Some feared the Bush Administration would go out with a bang, such as launching a military invasion of Iran in a bid to revive flagging Republican hopes. Nobody expected the bang would be the specter of the Great Depression. But that’s what you get when you hollow out federal regulatory bodies in favor of unbridled freedom for Big Business.
The Administration is now all over itself trying to stave off the collapse of global financial markets. The President, himself, strutted into the Rose Garden today to assure Americans that the money they thought they had stowed away for retirement or a kid’s college fund is still there. “We must act now to protect our nation's economic health from serious risk,” said the President. There is no word about whether President Bush believes a fresh round of tax cuts for the wealthy is the tonic to put Wall Street back on track.
The New York Times’ website nicely summed up the frantic activity organized by the Treasury Dept., Federal Reserve and Securities and Exchange Commission. Three headlines appeared simultaneously on the NYT website today. They are: “The S.E.C. temporarily bans short sales of stock in 799 financial companies;” “The Treasury offers to guarantee money-market funds up to $50B,” and “The Fed says it will buy mortgage-agency notes and lend money to ease the pressure.” It's a full-court press as the game clock ticks down.
The deregulatory zeal fostered by every Republican Administration since Reagan is at the core of the whole financial mess. Unfettered capitalism feeds upon itself. Mortgages are lumped together as securities to the point at which a financial investor doesn’t really know what it is buying. It is just in for the “flip” or passing the package along to another sucker.
A nation needs referees (federal regulators) to keep things in check. Wall Street Journal columnist Tom Frank explains in his magnificent book, “The Wrecking Crew,” how conservatives rail against Washington, and once in power starve regulatory agencies and parcel out the juicy surviving bits to cronies. That game is over.
By demanding the head of SEC chief Christopher Cox, John McCain shows how clueless he truly is. It's much more than Cox, who was once considered a potential running mate for the Arizona Republican until the truly qualified Sarah Palin was unearthed in Alaska. It’s the whole GOP philosophy of trashing regulatory structures that has brought markets to their knees.
McCain, as much as any GOP politico, was an advocate of the old “taking federal regulators off the backs of businesspeople” chestnut. In his most latest switcheroo, McCain now supports a return of a Resolution Trust Corp. (the body that bailed out the savings and loan companies) and a “safety and soundness regulator” in each federal agency.
McCain trashes Barack Obama for “using the economic crisis as a political opportunity.” And why not? Democrats are more inclined to restore clout to regulatory Washington. It's in their genes. A big new broom is exactly what this country needs to clean up the current mess.