CNN, LA Times uncritically reported McCain's false claim that Obama and Clinton proposed "a multibillion-dollar bailout for big banks and speculators"

››› ››› KATHLEEN HENEHAN

CNN's Suzanne Malveaux and an article in the Los Angeles Times both uncritically quoted Sen. John McCain's statement regarding possible responses to the home mortgage crisis: "What is not necessary is a multibillion-dollar bailout for big banks and speculators, as Senators Clinton and Obama have proposed." In fact, neither Clinton nor Obama has proposed "a multibillion-dollar bailout" for "speculators." Moreover, neither Malveaux nor the Times noted that McCain recently expressed support for the Federal Reserve's decision to extend a $30 billion line of credit to facilitate the acquisition of the near-bankrupt investment bank Bear Stearns by JP Morgan Chase.

During the March 27 edition of CNN's Situation Room, CNN White House correspondent Suzanne Malveaux uncritically quoted from a statement put out by the McCain campaign that day regarding possible responses to the home mortgage crisis: "I believe the role of government is to help the truly needy. ... Reforms should focus on improving transparency and accountability in our capital markets. ... What is not necessary is a multibillion-dollar bailout for big banks and speculators, as Senators [Hillary] Clinton and [Barack] Obama have proposed." A March 28 Los Angeles Times article also uncritically quoted McCain's assertion that "what is not necessary is a multibillion-dollar bailout for big banks and speculators, as Sens. Clinton and Obama have proposed." In fact, neither Clinton nor Obama, each of whom recently made speeches about the housing crisis, has proposed "a multibillion-dollar bailout" for "speculators." In their speeches, both Democratic presidential candidates expressed support for proposals put forward by Rep. Barney Frank (D-MA) and Sen. Chris Dodd (D-CT) that would reportedly authorize the Federal Housing Administration to guarantee as much as $300 and $400 billion, respectively, in refinanced mortgages to distressed borrowers. But, according to both Dodd's and Frank's websites, only owner-occupied residences would be eligible for a new FHA-insured mortgage; synopses of their proposals specifically state that they would not apply to "investors."

Moreover, despite reporting McCain's claim that Clinton and Obama "have proposed a multibillion-dollar bailout for big banks," which McCain called "not necessary," neither Malveaux nor the Los Angeles Times noted that McCain recently expressed support for the Federal Reserve's decision to extend a $30 billion line of credit to facilitate the acquisition of the near-bankrupt investment bank Bear Stearns by JP Morgan Chase. The Associated Press reported on March 26: "Asked whether the Fed went too far in helping Bear Stearns, McCain said: 'It's a close call, but I don't think so.' He said he doesn't support federal bailouts unless it has catastrophic effects on the entire financial marketplace and there were indications that a Bear Stearns failure would have rippled across the entire economy."

From McCain's March 27 statement:

"On Tuesday, I addressed the housing crisis and its devastating impact on our financial markets and the household budgets of millions of hardworking Americans. The fact is that there are about 4 million homeowners in danger of losing their homes. We have a responsibility to take action to help those among them who are deserving homeowners, and as I said this week, I am committed to considering any and all proposals to do so. Any action must further look to the future to make certain this never happens again.

"As I said on Tuesday, I believe the role of government is to help the truly needy, prevent systemic economic risk and enact reforms that prevent the kind of crisis we are currently experiencing from ever happening again. Those reforms should focus on improving transparency and accountability in our capital markets -- both of which were lacking in the lead-up to the current situation.

"However, what is not necessary is a multibillion-dollar bailout for big banks and speculators, as Sens. Clinton and Obama have proposed. There is a tendency for liberals to seek big government programs that sock it to American taxpayers while failing to solve the very real problems we face.

"This is a complex problem that deserves a careful, balanced approach that helps the homeowners in trouble, not big banks and speculators that acted irresponsibly. I again call on our lending institutions, where possible, to step up and help Americans who are hurting in this crisis."

From the March 28 Los Angeles Times article:

McCain emphasized Thursday that he thought any federal aid should be limited to "deserving American families" who were "in danger of not realizing the American dream."

"What is not necessary is a multibillion-dollar bailout for big banks and speculators, as Sens. Clinton and Obama have proposed," he said in a statement released by his campaign. "There is a tendency for liberals to seek big government programs that sock it to American taxpayers while failing to solve the very real problems we face."

The economy has not been an easy topic for any of the candidates. None of them has business experience, and all three are more comfortable talking about their well-established views on the Iraq war -- a topic they had once assumed would drive the election.

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

WOLF BLITZER (anchor): The Democratic presidential candidates are promising to give you some economic relief. Both Hillary Clinton and Barack Obama are offering ideas today for preventing Americans from falling through what Clinton calls the trap door.

Our Suzanne Malveaux is in New York. She's watching this story for us.

All right, is there any agreement, Suzanne, between Clinton and Obama on what to do next?

MALVEAUX: Well, there is some agreement, Wolf. Certainly, the Democratic candidates are squarely putting the blame on President Bush for the weak economy. They are saying that the billions that is spent on the Iraq war, that tax cuts for the wealthiest Americans have really contributed to this crisis.

But they're also taking aim at each other. They're trying to convince voters that they know what is best to get us out of this mess.

[begin video clip]

MALVEAUX: All three candidates are vying to become economist in chief.

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.

CLINTON: We're trying to run today's economy on yesterday's infrastructure. And we're jeopardizing tomorrow's prosperity.

MALVEAUX: Democrats Hillary Clinton and Barack Obama presented competing proposals on how to fix the ailing economy. Obama just a few blocks from Wall Street called for greater government oversight to protect families from predatory lenders.

OBAMA: The American economy does not stand still. And neither should the rules that govern it. The evolution of industries often warrants regulatory reform.

MALVEAUX: Clinton, kicking off a three-state tour from Raleigh, North Carolina, emphasized providing relief.

CLINTON: As president, I will work to rein in the corporate special interests and to rebuild a prosperous and strong middle class.

MALVEAUX: Clinton's plan calls for a $30 billion bailout for states to help them buy properties in foreclosure and a 90-day moratorium on foreclosures. Obama's plan calls for a $30 billion economic stimulus package and greater government intervention.

ALI VELSHI (senior business correspondent): Hillary Clinton's been out ahead of the other candidates for some months in terms of the detail that she's put into her plan.

MALVEAUX: Both Democrats attacked Republican John McCain for his approach, which limits the government's role in stabilizing the market.

OBAMA: It amounts to little more than watching this crisis unfold.

CLINTON: It seems like, if the phone were ringing, he would just let it ring and ring and ring.

[end video clip]

MALVEAUX: Well, John McCain's campaign put out a statement in response to some of that criticism saying: "I believe the role of government is to help the truly needy. ... Reforms should focus on improving transparency and accountability in our capital markets. ... What is not necessary is a multibillion-dollar bailout for big banks and speculators, as Senators Clinton and Obama have proposed" -- Wolf?

BLITZER: Suzanne, thank you. We are going to be discussing this later with the best political team on television.

Posted In
Economy, Elections
Network/Outlet
CNN, Los Angeles Times
Show/Publication
The Situation Room
Stories/Interests
2008 Elections
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