John Bolton

John Bolton

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Tuesday, September 23, 2008

Who is the REAL Reformer: Obama or McCain?

"There Is One Person Who's Been Consistent On Reform Issues, And That's Been John McCain." --Barack Obama 2006

That was Then, This is Now:

At the same venue where Obama failed to fill the hall that McCain and Palin packed four days earlier Obama said the following:

Uncharacteristically low turnout for Barack Obama rally in Green Bay, Wisc. BY ABDON M. PALLASCH
Chicago Sun Times
September 22, 2008

...“When it comes to regulatory reform, Sen. McCain has fought time and time again against the common-sense rules of the road that could’ve prevented this crisis,” Obama said.
I'm reminded of this quote from John McCain who delivered a speech on the Senate floor in 2005 in support of Senate bill S190 that would have reformed Fannie Mae and Freddie Mac:

If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
-- John McCain, May 25, 2006
Writing at Bloomberg news, Kevin Hassett describes what happened next:

For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: ``It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''
I've traced GOP efforts at reform in greater detail here. It's important to note that In 2005 while McCain was promoting reform; Obama was at the bank cashing the checks from Fannie Mae and Freddie Mac. Obama took over $125,000 in less than four years. Nearly as much as Senator Chris Dodd, the current banking Committee Chairman took in twenty years.

McCain is the REAL reformer!

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