The Gustavian Weekly

McCain’s financial flip-flop | The Gustavian Weekly

By Greg Boone Staff Columnist | September 26, 2008 | Opinion

Earlier this week, Presidential Candidate John McCain offered us his plan to rectify the financial and economic crisis currently shaking Wall Street. It’s pretty simple, actually: fire the head of the Securities and Exchange Commission. According to McCain, Commission Chairman Christopher Cox should be fired because he was “asleep at the switch” when the crisis hit. McCain was quoted in a Bloomberg article saying, “the chairman of the SEC serves at the appointment of the president, and in my view has betrayed the public’s trust.” McCain may be right that Cox needs to be fired, but if that is his plan for solving the crisis, his plan falls short.

It is clear that this crisis is not due to the people who have been in Washington the last few years (though it is worth noting that they were not part of the solution either until recently). Rather it is those who were in Washington twenty-plus years ago when the government deregulated the financial and banking institutions and allowed this kind of insanely risky investing. (As a matter of fairness it is worth noting here that deregulation began under Reagan but Bush 41, Clinton, and Bush 43 – until now – did nothing to re-regulate the markets, and in fact expanded the deregulation programs.) The Reagan Administration deregulation that John McCain supported, and has been consistently supportive of since, ignited the sub-prime mortgage phenomenon which led us to the economic fallout we are experiencing.

Now McCain is claiming that “the fundamentals of our economy are strong,” while simultaneously claiming he will burst into the White House with his unprepared Vice President and clean up Washington, Wall Street and finally stop putting lipstick on pigs. In his speech in Blaine on Friday McCain talked at some length about “shaking things up” in Washington and being an agent for reform, but how can we believe someone who has consistently endorsed the policies that allowed for what he now calls “reckless conduct, corruption, and unbridled greed that have caused a crisis on Wall Street” since the early 1980s and refuses to admit he was part of the problem? McCain has been in Congress since 1982 with a self described “long record in support of deregulation.” As recently as April of this year, John McCain said, “I don’t think anyone who wants to increase the burden of government regulation … has any real understanding of economics and the economy and what is needed in order to ensure the future of this country.”

John McCain wants to have his cake and eat it too. This is not flip-flopping on some mundane issue or backtracking on a previous statement; this is a complete reversal of economic philosophy in order to gain votes. Right now it is popular to support regulation because the economy is in turmoil. But what kind of change can we really expect from John McCain? Will he really put an end to the greed and corruption of the system from which he directly benefits? Or will he do it only if it is the popular thing to do when he wakes up that morning?

In the words of Harvey Pitt, “the true mark of leadership is focusing on constructive solutions, rather than asserting blame.” Barack Obama could be blaming McCain for supporting the deregulation led to this crisis, but he is instead proposing comprehensive reform to the fundamentals of the economy based on the idea that investors should not be allowed to take on these kinds of risks for the sake of making money. Obama is not the self-described deregulator, he is looking out for the people on Main Street. He is looking out for people like the man in West Virginia who was taken advantage of by a major mortgage lender only to have his home foreclosed upon, personal possessions repossessed, credit destroyed and marriage destroyed. It is the millions of people across the country who were duped into taking on more debt than they will ever be able to afford. John McCain is an enabler, not a reformer for these crises. He is a deregulator at heart and will undoubtedly sell out any new supporters he had to Wall Street as soon as it is politically convenient.

The bottom line is that the people most affected by this crisis are not the Wall Street investors who invested in mortgage-based securities or the mortgage lenders who lent enormous sums of money to people with none. It is not clear to me that either McCain or Obama will hold any of these investors responsible for what they have done. But the real people affected by this crisis are the people on Main Street and the investors should be forced to reply to them. Unfortunately, these investors make too much money, and these companies are too big to fail, and the rich people will be rewarded for taking stupid, foolish and downright sadistic risks. Meanwhile those who have less than anyone else will continue to strive for an American dream quickly being destroyed by the powerful elite.