epublican John McCain and Democrat Barack Obama said Tuesday the government should raise the federal deposit insurance limit from $100,000 to $250,000 as part of a renewed approach to shoring up the U.S. economy.
Avoiding the term "bailout," the presidential candidates said in separate statements that Congress must make another attempt to pass an economic rescue plan. The House on Monday balked at approving the Bush administration's $700 billion proposal, its 228-205 vote sparking the largest sell-off on Wall Street since the day after the Sept. 11, 2001, terror attacks.
The plan had the bipartisan support of congressional leaders, but about two-thirds of Republicans and about one-third of Democrats in the House voted against it. Polls showed widespread public disapproval for the plan.
"We haven't convinced people that this is a rescue effort, not just for Wall Street but for Main Street America, for working families, for small businesses, the heartland of America — all over America," McCain said on "American Morning" on CNN. "We didn't do a good enough job."
McCain said he recommended to President Bush on Tuesday morning that the Treasury's Exchange Stabilization Fund of $250 billion be used to shore up institutions, that the limit on federally insured deposits be raised to $250,000 and that the Treasury exercise its ability to buy up $1 trillion in mortgages.
"By the way, the first thing I'd do is say, 'Let's not call it a bailout. Let's call it a rescue.' Because it is a rescue. It's a rescue of Main Street America," McCain said.
In a statement earlier Tuesday, Obama said Congress should not start over as lawmakers consider their next move in the wake of the House's rejection of what he called "the economic rescue plan."
"Given the progress we have made, I believe we are unlikely to succeed if we start from scratch or reopen negotiations about the core elements of the agreement. But in order to pass this plan, we must do more," he said.
Obama said the current federal guarantee of up to $100,000 in bank deposit insurance, a limit set nearly 30 years ago, is adequate for most families but insufficient for many small businesses. Raising the limit to $250,000 "would boost small businesses, make our banking system more secure and help restore public confidence in our financial system," he said.
Obama said jobs, retirement savings and economic security for all Americans hang in the balance as Congress considers what to do next.
"While I, like others, am outraged that the reign of irresponsibility on Wall Street and in Washington has created the current crisis, I also know that continued inaction in the face of the gathering storm in our financial markets would be catastrophic for our economy and our families," he said.
The Federal Deposit Insurance Corp., an independent federal agency created in 1933, insures deposits in banks and thrift institutions for at least $100,000. Premiums paid by member institutions and investment earnings in Treasury securities fund the agency, which has an insurance fund of more than $49 billion, according to its Web site.
The FDIC says it insures more than $3 trillion in deposits and already provides up to $250,000 in insurance for retirement accounts such as individual retirement accounts and Keoghs. A five-person bipartisan board of directors appointed by the president manages the agency.