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Wednesday, September 17, 2008
Obama, McCain both wrong
The Atlanta Journal-Constitution
In a crisis politicians are just worthless. There’s nothing helpful they can do — and therefore they have nothing of value to say.
Not John McCain. Not Barack Obama. Not Barney Frank. Not Jim Martin. All are quoted in today’s AJC commenting on the collapse of Lehman Brothers, the takeover of Merrill Lynch and the Federal Reserve rescue of insurer American International Group.
McCain’s response to the rapid demise of Wall Street financial institutions was to say that “we are going to reform the way Wall Street does business and put an end to the greed that has driven our markets into chaos. We will stop multi-million dollar payouts to CEOs who have broken the public trust. We will put an end to running Wall Street like a casino. We will make businesses work for the benefit of their shareholders and employees.”
Obama is an empty suit, once again vowing that he would have been smarter, better and wiser in providing solutions — something he’s never yet demonstrated in his life. Alaska Gov. Sarah Palin had him pegged in her acceptance speech: “Listening to him speak, it’s easy to forget that this is a man who has authored two memoirs but not a single major law or reform — not even in the state senate.” The problem with Obama and his rhetoric is that, in his mind, all the world’s troubles started 8 years ago and they end with his election. This is not a guy you want around in crisis, any crisis.
Then there’s Barney Frank, chairman of the House Financial Services Committee, who is part of that cozy Washington insider culture that allowed Fannie Mae and Freddy Mac to operate with lax regulatory oversight, while using its profits to fund their social programs and campaigns and provide employment to the well-connected. Frank is part of the problem.
His comment to the AIG action?
“This is one more affirmation that the lack of regulation has caused serious problems. That the private market screwed itself up and they need the government to come help them unscrew it.” You wonder why politicians are unpopular? Barney Frank. Their action, or lack of it, help to create the problem — and they take no responsibility.
Even Jim Martin, the Democrat running for the U.S. Senate in Georgia, can’t resist the temptation to say stupid things. Opponent Saxby Chambliss has “been part of a system that’s been broken in Washington” and “I hold him accountable for the financial crisis we’re in,” said Martin. May-lar-kee. Chambliss has been there one term — of course, all this just started 8 years ago, as the left sees it — and during that time he’s been part of some problems, excessive spending among them. But on this Martin’s just background noise.
Right now the Bush Administration and the Federal Reserve are putting out fires that have been smoldering for decades. It is outrageous that even a dollar of taxpayer money has been required to salvage financial and now insurance firms. I’m not sold on the AIG rescue and want to see no more for financial institutions, but so far the Administration has handled the crisis properly to keep turmoil from spreading.
They’re not bailouts in the sense that taxpayers rescued investors and managers from bad decisions and reckless lending behavior. The reckless lost their investments, their companies and in many cases their jobs. The golden parachutes that would have brought Fannie Mae CEO Daniel Mudd $8.4 million and former Freddie Mac CEO Richard Syron $15.5 million have been taken away by the Federal Housing Finance Agency.
It’s probable that the failed companies are in better shape financially than the current panic among investors would suggest. It’s the panic the Administration and the Federal Reserve have to contain. Ultimately, these loan guarantee should turn out like the 1979 Chrysler Corp. guarantee. Taxpayers lost no money, but still government loan guarantees to private companies is no more desirable as financial policy than it was as industrial policy.
McCain suggests that something like a 9/11 Commission is needed and he’s right, though Obama ridicules it. The worst possible outcome now would be for Congress to dash out regulation, even of the sort McCain first suggested to combat “greed.” What’s needed is a careful analysis of how the Washington insiders and Big Money got so close that government lost its ability to regulate properly.
It started at the bottom with a system that allowed people to buy homes they couldn’t afford without checking their ability to repay and without requiring them to put down their own money. And it continued up the line. Nobody was accountable. Nobody owned the bad loans they made or took.
The solution is not more regulation. In some cases it may be less. At the end of the day, though, no private business — and especially not Freddy Mac and Fannie Mae — should exist in the marketplace with real or implied taxpayer guarantees.
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