The Old Flip and its Floppy Counterpart

    On September 18, presidential candidate John McCain offered us his plan to rectify and solve the financial and economic crisis currently happening on Wall Street.  It's pretty simple actually: fire the head of the Securities and Exchange Commission.  According to McCain, Commission Chairman Christopher Cox (the unintentional alliteration kills me every time I write it) 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 to change the culture of "greed and irresponsibility" in Wall Street, his plan falls short.  

    It is self-evident to anyone with a passing familiarity of this crisis that the problems are not with people who have been in Washington the last few years (though it is worth noting that they certainly were not part of the solution until recently).  Rather it is the people who were in Washington twenty plus years ago when the government deregulated the financial and banking institutions and allowed people to engage in this kind of insanely risky investing.  (As a matter of fairness it is also 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 of which we are experiencing the economic fallout. 

    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 and even more out of touch 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." (St. Petersburg Times, 5 June 2003)  As recently as April of this year, John McCain is quoted as saying "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, McCain Town Hall in Inez, KY 23 April 2008)

    John McCain wants to have his cake and eat it too.  This is not flip-flopping where he switches a position on some mundane issue, or backtracks on a pervious statement; this is something much worse: a complete reversal of economic philosophy in order to gain votes.  It is almost like there are two John McCains, both speaking out of their ass.  Right now it is popular to support regulation because the economy is in turmoil, but when all the mortgage companies, investment banks and other Wall Street investors are bailed out and the financial situation stabilized, it will be back to deregulation for McCain.  What kind of change can we really expect from John McCain?  Will he really "shake up Washington," as he claims he will?  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 John McCain's long record of deregulatory support for 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.  Investors should not be allowed to take advantage of people by giving loans to anyone with a credit score and a pulse.  Obama is not the self-described deregulator, he is looking out for the people on Main Street.  People like the man 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's 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 of all this 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. 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.