He also says keeping people in their homes should be among the top goals in that bailout package, for their own good, and that of the economy.
In an interview on The Early Show Thursday with co-anchor Harry Smith, the former president said, "I think that he (Obama) personally, and our party generally, tend to produce better economic results for ordinary people. And I think that, while Sen. McCain -- I like him and he's a friend of mine, and I trust him in many ways -- but the Democratic economic philosophy and Obama's specific proposals, I think, will produce better results for ordinary Americans."
Mr. Clinton said he doesn't think the election will hinge on the fate of the bailout package "because President Bush invited both Sen. Obama and Sen. McCain to come back and be part of the congressional briefings, work on this together. I think they need to be attentive to it and fulfill their responsibilities in the Senate and as the nominees of their party.
"But the larger issue is, how are we going to bring the economy back? How are we going to create jobs and raise incomes? That's the long-term stability. That is, there was too much investment in housing alone. We need a strategy here that will get America back across the board that includes dealing with the energy issues, dealing in the bills people are paying for that and the job opportunities there, and dealing with health care. That, I think, those big issues I think will tend to overcome the international issues."
And it's on that "larger issue" that Mr. Clinton thinks Obama would steer the nation down a better course than McCain.
Referring to McCain saying the economic peril the nation is in is the worst crisis since World War II, Smith asked Mr. Clinton, "Is it that bad?"
"I think it has the potential to be this bad," Mr. Clinton replied, "because, in the end, all financial transactions in all countries rest, in part, on confidence, that is, your local bank, for example, will insure your account up to $100,000, but they are only required by federal rules, and never have been required to keep more than a certain amount of, if you will, cash reserves, which is much less than it would take to cover all the outstanding obligations of the bank. This facilitates economic growth. This is not risky sub-prime mortgages and derivatives and all that funny stuff. When people lose confidence in everything, down to the point where money market accounts seem unstable and banks won't loan each other money, that's bad.
"We need to do some things to insert confidence back into the entire financial system, part of which is the stock market, but it also includes the financial system. And I thought actually -- I listened to the president's speech last night, and I thought it was well-constructed to explain to people why there was a problem today with all of the financial system and why, therefore, we needed to act."
Smith noted that many members of Congress are reporting resentment among their constituents over the prospect of bailing out the very companies and executives who caused the economic mess in the first place, and Mr. Clinton observed, "Well, you don't want to do that. We have to be careful not to have unjust enrichment. And I think the members of Congress have made that clear, and both candidates for president have made that clear. They put out a joint statement, I thought, which was encouraging last night, but here's how it would work: If you want to keep a company afloat that's made some improvident investments, some of them, one, Lehman Brothers, was allowed to fail and go into bankruptcy, and some of those same people you're worried about are taking up their assets at bargain basement prices.
"With AIG, the big insurance giant, I think that's going to be more typical. The government did loan them a lot of money, but they took an 80 percent ownership interest in the company, and they have to pay back with a pretty hefty interest rate.
"So, I think that, by stabilizing that company, the taxpayers will actually end up making money. We made money when we helped Mexico. we made money in the Chrysler bailout and, more to the point, in the Great Depression, when we kept a million people in their homes, the taxpayers made money. That's why I think the Congress should take a day or two to analyze this to make sure that's the way it's done -- that, instead of subsidizing the undeserving, we use this to stabilize the economy as a whole and help those homeowners that are hard working people."
Is there really as much urgency to getting a bailout approved as administration officials say?
"I don't have a stopwatch but, because it's a confidence issue, like Warren Buffett yesterday put $5 billion in investment into Goldman Sachs -- that's a confidence builder. People think he knows what he is doing."
"He got a pretty good deal, too!" Smith interjected.
"He got a real good deal," Mr. Clinton agreed, "but people think he knows what he is doing. Maybe that bought them (bailout negotiators) another day, but the point is it has to be done in a timely fashion.
"I think what they want to do is to guard against unjust enrichment, protect the taxpayers, maximize the stability, and keep as many people in their homes as they possibly can, because that will really save the economy and turn us around again if we don't have -- we're going to have 2 million homes foreclosed on this year. We don't want that again next year."
Mr. Clinton spoke to Smith at the site in Manhattan of his fourth annual Clinton Global Initiative.