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McCain Lays Wall St. Crisis at Obama’s Feet

Talking about Wall Street’s financial meltdown during a campaign stop in Green Bay, Wis., Sen. John McCain this morning blasted Sen. Barack Obama for his coziness with two former CEOs of the mortgage giants Fannie Mae and Freddie Mac — and accused the Democratic nominee of “profiting” from the broken system.

From McCain’s prepared remarks:

Two years ago, I called for reform of this corruption at Fannie Mae and Freddie Mac. Congress did nothing. The administration did nothing. Sen. Obama did nothing — and actually profited from this system of abuse and scandal.

While Fannie and Freddie were working to keep Congress away from their house of cards, Sen. Obama was taking their money. He got more, in fact, than any other member of Congress, except for the Democratic chairmen of the committee that oversees them. And while Fannie Mae was betraying the public trust, somehow its former CEO had managed to gain my opponent’s trust to the point that Sen. Obama actually put him in charge of his vice presidential search.

This CEO, Mr. Johnson, walked off with tens of millions of dollars in salary and bonuses for services rendered to Fannie Mae, even after authorities discovered accounting improprieties that padded his compensation. Another CEO for Fannie Mae, Mr. Raines, has been advising Sen. Obama on housing policy. This, even after Fannie Mae was found to have committed quote “extensive financial fraud” under his leadership. Like Mr. Johnson, Mr. Raines walked away with tens of millions of dollars.

Sen. Obama may be taking their advice, and he may be taking their money, but in a McCain-Palin administration, there will be no seat for these people at the policymaking table. They won’t even get past the front gate at the White House.

Let’s examine these comments. Politifact recently addressed McCain’s claims to have been at the forefront in calling for action on the impending Fannie Mae and Freddie Mac implosion — but his warnings came only “after a widely read report” sounded the alarm:

So it’s true that McCain spoke out - after a widely read report drew attention to chicanery at the firms. But the implication in McCain’s remarks is that his remarks in 2006 were in some way a warning about the financial markets disaster that struck in 2008. That strikes us as quite a stretch.

First of all, congressional efforts to increase oversight of Fannie Mae and Freddie Mac extend back to the early 1990s, making McCain a latecomer to the debate. The regulatory efforts proved unsuccessful because of Congress’ complicated relationship with the firms, whose dominance in the home-financing market makes their stability critical to the economy.

It’s true that Obama selected former Fannie Mae CEO Jim Johnson to head his vice presidential vetting team — clearly not the best choice, in light of recent events. As for Raines, the Obama campaign [disputes](We're All Socialists Now) he was ever an adviser, but The Washington Post reported in July that Raines had “taken calls from the Obama campaign” seeking advice on the mortgage crisis.

Obama has also received considerably more money from employees of Fannie Mae and Freddie Mac than McCain, according to OpenSecrets.org. Obama has received $99,299 to McCain’s $15,650.

But do campaign contributions constitute “profit,” as McCain claims? By the same definition, we could reasonably say that McCain is “profiting” from high oil prices, since he is, by far, the largest beneficiary of campaign contributions from the oil industry. According to OpenSecrets.org. McCain has received more than $1.6 million from oil industry employees, compared to about $457,000 for Obama.

Also, in a McCain campaign conference call with reporters yesterday, Doug Holtz-Eakin, a senior economic adviser, declined to answer numerous questions about details of McCain’s plan to crate a Mortgage and Financial Institution trust — dubbed MFI. He promised that there would be more details from McCain himself, in his speech today. But in the speech, McCain dedicated all of two paragraphs to the MFI, offering little in the way of new details.

Most striking perhaps, was that while McCain was saying “maybe just this once [Obama] could spare us the lectures, and admit to his own poor judgment in contributing to these problems,” he made no mention of the role played by the GOP-controlled Congress as it pursued aggressive deregulation of the financial markets since taking power in 1994.

There is probably plenty of blame to go around here.

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