McCain slams 'casino culture' on Wall Street

The US government was “forced” into proposing a $85bn bail-out of insurance giant AIG because of “failed regulation, reckless management and a casino culture on Wall Street”, Republican presidential nominee John McCain said today.

The Arizona senator’s comments come after he flatly rejected the idea of a tax-payer bail-out for the nation’s largest insurer yesterday.

His Democratic rival Barack Obama blamed the crisis on the Republicans and said it was “a stark reminder of the failures of crony capitalism and an economic philosophy that sees any regulation at all as unwise and unnecessary”.

Central banks around the world have pumped tens of billions of pounds into money markets to try to ease nerves in a troubled economy which has already seen the collapse of 158-year-old US investment bank Lehman Brothers.

In a statement to reporters, Mr McCain, 72, said: “The government was forced to commit $85bn to stop the collapse of AIG.

“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.”

He added that the United States “must not bail out the management and speculators who created this mess”.

“They had months of warnings following the Bear Stearns debacle, and they failed to act,” he said.

“We should never again allow the United States to be in this position.”

Mr McCain said the US needed “strong and effective regulation, a return to job-creating growth and a restoration of ethics and the social contract between businesses and America”.

He added that “important questions” remained to be answered by Wall Street and said if there was “was misrepresentation on part of the company executives”, then “there must be penalties”.

“We need to change the way Washington and Wall Street does business, and as president I will,” he said.

Although Mr McCain has stepped up criticism of government regulators as he seeks the presidency, he has long favoured a reduction in corporate regulation.

Earlier he told ABC’s Good Morning America that he did not want the US government to bail out AIG.

“But there are literally millions of people whose retirement, whose investment, whose insurance were at risk here,” he said.

“They were going to have their lives destroyed because of the greed and excess and corruption.”

Mr McCain’s campaign also released two new TV adverts which said that he was the right leader to keep Americans’ savings safe.

“I’ll meet this financial crisis head on,” he says in one advert.

“Reform Wall Street. New rules for fairness and honesty. I won’t tolerate a system that puts you and your family at risk. Your savings, your jobs – I’ll keep them safe.”

Mr McCain stumbled badly on Monday when he said American economic fundamentals were in good shape, and suffered another awkward moment yesterday when he declared no more taxpayer money should be used to bail out private financial institutions such as AIG.

The Bush administration did just that within hours.

The economy, and how the next president would guide the US through the current crisis, will be critical as voters decide who to choose on November 4.

The latest Gallup Poll tracking survey shows the two men in a statistical dead heat.

Mr Obama said the Republican anti-regulatory fervour of recent years was to blame for part of the mess.

He also released an unusually-long two-minute television advert in which he stressed his message that the US needed “real change”.

“600,000 Americans have lost their jobs since January,” he says in the advert.

“Pay cheques are flat and home values are falling. It’s hard to pay for gas and groceries and if you put it on a credit card they’ve probably raised your rates.

“You’re paying more than ever for health insurance that covers less and less. This isn’t just a string of bad luck.

“The truth is that while you’ve been living up to your responsibilities, Washington has not. That’s why we need change. Real change.”

The 47-year-old Illinois senator said there was no easy solution to the economic difficulties, but added that he “approved this message because bitter, partisan fights and outworn ideas of the left and the right won’t solve the problems we face today”.

“But a new spirit of unity and shared responsibility will,” he said.

Yesterday, Mr Obama said the nation faced “the most serious financial situation in generations” and declared Mr McCain and President George Bush jointly “support ideological policies that made the crisis more likely, do nothing as the crisis hits and then scramble as the whole thing collapses”.

Events this week were “the final verdict on an economic philosophy that has completely failed,” Mr Obama said.