Last night around 7:30 p.m., news emerged that the federal government would bail out troubled insurance giant AIG with an $85 billion loan. In exchange, the federal government will own 79.9% of the company.
The bailout was an effort of last resort, meant to save AIG from being forced to declare bankruptcy — which would have made it the biggest bankruptcy of all time, with major reverberations across the economy considering its trillion-dollar balance sheet and global ties across numerous industries. Earlier in the day yesterday, when a loan package failed to emerge, the market dropped just contemplating the possibility of an AIG bankruptcy. Last night on CNN, Campbell Brown introduced the news saying, "This affects almost everyone out there who has a 401K." An AIG bankruptcy would have been a very, very big deal.
You would not have known that, however, from John McCain yesterday on the "Today Show." Yesterday morning, McCain sat for an interview with Matt Lauer that was notable first and foremost for the strangeness of his demeanor: Wooden, sullen, and repeating the same talking points over and over again. Lauer asked all the right questions, but failed to elicit more from McCain than repeated exhortations against "fat cats" and "Beltway insiders." At one point, McCain was almost hostile to Lauer when he pressed him on the "fundamentals" issue ("There's nothing wrong with the workers of America. I believed that they're the fundamentals. You may not, others may not").
But Lauer was able to break through a bit on AIG, pinning McCain down on whether he thought the Feds should bail out the insurance giant, even if McCain gave no indication as to why:
LAUER: So many people in this room today will be watching what happens with American Insurance giant AIG....you heard Maria [Bartiromo] talking about it a second ago. They need something in the neighborhood of 75 billion dollars to become secure again. What should the government do? First of all, do we even have that kind of money in the system?
McCAIN: The government should not — of course, this is one of the outstanding and glaring examples of the terrible problems and corruption and greed and excess that has caused all of this fallout — which is going to harm the average American worker...no, I do not believe that the American taxpayer should be on the hook for AIG. And I'm glad that Secretary Paulson has apparently taken the same line.
LAUER: So if we get to the point middle of the week as we heard in that report where AIG might have to file for bankruptcy, they're on their own?
McCAIN: Well...quote, "on their own"...we have to - we cannot have the taxpayers bail out AIG or anybody else...this is something we're gonna have to work through — there's too much corruption, there's too much access, we can fix it, I believe in America - we can have a 9/11 commission such as we had after 9/11, 'cause this is a huge crisis and we can come up with fixes and we can make sure that every American has a safer future and that is to make them know that their bank deposits are safe and insured.
That was yesterday morning in the 7 a.m. hour. Cut to twelve hours later, and the feds did the exact opposite. Why? Because of those 401Ks, because of the interdependence of the economy with AIG's vast web of interests, because, to paraphrase CNN's Ali Velshi last night, the economy could take losing an investment bank but AIG, not so much.
From this interview, there is absolutely no indication that McCain knew and appreciated this. His response was unilateral, couched in terms of taxpayers being "on the hook" rather than being vulnerable to the losses that an AIG bankruptcy would trigger. Meanwhile, yesterday's market tanked even more just contemplating the possibility of an AIG bankruptcy, hours before the buyout plan was finally announced.
This should worry Americans, for obvious reasons — not only because of what McCain clearly failed to grasp about the situation, but because he didn't seem even really to try. In the middle of the worst financial crisis in years, he was surly, wooden, and uncooperative as an interviewer asked legitimate questions — precisely when it was most important to be forthcoming.
While McCain's testiness yesterday morning was well-noted, his glib assertion regarding AIG didn't get traction in the news cycle until today, when he reversed himself somewhat (see here and here; I didn't see this moment highlighted on "NBC Nightly News" or on MSNBC's post-AIG announcement coverage, though I may have missed it). But to my mind, it was the most important and revealing moment of the interview, because it revealed that McCain had little to no understanding of the issue. Even his statement today on "Good Morning America" — "There are literally millions of people whose retirement, whose investment, whose insurance were at risk here" — was not even hinted at in his Today show comments.
McCain's answer yesterday on AIG was not an accident. Put bluntly, I can't see any evidence that he knew what he was talking about; nor any evidence that he wanted to try. This is a blatant moment, on tape, under urgent questioning from the media at a moment of crisis, and not only was his lack of preparation apparent but his attitude spoke volumes. This isn't a matter of left or right, of "gotcha" or "in the tank" or anything else — it's a matter of accountability at a pretty critical moment. It should be noted, and remembered.
Full McCain interview with Lauer below (relevant point begins at 4:13; interview prior largely consists of repeated references to "fat cats," the "Beltway Old Boys network," and phrases like "Americans are hurting...our workers are the best"):
Here's the report by Maria Bartiromo to which Lauer refers. In McCain's defense, it talked about the AIG bankruptcy without going into the repercussions of same. But if I knew about it, he should have, too.