By Julianna Goldman and Edwin Chen
Sept. 24 (Bloomberg) -- Presidential candidates Barack Obama and John McCain offered a guarded embrace of the Treasury Department plan to rescue ailing financial firms, with each outlining a set of extra conditions and finding themselves in the rare position of competing for attention with Congress.
The two nominees agreed that any proposal to aid U.S. financial markets must include provisions for recouping government money and returning it to taxpayers.
``Inaction is not an option,'' McCain said yesterday in Freeland, Michigan. ``We must pass legislation to address this crisis.'' At the same time, he said the bailout represents ``an unprecedented sum,'' and ``that money can't simply go into a black hole of bad debt.''
Obama said the government should get a stake in any company that benefits from the bailout.
``If taxpayers are being asked to underwrite hundreds of billions of dollars to solve this crisis, they must be treated like investors,'' the Democratic presidential nominee said in Clearwater, Florida.
Obama and McCain each spoke at news conferences as Congress was debating the bailout plan in Washington. ``Both Obama and McCain are suffering from event-whiplash,'' said John Pitney, a political scientist at Claremont McKenna College in California. ``They both have the same difficulty: Nobody has a simple, painless solution.''
$400,000 Limit
Both candidates emphasized that the compensation of any company executives involved in the bailout should be limited, though McCain specifically said salaries should be capped at $400,000 -- the same pay as the U.S. president's.
The Bush administration and Congress are negotiating details of the plan to address the financial-markets crisis by having the Treasury remove troubled assets from the banking system. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke warned lawmakers yesterday that the U.S. must act quickly to return markets to normal functioning or risk a contraction of the economy.
The administration is pushing for action by the end of the week. McCain and Obama meet on Sept. 26 for the first of three debates.
Obama said the plan to stabilize the financial markets should also include provisions for the government to purchase troubled mortgages directly, rather than just mortgage-backed securities, to provide help to taxpayers struggling to keep their homes. He also wants an independent oversight board.
Equity Stakes
He suggested putting ``equity into those firms instead of buying their troubled assets,'' added that ``regardless of how we structure the plan, if the government makes any kind of profit on the deal, we must give every single penny back to the taxpayers who put up the money in the first place.''
Obama accused President George W. Bush of trying to panic lawmakers and the public into rushing forward with the rescue plan, saying taxpayers shouldn't be expected to hand the administration a blank check.
``The president's stubborn inflexibility is both unacceptable and disturbingly familiar,'' Obama said, making an indirect reference to the administration's pressure on Congress in the run-up to the Iraq War. ``This is not the time for my- way-or-the-highway intransigence from anyone involved.''
Oversight
McCain said he also wants a bipartisan board to oversee the Treasury secretary's implementation of the rescue.
``Never before in the history of our nation has so much power and money been concentrated in the hands of one person, and there must be protections and oversight in place,'' he said.
He said the legislation and the bailout must be transparent, with details about which companies would be affected and how they were selected available ``online and elsewhere'' for the public to scrutinize.
Lawmakers also must not include any special spending projects, known as earmarks, in the legislation, he said.
Neither man would say whether he would vote against the rescue plan if his conditions aren't included.
``I will strongly recommend to Secretary Paulson that we go back to the drawing board,'' Obama said when asked if there was any single principle that, if eliminated, would cause him to drop his support.
Only a Close Vote
He also said he likely wouldn't return to Washington to cast a vote on legislation enacting the rescue plan unless ``this ends up being a close vote or a vote where the outcome is at all in question.''
Obama reiterated his call for an additional economic- stimulus package. He said it should be dealt with separately from the market-rescue legislation.
Americans oppose government rescues of ailing financial companies and blame Wall Street and Bush for the credit crisis, a poll showed.
By a margin of 55 percent to 31 percent, Americans say it's not the government's responsibility to bail out private companies with taxpayer dollars, even if their collapse could damage the economy, according to the latest Bloomberg/Los Angeles Times poll.
Poll respondents say Obama would do a better job handling the financial crisis than McCain, by a margin of 45 percent to 33 percent.
To contact the reporter on this story: Julianna Goldman in Clearwater, Florida at jgoldman6@bloomberg.net; Edwin Chen in Freeland, Michigan, at echen32@bloomberg.net
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