Video: McCain: SEC chief 'betrayed public trust'

updated 9/18/2008 5:49:48 PM ET 2008-09-18T21:49:48

Republican John McCain, buffeted by criticism about his response to Wall Street's financial problems, said Thursday he would fire the SEC chairman and create a special trust to help strengthen weak institutions.

In all but calling for the firing of Securities and Exchange Commission Chairman Christopher Cox, McCain turned on a fellow Republican and former 17-year House member who served on committees overseeing investor protection and U.S. capital markets. President Bush appointed Cox in 2005.

McCain also tried to counter Democratic rival Barack Obama as the two White House contenders jockeyed to explain how, as president, they would prevent the sort of financial tremors that have shaken the financial industry and consumer confidence this week.

Economic issues traditionally favor Democrats and were expected to be especially potent for Obama in an election cycle after eight years of a Republican White House and a Congress controlled mostly by the GOP. McCain has a long history of opposing government regulation and receives economic advice from former Texas Sen. Phil Gramm, an advocate of free-market principles. In addition, McCain has served on and has been chairman of the Senate Commerce Committee, which has regulated — and deregulated — vast parts of the economy.

"The chairman of the SEC serves at the appointment of the president and, in my view, has betrayed the public's trust," McCain told a rally in this battleground state. "If I were president today, I would fire him."

In a statement, Cox chalked up McCain's comments to the heat of the campaign. Cox said the financial crisis was "presenting new challenges on an hourly basis" and that "steadiness and reduction of uncertainty" is what the U.S. and the world needed.

"History will judge the quality of our response to this economic crisis, but now is not the time for those of us in the trenches to be distracted by the ebb and flow of the current election campaign," Cox said. "And it is precisely the wrong moment for a change in leadership."

Cox said he's always been clear about his intent to leave the SEC when the Bush administration ends in January 2009. Cox's term officially ends in June 2009, but he could stay on until a successor is named.

Campaigning in New Mexico, Obama mocked McCain's call to fire the SEC chairman, basically saying why stop at Cox.

"In the next 47 days you can fire the whole trickle-down, on-your-own, look-the-other-way crowd in Washington who has led us down this disastrous path," he told a campaign rally in Espanola. "Don't just get rid of one guy. Get rid of this administration. Get rid of this philosophy. Get rid of the do-nothing approach to our economic problem and put somebody in there who's going to fight for you."

McCain also proposed creating a trust to review mortgage and financial institutions, identify weaker ones and strengthen them before insolvency.

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"Today we need a plan that doesn't wait until the system fails," the senator said. "For troubled institutions, this will provide an orderly process through which to identify bad loans and eventually sell them."

McCain's running mate, Alaska Gov. Sarah Palin, joined him in Cedar Rapids and drew some of the biggest cheers with her stump remarks. She fumbled a bit at the start when she said it was good to be in "Grand Rapids" — the Michigan city they'd just flown in from.

Their speeches were repeatedly interrupted by protesters who were dragged away screaming while the audience broke into chants of "USA, USA," and "We Will Win, We Will Win."

Palin also talked about business tax cuts that would be a priority in "a Palin and McCain administration." Afterward, the pair visited a flood-damaged area of Cedar Rapids; their schedule initially called for just the rally.

Stocks on Wall Street have tumbled this week amid the worst financial meltdown in the U.S. since the Great Depression. The Lehman Brothers investment bank filed for bankruptcy, retail broker Merrill Lynch agreed to be sold for half its recent value and the government agreed to an $85 billion loan to prop up mega-insurer AIG.

Earlier in the week, Obama criticized McCain for suggesting creating a high-level commission to study its causes, similar to the panel that investigated the Sept. 11, 2001, terrorist attacks.

McCain, meanwhile, has shifted from initially saying the country's economic fundamentals were strong. Since being ridiculed for that, he now says the economy is in "crisis" but that the fundamental productivity of the American worker endures.

On Thursday, he accused Obama and Democratic congressional leaders of exploiting economic problems for political gain.

"My friends, that is the kind of me-first, country-second politics that are broken in Washington," said McCain, a 26-year member of Congress. "My opponent sees an economic crisis as a political opportunity instead of a time to lead. Sen. Obama isn't change; he's part of the problem with Washington."

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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