The crisis in the nation's financial system precipitated by the bankruptcy of Lehman Brothers dominated US media coverage last night and this morning. Reports highlighted heavy losses on Wall Street, where the Dow Jones Industrial Average lost 500 points or 4%, and a sense of uncertainty and gloom among investors. The AP notes Lehman "filed the largest bankruptcy in American history. A second storied bank, Merrill Lynch, fled into the arms of Bank of America." NBC Nightly News termed it "certainly the largest financial disaster in decades in this country, and perhaps the end of an era in American business." ABC World News said, "That 500-point drop in the Dow is telling us investors are worried there's more to come."
A number stories and analyses warn the entire economy could now be at risk of serious damage. ABC World News, for example, said the "events on Wall Street will send aftershocks throughout the economy and could affect a lot of Americans." The Los Angeles Times reports, "On Monday the angst on Wall Street was no less palpable on Main Street." In a similar report, the Washington Post says "some economists worried whether Wall Street's troubles were spilling over into other parts of the economy, renewing pressure on the Federal Reserve to cut interest rates when it meets today." In a separate, more upbeat article, the Washington Post reports that "since the housing problems began to boil over last year, the economy has continued to expand," and "many analysts call the growth -- halting and tepid as it may be -- evidence of the strength and resilience of the US economy, which they say has evolved in ways that so far have allowed it to absorb the shocks to the housing and financial sectors."
In a front-page story titled "Wall Street Braces For More," the Los Angeles Times offers a markedly pessimistic assessment of what's ahead for the economy, while USA Today reports "some investors are coming to the conclusion that the entire [financial] system is at risk." The New York Times notes "economists and strategists" said "the market volatility was likely to continue for some time," and the Financial Times runs a similar story.
AIG, WaMu Could Be Next The Washington Post reports "the Federal Reserve and Treasury Department struggled yesterday to contain the fallout from an upheaval among the country's largest investment banks as they moved on to their next challenge -- engineering a $75 billion private rescue of the nation's largest insurance company," American International Group. The New York Times notes "the day started off with news that A.I.G. had requested a $40 billion bridge loan from the Fed, a request that was rebuffed, and ended with the word that its need had soared to $75 billion. The firm suffered several credit-rating downgrades Monday evening, including cuts by Standard & Poor's and Moody's." The Financial Times and Wall Street Journal, which titles its story "AIG Faces Cash Crisis As Stock Dives 61%," also report the story. Michael Lewitt, president of a money management firm, pens a New York Times op-ed in which he says AIG "poses a much larger threat to the financial system than Lehman Brothers ever did because it plays an integral role in several key markets: credit derivatives, mortgages, corporate loans and hedge funds."
The Washington Post, meanwhile, reports Washington Mutual, "whose stock has been hammered the past week, has raised concern because its demise would be the largest bank failure in U.S. history, putting stress on the Federal Deposit Insurance Corp. to cover depositors." Yesterday, "Washington Mutual...closed at $2 per share, down 27 percent on the day. The stock is 95 percent off its 52-week high."
World Markets Plummet The Wall Street Journal reports the "convulsions in the US financial system sent markets across the globe tumbling, as two of Wall Street's biggest firms looked set to exit the scene and insurance titan American International Group Inc. turned to the Federal Reserve and the state of New York for assistance." The AP reports "the steep decline in US stocks sent Asian stock markets tumbling sharply Tuesday as investors were rattled by concerns over an expanding global financial crisis." Japan's benchmark Nikkei 225 stock index "fell 4.8 percent to 11,632.99, falling under than 12,000-point level for the first time since mid-March." The Washington Post runs a similar story.
Media reports suggest the efforts by President Bush and Treasury Secretary Henry Paulson on Monday to stabilize the financial markets failed to reassure investors. On the its front page, the New York Times reports "trading opened sharply down Monday morning, and the mood later turned even gloomier, despite efforts by...Bush and...Paulson in separate appearances at the White House, to reassure markets that Wall Street's deepening problems would not weaken an already anemic economy." The Los Angeles Times notes the Dow suffered its "worst one-day percentage drop since the blue-chip index slid 4.6%, on July 19, 2002."
