(Reuters) - The Federal Reserve on Tuesday slashed U.S. interest rates by a hefty three-quarters of a percentage point in another step to try to contain a fast-growing financial crisis.
Following are the presidential candidates’ reaction to the moves:
McCain has the “utmost confidence” in Fed Chairman Ben Bernanke and supported his decision to step in, senior adviser Douglas Holtz-Eakin said by phone.
Asked if federal funds should be used to bail out Wall Street, Holtz-Eakin said: “If the financial system were to worsen considerably from where it is now, it would put at risk too many jobs, and so policies have to be devoted to shoring up that financial system. Those are appropriate policies.”
Speaking before the Fed took action last week, McCain said he hoped a bailout would not be necessary.
“Bailout always have intended consequences and unintended consequences,” McCain told reporters on his campaign bus. “After the savings and loan crisis (of the 1980s), I think we all knew the government had to act. But we wasted billions.”
Speaking shortly before the Fed action, Clinton emphasized the need to address the home foreclosure crisis and said cutting interest rates would not be enough to fix the economy.
“Driving the cost down hopefully will spur some economic activity,” she said in Philadelphia. “I don’t think that alone will fix our problem.”
“If we don’t deal with the home foreclosure crisis, the economy will not recover.”
Commenting on the rate cut, Obama said: “The Fed cannot solve this problem alone. The president and Congress must work together to adopt policies that will help those suffering the most in this economic crisis -- working families and homeowners. That’s why I will continue to work with Senator Dodd and the rest of my colleagues in the Senate to adopt a responsible and fair housing policy that helps families avoid foreclosure, reduces potential losses for investors, and injects more credit and confidence into the marketplace.”
Earlier, Obama said it was premature to talk about taxpayer-funded bailouts but added that government officials must ensure that Wall Street’s woes do not take a huge toll on the broader economy.
He urged passage of legislation that would encourage lenders to buy or refinance failing loans, which he said would prevent more foreclosures.
He criticized President George W. Bush for failing to take steps to prevent the crisis but had praise for Treasury Secretary Henry Paulson and Bernanke.
“I‘m encouraged that they’re trying to act swiftly to prevent further erosion in the markets,” he said.
Reporting by Andy Sullivan, Caren Bohan, and Jeff Mason; editing by Philip Barbara