Maximizing McCain's Flip-Flop on Financial Regulation

Last night on MSNBC, Rachel Maddow and I discussed John McCain's new rhetoric claiming he supports better financial regulation. But instead of focusing only on McCain's words, we examined the Arizona senator's career as a public official -- and took a look at an issue that, until Sen. Sherrod Brown's statements today, no major elected Democrats have been willing to touch: the issue of McCain's formative regulatory experience coming as a member of the Keating Five pressing federal financial regulators to stop doing their job in advance of the S&L crisis. Though that crisis is the most analogous economic event to today's Wall Street meltdown, it is an issue that, until Sen. Sherrod Brown's statements today, no major elected Democrats have really touched.

McCain, as the S&L scandal first suggested, is no run-of-the-mill free-market fundamentalist. Yes, he voted for the ill-advised repeal of the key Depression-era law that might have prevented the rampant consolidation and speculation that brought on today's emergency. But, then again, Bill Clinton and his DLC Democrats supported it too. Yes, McCain's top economic adviser is Phil Gramm, the UBS investment banker who pushed through so much deregulatory legislation as a senator. But then again, Barack Obama's top economic adviser is Robert Wolf, Gramm's UBS boss.

Where McCain really leaps to the fringe and differentiates his extremism from others is in his use of the deregulatory label to publicly define himself. That's how you can really tell what a politician believes in.

This is not a guy who just votes for the corrupt legislation his Wall Street friends tell him to vote for -- this is a guy who has staked his name on being "fundamentally a deregulator," as he recently described himself.

On 11/19/93, McCain took to the Senate floor to support an early financial deregulation bill and decry what he called "the tremendous regulatory burden imposed on financial institutions." The guy who now claims to be the trustbusting Teddy Roosevelt back then lamented "the rapidly increasing regulatory burden imposed on banks is to cause them to devote substantial time, energy and money to compliance rather than meeting the credit needs of the community."

Ten years later, McCain was bragging to the Associated Press that "I have a long voting record in support of deregulation," and to CNN that "I am a deregulator. I believe in deregulation."

And, during this year's presidential campaign taking place in the shadow of financial meltdown, McCain was only months ago insisting on PBS that "we need less government [and] less regulation" and that "I'm always for less regulation."

Of course, there's plenty of good news for both Democratic partisans and ideological progressives about McCain's about-face.

For partisans concerned only about Obama winning the election, McCain's 180 on regulation opens up an obvious chance for Democrats to label him a against-it-before-I-was-for-it, say-anything-to-get-elected hypocrite - and Obama is (finally) moving to seize that opportunity.

For ideological progressives long fighting the good fight to resurrect the common-good regulatory agenda of the New Deal, McCain's shift reflects a broader shift in the public debate. Suddenly, regulation isn't a four-letter word anymore. Suddenly, even John "I'm always for less regulation" McCain is for regulation. That rhetorical shift could help create an election mandate forcing whoever wins the presidential contest to actually move away from Reagan-style extremism for the first time since, well, Reagan.

But as I told Maddow (and as I will examine further in my upcoming newspaper column on Friday), we have to all follow the money and the actions. Both Obama and McCain have taken huge sums of cash from the industries that caused this crisis. Both Obama and McCain continue to rely on Wall Streeters who engineered the meltdown as their top economic advisers (though only McCain employs lobbyists intimately involved in the crisis). That kind of influence doesn't just slink away with a boom-bust crisis -- it fights hard to make sure nothing concrete comes out of the situation (think the weak Sarbanes-Oxley after Enron).

Whether we get the kind of populist reforms will be decided by how much grassroots pressure is put on either of these potential presidents when they reach the Oval Office. The talk right now from both candidates may be good -- and Obama is smart to point out McCain's absurdly dishonest rhetoric. But talk is cheap when it comes time to write legislation.

Comments

[dalporto]

The truth is that the US financial system is on the verge of collapse, and the government needs to step in. The conservatives have long argued for financial deregulation arguing that it would create innovation and additional investment. It is true that it created innovation, for the mortgage derivatives are very innovative and sophisticated. But what is also true is that greed is at the root of today's crisis, and greed drove the banks to insolvency. I think what has been proven over and over again since the great depression is that wallstreet is not capable of behaving responsibly and without strong regulatory oversight.

As for McCain, since his primary loss to Bush in 2000 he has been systematically flip-flopping to first win the republican primary and now potentially the presidency. You may ask yourself what he actually believes in. I would argue that he believes in nothing at all except getting elected. So it is not surprising at all that despite decades of support for deregulation he has flopped his position based on minute by minute public mood.

Here is a good analysis of his other flip-flops:

http://www.fixourpolicies.com/index.php/2008-Elections/McCain-Flip-Flops.html

[ProudLiberalDan]

Keating Five is relevant, but it's a tough one to make clear to the American people as it was 20 years ago.

The real untapped vein of gold is on the Social Security issue. Ever since 1934, Social Security has lost more Republicans more elections than any other issue since. The elections of 1982 and 1986 were won by the Democrats in no small part to this issue. In 1992 Florida was narrowly won by Bush Sr. In 1996, Clinton won a six point victory in Florida in no small part to the Social Security and Medicare issues.

John McCain's record of support for privatizing Social Secuirty and his comments calling it a disgrace are what should be hammered here. There is no doubt an anti-Medicare vote/statement out there in McCain's history too.

This is how to win Florida. Floridians aren't all that motivated by "new politics". They are motivated by Social Security and Medicare.

Conservatives have wanted to kill Social Security and Medicare through privatization ever since it was established, not because they don't work, but because they DO, and it disproves their anti-government, low taxes for the wealthy, ideology. Social Security is an insurance program that had kept tens of millions of seniors out of poverty and Medicare has helped tens of millions of seniors have access to health care.

[blindhog]

It's hard to pin down a slicked up ghost with a constant fake smile and gleaming white teeth. That's what today's Republican politians and their spokespeople are. They are fakes who want us to believe one thing, when in reality they believe something else. They are an illusion, a fraud, a pretty face hiding a hideous core.

Poor and middle class Republicans ought to see THESE Republicans for who they really are.

President Eisenhower would turn in his grave to see what his dear party has turned into, a rich man's hoax. Leading the pack of this hoax is John McBush.

[inwonderland]

David you were grand on Rachel's show, but please speak in short, succinct statements so that the duped American public can view McCain for who he really is...the fox guarding the financial henhouse.

HE WAS A PROUD DEREGULATOR. What does that mean to Americans? HE CAN'T BE PART OF A SOLUTION BECAUSE HE WAS KEY TO CREATE THE DIRE PROBLEMS IN MORTGAGES and Wall Street. DOCUMENT HIS DEREGULATION STATEMENTS.

How can someone with 26 years in Washington, say he will reform where he has been for decades? He can't.

He wants to own the 26 years of experience..but not the responsibility of his mistakes in that time.

DAVID & OTHERS...Please point out the simple fact. McCain, who wanted to punt Social Security to Wall Street...WHAT DOES THAT SAY ABOUT HIS JUDGMENT? That and his pick of the novice Palin
can only make the voter hold his ballot, until November 4th.

It's not so much of McCain the POW rather the maverick, admirable McCain of 2000 being MIA.