Fox News' Special Report reported as "the stock market suffered the its worst day since reopening after the 9/11 attacks...Bush's message was: fasten your seatbelts, this ride could get bumpy." USA Today reports Bush's "statement seemed to serve notice that the government will not continue to bail out Wall Street." The Wall Street Journal says the President's "relatively low-profile role in the government's response to the financial industry's woes is now coming under fire from Democrats who see a potential campaign issue."
The Washington Post says Paulson "signaled yesterday that taxpayer funds could still be used broadly to 'maintain the stability and orderliness of our financial system' but that he was pressing healthier Wall Street firms and commercial banks to join together to assist in rescuing individual firms -- much like the purchase of Merrill Lynch on Sunday by Bank of America." AFP notes Paulson "repeatedly brushed aside questions about whether the Bush administration ought to shoulder at least some of the blame for the crisis, saying: 'I'm playing the hand that was dealt me.'"
The New York Times reports, "A senior administration official, recounting the fall of Lehman, said that for weeks Mr. Paulson had been pressing Richard S. Fuld Jr., the company's chief executive, to sell the company," because otherwise "it would not survive." This "official" also "said that, several weeks ago, Mr. Paulson had a list in his mind of major institutions that might not be able to resolve their huge investments in troubled real estate and that the list consisted of Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch and Washington Mutual."
Paulson Praised Paulson wins praise in major papers' opinion pages this morning, including positive editorials in the New York Times, Wall Street Journal, Los Angeles Times and Washington Post, and praise from the Washington Post's Steven Pearlstein, the Washington Post's Sebastian Mallaby, and CNBC's Larry Kudlow, in a piece for National Review Online, among others.
The Washington Post reports key Democratic lawmakers "said yesterday that the government may need to create a federal entity to manage the assets of insolvent institutions, much as the Resolution Trust Corporation liquidated failed thrifts during the savings-and-loan crisis of the 1980s." Rep. Barney Frank, who chairs the House Financial Services Committee, "said he sees a growing recognition among economists and even some conservative market observers that further federal intervention may be needed to stabilize markets roiled by waves of foreclosures, plummeting home prices, paralyzed credit markets and a crisis of confidence in some of Wall Street's largest players."
The Hill reports "Democratic leaders responded to the financial crisis on Wall Street by pushing for a new economic stimulus package designed to direct money toward ailing industries and states." Democrats, adds The Hill, "see a huge political opportunity in the $50 billion package they have been planning for weeks." The Wall Street Journal says "the biggest piece of the Democratic bill would provide funding for infrastructure projects, congressional sources said. The bill would also provide money for food stamps and help to cash-strapped states that are shouldering increased costs in Medicaid, the health program for the poor."
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While Sen. Obama sought to hang the financial crisis around Sen. John McCain's neck, elements of the media gave pointedly different versions of McCain's remarks on the economy. ABC World News reported that in Western Colorado yesterday, Sen. Barack Obama said "the economic philosophy John McCain subscribes to is behind the most serious financial crisis since the Great Depression." Obama "seized on remarks McCain made in Jacksonville, Florida this morning to paint McCain as out of touch. McCain said these are difficult times, but he also said this." McCain was shown saying, "The fundamentals of our economy are strong." Fox News showed footage of the full McCain quote, "The fundamentals of our economy are strong, but these are very, very difficult times. I promise you we will never put America in this position again. We will clean up Wall Street!" The CBS Evening News adds that "a combative" Obama "pounced on the worrisome news from Wall Street as exhibit-A in his argument for change." Obama: "Too many folks in Washington and on Wall Street weren't minding the store."
Both Candidates Call For Increased Regulation The Financial Times reports McCain and Obama "both vowed on Monday to tighten regulation of the US financial system as they each sought to turn the Wall Street banking crisis to their electoral advantage." Obama "described the turmoil as the 'most serious financial crisis since the Great Depression,'" and "McCain promised 'major reform' to 'replace the outdated and ineffective patchwork quilt of regulatory oversight in Washington and bring transparency and accountability to Wall Street.'" In a widely-distributed piece, McClatchy also reports both candidates "reacted to Monday's stock market plunge by calling for more federal regulation and criticizing Wall Street." NBC Nightly News reported that Obama and McCain "generally agree on the response to the growing credit crisis" but "dig deeper and there are differences in the prescriptions they propose, differences that reflect their parties' philosophies of government regulation."
