McCain reverses position on AIG bailout

Lake Orion, Mich. —- A day after he dismissed a federal bailout for American International Group, Republican John McCain announced Wednesday that circumstances had forced him to shift his position and that he supported the proposed $85 billion rescue of the insurance giant.

McCain, who in recent days has slammed what he called Wall Street greed and corruption for causing the latest downward spiral of the stock market, said he had to change his position on AIG to protect millions of Americans who could be hurt if the company was forced to seek bankruptcy protection.

“The government was forced to commit $85 billion,” McCain said in a statement. “These actions stem from failed regulation, reckless management and a casino culture on Wall Street that has crippled one of the most important companies in America.

“The focus of any such action should be to protect the millions of Americans who hold insurance policies, retirement plans and other accounts with AIG,” he said. “We must not bail out the management and speculators who created this mess.”

In a campaign stop in Elko, Nev., Democrat Barack Obama was also insistent that any federal action must not bail out the shareholders and management of AIG.

Obama also attacked McCain.

“His first reaction to this crisis on Monday was to stand up and repeat the line he’s said over and over and over again throughout this campaign —- quote —- ‘the fundamentals of our economy are strong,’ ” Obama said. “Now, his campaign must have realized that probably wasn’t a smart thing to say on the day of a financial meltdown, so they sent him back out a few hours later to clean up his remarks.”

Both candidates have called for regulatory reform to prevent further difficulties in the capital markets. And each has upped his populist rhetoric while insisting to voters that his opponent lacks the leadership to make substantial changes.

But the financial tailspin represents a special problem for McCain because Republicans generally favor open, unregulated markets and oppose federal loan guarantees and bailouts.

On Tuesday, McCain opposed the idea of an AIG bailout. “We cannot have the taxpayers bail out AIG or anybody else,” McCain said.

But the campaign was forced to reconsider, senior adviser Matt McDonald said Wednesday.

“He doesn’t like what happened, but his priority is working Americans who could be impacted,” McDonald said of McCain. “They’re the ones who have to be protected.”