Coverage of the latest crises in the US financial system casts the situation is dire terms, presenting the demise of Lehman Brothers as a potential harbinger of future collapses. The Washington Post (9/15) reports this morning, "Lehman Brothers filed for bankruptcy early Monday morning, becoming the largest financial firm to fail in the global credit crisis, after federal officials refused to help other companies buy the venerable investment bank by putting up taxpayer money as a guarantee." The Wall Street Journal reports "the American financial system was shaken to its core on Sunday," and "a sense of foreboding gripped Wall Street," while the New York Times titles one of its stories on the crisis "Nation's Financial Industry Gripped By Fear," and the Wall Street Journal says in an editorial, "We are getting a Category 5 test of our financial levees."
A number of reports pay particular attention to the role of the US government in the Lehman crisis, in some cases blaming Federal officials for the firm's expected collapse. In reporting typical of much of the media coverage, the New York Times says "Wall Street and the federal government played a game of chicken over the weekend, and neither side backed down, pushing Lehman Brothers toward bankruptcy and setting off worries of a worldwide sell-off when markets open on Monday." The Wall Street Journal says that while the US government "bailed out Fannie Mae and Freddie Mac a week ago and orchestrated the sale of Bear Stearns Cos. to J.P. Morgan Chase & Co. in March," it "played much tougher with Lehman," refusing "to provide a financial backstop to potential buyers." Another Wall Street Journal story reports that "despite serious efforts by potential bidders and Lehman, a deal never came together over the weekend, largely because the federal government refused to put up any cash."
On NBC Nightly News, CNBC's senior economics reporter Steve Liesman said, "The big story here" is that "the government, so far, has refused to put any money in and is letting the markets sort this out as best they can on their own." The Washington Times reports "the federal involvement appeared minimal, aimed mostly at facilitating the liquidation of Lehman," with Treasury Secretary Henry Paulson "adamantly against providing any guarantees on Lehman's money-losing assets like the guarantee the Fed provided on $29 billion of Bear Stearns mortgages in March to facilitate Bear's takeover by J.P. Morgan." The Washington Post says that the government's "decision not to intervene carries the risk that the ripples of Lehman's failure could prove impossible to contain." The New York Times, USA Today, AP run similar reports, while the Financial Times notes "some saw a good cop/bad cop act, with Mr Paulson taking a hard line on public funds while Tim Geithner, the president of the New York Fed, looked for ways to get a deal done that would be subject to this constraint."
Liberal columnist Paul Krugman asks in the New York Times, "Will the US financial system collapse today, or maybe over the next few days? I don't think so -- but I'm nowhere near certain." Paulson "seems to be betting that the financial system -- bolstered, it must be said, by...special credit lines -- can handle the shock of a Lehman failure. We'll find out soon whether he was brave or foolish."
More Worrying News In another sign of trouble in the financial system, the Wall Street Journal reports, "In a rushed bid to ride out the storm sweeping American finance, 94-year-old Merrill Lynch & Co. agreed late Sunday to sell itself to Bank of America Corp. for roughly $44 billion." The AP notes that following the Lehman saga, "many market participants believe Merrill Lynch -- the first of the major financial services firms to oust its CEO after the credit markets seized up last year -- might have been the next firm to lose the confidence of its investors, counterparties and clients." The New York Times, Los Angeles Times and Washington Post also report the story.
The Wall Street Journal also reports, "Insurer American International Group Inc., succumbing to relentless investor pressure that drove its shares down 31% on Friday alone, is pulling together a survival plan that includes selling off some of its most valuable assets, raising more capital and possibly going to the Federal Reserve for help, people familiar with the situation said." The Journal adds that "during a weekend scramble to shore up its finances, AIG turned down a capital infusion from a group of private-equity firms because it would have effectively given them control of the company, an 89-year-old giant that does business in nearly every corner of the world." The AP and New York Times run similar reports.
