Hoover, 2008: McCain's Bogus Reform
Robert Scheer is the editor of Truthdig, where this article originally appeared. His latest book is The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America(Twelve).
And the winner is... Franklin Delano Roosevelt. Remember him--the great Democratic president who saved capitalism from the capitalists by reining in their exorbitant greed? Forget the Reagan Revolution heralding a new era of small government, which turned out to be nothing more than a fig leaf for legalized corporate crime. The hero of the hour is FDR, as the essential wisdom of his New Deal is now embraced by most Republicans as well as Democrats.
Roosevelt's legacy was acknowledged Monday when GOP presidential nominee John McCain absurdly accused his Democratic opponent, Barack Obama, of advocating policies pursued by Herbert Hoover, the Republican incumbent whom Roosevelt defeated in 1932. While clueless GOP vice presidential candidate Sarah Palin prattled on at the same rally about Reaganomics and getting government out of the way of business, most other Americans noticed--and are grateful--that the federal government now directly manages many of our biggest businesses in the all-important financial sector.
The banking bailout is pure FDR at his big-government best. Greedy bankers are being taken to the woodshed and read the riot act: if they behave, then they will once again have the opportunity to be filthy rich--that's the American way.
As McCain put it Tuesday: "I will begin by making certain that the $700 billion already committed to economic recovery is not used to further enrich the very people and institutions that invited these troubles with their own reckless conduct."
Yes, McCain finally gets it: "I will not play along with the same Washington games and gimmicks that got us into this terrible mess in the first place. I am going to Washington to fight for you." I didn't check whether this performance made it into the "Moment of Zen" in The Daily Show With Jon Stewart, but it should have. "I am going to Washington" is a classic proclamation of stupidity that assumes the rest of us are unaware of where McCain has been these past three decades.
The "gimmicks that got us into this terrible mess in the first place" were made legal by the passage of radical deregulatory legislation that McCain, as much as anyone in Washington, enthusiastically supported. Those gimmicks--hybrid instruments, credit swaps and so on--were codified in laws pushed through Congress by Phil Gramm, the man McCain esteemed so highly that he chaired the then-senator's 1996 presidential campaign and then chose Gramm to co-chair his 2008 run for the White House.
No one in Washington had a clearer warning of the dangers of those games and gimmicks than McCain, who, as one of the Keating Five, ran interference for the savings-and-loan swindlers of an earlier era. But McCain did not personally share in the financial misfortune of those who lost their life savings in the S&L meltdown; his wife, Cindy McCain, had an inside track with Charles Keating and made more than a million bucks participating in Keating's swindles before the financier was dispatched to prison.
Instead of learning the harsh lessons of the S&L debacle, McCain plunged ahead, crusading for even more extreme deregulatory measures that dismantled the financial safeguards FDR had put in place to prevent another Great Depression. McCain, as much as anyone, is responsible for the decriminalization of the reckless conduct that he now attributes to Wall Street: "We will learn from this crisis to prevent the next one, with much stricter oversight. No more wild over-leveraging, no more liabilities concealed from the public and from shareholders, no more bundling of assets to maximize profit by assuming insane risks. Those days are over on Wall Street. With new rules of public disclosure and accounting, my reforms will make certain those betrayals of shareholders and the public trust are never repeated."
Why not begin with a reversal of the Commodity Futures Modernization Act, which Gramm sneaked into an omnibus bill only hours before Congress adjourned for the 2000 Christmas recess, codifying "Legal Certainty for Swap Agreements"? Or that act's Title IV, which explicitly exempted from regulation the new gimmicks (which McCain now condemns) by forbidding the government to "exercise regulatory authority with respect to...an unidentified banking product which had not been commonly offered, entered into, or provided in the United States by any bank on or before Dec. 5, 2000"?
Over the last eight years, McCain has consistently opposed all efforts to modify the legislation that gave the bandits the keys to the banks. It's McCain who is the Herbert Hoover in this presidential race.