As turmoil on Wall Street comes to dominate the presidential campaign, Barack Obama has issued a statement that neither criticizes nor explicitly endorses the Federal Reserve's decision to bail out AIG.
"Sen. Obama is not going to be second-guessing the Federal Reserve at a time like this," Jason Furman, a senior economic adviser to the Illinois Democrat, told Renee Montagne.
"Our economic problems are very serious. Eight years of shredding regulations that protect consumers, lax oversight of banks, being behind the curve in dealing with this have put us in this position," Furman said. "What's important is what we do now."
Obama was aware of the nation's economic problems before they reached a crisis point, Furman said.
"He sent a letter to Bernanke and Paulson in March 2007, warning about the mounting foreclosure crisis and the consequences it would have for our economy," Furman said.
By suggesting a summit to deal with that issue and proposing new regulations, Furman said, Obama has urged changes in how the nation approaches the credit slump.
In addition to keeping a watchful eye on large and powerful institutions, "you also just need to enforce the rules on the books," Furman said. "Some of these tools were already there, and you've seen regulators in recent years look the other way."
Part of the problem, Furman said, is that the Securities and Exchange Commission lost some power during the Bush administration. Noting the need to end bailouts, Furman said, "We need to, for example, prop up our economy as a whole with a fiscal stimulus. We need far more ambitious measures to deal with the root of this problem, which is in the housing sector."
But the end goal of any plan, Furman said, is to protect American taxpayers.
A day after heavy losses on Wall Street, John McCain's chief economic adviser says the Republican candidate wants to reform the regulatory system.
"We've got a patchwork of regulators right now — an alphabet soup, so to speak — and there are transactions that get treated differently," Douglas Holtz-Eakin tells host Steve Inskeep.
McCain, who has previously characterized himself as a "deregulator," would seek to have the same regulation for the same types of economic transactions. This is not an issue of more or less regulation, Holtz-Eakin says. "It's making sure the playing field is level and that everyone gets a fair chance."
He calls the economic crisis a complete failure on a bipartisan basis.
"Mass securitization and new exotic financial instruments really lead a lot of firms into bankruptcy, lead a lot of people into loans they couldn't handle," he says.
Holtz-Eakin says McCain challenged the Bush administration on Fannie Mae and Freddie Mac back in 2005, arguing that they should be downsized and sold off, but it wasn't a priority for the administration.
"And now you see what we have," he says. "We have $5.6 trillion worth of debt, now explicitly backed by taxpayers ... and that's not acceptable. We can't do this, where private individuals, shareholders and management are making a pile of money at the taxpayers' expense."
Holtz-Eakin says McCain feels CEO salaries would be reined in quickly if they were put before shareholders for a vote. Shareholders might start thinking, "Gee, that could be my money or that could be money we plow into investment or research."
Income inequality is a big problem, Holtz-Eakin says, and the dividing line is education.
"Those with poor skills and low education do not succeed in this economy," he says. "[McCain] has proposed to reform dramatically our K-12 education system so that we stop failing so many young Americans."