Moreover, the Financial Times reports that while "attention has focused on the danger presented by the failure of Lehman Brothers...the failure of a commercial bank such as Washington Mutual can have systemic consequences if it threatens a run on other weak banks." Washington Mutual is "the sixth largest bank in the US," and "has lost more than a third of its market value recently as investors fear it lacks liquidity and capital to survive the credit crisis." The Times adds, "Washington Mutual had $143bn in insured deposits on June 30 about three times the size of the deposit insurance fund, but less than half of its $307bn assets."
The Washington Post (9/15, Goldfarb, 696K) reports, "The federal government said today it would not allow mortgage finance firms Fannie Mae and Freddie Mac to pay their departing chief executives the 'golden parachutes' outlined in their contracts." The severance packages "could have been worth as much as $25 million" but "a law passed by Congress this summer granted the director of FHFA, James Lockhart III, the power to limit severance payments made to departing executives."
Gen. David Petraeus, widely credited for vastly improving the situation in Iraq, is about to take over as head of US Central Command, overseeing US military involvement in the Middle East, Afghanistan and the rest of Central Asia." USA Today reports Petraeus told his troops in Iraq "in a farewell letter issued Saturday that they have brought hope to a country that had been 'besieged by extremists' and on the verge of civil war." Wrote the General, "Your accomplishments have, in fact, been the stuff of history." In Iraq, Petraeus "will be replaced in Iraq by Gen. Raymond Odierno, who until seven months ago had served under Petraeus as the No. 2 ranking American officer in Iraq and helped execute the surge strategy."
Petraeus also gave an interview to the AP, in which he said that "experience in Iraq shows it will take political and economic progress as well as military action to tackle increased violence in Afghanistan." Said Petraeus, "You don't kill or capture your way out of an industrial strength insurgency. ... We've got a situation in Afghanistan where clearly there have been trends headed in the wrong direction. ... Military action is absolutely necessary but it is not sufficient. Political, economic and diplomatic activity is critical to capitalize on gains in the security arena."
EU Diplomat: Conditions Worst Since 2001 The New York Times reports, "One of the most experienced Western envoys in Afghanistan said Sunday that conditions there had become the worst since 2001. He urged a concerted American and foreign response, even before a new American administration took office, to avoid 'a very hot winter for all of us.'" The envoy, "Francesc Vendrell, a Spanish diplomat with eight years' experience in Afghanistan, especially criticized the growing number of civilian deaths in attacks by American and international forces," which he said "have created 'a great deal of antipathy' and widened the distance between the Afghan government and citizens."
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Sen. John McCain is up over Sen. Barack Obama in two national polls out in the last 24 hours, while the race is tied in a third. The Gallup daily presidential tracking poll of 2,787 registered voters taken September 11-13 shows McCain leading Obama 47%-45%. The Rasmussen Reports automated presidential tracking poll for September 14 shows McCain leading Obama 50%-47%. Rasmussen notes that this is the first time McCain has reached the 50% threshold since Obama secured the nomination. A Newsweek poll of 1,038 registered voters taken September 10-11 shows Obama and McCain tied at 46%.
On ABC World News last night, Mark Halperin said, "I talked to a lot of Democratic strategists who are helping the campaign or inside the campaign. They are not panicked, but they are concerned. Three things that all of them point to. One, they say the Obama campaign should stop focusing so much on Sarah Palin. They're not running against Palin." Second, "they say, Obama has to find a way to get up in McCain's face, to get inside his head the way the McCain campaign has gone after Obama. They are frustrated by how many attacks, many of them false, coming from the McCain campaign." And then "the most important one they all cite, they say Obama has to get back to talking about the economy."
At the state level, Karl Rove, on Fox News Sunday said that in his analysis of state polls for the first time since May Sen. McCain leads Sen. Obama, 227 electoral votes to 215. However, according to Rove, "If you take the undecided states, the toss-up states, and put them into the camp of whoever leads, give the states where even it's within the majority of error, Obama leads, he gets 273 electoral votes and McCain gets 265. So the advantage is still with Obama."
McCain Edges Obama In Nevada A Rasmussen Reports automated poll of 700 likely Nevada voters taken September 11 shows McCain leading Obama 49%-46%.
