US Republican presidential candidate John McCain admonished the Federal Reserve today to get out of
the business of bailouts and get back to managing money supply and protecting the purchasing power of the dollar.
Mr McCain, who laid out some of his ideas for solving the financial crisis on Wall Street, said his reforms would prevent financial firms from concealing bad practices.
In a swipe at the Bush administration, Mr McCain said the Treasury Department under his watch would follow consistent policies for guaranteeing loans.
"In cases where failing companies seek taxpayer bailouts, the Treasury Department will follow consistent policies in deciding whether to guarantee loans," he said.
"With billions of dollars in public money at stake, it will not do to keep making it up as we go along."
US President George W. Bush today said government intervention was necessary to solve the problems plaguing the financial markets, calling it a "pivotal moment for America's economy."
"We must act now to protect our nation's economic health," Mr Bush said after plans were unveiled to address the toxic mortgage debt plaguing financial institutions. "Given the precarious state of today's financial markets and their vital importance to the daily lives of the American people, government intervention is not only warranted, it is essential."
Earlier Democratic presidential nominee Barack Obama said he supported efforts by the US Treasury and Federal Reserve to shore up confidence in the financial markets and said he would hold off from presenting his own economic recovery plan.
"The events of the last few days have made it clear that we must take further bold and decisive action to shore up confidence in our financial markets and avoid a deepening economic crisis that could jeopardize the life savings and well-being of millions of Americans," Mr Obama said in a statement.
Mr Obama said he supported efforts by Treasury Secretary Henry Paulson and federal Reserve Chairman Ben Bernanke to work with the Congressional leadership to find a solution to the deepening crisis.
As Wall Street grapples with the worst crisis since the Great Depression, the financial turmoil has become the top theme on the campaign trail where Obama is locked in a tight race with his Republican rival John McCain.
The Illinois senator said he would be discussing the Fed-Treasury proposal with his top economic advisers on Friday morning. Among those who have been advising Mr Obama on his response to the financial crisis are former Federal Reserve Chairman Paul Volcker and former US Treasury secretaries Lawrence Summers and Robert Rubin.
"Given the gravity of this situation, and based on conversations I have had with both Secretary Paulson and Chairman Bernanke, I have asked my economic team to refrain from presenting a more detailed blue-print of how an immediate plan might be structured until the Treasury and the Federal Reserve have had an opportunity to present their proposal."
Mr Obama said it was critical that the markets and public have confidence in the Fed and Treasury's efforts and that their work be "unimpeded by partisan wrangling."
Yesterday Mr Obama urged the Federal Reserve and the Treasury to take emergency steps to keep credit flowing to the troubled housing market, saying it would help stem the crisis sweeping financial markets.
In his statement today, Mr Obama said the government needed to also take action to create jobs and help support distressed homeowners and communities.
He also said any taxpayer-funded support plan by the US government needed to have a long-term goal of creating a stable financial market and a growing economy.
"This plan must be temporary and coupled with tough new oversight and regulations of our financial institutions," he said. "There must be a clear process to wind down this plan and restore private sector assets into private sector hands after restoring stability to the system."
Mr Obama also urged that the plan be part of a globally co-ordinated effort.