New McCain Attacks Echo Rove Advice

Posted by Sam Stein, Huffington Post at 4:30 AM on September 20, 2008.

Is John McCain's campaign taking political directives on how to handle the current economic crisis from Karl Rove?

A day before the Arizona Republican began criticizing Barack Obama for taking economic advice from former Fannie Mae executive Frank Raines - a dubious claim that was challenged even by the source who first reported it - the former Bush strategist urged McCain to do just that.

During an appearance on Hannity and Colmes on Wednesday, Rove outlined what he thought would be the best counterattack for McCain to launch the opposition's way: mainly, tie the current financial and housing market crisis to the Democrats and play guilt by association with Obama.

"I do think that McCain and Palin ought to identify that the source of this contagion, the thing that started these dominos going down was the misbehavior of Fannie and Freddie, who I would remind you are the biggest part of the bailouts," he said. Earlier in the program, he had specifically brought up Raines' name in this context.

"Remember in 2003 and 2004, Raines was one of the people at Fannie and Freddie. He was the head who said our financial statements are untrustworthy. These people have not been able to put out trustworthy financial statements for the better part of the decade. These are out of control, greedy enterprises masquerading as mortgage companies. But they are really just political lobbying firms trying to get special treatment from Congress in order to enrich their leadership."

A day later, McCain echoed Rove's advice.

On Thursday evening, the Senator's campaign released an advertisement declaring that Frank Raines was an Obama economic adviser. "Shocking," declared the ad, citing the mismanagement that occurred under Raines' reign, as well as his large compensation package. Shocking, indeed. The Associated Press and other news outlets reported hours later that the claim was not honest. Raines had even told a senior McCain aide, in a private email, that he was not an Obama adviser.

Nevertheless, Rove's charge made its way into Friday's speech as well, where McCain criticized Obama again for turning to Raines, but also for initially tasking Jim Johnson, another former Fannie CEO, with heading his vice presidential search committee.

It was, it seems, shades of Rove.

"This CEO, Mr. Johnson, walked off with tens of millions of dollars in salary and bonuses -- guess for what? -- for services rendered to Fannie Mae, even after authorities discovered accounting improprieties that padded his compensation," McCain declared. "Another CEO for Fannie Mae, Mr. Raines, has been advising Senator Obama on housing policy (chuckles); this even after Fannie Mae was found to have committed, quote, 'extensive financial fraud' under his leadership. Like Mr. Johnson, Mr. Raines walked away with -- guess what? -- tens of millions of dollars."

As for the more substantive charge, that Democrats and Obama sat on their hands while McCain warned of an impending crisis, that is dubious. Congress ultimately failed to take appropriate action in heading off the credit crisis. But as PolitiFact noted, it was not as if the Republicans -- who pursued many of the lax regulation laws that created the situation -- were banging on the door. McCain, the fact-checking group notes, "was a latecomer to the debate," and that "he got involved after a comprehensive government report issued a loud alarm to anyone watching... All McCain was talking about then was the potential fallout of accounting troubles in Fannie Mae and Freddie Mac. He didn't say anything about a freewheeling climate among creditors that had major financial institutions becoming badly leveraged on bad loans."

Sam Stein is a Political Reporter at the Huffington Post, based in Washington, D.C.