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McCain Says U.S. Should Let AIG Fail to Prevent `Moral Hazard'
By Nancy Moran
Sept. 16 (Bloomberg) -- Republican presidential nominee John McCain said the U.S. government should let American International Group Inc. fail to prevent the financial burden from being placed on taxpayers.
``I think you have to, but I also know that there are great efforts being made to try to raise sufficient capital to keep AIG in business,'' McCain said in an interview with CNBC from Miami.
Taxpayers shouldn't be held responsible for the bad performance of U.S. institutions, and ``the moral-hazard issue is something that we have to take head-on,'' he told the cable news channel.
His comments came as the New York-based insurer sought as much as $75 billion in loans arranged by Goldman Sachs Group Inc. and JPMorgan Chase & Co. to restore capital, according to two people familiar with the situation. New York Governor David Paterson, who appeared on the network after McCain, said AIG probably has a day left to try to raise funds.
McCain, who faces Democratic candidate Barack Obama in November's general election, said U.S. Treasury Secretary Henry Paulson ``has been correct'' in stating that taxpayers shouldn't be held responsible for business failures.
The U.S., at the same time, needs to make a commitment to the American people that ``we will fix this and it will never happen again,'' McCain said.
Regulatory agencies that were designed in the 1930s need to be consolidated to meet the need for transparency and effective regulation of markets in a ``global, instantaneous economy.''
``There is a risk of overregulation and overreacting. Congress has a tendency to do that, but to say this is just a blip on the radar -- this is serious.''
``This isn't just going to cost jobs on Wall Street, this is going to cost jobs all over America,'' McCain said.
By Nancy Moran
Sept. 16 (Bloomberg) -- Republican presidential nominee John McCain said the U.S. government should let American International Group Inc. fail to prevent the financial burden from being placed on taxpayers.
``I think you have to, but I also know that there are great efforts being made to try to raise sufficient capital to keep AIG in business,'' McCain said in an interview with CNBC from Miami.
Taxpayers shouldn't be held responsible for the bad performance of U.S. institutions, and ``the moral-hazard issue is something that we have to take head-on,'' he told the cable news channel.
His comments came as the New York-based insurer sought as much as $75 billion in loans arranged by Goldman Sachs Group Inc. and JPMorgan Chase & Co. to restore capital, according to two people familiar with the situation. New York Governor David Paterson, who appeared on the network after McCain, said AIG probably has a day left to try to raise funds.
McCain, who faces Democratic candidate Barack Obama in November's general election, said U.S. Treasury Secretary Henry Paulson ``has been correct'' in stating that taxpayers shouldn't be held responsible for business failures.
The U.S., at the same time, needs to make a commitment to the American people that ``we will fix this and it will never happen again,'' McCain said.
Regulatory agencies that were designed in the 1930s need to be consolidated to meet the need for transparency and effective regulation of markets in a ``global, instantaneous economy.''
``There is a risk of overregulation and overreacting. Congress has a tendency to do that, but to say this is just a blip on the radar -- this is serious.''
``This isn't just going to cost jobs on Wall Street, this is going to cost jobs all over America,'' McCain said.
