GREEN BAY, Wis. — Republican John McCain said Friday the Federal Reserve needs to stop bailing out failed financial institutions. The Republican presidential hopeful said the Fed should get back to "its core business of responsibly managing our money supply and inflation" and he laid out several recommendations for stabilizing markets in the financial crisis that has rocked Wall Street and commanded the dialogue in the presidential campaign.
McCain made little mention of the massive proposal being crafted by Treasury Secretary Henry Paulson that could amount to a $1 trillion taxpayer bailout of the mortgage industry. McCain said simply that leaders should put aside partisan differences and "any action should be designed to keep people in their homes and safeguard the life savings of all Americans."
The Fed engineered an $85 billion takeover of insurance giant AIG this week after seizing control of housing giants Freddie Mac and Fannie Mae. McCain said that to help return the U.S. to fiscal solvency, the powerful central bank should instead focus on shoring up the dollar and keeping inflation low.
"A strong dollar will reduce energy and food prices," McCain said to applause from the Green Bay Chamber of Commerce. "It will stimulate sustainable economic growth and get this economy moving again."
In the speech and later at a boisterous rally in Minnesota, McCain sharply criticized Democratic rival Barack Obama for ties to Freddie Mac and Fannie Mae and for advocating tax increases McCain said would "turn a recession into a depression."
Obama has said he would raise taxes on people making over $250,000 a year and would cut taxes on the middle class. McCain restated his claim that Obama had voted to raise taxes on people who make just $42,000 a year _ a claim that has been widely debunked by nonpartisan fact check organizations.
McCain noted the Illinois senator had taken large campaign contributions from both Fannie Mae and Freddie Mac and that the one-time head of Obama's vice presidential search team, Jim Johnson, had received a $21 million severance deal after stepping down as Fannie Mae CEO. McCain's campaign released a new television ad Friday hitting Obama for his connection to Johnson.
The Arizona senator neglected to say that some of his closest advisers had ties to or lobbied for the home loan giants.
McCain is correct when he says Obama is the No. 2 recipient of campaign money from employees of Fannie Mae and Freddie Mac. Obama has collected $126,349 from those sources, according to a compilation by the Center for Responsive Politics, second only to Senate Banking Committee Chairman Sen. Christopher Dodd, D-Conn., who has received $165,400. The ranking covers the period since 1989.
In Minnesota, the mention of Johnson's severance deal brought loud chants from thousands of McCain supporters who filled an airport hangar. "Give it back! Give it back!" they shouted.
McCain renewed his call for tighter regulation of financial markets, even though he has generally championed deregulation throughout his career in the Senate and as chairman of the influential Commerce Committee.
He called Securities and Exchange Commission Chris Cox a "good man" but reiterated his view that Cox should step down or be fired, saying there needed to be greater accountability in Washington.
McCain said as president he would create a Mortgage and Financial Institutions Trust to help homeowners avoid foreclosure. He said he would propose and sign into law changes to prevent financial firms from concealing "bad practices."
Throughout the week, McCain and Obama have tangled over which candidate is better to steer the U.S. out of its financial crisis. One investment giant, Lehman Brothers, collapsed this week and another, Merrill Lynch, was purchased by rival Bank of America for less than half its value.
McCain spokesman Matt McDonald said the campaign was reviewing the Paulson plan and McCain had not yet taken a position on it. "He's supportive that there are steps being taken," he said.