As our financial markets enter a near-meltdown the likes of which we haven’t seen since the Great Depression, two questions need to be asked: “Who is to blame?” and “What will our next president do?”
Investor’s Business Daily thinks they know who the culprit is — the president. The ex-President Bill Clinton, to be exact. From a recent editorial:
But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street’s most revered institutions.
For his part President Bush has done little to deepen the crisis, and his Federal Reserve Chairman, Ben Bernanke, has done much to alleviate the problem. Some would say he’s done too much — the Fed’s seemingly endless injections of liquidity have maimed the dollar and spiked inflation. Monica Lewinski and Hillary Clinton, it would seem, aren’t the only ones still paying for Clinton’s sins.
But what about our next president?
When it comes to Lehman Brothers in particular, both candidates have taken lots of donations. Obama has received almost $400,000 from Lehman employees in his three-plus years in the Senate. McCain has gotten less than $150,000 from them since 1989. Certainly both have benefited from Lehman’s largess, and simply taking donations doesn’t prove any kind of corruption. But a hundred k a year certainly cuts into Obama’s message of “change.” “Hope,” too.
In fact, of the nearly three million dollars Lehman employees and PAC distributed in the last 19 years, just two senators — Obama and Clinton — received more than a quarter of the total, split nearly evenly. McCain got about five percent.
Nevertheless, McCain isn’t exactly jumping on board the free market bandwagon.
that the U.S. needs to strengthen its oversight of markets while remaining aware of the “risk of overregulation.” The Republican senator said regulators also need to “do a better job in reining in short sellers.”
In other words, when Congressional oversight of banks forces banks into taking risks they can’t afford, the solution is more Congressional oversight of banks. To put it more plainly: When the boat is taking on water, open up the taps.
And what’s the Obama Plan? In his own words:
This country can’t afford another four years of this failed philosophy. For years, I have consistently called for modernizing the rules of the road to suit a 21st century market – rules that would protect American investors and consumers. And I’ve called for policies that grow our economy and our middle-class together. That is the change I am calling for in this campaign, and that is the change I will bring as President.
If there’s been an actual governing philosophy these last four years — other than encouraging Republicans to spend like Democrats — I can’t find it. The Atlantic‘s Megan McArdle calls Obama’s response “high-test hooey.” She continues:
This was not some criminal activity that the Bush administration should have been investigating more thoroughly; it was a thorough, massive, systemic mispricing of the risk attendant on lending to people with bad credit. (These are, mind you, the same people that five years ago the Democrats wanted to help enjoy the many booms of homeownership.) Lehman, Bear, Merrill and so forth did not sneakily lend these people money in the hope of putting one over on the American taxpayer while ruining their shareholders and getting the senior executives fired. They got it wrong. Badly wrong. So did everyone else.
Maybe McCain’s solution fails the sniff test, because economic populism is what the public wants when things go wrong — even though the cure is worse than the disease. And even though the “cure” caused the disease in the first place.
Maybe Obama isn’t being too specific, because he doesn’t want anyone to look too closely. They might find there’s more — and less — there than meets the eye.
Finally, Brett Arends warns, “Taxes are going up sooner or later anyway, no matter who wins the election, because of our gigantic federal deficits. (If you think Lehman Brothers was bad, you should look at Uncle Sam).”
Indeed. When it comes to large-scale theft, even the most politically-connected Wall Street boys are pikers compared to Congress.