On its front page, the Washington Post says that "the question for the final seven weeks of the general-election campaign is whether...Obama or...McCain can convince voters that he is capable of leading the country out of the morass." McCain, adds the Post, "faces the bigger challenge," because "as the Republican nominee, he must answer for what has happened on President Bush's watch and offer a plausible explanation for why his conservative administration would be genuinely different." In addition, the New York Times reports on its front page that McCain's "record on the issue, and the views of those he has always cited as his most influential advisers, suggest that he has never departed in any major way from his party's embrace of deregulation and relying more on market forces than on the government to exert discipline."
Obama Skips Over Mention Of Fannie Mae In Criticism Of McCain The New York Sun reports in a blog posting, "There was a curious omission today when Senator Obama lit into Senator McCain over the presence of lobbyists in the upper echelon of his campaign." Noting that in Colorado yesterday, Obama "decoupled Freddie Mac from" Fannie Mae, the Sun says, "Why is Mr. Obama leaving Fannie Mae out of his lobbyist riff? It couldn't be because the man he first selected to oversee his vice presidential vetting process, James Johnson, was once Fannie Mae's CEO?"
In a number of new polls out in the last 24 hours, Sen. John McCain appears to be inching ahead in a number of key battleground states.
McCain Retakes Lead In Colorado A Fox News/Rasmussen Reports automated poll of 500 likely Colorado voters taken September 14 shows McCain leading Obama 48%-46%. In a similar survey last week, Obama led 49%-46%.
Race Tied In Pennsylvania A Fox News/Rasmussen Reports automated poll of 500 likely Pennsylvania voters taken September 14 shows McCain and Obama tied at 47% apiece. In a similar survey last week, Obama led 47%-45%.
Three Polls Show McCain Up In Ohio A Fox News/Rasmussen Reports automated poll of 500 likely Ohio voters taken September 14 shows McCain leading Obama 48%-45%. In a similar survey last week, McCain led 51%-44%. A Suffolk University poll of 600 likely Ohio voters taken September 10-13 shows McCain leading Obama 46%-42%. A SurveyUSA automated poll of 692 likely Ohio voters taken September 12-14 for a group of state TV stations shows McCain leading Obama 49%-45%.
McCain Takes Lead In Florida A Fox News/Rasmussen Reports automated poll of 500 likely Florida voters taken September 14 shows McCain leading Obama 49%-44%. In a similar survey last week, the race was tied at 48%.
McCain Competitive In New York, New Jersey Two other new polls today show McCain competitive in a pair of Democratic-leaning northeastern states. A Siena Research Institute poll of 626 likely New York voters, conducted over September 8-10, shows 46% would vote for Obama, while 41% would vote for McCain. The Rochester Democrat and Chronicle says, "For New York to suddenly be competitive could signal trouble for Obama's presidential chances. Ronald Reagan in 1984 was the last GOP presidential candidate to win New York. 'As voters begin to focus on the race, New York's overwhelming Democratic enrollment advantage is not reflected in how voters tell Siena they plan to vote,' said poll spokesman Steven Greenberg."
In addition, a Quinnipiac University poll of 1,187 likely New Jersey voters taken September 10-14 shows Obama leading McCain 48%-45%, down from a 51%-41% lead in a similar poll released August 13. Quinnipiac Pollster Clay Richards said this morning, "The McCain-Palin ticket has narrowed the gap dramatically, but it will take more than this post convention bounce for the Republicans to win in true blue New Jersey. The upcoming debates probably will provide a clue to whether Sen. McCain can build on his current momentum, or whether the tide will turn back to the Democrats."
However, a second New Jersey poll out this morning, with a significantly smaller sample, shows Obama with a larger lead. A Monmouth University /Gannett poll of 689 registered voters, including a sub-sample of 589 likely voters, taken September 11-14 shows Obama leading 49%-38% among registered voters and 49%-41% among likely voters. In a similar poll taken in July, Obama led by 14 points among both registered and likely voters.
