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McCain: 'Complacent' lenders led to mortgage crisis

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(CNN) -- Sen. John McCain Tuesday blamed "rampant" speculation and "complacent" lenders for the current mortgage crisis.

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Sen. John McCain will blame "complacent" lenders and speculators for the current mortgage crisis.

But one of McCain's potential Democratic rivals in the general election, Sen. Hillary Clinton, said McCain's reluctance to bail out banks and borrowers in trouble sounded like Herbert Hoover, the Republican president in office at the start of the Great Depression.

During his speech in Santa Ana, California, the presumptive Republican presidential nominee said "lenders ended up violating the basic rule of banking: Don't lend people money who can't pay it back."

While the Democratic presidential candidates have both proposed specific plans to address the mortgage crisis, Tuesday's speech included McCain's most extensive comments on the subject to date.

McCain, however, did not offer any specific proposals in the speech to fix the problem.

The economic slowdown caused by the credit crunch has become a top concern for voters. Consumer confidence in March dropped to its lowest level in five years, according to The Conference Board. Video Watch McCain take on the mortgage crisis »

Vowing not to "play election year politics," McCain called for more transparency in lending, and higher capital reserves for lenders.

McCain also called on homeowners to provide "responsible" down payments for homes, saying government-backed companies, like Fannie Mae, should never back loans when the borrower "clearly does not have skin in the game."

McCain said he opposed any government bailout of "those who act irresponsibly, whether they are big banks or small borrowers."

"Any assistance must be temporary and must not reward people who were irresponsible at the expense of those who weren't," McCain said.

McCain did not propose any specific regulatory changes, but did say "regulatory, accounting and tax impediments to raising capital" should be removed to help institutions create larger buffers against losses.

Sen. Barack Obama's campaign lashed out at McCain's solutions to the country's economic problems.

"It's deeply troubling that John McCain is suggesting that the best way to address the housing crisis is to sit back and watch it happen -- which is just further evidence that he would continue President Bush's failed economic policies," said campaign spokesman Bill Burton.

McCain made his speech shortly before Sen. Hillary Clinton discussed the country's economic situation at an event in Greensburg, Pennsylvania, Tuesday.

Speaking to the media after her speech, Clinton criticized McCain for opposing bailouts for banks and borrowers who acted irresponsibly. Video Watch Clinton send a message »

"It sounds remarkably like Herbert Hoover ... I don't think that's a good economic policy." Clinton said. "We have a framework of regulation, it needs to be updated and modernized." Video Watch the candidates spar on the issues »

"The government has a number of tools at its disposal that are well-suited for just this situation, and I think that inaction has contributed to the problems we face today," she added. Video Watch Clinton discuss the economy »

During her speech Clinton urged McCain to reject President Bush's proposal to privatize Social Security, saying "Social Security privatization is a bad idea whose time has come and gone."

"The American people rejected the Bush privatization plan in 2005 and the American people will reject the Bush-McCain privatization plan in 2008."

The New York senator also discussed retirement reform.

"Fewer than half of all American families have retirement savings accounts in any given year ... and those who do contribute are saving too little," she said. "As president I will create an American retirement account, that will take the best of 401k plans and make it available to every working person in America."

On Monday, Clinton outlined a four-point plan to address the current economic troubles. Video Watch CNN's Ali Velshi explain Clinton's plan »

In a speech in Philadelphia, Pennsylvania, Clinton proposed allowing Federal Housing Authority to guarantee more mortgages, which would allow homeowners to restructure their loans.

The New York senator also called for President Bush to immediately bring together an "emergency working group" of financial experts to come up with ways to deal with the crisis. Video Watch Clinton call the problem a "crisis in confidence" »

Clinton proposed giving mortgage service companies legal protections to allow them to help troubled homeowners, and she re-introduced an idea for a second economic stimulus package that would include $30 billion to help homeowners facing foreclosure.

"We need a president who can restore our confidence, a president who is ready to confront complex economic problems with comprehensive solutions. ... If you give me the chance, I will be that president. I will start by facing our economic situation as it is, not as we wish it would be," she said.Watch how Clinton would fix the housing crisis

Reacting to Clinton's proposals, the campaign of her rival, Obama said her proposals sounded like measures they have already proposed.

"Most of them are repackaged ideas," Obama campaign manager David Plouffe told reporters during a conference call Monday. "We've talked about many of the same solutions."

The Obama camp said Clinton's proposal for an "emergency group" echoes a letter Obama sent to Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson a year ago.

A Republican committee spokesman assailed the plans of both Democrats.

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"Both Barack Obama and Senator Clinton's plans to increase taxes would hurt hardworking families and take money out of their pockets to place it in the hands of government bureaucrats," Danny Diaz said.

"As Senator McCain focuses on dealing with the important issues confronting the nation, Democrats' attacks further underscore their inability to demonstrate the leadership Americans expect." E-mail to a friend E-mail to a friend

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