Under growing pressure from conservatives and "tea party" activists, Sen. John McCain of Arizona is having to defend his record of supporting the government's massive bailout of the financial system.

Q & A

McCain discusses issues

Hayworth, McCain trade jabs

In response to criticism from opponents seeking to defeat him in the Aug. 24 Republican primary, the four-term senator says he was misled by then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. McCain said the pair assured him that the $700 billion Troubled Asset Relief Program would focus on what was seen as the cause of the financial crisis, the housing meltdown.

"Obviously, that didn't happen," McCain said in a meeting Thursday with The Republic's Editorial Board, recounting his decision-making during the critical initial days of the fiscal crisis. "They decided to stabilize the Wall Street institutions, bail out (insurance giant) AIG, bail out Chrysler, bail out General Motors. . . . What they figured was that if they stabilized Wall Street - I guess it was trickle-down economics - that therefore Main Street would be fine."

Nearly 15 months later, commercial lenders still are in shaky condition and the commercial real-estate industry is in trouble, he said. On Friday, President Barack Obama announced $1.5 billion in funding for new measures to help Arizona and four other states hit hard by the tanked housing market and by joblessness.

But McCain stopped short of calling the TARP a mistake.

"Something had to be done because the world's financial system was on the verge of collapse," he said. "Any economist, liberal or conservative, would agree with that. The action they took, I don't agree with."

Republican Senate primary challenger J.D. Hayworth is using the TARP vote as a bludgeon against McCain's reputation as a fiscal hawk. Tea partyers point to it as the start of a new explosion of federal spending that has continued into the Obama administration.

Paulson, President George W. Bush's Treasury secretary from 2006 to 2009, also is dishing out criticism of McCain, who on Sept. 24, 2008, temporarily suspended his ultimately unsuccessful presidential campaign to go to Capitol Hill to confront the economic crisis.

In his new book "On the Brink: Inside the Race to Stop the Collapse of the Global Financial System," Paulson belittles McCain's contribution to the response, noting that "when it came right down to it, (McCain) had little to say in the forum he himself had called." He also called McCain's decision to return to Washington, apparently without a plan, "impulsive and risky" and even "dangerous."

McCain said Bush called him in off the campaign trail, saying a worldwide economic catastrophe was imminent and that he needed his help. "I don't know of any American, when the president of the United States calls you and tells you something like that, who wouldn't respond," McCain said. "And I came back and tried to sit down and work with Republicans and say, 'What can we do?' "

McCain last month voted against confirming Bernanke for a second term as Fed chairman, saying he should be held responsible for his contribution to the meltdown. Bernanke still won easy Senate approval.