McCain Up 4 In Ohio A Suffolk University poll of 600 likely Ohio votes taken September 10-13 shows McCain leading Obama 46%-42%.
Race Tied In Minnesota The Minneapolis Star Tribune (9/14, Von Sternberg, 357K) reports that a "new Star Tribune Minnesota Poll shows that the race is now a dead heat between Barack Obama and John McCain, each supported by 45 percent of likely voters in the state."
Obama Leads In Iowa By 12 Points In Des Moines Register Poll A Des Moines Register poll shows Obama leading McCain in Iowa by a margin of 52%-40%. The survey of 801 Iowa voters was conducted over September 8-10.
Obama Holds Small Lead In New Jersey A Marist poll of 805 registered New Jersey voters taken September 5-8 shows Obama leading McCain 47%-40%. Among a smaller sub-sample of 584 likely voters, Obama's lead is just 48%-45%.
Race Expected To Be Fought In Familiar States The Washington Post reports in a front page story that Obama's advisers once "talked optimistically about dramatically redrawing the electoral map. Their optimism remains, but as the campaign heads into its final 50 days, strategists for both parties say the election is likely to be decided on mostly familiar ground." As in "the past two campaigns, four big states -- Pennsylvania, Michigan, Ohio and Florida -- are expected to dominate the attention of the candidates."
One other state is drawing a significant amount of attention. The Denver Post reports that both Obama and Gov. Sarah Palin are slated to campaign in the battleground state of Colorado today, which also played host to the Democrats' convention. Palin "will speak this morning at a rally at the Jefferson County Fairgrounds, and Obama has three events - in Grand Junction, Pueblo and Denver - planned for today and Tuesday."
Sen. Barack Obama reported yesterday that he raised $66 million in August, the best fundraising showing yet by a presidential candidate for a one-month period. Some in the media are treating as a victory for this campaign for example, ABC World News reported, "The polls are neck a neck, but Senator Barack Obama has scored a victory in fund-raising. He reported raising $66 million in August. That is a record for a presidential candidate. Senator John McCain reported $47 million in donations, a personal best for his campaign."
However, most reports note, as The Politico does, that the amount is "only a down payment on the huge sums the Democratic presidential nominee must continue to collect in order to compete through the Nov. 4 election" because he opted out of public financing which gives about $85 million to the McCain campaign. In addition, the financing of presidential races is done both by the candidates and their national committees. The Washington Post says Obama "may not have an overwhelming financial advantage against McCain because of a strong effort by the Republican National Committee, which has outraised its Democratic counterpart for months." The RNC "raised about $23 million in August, and through its various state and federal accounts, the Republican Party started September with more than $110 million at its disposal for the presidential contest, GOP sources said." The Los Angeles Times reports that DNC brought in $17.3 million in August. The Wall Street Journal concludes that between "party funds and campaign funds, the Republicans appear to have had about $200 million banked as of Sept. 1. The Democratic total as of that date appears to have been roughly half that."
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Democrats continued their barrage against Gov. Sarah Palin, even as some analysts were warning it is harming the Obama campaign. In a Financial Times column, Clive Crook says if Sen. Barack Obama "loses this election to John McCain something which, for the first time, I regard as a real possibility history will point to" McCain's selection of Gov. Sarah Palin "as the pivotal moment," which was when "when livid Democrats and their friends in the media voiced their feelings about her and much of the electorate, and gravely harmed their candidate's prospects." The Democratic "talking-heads had to exult in their disdain for Ms Palin and all she represents namely, a good part of the electorate whose support Mr Obama needs. In the space of a few days, they irreversibly damaged Mr Obama's candidacy and transformed this election." Bill Kristol, on Fox News Sunday echoed a similar line, saying that the media "is really helping Sarah Palin."
