Candidates continue debate on relief for mortgage holders

ByABC News
October 9, 2008, 2:46 AM

WASHINGTON -- Republican John McCain on Wednesday touted his plan to have government buy up bad mortgages, while Democrat Barack Obama said his rival's approach would hurt taxpayers and help bad lenders.

A day after the second presidential debate was dominated by exchanges on the sagging economy, McCain told supporters in Pennsylvania his $300 billion plan would help struggling homeowners obtain "manageable mortgages."

His plan would direct the Treasury secretary to buy the mortgages directly and use funds from the $700 billion financial bailout approved by Congress last week. The bailout package currently calls for the government to buy mortgage-backed securities and allow — but not require — direct purchases of mortgages.

"We must go to the heart of the problem, and right now that problem is a housing crisis," McCain said.

Obama has said he wants the government to consider such a move, but he has not called for a mandate. His campaign said a key difference between McCain's proposal and the new government bailout program is that lenders would absorb losses that would otherwise go to taxpayers.

"The biggest beneficiaries of this (McCain) plan will be the same financial institutions that got us into this mess," Obama economic policy director Jason Furman said.

McCain policy adviser Douglas Holtz-Eakin said the Republican wants direct action so homeowners get relief quicker. He said the McCain plan could affect as many as 10 million mortgage holders.

In Indiana, Obama again sought to link McCain to President Bush. "It is time to turn the page on eight years of economic policies that put Wall Street before Main Street."

The campaigns also followed up the debate with new television advertisements. Obama's spot criticizes McCain's plan for health care tax credits, saying it would lead to taxes on employer-based benefits.

McCain's ad, meanwhile, questions Obama's qualifications, calling him the "most liberal" member of the U.S. Senate and saying he is "not presidential."