October 1, 2008 / 9:00 AM / 9 years ago

Obama, McCain urge revival of bailout

<p>Conservative leader and Prime Minister Stephen Harper listens to a question during a news conference in Ottawa September 29, 2008. REUTERS/Chris Wattie</p>

RENO, Nevada (Reuters) - White House contenders Barack Obama and John McCain sought to persuade skeptical Americans on Tuesday to back a $700 billion Wall Street bailout package and planned to be in Washington on Wednesday to vote on the measure.

A day after the U.S. House of Representatives sent global markets reeling by rejecting the financial rescue plan, Senate leaders said on Tuesday they scheduled a Wednesday evening vote on a new version of the measure, including a big increase in the amount of bank deposits protected by the government’s insurance program.

The campaigns of Democrat Obama and Republican McCain said the candidates would be on hand for the vote.

Obama and McCain had blamed each other for contributing to the collapse of the legislation on Monday, but a day later each stressed the need for both parties to work together to try to reach an agreement palatable to some of the 95 Democrats and 133 Republicans who combined to defeat the bailout.

Both encouraged Americans to back a Wall Street rescue because, as McCain said in Des Moines, Iowa, “Inaction is not an option.” If the bailout passes the Senate, as expected, it would put more pressure on the House to follow suit when it meets again on Thursday.

Raising the limit on bank deposit insurance to $250,000 from $100,000 is an effort to shore up consumer and business confidence in banks and prevent a run on deposits. It may also win over politicians trying to sell the public on the hugely expensive plan, funded by taxpayers and seen as benefiting wealthy financiers who helped create the problem.

A new poll by the Pew Research Center found weakening public support for the bailout. The Saturday-Monday survey said Americans backed the plan by only a 45 percent to 38 percent margin.

‘TIME FOR ACTION’

Obama told thousands at an outdoor rally in Reno: “It is not a time for politicians to concern themselves with the next election. It is a time for all of us to concern ourselves with the future of the country we love. This is a time for action.”

McCain had said he believed one reason the House had not approved the package was because “it hasn’t really sunk in that the people who are hurting and are being hurt are Main Street families, small businesses, those kinds of people that are the engine of our economy.”

Obama, an Illinois senator, and McCain, an Arizona senator, are trying to use the crisis to project leadership. Both Obama and McCain said they backed lifting the limit on bank deposit insurance as a way to restore confidence.

Democrats accused McCain of interfering last week when he suspended his campaign and flew to Washington to participate in bailout negotiations that ended in disarray.

Opinion polls showed Americans trusted Obama more to handle the U.S. economy, helping him jump out to a slight advantage over McCain with Election Day five weeks away on November 4.

His lead over McCain narrowed in a new ABC News/Washington Post poll. He was up by 50 percent to 46 percent among likely voters, down from a 9-point edge nationally a week earlier.

McCain has suggested some short-term steps to stem the crisis, such as broadening the use of the Treasury’s Exchange Stabilization Fund, which was used in the mid-1990s to help Mexico through a financial crisis. The Bush administration is already tapping it to help money market funds.

Marathon talks among Treasury Secretary Henry Paulson and Capitol Hill negotiators produced a deal over the weekend for a $700 billion bailout bill that included some provisions sought by lawmakers of both parties that would allow the government to recoup some of the cost of the rescue.

On Tuesday, amid the market turbulence and concerns about a deepening worldwide financial crisis, the presidential contenders stepped up their support for the package and pledged to do what they could to try to get it passed.

Additional reporting by Deborah Charles, Donna Smith and Jeff Mason; Writing by Patricia Zengerle; Editing by Peter Cooney

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