Remember when John McCain’s economic guru, Phil Gramm, got in trouble for saying that Americans were whining about a financial mess that the Republican nominee for president now says is “a crisis”? McCain grudgingly parted company with Gramm, only to have the former senator from Wall Street (via Texas) show up at the Republican National Convention as a VIP guest of, you guessed it, the McCain campaign.
Well, now, McCain is attacking Securities and Exchange Commission (SEC) Chairman Chris Cox.
Speaking in Iowa, the Republican candidate savaged Cox, saying, “The chairman of the SEC serves at the appointment of the president. And in my view has betrayed the public trust.has betrayed the public’s trust.”
McCain, who is scrambling to distance himself from the Bush administration financial-services policies and so-called regulators that he once supported, added: “If I were president today, I would fire him.”
Someone on McCain’s staff will have to inform him that president’s cannot “fire” SEC chairs — the heads of independent regulatory commissions, once their presidential nominations are confirmed by the Senate, serve terms that they are allowed to finish. At the most, McCain could merely pressure Cox to quit.
That is, undoubtedly, a good idea.
It would also be a new one for McCain.
Cox, a former California congressman who worked closely with McCain on a number of issues when McCain’s Senate Commerce Committee chairmanship coincided with Cox’s House Eneregy and Commerce Committee asignment, and who was recently boomed as a prospective vice-presidential running mate for the Republican, will be excused if he feels like he is the one who has been betrayed.
Cox’s nomination to serve was considered by the Senate in the summer of 2005, at a time when McCain was positioned, as chair of the Senate Commerce Committee, to raise any concerns he might have had — and even to hold hearings — about the selection. As McCain, himself, bragged this week: “I understand the economy. I was chairman of the Commerce Committee that oversights every part of our economy.”
While that statement was a bit of a stretch, it is reasonable to suggest that the Commerce Committee chair could have identified an opening (perhaps through the committee’s responsibility for overseeing interstate commerce) to hold a hearing and raise concerns about Cox.
Instead, McCain made no complaint and ceded responsibility for reviewing the Cox nomination to the Banking Committee, which has primary responsibility for reviewing SEC nominations. The Banking Committee gave Cox a predictable free ride from the Wall Street-friendly Republicans and Democrats who pack the panel.
McCain is talking tough now.
Could McCain have done more at a point when it might have mattered? Absolutely.
It is not as if Cox’s determination to neuter the SEC as a regulatory agency was a secret.
Indeed, McCain had all the fodder he could have possibly needed for a hearing to raise questions about the Cox nomination.
The outgoing SEC chair in 2005, William Donaldson — a former Yale dean, under Secretary of State, and Wall Street executive — had frustrated the White House and Republicans in Congress by often siding with the two Democrats on the commission in favor of stricter regulation of banking and financial services. Reportedly under pressure from his fellow Republicans, Donaldson quit two years before his term was done.
When President Bush picked Cox, the BBC summed up the shift with a headline: “New SEC Head Signals Big Change.”
“The Securities and Exchange Commission (SEC) is expected to adopt a more ‘laissez-faire’ approach if Christopher Cox is confirmed as its new chairman,” reported the BBC, which noted that, “Current chief William Donaldson quit on Wednesday, raising doubts over whether the finance watchdog will stick to its tough stance on corporate misconduct. Mr Cox, a former corporate lawyer, is seen as close to the finance industry. Experts say he could move the SEC towards a lighter touch on regulation.”
The U.S. Chamber of Commerce confirmed the assessment by declaring that the “pendulum is swinging back” away from regulation.
Then-California State Treasurer Phil Angelides, who had known Cox for years, was urging the Senate to reject Mr Cox for the SEC post. “I fear that if Congressman Cox is confirmed, it will spell the death-knell for reform efforts,” said Angelides.
McCain did nothing, and when the full Senate considered the Cox nomination in late July, 2005, he raised no objections.
No wonder, then, that as the search for a running-mate for McCain progressed this spring and summer Cox was frequently boomed as aan ideal partner for the Republican nominee.
Republicans in Congress, who knew both men, thought they would fit together well, as did a number of conservative pundits and publications.
Robert Novak reported in March that, “Former conservative colleagues in the House of Representatives are boosting Christopher Cox, chairman of the Securities and Exchange Commission since 2005, to be Sen. John McCain’s vice presidential running mate.” The National Review hailed Cox as “omnicompetent.” The American Spectator dubbed Cox a “first choice.”
McCain chose not to partner with Cox this fall, which may well have been the savviest economic move the Republican nominee has ever made.
But let’s be clear: McCain’s charge of today that Cox ought not be chairing the SEC comes three years too late.