McCain: Wall Street Woes Point To Regulation Need
As a free market conservative, I never thought I would be among the first to raise a hue and cry for re-regulation, but that is exactly what I’m advocating. The monumental failures of former Wall St. titans Merrill Lynch and Lehman Bros., along with mortgage giants Fannie Mae and Freddie Mac, have demonstrated
beyond any reasonable doubt, that these institutions had virtually no internal controls. That being the case and considering the devastation they leave behind them when they fail, I feel that we must come to the conclusion that external controls are now necessary.
Even for those who don’t accept re-regulation with out stretched arms, considering the massive bailouts that have already been made and keeping in mind the much rumored commercial banks that may need to be rescued by the FDIC, what alternative do we have? As big as the Federal government is, it’s resources aren’t infinite. Unless someone just happens to have an extra trillion dollars just laying around, I don’t know what else we can do, but craft new legislation that will re-institute the kind of risk management that sophisticated money management firms are expected to employ on their own.
I read an article yesterday that came to the conclusion that “moral hazard” ( usually an insurance term ) has been re-introduced to the players of Wall Street. If you take big risks and the trades go south, you are on your own. The days of coming to the U.S. Treasury or lining up the limos outside the New York Fed are over.
~~John Cronin~~
By GLEN JOHNSON
Associated Press
September 15, 2008
JACKSONVILLE, Fla. (AP) – Wall Street turmoil underscores the need to overhaul “the outdated and ineffective patchwork quilt of regulatory oversight in Washington,” Republican presidential contender John McCain said Monday.
In a statement issued in advance of market openings, the Arizona senator said he agreed there should be no taxpayer-financed bailout of Lehman Brothers even as the investment banking giant faced the specter of liquidation. Meanwhile, Merrill Lynch was selling itself to Bank of America for less than half of the iconic brokerage firm’s recent value.
“It is essential for us to make sure that the U.S. remains the pre-eminent financial market of the world. This will be a highest priority of my administration. In order to do this, major reform must be made in Washington and on Wall Street,” McCain said in his statement.
He added: “The McCain-Palin administration will replace the outdated and ineffective patchwork quilt of regulatory oversight in Washington and bring transparency and accountability to Wall Street. We will rebuild confidence in our markets and restore our leadership in the financial world.”
Over the weekend, advisers both to McCain and Democratic rival Barack Obama said they did not favor a government bailout of Lehman Brothers like that previously provided to Fannie Mae and Freddie Mac. The government also help engineer the recent sale of Bear Stearns Cos. to J.P. Morgan & Co.
“I am glad to see that the Federal Reserve and the Treasury Department have said no to using taxpayer money to bailout Lehman Brothers, a position I have spoken about throughout this campaign,” said McCain. “We are carefully monitoring the financial markets, including the duress at Lehman Brothers that is the latest reminder of ineffective regulation and management. Efforts must also be focused on ensuring that the deposits of hardworking Americans are protected.”
September 16th, 2008 at 11:34 pm
Reexamination of Wall Street regulations is surely a step in the right direction along with closer scrutiny regarding oversight and accountability. Greed + corruption = destruction.
Barney Frank was responsible for the oversight of Fannie Mae and Freddie Mac. From Wikipedia: In 2003, Frank rejected Bush administration and Congressional Republican efforts for the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis. Under the plan a new agency would have been created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry. “These two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis,” Frank said. He added, “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Barney Frank played partisan politics with regulation reform. Look where Fannie Mae and Freddie Mac are today.
Interesting that Freddie Mac and Fannie donated $85,000 to Obama’s campaign.
Even more interesting is that Barney Frank continues to hold court as Chairman of the House Financial Services Committee.