Barry Bosworth, an economic expert at the Brookings Institution, Obama tends to favor a greater government role than McCain and has a "much greater interest" in more active regulatory oversight.

Bosworth notes that both parties now have "strong ties" to Wall Street firms, complicating efforts at significant reform.

"It's going to be a problem," he said.

The McCain campaign is pushing the notion that McCain and running mate Sarah Palin are Washington outsiders who can solve Wall Street's problems: Palin suggested on Monday in Colorado that Washington has been "asleep at the switch." She said the Republican ticket is "going to put an end to the mismanagement and abuses on Washington and Wall Street that have resulted in this financial crisis.”

That message is complicated by the fact that the man at the top of the ticket has been in Washington, as the Obama camp likes to point out, for more than 25 years. But Obama has problems of his own selling a message of economic competence: A CBS News poll this month found that 41 percent of Obama supporters with reservations cite his level of experience as their biggest concern, and voters facing economic hardship may be less willing to support a candidate who is relatively new to the national scene.

Obama looked to counter those concerns Monday by hammering home his campaign's criticism of McCain's suggestion that the fundamentals of the economy are strong.

"What’s more fundamental than the ability to find a job that pays the bills and can raise a family?" Obama asked in prepared remarks. "What’s more fundamental than knowing that your life savings is secure, and that you can retire with dignity? What’s more fundamental than knowing that you’ll have a roof over your head at the end of the day? What’s more fundamental than that?"

Ayers suggested that the candidate says something clear and compelling about how to stabilize the economy will have the upper hand on the issue.

"The challenge is for a candidate to come up with something that is sufficiently different and persuasive and compelling that will capture people's attention," Ayers said. "In a contest between the simple and easy to understand and the complex and difficult to understand, simple and easy always wins."

[freemanswish]

All the Democrats are hiding now!

Hillary aint so high and mighty,Biden is a joke there

all ducking, because the headlines are bad.


You think the people dont notice? Your wrong!

This is a prime example of fickle Obama avoiding the

real problems.

I will definitely vote McCain/Palin and im an independent

[concerns47]

Article in Forbes

Time to panic? Actually, it%u2019s really not
The economy isn%u2019t the problem, it%u2019s stupid banks making stupider loans

By Brian S. Wesbury and Bob Stein

updated 13 minutes ago
There is not enough room on page one of the nation''s newspapers for all of this week''s news. Any of the major business stories %u2014 the Lehman bankruptcy, a sale of Merrill Lynch, AIG capital needs, plummeting oil prices or new Fed lending facilities %u2014 could be above-the-fold headline news.
The U.S. is moving through its deepest set of financial market difficulties since the banking and savings and loan crises of the 1980s and 1990s.
The key thing to remember here is that the emphasis belongs on the word financial. The economy is not the problem; lousy lending standards and the excessive use of leverage are the problem. Gales of punitive destruction are knocking down one investment bank after another, while gales of creative destruction continue to move the economy forward. In fact, real gross domestic product (GDP) has grown 2.2 percent in the past year and accelerated to a 3.3 percent growth rate in the second quarter.

[samsel3]

The folks who brought you War without end also bring you Global financial collapse. McCains economic policies will bring disaster.

They include industry deregulation, less oversight of government for Big Business. This is what created the problem. Do you really want to repeat the past ?

McCain is an outright Liar and will say anything to continue the party s policies. Just examine the views of his campaign advisors. Lobyist, Lobyist, Lobyist, Lobyist, and another Lobyist.

If you want a nuclear war vote McCain..............

[ubu2008]

Obama and his friends are panicing. I cannot wait until John McCain slams him for his attempt to recreate history on the mortgage crisis. John McCain co-wrote legislation in 2005

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

John McCain, May 26, 2006

John saw this comming and begged for congress to act.

Obama/Biden have done nothing but lie and MSM doesn''''t even remember the John McCain efforts to protect the taxpayer.

[babooph]

One of them has to win -the only problem for the nation is if John wins & dies-1 chance in about 5 for that -VERY SCARY!!!!

[demwatcher]

The November 2008 Presidential election was too close to call, even for the media. So to break the tie, Obama and McCain agreed to a challenge. They both would go ice fishing for three days.

On day one, McCain came back with ten fish and Obama none.

On day two, McCain came back with 20 fish and Obama none.

On the third day, Obama''s advisors told him to follow McCain to see if he was cheating. At the end of the day, Obama returned and told his advisors; "I don''t know how McCain got so many fish. All he did was cut holes in the ice all day."

The moral: Experience Matters.

[caliguy55]

During the last week, the McCain campaign has unabashedly engaged in the active spreading of mistruths and falsehoods. It said that Barack Obama supported %u201Ccomprehensive *** education%u201D for children in kindergarten (%u201Cdishonest%u201D and %u201Cdeceptive%u201D said The Washington Post); that Mr. Obama used the colloquial expression %u201Clipstick on a pig%u201D to describe Sarah Palin (G.O.P. Senator Orrin Hatch labeled the charge %u201Cridiculous%u201D); that Ms. Palin never accepted earmarks as governor of Alaska; (this is patently false, she actually requested $450 million in earmarks as governor); that Mr. Obama will raise taxes on middle-class families (his plan would actually give a tax cut to 80 percent of Americans); that his health care plan will force families into a government-run health care plan; (a public health expert quoted in this paper called that %u201Cinaccurate and false%u201D); that Ms. Palin told Congress %u201Cthanks, but no thanks%u201D on the Bridge to Nowhere (she initially supported the bridge and kept the Congressional funds earmarked for the project); that Ms. Palin visited Ireland and Iraq (her airplane refueled in the former and never crossed the border into the latter). Now there are even reports that the McCain campaign fabricated crowd estimates for a recent rally in Virginia.

http://campaignstops.blogs.nytimes.com/2008/09/16/the-politics-of-lying/

[alanrobisch]

You are blinded by the bible in your face because that is not what most intelligent American''''s saw!!!!

