McCain sees disaster if bailout bill fails again

Republican presidential nominee Senator John McCain (R-AZ) cups his ear noting some background noise at a small business economic roundtable discussion at EFCO Forms in Des Moines, Iowa September 30,2008.

INDEPENDENCE, Mo. (Reuters) - Republican presidential candidate John McCain said an improved bill to bail out Wall Street was a "decisive step in the right direction" and warned that if a Senate vote on Wednesday failed, the country's financial problems would get much worse.

"If the financial rescue bill fails in Congress yet again, the present crisis will turn into a disaster," the Arizona senator said on Wednesday during a campaign speech in Missouri, an electoral battleground state.

"In the case of this bill, I am confident there are enough people of good will in both parties to help see America through this crisis."

McCain, who is returning to Washington later in the day to vote on the bill, said its price tag would have implications for future spending, which he would address with a spending freeze if he wins the November 4 election.

"As president, I will impose a one-year spending freeze on every agency of the federal government, excepting only national defense, the care of our veterans and a few critical priorities," he said.

McCain said his administration would act swiftly to reform financial regulation and mortgage giants Fannie Mae and Freddie Mac.

"I will also act immediately with reforms to restore fairness, integrity, and financial sanity to the institutions that have failed us on Wall Street," he said.

"On my watch, the rules will be enforced, and violations will be prosecuted. And there will be new rules to shrink, sell, and clean house at Fannie Mae and Freddie Mac."

(Reporting by Jeff Mason; Editing by Chizu Nomiyama)