Obama backs investment in banks

October 14, 2008 5:15:46 PM PDT
Democratic presidential candidate Barack Obama endorsed the federal government's plan to invest $250 billion in the nation's banks, saying it will strengthen the financial system and give taxpayers some extra protection. "I think the idea of injecting capital directly into banks is a good one," Obama said Tuesday while campaigning near Toledo. "It gives taxpayers a better chance of getting their money out. Potentially, it also gives the Treasury some more direct mechanisms to monitor and apply some ground rules to participating banks."

Obama told reporters that he wants to see limits on the salaries of top executives at the banks that accept the money. He also says taxpayers must get the same ownership and returns as other investors in the banks.

"I think that if taxpayers invest in Goldman Sachs, they shouldn't get a worse deal than when Warren Buffet invests in Goldman Sachs," Obama said.

The Illinois senator also said he was open to the federal government to guaranteeing loans so that financial institutions will be more open to offering car loans, business loans and the other transactions needed to keep the economy going. He called that idea "potentially promising."

Mindful that bailouts for big business aren't popular with voters, Obama repeated his call for measures to help people feeling the economic pinch.

"We still need a rescue package for the middle class," Obama said a day after he discussed such options as a 90-day moratorium on foreclosures, a tax credit for businesses that create new jobs and letting people dip into retirement funds without a penalty.

"Those are all issues that await action by Congress, and if we don't get it done in the lame-duck session then they're going to be some of my top priorities when I am president," he said.

Obama said he hadn't reviewed the economic proposals that Republican John McCain offered Tuesday. But he did question one of McCain's proposals: cutting the capital gains tax in half.

Capital gains are the profits made from selling an asset. Obama said even the smartest investors aren't seeing any profits these days, so there would be little relief from reducing capital gains taxes.

"That probably is not going to be particularly useful in solving the financial crisis," he said.

Obama limited his campaigning as he prepared for his debate Wednesday against McCain.

On the Net:

McCain: http://www.johnmccain.com
Obama: http://www.barackobama.com