McCain Stuck Between a Rock and a Stock Price

In the midst of the mortgage crisis America is preparing to vote for a new president. Voters are interested in learning how candidate John McCain will handle the Sallie Mae/Freddie Mac situation should he be elected.

By James R. Lindamood

Conservative voters have been skeptical about John McCain since he became the presumptive nominee for the Republican Party. However, lately it seems that McCain has been pushing all the right buttons with the party's conservative foundations. McCain's views on tax cuts and budget reform have begun to draw more and more conservative Republics over to his side of the room. The biggest test of his candidacy so far is going to be his adopted position on the Sallie Mae / Freddie Mac debacle.

The issue at hand is the proposed “bail out” of the two mortgage powerhouses. Federal aid comes in a housing package that may come up for a Congressional vote next week. While Republican Party leaders have agreed that some assistance for the two mortgage giants may be warranted, they do not believe that a federal bail-out is the proper way to go.

Conservative Republics want to see McCain reform the way that the two mortgage leaders do business. While financial assistance may be agreed upon, they want to see tighter governmental regulation of the industry, and in particular of the two government-sponsored companies at issue. Bush administration officials have proposed a solution that the Republican base doesn't think is strong enough; they want to either sever the government's ties to the companies completely, or tighten their mandate to guide the way they do business.

While Rep. Paul D. Ryan of Wisconsin says that he, “would like to see the nominee of our party be in favor of cantaining these entities, so they don't put the taxpayers at risk ever again,” it has long been the policy of the conservative Republican base that businesses should be left alone, and market forces should guide their practices. However, with over half the country's mortgage debt being held by Freddie and Fannie, that may not be feasible. If the financial problems of the two companies worsen, the economy as a whole will suffer.

Many Republican pundits, however, doubt McCain's willingness to go far beyond the legislation and into the unknown. By agreeing to the legislation, he may ostracize what support he has within his own party, but if he doesn't support a bail-out, he may be painted as “unsympathetic” during the elections, and subsequently lose.