Meanwhile, Obama's surrogates continued their offensive against Palin on the weekend shows yesterday. Rep. Debbie Wasserman-Schultz (D), on CBS's Face the Nation said, "So the tough questions that have been asked of Sarah Palin thus far just have been about the fact that she doesn't know anything and isn't ready to be vice president." Sen. Charles Schumer (D), on NBC's Meet the Press, claimed Palin "is campaigning on a basis of reform...and she talks the talk, but so far she hasn't walked the walk. There was an article in today's newspaper that said that part of the Bush doctrine she evidently believes in is cronyism, because she filled the Alaska government with old pals." The Washington Post adds that New Mexico Gov. Bill Richardson (D), during an appearance Sunday on CNN's "Late Edition," said of Palin, "It is clear that she doesn't pass the test as a national security candidate."
Perceived Attacks On Small Towns May Handicap Democrats According to U.S. News and World Report, "In order to win in 2008, Democratic leaders knew that they needed to woo small-town America. ... So the Democratic machine went to work, bringing Barack Obama to places like Montana, hoping that he could build on that dissatisfaction and show that the Democratic Party cares about Main Streets across the U.S.A., no matter how rural or sparsely populated. Which is why the attack on Alaska Gov. Sarah Palin, and her prior experience of being the mayor of a town of 9,000, is both strange and troubling. The 2000 and 2004 electoral maps show, and political experience confirms, that America is a place of small towns. So casting aspersions on those who live and govern in Small-Town America seems to be, well, a stupid way of courting those voters."
In an analysis on its website, CNN discusses the lack of media attention that Sen. Joe Biden has received in the aftermath of Gov. Sarah Palin's emergence in the race, saying, "the only surefire way Biden can make the news is to go directly after Palin -- something he usually refuses to do." To some extent, Biden seems to be taking that advice, though, as The Politico reports Biden "will deliver a high-profile address intended as the first attack in a sustained anti-McCain offensive in a speech called 'Bush 44' he'll deliver Monday in the key battleground state of Michigan." Biden will "assert - as the title indicates - that a McCain presidency would amount to a third Bush term and will focus, in a detailed, comprehensive and aggressive way, on John McCain's domestic policies and harsh campaign tactics, a campaign aide told Politico." The speech is "intended to integrate him more into the broader campaign strategy and to use him as a super-surrogate to take high-profile hits at McCain."
The AP reports in her "first cautious steps on the campaign trail without running mate John McCain," Gov. Sarah Palin "is making a brief swing through the West. It's a region the campaign believes will be particularly receptive to Palin's Washington-outsider message and outdoorsy persona" and "a place poised to swing the election." Palin stopped in Carson City, Nevada, and Denver, "places full of voters who need no explanation on the nuanced difference between a hockey mom and a soccer mom." ABC World News adds, "Last night, Palin made her first solo campaign stop at the Pony Express Pavilion in Carson City, Nevada. As a lot of new questions are being raised about Palin's political resume, the Republican faithful seem to be keeping the faith for now. They're enthusiasm for her is undiminished." Bloomberg News says during her first solo swing, Palin "stuck closely to scripted applause lines in her standard stump speech, avoiding unrehearsed statements to the public or the press."
The Washington Post reports Sen. Hillary Rodham Clinton "made a pair of campaign stops in this important battleground" of Ohio on Sunday for Sen. Barack Obama "generating large, passionate crowds -- and barely mentioning Alaska Gov. Sarah Palin." The Post adds Clinton "mentioned Palin just twice in speeches here and in Akron, in one instance repeating an earlier line: 'No way, no how, no McCain and no Palin.'" The Washington Times adds Clinton, "who in a brutal Democratic primary fight drove a wedge between female voters" and Obama "in this critical electoral state, worked to repair the damage Sunday and stem a recent shift of white female voters to the Republican ticket."
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Jay Leno: "Well, if you watched TV last night, you know Charlie Gibson did something John McCain has never done -- interviewed Sarah Palin."
Jay Leno: "At one point, Charlie Gibson asked Palin about the Bush Doctrine, but she didn't know what it was. But, you know, to be fair, even Bush doesn't know what the Bush Doctrine is."
Jay Leno: "The other day while talking to a group of supporters, Joe Biden said that Hillary Clinton might have been a better pick for vice president than him. Well, that's one thing to get the base fired up, huh? Tell them they picked the wrong person! Yeah! That'll get them fired up!"
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