McCain on avoiding foreclosure

COOPER: Next question to Senator McCain from Jim Vandehei.

VANDEHEI: We're staying on the economy here. As you well know, foreclosures last year were up 75 percent. A lot of people are losing homes. A lot of people who have adjustable rate mortgages are about to have them adjust up.

Amanda Oro (ph) from Casey, Illinois wants to know if you have a plan to help people with bad credit get lower interest rates so they can keep those homes and avoid foreclosure.

MCCAIN: Yes, and it's tough and it's tough here in California, it's tough in Arizona, it's tough particularly all over, but it's very tough particularly in the high growth states.

And I think the efforts that have been made so far are laudable. We may have to go further, but the fact that the FHA and the other organizations of government under Secretary Paulson's direction, and I think he is doing a good job of sitting down and fixing at least a significant number of these problems.

I think that we've got to return to the principal that you don't lend money that can't pay it back. I think that there's some greedy people on Wall Street that perhaps need to be punished. I think there's got to be a huge amount more of transparency as to how this whole thing came about so we can prevent it from happening again.

When a town on Norway is somehow affected by the housing situation in the United States of America, we've gotten ourselves into a very interesting dilemma.

If necessary, we're going to have to take additional actions and particularly in cleaning up a mortgage. A mortgage should be one page and there should be big letters at the bottom that says, "I understand this document."

We ought to adjust the mortgages so people who were eligible for better terms, but were somehow convinced to accept the mortgages which were more onerous on them. We need to fix the rating systems, which clearly were erroneous in their ratings, which led people to believe that there were these institutions which were stable, which clearly were not.

MCCAIN: So I think what we've done so far is good. I think we may have to take further steps if this subprime lending situation continues to be serious.

And finally, could I just mention on the issue of rebates, fine, because part of this is psychological. Part of the problem we have, of course, in any recession is psychological. And I'm still optimistic that nothing is inevitable.

I still rely on the innovation and the talent of the United States of America. But we've got to make the tax cuts permanent. We need to get rid of the Alternative Minimum Tax.

We need to give people a depreciation in one year for their business and investment. We need to encourage research and development and tax credits that are associated with it.

And we've got to stop spending. We've got to stop -- one place where Ron Paul and I are in total agreement, spending is out of control. And I'm tired of borrowing money from China.