POLITICS
10/19/2008 05:12 am ET | Updated May 25, 2011

McCain Camp Removed Bush Criticism From Wall Street Statement

In private late Tuesday evening, the McCain campaign circulated a draft statement on the Wall Street crisis that attacked the Bush administration for a slow and "inconsistent" response, and charged that executives at several financial firms had made "misleading and false" statements.

But the criticism never appeared. After being circulated not only among McCain aides but also major campaign donors who have worked in the investment industry, the language was softened.

The official McCain statement released Wednesday morning made no mention of the Bush administration, instead accusing management and speculators of "creat[ing] this mess."

The earlier draft, obtained by the Huffington Post, was circulated among top advisers such as Douglas Holtz-Eakin and Matt McDonald, as well as some major donors, including Greg Wendt of the Capital Group. It expressed "concern[s] that the Administration has been inconsistent with the way they have dealt with each crisis. Taxpayer money was used for Bear Stearns, it was not used for Lehman Brothers and now it is used again for AIG. The American people need to know the thinking and the standards behind using taxpayer's money to support these private sector institutions."

The draft added, "We also should know why the Administration did not deal with the problems at Fannie Mae and Freddie Mac sooner."

This proclamation was far more caustic to President Bush than the language McCain ultimately used. Indeed, in the official statement, McCain never mentioned concerns about the administration.

Criticism of Wall Street executives was also toned down. In the draft, McCain accused management at Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, and AIG of making "misleading and false" statements, and called for "an investigation into whether these senior managers were knowingly dishonest with the public when they knew their companies were in deep trouble."

McCain's final version simply stated, "Important questions remain to be answered by Wall Street. Did executives mislead investors and regulators about the severity of the problem?"

The toned-down comments are a reflection of the difficulties McCain has faced in navigating the current market failures. While Barack Obama has railed against President Bush for pursuing the lax economic oversight that led to risky investments and an unstable housing market, McCain has refrained from directly addressing his party head. It has left him at a disadvantage, unable to distance himself from the figurehead of the current crisis. On Thursday, McCain ratcheted up his rhetoric against the administration, calling for the firing of Christopher Cox, the Bush-appointed head of the Securities and Exchange Commission. As ABC News noted, McCain's statement made little sense as the President actually lacks the authority to fire an SEC commissioner.

While much of the rest of the draft and the private statements remain the same, there are some subtle differences. In the former, the Senator states that any federal intervention on AIG's behalf should "ONLY" be for the protection of "the people who hold insurance policies, retirement plans and other accounts with AIG and protect the financial system from collapsing." That line was ultimately softened to read that "the focus of any such action" should be to protect those groups and the financial system more broadly - an alteration that, it seems, was meant to give the campaign leeway to embrace federal action if need be.

HERE IS THE DRAFT STATEMENT AS OF LATE TUESDAY EVENING:

The government rescue of AIG is another unfortunate event following the bailout of Fannie Mae and Freddie Mac. It is another example of the reckless management of one of the most important companies in America. Given the serious financial conditions of the markets and at AIG, it was decided to extend a borrowing facility from the Treasury. This action should only protect the people who hold insurance policies, retirements plans and other accounts with AIG and protect the financial system from collapsing. Under no condition should incompetent management, the board of directors and shareholders benefit from this remedy.

Misrepresentation have been made in the recent past by senior management of these companies confirming the financial health of their companies. In cases like Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac and now AIG these statements proved to be misleading and false. It has been at the expense of taxpayers, good employees, and the savings and retirement accounts of hardworking people. I call for an investigation into whether these senior managers were knowingly dishonest with the public when they knew their companies were in deep trouble. If they misled the public there should be serious penalties.

I am also concerned that the Administration has been inconsistent with the way they have dealt with each crisis. Taxpayer money was used for Bear Stearns, it was not used for Lehman Brothers and now it is used again for AIG. The American people need to know the thinking and the standards behind using taxpayers money to support these private sector institutions. American workers see their businesses suffering and many are going out of business but there is no bailout for them. We also should know why the Administration did not deal with the problems at Fannie Mae and Freddie Mac sooner.

This crisis is pushing to a breaking point our financial markets, the economy and hardworking Americans. We need answers and I plan to get them. We need to change the way Washington and Wall Street do business and I plan to make them.

AND HERE IS THE OFFICIAL STATEMENT RELEASED WEDNESDAY MORNING:

"Today, the government was forced to commit $85 billion to stop the collapse of AIG, another in a growing series of events that includes Bear Stearns, Lehman Brothers, Fannie Mae and Freddie Mac. These actions stem from failed regulation, reckless management, and a casino culture on Wall Street that has crippled one of the most important companies in America. The focus of any such action should be to protect the millions of Americans who hold insurance policies, retirement plans and other accounts with AIG. We must not bailout the management and speculators who created this mess. They had months of warnings following the Bear Stearns debacle, and they failed to act.

"We should never again allow the United States to be in this position. We need strong and effective regulation, a return to job-creating growth and a restoration of ethics and the social contract between businesses and America. Important questions remain to be answered by Wall Street. Did executives mislead investors and regulators about the severity of the problem? We must investigate whether or not there was misrepresentation on part of the company executives. If there was, there must be penalties. We need to change the way Washington and Wall Street does business, and as President I will."