Obama and McCain favor private solution to Lehman woes

WASHINGTON (Reuters) - Presidential candidates Barack Obama and John McCain favor a private solution to Lehman Brothers' current problems and believe a taxpayer bailout should be avoided, senior economic advisers to both men said on Saturday.

Speaking to reporters during a teleconference, Jason Furman, an aide to Democratic nominee Obama, was asked whether the candidate would support a government bailout of Lehman.

Furman responded: "Senator Obama believes we should have a private solution to Lehman's problem. And, unlike Bear Stearns, the Federal Reserve now has a special lending facility in place that could prevent a wider run on the market."

A top adviser to Republican nominee McCain said using taxpayer funds should be avoided.

"I have not heard of any proposal for taxpayer money (to be used) ... and obviously that would be something that is not anyone's first choice," Douglas Holtz-Eakin told Reuters.

"What's going on is a private-sector transaction and that's, you know, that's fine."

Holtz-Eakin said regulators should be ready to act if approval of the sale of Lehman assets were required.

"To the best of our understanding, Lehman is trying to arrange for a sale of some or all of its assets as part of solving what could be some financial distresses," he said.

"That's a private matter. One would hope that regulators are, you know, examining the books so they can approve any sale if necessary."