Posted by mel130ny at 03:02 PM : Sep 16, 2008
+ report abuse

I guess you are one of those intelligent americans. Can''t be you viewed it from a different perspective. Obama has a problem coming to the point. He is evasive just like every other politician.

[alanrobisch]

is very beautiful in Alaska - WHY should MEN for their own GREED destroy it???? WHY??? Just to get a year''''s worth of oil!!!! Is it worth it to YOU??? A year''''s worth of oil is not worth it to me!!!! I like to leave what is beautiful alone!!!!

Posted by mel130ny at 03:14 PM : Sep 16, 2008
+ report abuse

I agree with you that it is a beautiful place and I value the wilderness,but the beautiful wilderness will remain almost entirely intact with the amount of area that we will be drilling in. It is wise to use it now because we need it now to bridge the gap between the creation of alternative energy and energy we can use now. It would help to bring down gas prices heating oil prices Etcetera. Our economy runs on oil. Inexpensive oil is necessary to maintain our economy until alternate sources can be found AND ARE Available to be used in significant quantity

[noloyalisti]

I hope none of the investors losing their life savings are Democrats. The Republicons deserve what they get, they have been supporting an ownership society since Ray Gun.

As Obama wisely said: Lose your savings, you''re on your own. Lose your house, your job, your health care, you''re on your own. Time to keep the Republic Con Men away from our government. Vote Democratic.

[blindhowlin]

John, John, John, you need to say no to the Lobbyists NOW and hire some new people to run your campaign.

[screan_name]

Hey, if Lehman can make a bad loan decision, with all their expertise, what chance does your average homeowner have?

Posted by mrmazerati

Thats the way I see it. 100% agree. Plus even that extra cost of this regulation certainly would have saved the taxpayers how much money over the long run.

Now McCain wants to investigate this? Why doesnt'''' he go ask Phil Gramm?!

Posted by melchg at 02:23 PM : Sep 16, 2008



Several of McSame''s top advisors were lobbyists for Fannie Mae and Freddie Mac. These guys spread millions around Congress to get them to turn a blind eye to their reckless practices. Now the American taxpayer has to pick up the tab for cleaning up the mess.

McSame is part of the problem, not the solution.

[ncvoter2]

you might have to sell that ''vette

[ncvoter2]

stocks dropping. glad i don''t have a 401k

[mrmazerati]

Look, the upshot is that most people assume they can trust their lenders, whom they assume to be subject to tight oversight and regulation. After all, they''re the money experts, right? And that''s the way it should be. A home loan is too fraught with stress and paperwork to be able to cover every detail before closing. Most folks are just worried enough about how to get through the work week and get all the paperwork done at the same time, much less combing over every single thing before closing. After all, that ''s what they PAY their loan officers to do. It''s called closing costs. Is it technically the buyers'' fault? Sure. Is it reasonably their fault? I really don''t see how. To hang your average working stiff with the fine print on a contract is just not reality. There need to be safeguards. And the safeguards need to start with the lenders and the loan officers. Hey, if Lehman can make a bad loan decision, with all their expertise, what chance does your average homeowner have?

[screan_name]

Seems to me they were kind of stupid then. I don''''t sign anything that has money attached to it until I''''d consulted somebody that can explain the befits or losses that might be attched to it! Especially, I don''''t ask the people who are trying to get me to sign it!

But honk on....

Posted by StormeyOne at 02:11 PM : Sep 16, 2008



Agreed. But unfortunately, the average consumer doesn''t do this. We are used to government protections that keep us from having to be an expert in finance just so we won''t be ripped off. I still think the fault lies mostly in the hands of the federal government for abandoning sound regulation that protected the consumer and the country from this kind of disaster and subsequent bailouts.

[noloyalisti]

You realize now that the Republicons have become irrelevant for America. They have no clues about foreign policy or financial ideas. They just want to give more of our money to the rich and support corporate America. Maybe they will throw us some food scraps in their concentration camps they have built for us.

[mrmazerati]

No he didn''''t. He had an economic bubble that everyone knew would tank out soon...and it did! Go figure!

Posted by StormeyOne

No, he had the longest running winning streak in the history of the US. That''s not me, it''s just plain history. Numbers is numbers.

[dinkydog1]

Mel, your efforts at educating the village idiots are appreciated but aren''t working. These guys rode in on the short bus.

[screan_name]

StormeyOne


Speaking of stupid, you''re missing the point entirely.

Very few of the people who bought a variable interest loan knew that''s what they were getting themselves into. Deregulation of the industry allowed lenders to conceal the ugly details of their loans in fine print and legalese gobbledygook. They simply trusted what their greedy loan officers told them. They also trusted that the Federal Government would not allow these institutions to pray upon their customers. After all that was the case for decades until Republicans slashed regulation and oversight of these institutions. Republicans turned "buyer beware" into "your on your own suckers".


I''m sorry that you are a moron.


lol!