McCain Suddenly Shifts Gears on Regulation
It is quite striking to watch Sen. John McCain take a downright populist tone as he champions stronger regulation as several financial giants teeter on the verge of collapse — while pretending he wasn’t a central player in the deregulation of financial markets in the first place. From The Washington Post:
“„In 2002, McCain introduced a bill to deregulate the broadband Internet market, warning that “the potential for government interference with market forces is not limited to federal regulation.” Three years earlier, McCain had joined with other Republicans to push through landmark legislation sponsored by then-Sen. Phil Gramm (Tex.), who is now an economic adviser to his campaign. The Gramm-Leach-Bliley Act aimed to make the country’s financial institutions competitive by removing the Depression-era walls between banking, investment and insurance companies.
“„That bill allowed AIG to participate in the gold rush of a rapidly expanding global banking and investment market. But the legislation also helped pave the way for companies such as AIG and Lehman Brothers to become behemoths laden with bad loans and investments.
“„McCain now condemns the executives at those companies for pursuing the ambitions that the Gramm-Leach-Bliley Act made possible, saying that “in an endless quest for easy money, they dreamed up investment schemes that they themselves don’t even understand.”
“„He said the misconduct was aided by “casual oversight by regulatory agencies in Washington,” where he said oversight is “scattered, unfocused and ineffective.”
This morning, the McCain campaign released a statement on the $85 billion federal bailout of insurance giant AIG, which he said he opposed yesterday but has since softened his position.
“„“Today, the government was forced to commit $85 billion to stop the collapse of AIG, another in a growing series of events that includes Bear Stearns, Lehman Brothers, Fannie Mae and Freddie Mac. These actions stem from failed regulation, reckless management, and a casino culture on Wall Street that has crippled one of the most important companies in America…
“„“We should never again allow the United States to be in this position. We need strong and effective regulation, a return to job-creating growth and a restoration of ethics and the social contract between businesses and America.”
At the same time, McCain schizophrenically tells reporters that he’s the man to fix the mess, because he chaired the Senate committee charged with economic regulation. From The Associated Press:
“„“I was the chairman on the Senate Committee on Commerce, Science and Transportation for six years,” he told reporters aboard his “Straight Talk Express” campaign bus amid Monday’s market meltdown. “That’s the committee that oversights our economy — transportation, science, telecommunications, airlines — all of the factors that drive our economy.”
McCain chaired the committee from 1997 until 2001 — which would place him at the helm when the aforementioned Gramm-Leach-Bliley Act was passed — and again from 2003 until 2005.
In an interview on Good Morning America this morning, McCain cited “greed and corruption” as a cause of AIG’s near-collapse, but The Associated Press reports the campaign could not cite a specific example when asked.
“„“Well, at this hour, when you look at the situation, it is still muddled and unclear,” [McCain campaign adviser Steve] Schmidt told The Associated Press. “But it is clear that the system has been corrupted, that there has been systemic failures, that the economy has been damaged by greed and avarice, and the broken institutions between Washington and New York have now conspired in a way that has put the American economy in crisis.”
However, until recently, an opposition to government regulation has been one of McCain’s consistent themes on the campaign trail. Here’s a sample of recent McCain quotes on the subject:
“„“I don’t think anyone who wants to increase the burden of government regulation and higher taxes has any real understanding of economics and the economy and what is needed in order to ensure the future of this country.” [McCain Town Hall in Inez, Kentucky, 4/23/08]
There’s a lot more where that came from. The simple fact is that McCain has subscribed to an anti-regulatory worldview for his entire career. That he is suddenly changing his tune two months before a presidential election should probably call into question his sincerity.
