INDIANAPOLIS (AP) -- Barack Obama says the nation is suffering from "irrational despair."

Obama made the comment in an interview with ABC News. He also says financial institutions have lost trust and "are afraid to lend to each other."

His campaign is criticizing John McCain's mortgage bailout plan, saying it would cause the government to lose money by paying too much for bad loans.

McCain's proposal to spend $300 billion in federal funds to buy distressed mortgages was made in last night's presidential debate. It seemed to catch Obama off guard.

At first, Obama's campaign said he had made similar proposals and there was nothing new in McCain's remarks. But after McCain aides offered more details, Obama's campaign shifted gears.

Obama economic adviser Jason Furman says the McCain proposal would cause the government "to massively overpay for mortgages" and "would guarantee taxpayers lose money."

(Copyright 2008 by The Associated Press. All Rights Reserved.)