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How Obama Can Demonstrate Real Leadership on the Economic Crisis

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Watching John McCain thundering against Wall Street greed is like tuning into to the old Lawrence Welk show to find him doing a polka version of a hard-core rap song ("A-one and a-two, motherfucker!").

Speaking yesterday outside an auto plant in Grand Rapids, Michigan, McCain read his populist rhetoric -- "These workers here are the best in the world. They are the backbone and foundation of our economy." -- with a robotic cadence dripping with inauthenticity.

Wall Street is melting down, and McCain and the GOP have no credible response. When your erstwhile economic guru, Phil Gramm -- a man whose 1996 run for the presidency McCain chaired, and who appears to remain influential behind-the-McCain-campaign-scenes -- is Patient Zero of this killer economic epidemic, it's pretty hard to suddenly start channeling Upton Sinclair.

McCain is so clearly clueless on this issue, the current battle over who is best suited to deal with the financial crisis should be a rout. And, so far, Obama has shown not just an incomparably greater grasp of the situation and substantive policies to deal with it, but a real fire in the belly in going after McCain's vulnerable flank.

But for Obama to show the kind of transformational leadership the crisis demands, he needs to do what so many of his critics have chided him for not doing: take a stand that puts him at odds with the establishment of his own party. He did it in 2002 with the war in Iraq. He can do it in 2008 with the economy.

He needs to start by making sure that the economic advisers he turns to extend beyond those he had on a conference call on Monday -- Robert Rubin, Lawrence Summers, Laura Tyson, and Paul Volcker. It's great to include graybeards who have been through crises before, but he needs to go beyond the two Treasury Secretaries who were complicit in the 1990s deregulation orgy that has led to so many of the problems we are now seeing. And he needs to make it clear that the Clinton-era Democrats who put the interests of Wall Street ahead of the interests of Main Street are not going to be the primary voices he listens to.

Rubin and Summers played a pivotal role in dismantling banking regulations like the Glass-Steagall Act of 1933, FDR's pivotal banking legislation designed to constrain the power of Wall Street, and make the activities of the banking industry more transparent. It specifically kept commercial banks separate from their investment banking cousins -- and had long been the Moby Dick of the banking industry, the elusive prey the financial industry Captain Ahabs were determined to harpoon. Consequences be damned.

Phil Gramm, then chairman of the Senate banking committee, did the heavy lifting, and John McCain was an ardent supporter of the deregulation, but Rubin and the Clintonites were certainly up to their eyeballs in pushing legislation gutting so many of the regulations designed to bring accountability to our complex free market system. These bills included the the Financial Modernization Act, which obliterated Glass-Steagall; and the Commodity Futures Modernization act, which gave us unregulated trading of derivatives and the kind of credit default swaps that threaten our economy -- both signed into law by Bill Clinton.

Speaking at a large rally in Las Vegas on Wednesday, Obama declared: "we can't steer ourselves out of this crisis if we're heading in the same disastrous direction. We can't steer ourselves out of this crisis using the same old map, we can't steer ourselves out of the crisis if the new driver is getting directions from the old driver, and that's what this election is all about."

Bull's-eye. Now he needs to make sure the old drivers in his own party don't have their hands on the wheel -- or are the loudest of his backseat drivers -- as the nation navigates this rocky financial road and charts a new direction.