Carly Fiorina on Why She's Backing John McCain

By Maria Bartiromo

Anne Ryan/Polaris

With the black-and-blue economy now the No. 1 issue vexing American voters, presumptive Republican Presidential nominee John McCain is busy sharpening his economic line. On Mar.25 in California, he addressed the housing debacle and the Fed-backed JPMorgan (JPM)-Bear Stearns (BSC) deal. McCain cautioned against bailing out individuals who had speculated during the housing bubble. He largely rejected the approaches of Senators Hillary Clinton and Barack Obama, both of whom have put forth plans to rescue strapped homeowners without, critics say, differentiating between those in need and those who may have acted—in McCain's words—"irresponsibly." In an interview the next day, former Hewlett-Packard (HPQ) CEO Carly Fiorina, who is advising McCain and campaigning with him and for him, expanded on the senator's positions.

Maria Bartiromo

Senator McCain seems to have staked out a position on the housing crisis that will play well with fiscal conservatives, saying it's not government's job to bail out and reward those who act irresponsibly. But how will it play with Jane and Joe Six-Pack?

Carleton S. Fiorina

One of the really important things that I think he did in that speech was draw some very important distinctions. One was to say: Look, it isn't government's role to bail out speculators or investors who made some bad bets. But he did specifically say that government does have a role; government has a role in helping the truly needy who are cash-strapped but creditworthy, who through no fault of their own are in trouble. He said government has a role to prevent systemic economic risk, which is why he supported the bailout of Bear Stearns. And he has said government has a role in enacting reforms to ensure that this kind of thing doesn't happen again, and in particular he would focus those reforms on restoring transparency and accountability in the system.

Some have suggested the JPMorgan-Bear Stears deal is little more than Wall Street socialism. What's your take on that?
When you have a run on a bank, which is in essence what was going on with Bear Stearns, that represents a confidence issue. And I think it's important to stem those crises of confidence quickly.

There has been little talk until now about individuals who became speculators. But is Senator McCain placing too much emphasis on the behavior of individuals vs. the behavior of brokers, lenders, and Wall Street?
I think his assessment of that was pretty balanced in his speech. He talked about Wall Street bankers and investors and mortgage lenders who engaged in risky behavior or who, frankly, got involved in a set of financial instruments they didn't really understand and that had insufficient scrutiny. On the other hand, there are 80 million homeowners in this country. There are 55 million mortgages; 51 million of those mortgages are in fine shape. We're talking about 4 million mortgages that are a problem. So there is a role in terms of big institutions, but there's also a role in terms of individuals who piled into a market, figured prices were only going up, never coming down, and wanted to flip a house quick and got into a mortgage that they really shouldn't have.