MELISSA BLOCK, host:
From NPR News this is All Things Considered, I'm Melissa Block.
MICHELE NORRIS, host:
And I'm Michele Norris. The presidential debates are over. The candidates are in the home stretch. We're going to start this hour by looking ahead because soon either Barack Obama or John McCain will lead a country gripped by the worst economic turmoil in generations. And as NPR's Chris Arnold reports, whoever ends up in the White House will have historic power to reshape the nation's financial system.
CHRIS ARNOLD: The next president is going to inherit a giant mess. But he'll also be in a position to push through sweeping reforms. The way people get their home loans could be reinvented, the government could control the risks that are being taken on Wall Street, and millions of people are facing foreclosure are looking for help. Michael Beschloss is a presidential historian.
Mr. MICHAEL BESCHLOSS (Presidential Historian): The test of the next president being a great president is going to be, is this someone who does what an ordinary president does, which is try to put out the fire and fix things immediately, but not very much more than that?
ARNOLD: Or someone who makes historic changes to reform the system. The executive branch has just been given great latitude to act here.
Mr. BESCHLOSS: When Congress passed that bailout bill, it was really crossing the Rubicon. When before in American history, it's been pretty rare that you've had a situation that the government could get involved in buying and selling stocks, deciding which banks might be worth shoring up. When we're in a crisis time, people are willing to let a president have a lot more power than they would in a normal time.
ARNOLD: That gives a president a window of opportunity to take bold actions while the crisis is under way. That happened during the last great financial crisis. John Steele Gordon is an economic historian. He points to March 4th, 1933, the day Franklin Roosevelt was inaugurated.
Mr. JOHN STEELE GORDON (Economic Historian): The next three months became known as the hundred days. And in those hundred days, Franklin Roosevelt exercised simply extraordinary power. Nobody has ever had the sort power that Frank Roosevelt had in those hundred days. He would send legislation up to Capitol Hill. It would pass through both Houses virtually unexamined and be back on his desk the same day.
ARNOLD: We're not quite there right now. But even with the unpopular lame duck President Bush, his Treasury Secretary Henry Paulson has powerful leverage to get what he wants. That was evidence just the other day when Paulson leaned on the banks to agree to give up stock in return for help. In that moment, the government nationalized a chunk of the banking industry. John Steele Gordon.
Mr. GORDON: It's amazing to think that the secretary of the Treasury could call the CEOs of the nine largest banks in the country into a Treasury conference room and give them a sheet of paper saying, sign this, and you know, we're not changing the terms. And within a couple of hours, all nine of them had signed it because they realized they had effectively no choice.
ARNOLD: Many economists want a laundry list of reforms. One is to set up a much more aggressive regulator to oversee risk and leverage inside financial firms. Another is reshaping Fannie Mae and Freddie Mac, those two giant companies at the heart of the home mortgage market. And some want to see an overhaul of that whole industry. Basically now selling mortgages can be like selling used cars. Brokers get commissions even if they're selling junk. Mike Calhoun heads up the Center for Responsible Lending.
Mr. MIKE CALHOUN (Head, Center for Responsible Lending): Our current mortgage market rewards lenders and companies for making the loans even if the loan is abusive or unsustainable.
ARNOLD: Another problem the next president is likely to try to tackle, right now, 200,000 households a month are going into foreclosure. The $700 billion rescue package didn't really address that underlying problem. Of course, there's the danger that the next president could overreach in all kinds of ways and that new regulations could get passed that aren't thought out well and that are too constricting and hurt the economy. So the stakes are high for whichever candidate inherits these greatly expanded presidential powers. Chris Arnold, NPR News.
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