Obama Strong In Two Virginia Polls However, it is not all good news for the McCain camp this morning. Despite an AP piece that says Obama faces an "uphill" fight in Virginia, two polls show him tied or leading there. A SurveyUSA automated poll of 723 likely Virginia voters taken September 12-14 for a group of state and regional TV stations shows Obama leading McCain 50%-46%. A Fox News/Rasmussen Reports automated poll of 500 likely Virginia voters taken September 14 shows the race tied at 48%. In a similar survey last week, McCain led 49%-47%.
Gallup reports this morning, "Voter preferences in the race for president are unchanged from where they stood over the weekend. John McCain still edges out Barack Obama, 47% to 45%, according to Gallup Poll Daily tracking from Sept. 12-14." McCain's "persistent two-point advantage across the three most recent Gallup Poll Daily tracking reports suggests he does hold a real, albeit slight, lead over Obama." The survey includes 2805 registered voters, conducted over September 12-14. In addition, the Rasmussen Reports automated daily presidential tracking poll for September 15 shows McCain leading Obama 49%-47%.
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The New York Times reports after "largely staying on the sidelines, the types of independent groups that so affected the 2004 presidential campaign are flooding back as players in the final sprint to the election this fall, financing provocative messages on television, in mailboxes and through the Internet." Democratic-leaning MoveOn "says it will double its advertising budget to $7 million and start a campaign this week that ties" Sen. John McCain "to lobbyists," while the Service Employees International Union "has begun a $2.1 million advertising campaign that criticizes Mr. McCain's economic record." According to Fox News' Special Report, "A pro-Obama group has produced this ad questioning McCain's temperament, using a P.O.W. held during McCain's captivity to question his fitness for office." Fox showed a clip from the ad with a former POW Phillip Butler saying, "John McCain is not somebody that I would like to see with his finger near the red button."
The AP reports "ads assailing" Obama "on taxes and abortion are coming out in key states and on national cable networks -- aired by independent groups largely financed by two wealthy donors." The abortion ad, "a $350,000 spot that will appear during the next week in Ohio and New Mexico, aims to cast Obama as out of the mainstream, even among abortion rights advocates. Aired by BornAliveTruth.org, it single out his efforts while in the Illinois Senate to defeat the Born Alive Infants Protection Act."
The Washington Post reports Sen. Barack Obama's campaign "accused Sen. John McCain of running a 'disgraceful, dishonorable campaign' in an advertisement launched Monday as the Democratic nominee vowed to leave no attack unanswered in the final weeks of the race for the White House." In an analysis story, the Washington Post says the Obama commercial "relies almost entirely on harsh media criticism of John McCain's ads, and most of the citations are from liberal sources, such as Time columnist Joe Klein, Washington Post columnist E.J. Dionne, Washington Monthly blogger Steve Benen and the New Republic."
The CBS Evening News reported, "Again today, Governor Palin repeated her boast that she shot down a now infamous Alaska project." Palin: "And that infamous bridge to nowhere, I did tell Congress 'thanks, but no thanks.' If we wanted a bridge up there, we were going to build it ourselves." CBS adds, "That claim was debunked in a CBS News reality check. In fact, the state kept the cash." The Washington Post's Eugene Robinson, in a column titled "Running On A Lie," also hits Palin on the bridge issue today.
The AP, meanwhile, reports Palin "is unlikely to speak with an independent counsel hired by Alaska lawmakers to review the firing of her public safety commissioner, a spokesman for Republican presidential candidate John McCain said Monday." The Washington Post reports, "One lawmaker complained earlier this month that state Sen. Hollis French, the Anchorage Democrat overseeing the investigation, appears to be steering the investigation 'in a manner that will have maximum partisan political impact on the national and state elections.'"
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Jay Leno: "Well, if you saw the big interview with Gibson, Sarah Palin quoted Abraham Lincoln, when Lincoln said, 'Let us not pray that God is on our side in any war or at any other time, but let us pray that we are on God's side.' And here's the amazing part. You know who Abraham Lincoln said that to? John McCain."
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