Published: September 30, 2008 11:29 am            

Obama, McCain urge Congress to find resolution

WASHINGTON — John McCain and Barack Obama urged Congress today to redouble efforts to save a financial system bailout and proposed increasing federal deposit insurance to $250,000 as part of it. President George Bush warned that failure to move now would inflict “painful and lasting damage” to the economy.

“Congress must act,” Bush demanded in brief comments at the White House.

He said his administration would work with congressional leaders to get the defeated $700 billion relief package back on track. The House voted 228-205 Monday against the bill designed to rescue the nation’s financial system. That triggered the biggest one-day sell-off on Wall Street since the 2001 attacks, as the Dow Jones industrial plummeted by 778 points. Both McCain and Obama, in advance of Bush’s brief talk at the White House, called on lawmakers in their parties to stay at work until an acceptable plan is assembled.

Bush noted that the maximum $700 billion in the proposed bailout was huge, but was dwarfed by the $1 trillion in lost wealth that resulted from Monday’s stock-market plunge. He also said the actual cost to the taxpayers should be much less ultimately, arguing that once markets recover, assets likely will gain value over time.

The rescue package and the nation’s faltering economy was also Topic A on the presidential campaign trail as both Republican McCain and Democrat Obama addressed the subject. Both called for raising federal deposit assurance on deposits, savings accounts and bank certificates of deposit from the present $100,000 to $250,000.

“The first thing I would do is say, ’Let’s not call it a bailout. Let’s call it a rescue,” McCain said in a CNN interview. The Arizona Republican said that “Americans are frightened right now” and it is the job of political leaders to give them both an immediate solution and a longer-term approach to the problem.

Interviewed on Fox news network, McCain said, “I am confident we will have a bill and it will rescue the American economy.”

McCain announced a brief suspension of his campaign last week to return to Washington and become involved in negotiations on the bailout but would not say whether he was contemplating that again. “I will do whatever is necessary” to help, he said.

Top congressional and White House officials were stunned when the House rejected the massive rescue plan, and a host of lawmakers said Tuesday that they felt the Congress should persevere in its attempt to find consensus on a proposal that can be passed.

Obama issued a statement Tuesday saying lawmakers should not start from scratch as they weigh their next move.

The Illinois senator said that significantly increasing federal deposit insurance would help small businesses and make the U.S. banking system more secure as well as restore public confidence in the nation’s financial system.

Obama also said further inaction would be catastrophic for the economy and for American families.

In his comments from the Diplomatic Reception Room of the White House, Bush pointed to Monday’s drop in the Dow Jones industrials.

“The dramatic drop in the stock market that we saw yesterday will have a direct impact on retirement accounts, pension funds and personal savings of millions of our citizens,” he said. “And if our nation continues on this course, the economic damage will be painful and lasting.”

He said he was disappointed by Monday’s House vote but that “this is not the end of the legislative process.”

“I recognize this is a difficult vote for members of Congress,” Bush said. “And I understand that. But the reality is we are in an urgent situation and the consequences will grow worse each day if we do not act.”

He said this was a critical moment for the U.S. economy. “And we need legislation that decisively addresses the troubled assets now clogging the financial system, helps lenders resume the flow of credit to consumers and businesses, and allows the American economy to get moving again.”

        

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