Casting McCain as opponent of fed intervention

http://mediamatters.org/items/200803280005

Casting McCain as opponent of fed intervention in mortgage crisis, Blitzer ignored his approval of Bear Stearns aid

Summary: CNN's Wolf Blitzer highlighted Sen. John McCain's assertion that he has "always been committed to the principle that it's not the duty of government to bail out and reward those who act irresponsibly, whether they're big banks or small borrowers," but did not mention that McCain reportedly said he didn't think the Federal Reserve "went too far in helping" investment bank Bear Stearns avoid bankruptcy.

During the March 27 broadcast of CNN's The Situation Room, host Wolf Blitzer highlighted Sen. John McCain's assertion that he has "always been committed to the principle that it's not the duty of government to bail out and reward those who act irresponsibly, whether they're big banks or small borrowers," without noting that McCain reportedly stated that he didn't think the Federal Reserve acted improperly by extending a $30 billion line of credit to facilitate the acquisition of the near-bankrupt investment bank Bear Stearns by JP Morgan Chase.

Blitzer introduced the segment by contrasting McCain's statement with Sen. Barack Obama's March 27 remark that "[i]f we can extend a hand to banks on Wall Street when they get into trouble, we can extend a hand to Americans who are struggling, often through no fault of their own," saying that in the two "sound bites, you have a real difference" between the candidates on the question: "Should the federal government intervene, regulate more, or not?" Later, after Democratic strategist Jennifer Palmieri asserted that "the problem politically, I think, for John McCain is that he's siding -- he's saying, Bear Stearns, it's OK to bail them out, but I don't want to bail out people who have actually lost their homes," Blitzer replied: "Well, he actually said, to be fair to John McCain, he said, whether they're big banks or small borrowers, you know, stay out of it." Palmieri interjected, stating, "But the big bank did get bailed out. I mean, Bear Stearns did get bailed out," to which Blitzer replied, "Right."

Indeed, as Media Matters for America noted, a March 26 Associated Press article stated that the Federal Reserve "essentially bailed out the investment house Bear Stearns," and reported that McCain disagreed with the suggestion that the Federal Reserve "went too far in helping" the bank, quoting him as saying: "It's a close call, but I don't think so."

From the March 27 edition of CNN's The Situation Room:

BLITZER: On the economic issue, there seems to be a real split between the two Democratic candidates and John McCain. Here's a little example of what they're saying.

[begin video clip]

OBAMA: If we can extend a hand to banks on Wall Street when they get into trouble, we can extend a hand to Americans who are struggling, often through no fault of their own.

McCAIN: I've always been committed to the principle that it's not the duty of government to bail out and reward those who act irresponsibly, whether they're big banks or small borrowers.

[end video clip]

BLITZER: All right, so there, in a couple of sound bites, you have a real difference. Should the federal government intervene, regulate more, or not?

Usually, when economic times are good, the public says, butt out. But when economic times are bad, politically, Terry, the public often says, help.

TERRY JEFFREY (editor-in-chief, Cybercast News Service): Yeah, well, there's no doubt about it. I mean, the economy is turning in a direction that's helpful for the Democrats politically. But I think John McCain here hit on the principle exactly right, Wolf.

He's saying that people who borrowed money that they shouldn't have and people who loaned money that they shouldn't have should not be bailed out by hardworking taxpayers. We shouldn't transfer wealth from people who saved their money, used it intelligently, didn't overextend, to people who didn't.

On the other hand, he's saying -- and it was right after that quote -- that if there is a systemic threat to the financial system or to the economy, he favors practical steps to make sure that innocent people are not, in fact, economically injured. And I think that's exactly the right principle.

BLITZER: Talk about the politics of this.

PALMIERI: Well, I think the politics are difficult, because a lot of homeowners that are losing their homes feel that they -- that it was because that the rules were set up, you know, for them to fail and that they -- and that it's not their fault.

And the problem politically, I think, for John McCain is that he's siding -- he's saying, Bear Stearns, it's OK to bail them out, but I don't want to bail out people who have actually lost their homes.

BLITZER: Well, he actually said, to be fair to John McCain, he said, whether they're big banks or small borrowers, you know, stay out of it.

PALMIERI: But the big bank did get bailed out. I mean, Bear Stearns did get bailed out.

BLITZER: Right.

JEFFREY: But he said it was a close call when he was asked about that. But the principle there --

PALMIERI: But --

JEFFREY: -- the question there is, they shouldn't have -- they don't -- the Bear Stearns people, and the bankers, these millionaires in New York, they don't deserve a bailout from middle-class taxpayers in any place in America.

The question is whether that bailout was designed to protect innocent people from collateral economic damage. That's a prudential decision. And he said it was a close call.

PALMIERI: Right. But I think, politically, it is difficult to be seen as bailing out Bear Stearns and not being as concerned about the homeowner.

And there is -- there does seem to be an interesting thing that -- about him in deregulation. You know, he -- yesterday, [U.S. Treasury] Secretary [Henry] Paulson gave a speech where he said that -- he suggested that perhaps we might need a little more regulation in the financial markets. And McCain is saying, we actually need to have less.

And this is a big thing with [former Texas Sen.] Phil Gramm, you know, his -- one of his supporters. And I don't -- and it -- and he does the same thing with health care. You know, he doesn't think there should be as much regulation on insurers and health care.

— J.M.

Posted to the web on Friday, March 28, 2008