"McCain Claims Federal Government Shouldn’t ‘Reward’ Irresponsible Banks — Except Bear Stearns"
Aided by “a large flat screen monitor and two side panel teleprompters,” Sen. John McCain (R-AZ) yesterday laid out his response to the housing crisis, proclaiming that the government should not “bail out” big banks or borrowers if they act irresponsibly:
I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.
In contrast, when McCain was asked whether the Federal Reserve went too far in extending a $30 billion credit line to finance the takeover of Bear Stearns by JPMorgan. “It’s a close call, but I don’t think so,” he said.
McCain is unwilling to criticize actions by the Bush administration, despite his rhetoric and alleged principles. Bear Stearns was the second-biggest underwriter of U.S. mortgage bonds and acted “irresponsibly” for years. According to McCain’s logic, the Fed should not have bailed out this institution:
Absent CEO: In 2007, then-CEO James Cayne was “playing bridge and golf” while its hedge funds which invested heavily in mortgage securitiescollapsed, missing 10 critical days last July. He also allegedly smoked marijuana after bridge tournaments.
A source of the crisis: Stearns provided “munificent lines of credit to public-spirited subprime lenders like New Century (now bankrupt). It is also the owner of EMC Mortgage Corporation, one of the most aggressive subprime mortgage servicers out there.”
Putting the public at risk: The firm tried to unload “toxic” mortgage-backed securities onto the public last summer in “an initial public offering of a financial company called Everquest Financial.”
McCain has once again shown that he is willing to abandon his so-called “straight talk” in order to stay in line with the Bush administration’s agenda.
David Abromowitz at the Center for American Progress has more on why struggling homeowners — in addition to Bear Stearns — need federal assistance.