Tag Archives: free markets

Pretense: McCain flops at flip-flopping on financial regulation

Pretense: a claim made or implied ; especially : one not supported by fact

Now that the financial markets are collapsing around everyone’s ankles, (and McCain’s pants around his own – now where is Spain?), he’s trying to erase our memories of his longtime record as a firm opponent of regulating the financial industry (or any other).  In truth, he has been a proponent of GOP deregulation ideology going back for decades.

But finally some are calling him on his bullshit. NYTimes yesterday:

The crisis on Wall Street is fundamentally a failure to do the things that temper, detect and punish corruption and greed. It was a failure to police the markets, to enforce rules, to heed and sound warnings and expose questionable products and practices.

The regulatory failure is rooted in a markets-are-good-government-is-bad ideology that has been ascendant as long as Mr. McCain has been in Washington and championed by his own party.

Not only does McCain not have a record of supporting regulation: he has a record of unethically pressuring regulators. The matter of the “Keating Five” is re-surfacing for us to have another look-see.  Back in 1987, he used the power of his office to get regulators to back off the troubled Lincoln Savings and Loan, which just happened to be run by a major McCain campaign contributor, Charles Keating.

As the Boston Globe reported: it was a fiction that McCain was somehow less guilty than the other members of the Keating Five:

Dennis DeConcini, a former Democratic senator from Arizona and another of the Keating Five who hosted the key meeting in his office, said in an interview that McCain has gotten a relatively “free ride” even though DeConcini insists that McCain was the “most culpable” of the senators because he had the closest relationship with Keating

McCain met Keating in 1982, during McCain’s successful run for Congress, and soon began accepting offers from Keating to fly McCain’s family on a corporate plane to Keating’s house in the Bahamas. McCain did not pay for most of the trips until years later, when the matter became public.

The Globe quotes a federal regulator who attended the meeting where McCain sought to protect his contributor from oversight:

“This was an institution that is probably the worst institution in America,” Black said, referring to Lincoln. Instead of trying to help “bring it under control, five US Senators were pushing us in the opposite direction.”

Lincoln’s bankruptcy ended up costing taxpayers 3 billion dollars.

Then there’s the small matter of supporting the The Gramm-Leach-Bliley Act, or GLBA for short. In 1999, this was the very legislation that “got government off the backs” (favorite Republican line) of the financial industry.  GLBA essentially eliminated the barriers between commercial and investment banks to consolidate and merge, so that you could have hedge funds, regular banking, lenders, brokerage services and insurance companies all under one roof.  Plus – GLBA repealed key parts of the Glass-Steagall Act, enacted in 1933 in response to the Great Depression to enact stricter controls, and yes, regulation over the banking industry where speculation had run amok.

GLBA was authored by McCain’s favorite economic advisor to his campaign, former Senator Phil Gramm – the same guy who called us a “nation of whiners”.

Of course, when McCain is trying to win the Presidency and be everything to everyone, it’s easy to see why he’d be against regulation before he was for it. Here is a look at McCain’s back-and-forth on regulation during the last 24 hours:

– Deregulation: McCain issued a statement Monday morning saying that “we cannot tolerate a system that handicaps our markets and our banks.”

– Regulation: McCain’s campaign then put out an ad calling for “tougher rules on Wall Street.”

– Deregulation: This morning, on NBC’s Today Show, McCain said, “Of course, I don’t like excessive and unnecessary government regulation.”

– Regulation: Then, on CBS’s The Early Show, McCain said, “Do I believe in excess government regulation? Yes.”

– Both: On CNBC’s Squawk Box, McCain said, “We don’t want to burden average citizens with over-regulation and government bureaucracy…And I’m proud to be a Teddy Roosevelt Republican, who said, ‘unfettered capitalism leads to corruption,’ and we’ve got to fix this.”

No amount of “straight talk” is going to be able to cover up the total failure of the Republican “free market” ideology.

Privatization: your Social Security could have crashed too

Privatization: the Republican economic philosophy that government sucks and we should turn over government functions and agencies to private enterprise, which in its infinite unregulated free market wisdom will make the rich richer and the rest us dumpster-diving. In the case of Social Security our personal accounts could be invested in various managed investment funds…

Yesterday Barack Obama said current Wall Street woes prove that the Republican economic philosophy has failed, but he hasn’t yet pointed out the obvious: if McCain had had his way, that would be our Social Security money Wall Street is losing.

John Neffinger at Huffington Post says:

…not that long ago we had a rare political moment in this country, a moment where the public sat up and took notice of economic policy — and spoke out and made its voice heard too. When George W. Bush made it to term #2, he decided to try to privatize social security to reward his supporters on Wall Street with a new source of capital, customers, and fees. (Those would be the same people whose firms are now cratering under the weight of the bad debt they recklessly took on while Republican regulators looked the other way).

But as it turned out, we Americans were not about to let our elected representatives turn over our social security taxes to Wall Street financiers to gamble with if it meant losing the guaranteed income that has allowed millions upon millions of American seniors to live out their sunset years with at least a basic measure of dignity.

But while ordinary Americans spoke out, John McCain stood with Bush (hugged him awkwardly in public, even), against the American people. In fact, just six months ago, McCain again let slip his fondness for privatization…

It’s time to remind Americans what the world would look like if John McCain was in charge of our economic policy. Plenty of people are losing plenty of their retirement savings as it is. But if we had let Bush and McCain privatize social security, some of those people would be losing a lot more. And a lot of other people with less retirement savings would be hurting even more, because they depend on social security to cover basic needs.

This is something Americans understand: social security is secure, and the stock market is anything but. There are few more personal or dramatic ways to illustrate McCain’s terrible judgment than to imagine the nightmare scenario so many Americans would face if McCain and Bush had gotten their way on this — or if McCain were to get his way as President.

Wakie, wakie! Can we talk about something besides pigs, lipstick and bridges to nowhere?