Obama compares housing crisis to Great Depression

CAPE GIRARDEAU, Missouri Wed May 14, 2008 8:46am EDT

Democratic presidential candidate Senator Barack Obama (D-IL) speaks at the Thorngate Limited garment factory in Cape Girardeau, Missouri, on the night of the West Virginia presidential primary, May 13, 2008. REUTERS/John Gress

Democratic presidential candidate Senator Barack Obama (D-IL) speaks at the Thorngate Limited garment factory in Cape Girardeau, Missouri, on the night of the West Virginia presidential primary, May 13, 2008.

Credit: Reuters/John Gress

CAPE GIRARDEAU, Missouri (Reuters) - Democratic presidential front-runner Barack Obama compared the U.S. housing crisis to the Great Depression on Tuesday during a stop in Missouri, a key battleground state in the November election.

The Illinois senator, who has a nearly insurmountable lead over rival Hillary Clinton in the race to become their party's White House nominee, said poor financial regulation was a common thread between the sluggish state of the economy now and the situation in the 1920s and 1930s.

"I don't think that we're ... necessarily going in the direction of the Depression," he said in response to a question during a visit to a suit-making factory.

"There are some similarities, though, to what happened back in the late 20s and early 30s and what's been happening now, and the biggest similarity is how we've been dealing with Wall Street and what's happening in the financial markets."

Obama said the U.S. housing crisis resulted from a lack of regulation of mortgage lenders and investment banks who ended up with worthless assets, leading people to panic.

"As your president my job is to regulate what happens in the financial markets to make sure that people aren't taking these kinds of risks and that we're having full disclosure," he said.

"If we do that then I think we can feel pretty confident we're going to avoid a depression."

Obama repeated his call for measures to help people facing foreclosure stay in their homes. Clinton has also laid out proposals to address the issue.

(Reporting by Jeff Mason, editing by Chris Wilson)

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