Notes to Self: For Wednesday...
Comic Relief: John McCain: Deficit Super-Hawk:
Democrats Are Better Republicans than Republicans Are:
Source: Doug Henwood, Liscio Report.
Democrats Are Better Democrats than Republicans Are:
Source: Doug Henwood, Liscio Report.
The Magnitude of the Financial Crisis:
McCain on How to Fix the Financial Crisis: Replace Chris Cox with Andrew Cuomo:
George Will:
McCain Loses His Head: John McCain furiously, and apparently without even looking around at facts, said Chris Cox, chairman of the Securities and Exchange Commission, should be decapitated. This childish reflex provoked the Wall Street Journal to editorialize that "McCain untethered" -- disconnected from knowledge and principle -- had made a "false and deeply unfair" attack on Cox that was "unpresidential" and demonstrated that McCain "doesn't understand what's happening on Wall Street."...
McCain's smear -- that Cox "betrayed the public's trust" -- is a harbinger of a McCain presidency. For McCain, politics is always operatic, pitting people who agree with him against those who are "corrupt" or "betray the public's trust," two categories that seem to be exhaustive -- there are no other people....
On "60 Minutes" Sunday evening, McCain, saying "this may sound a little unusual," said that he would like to replace Cox with Andrew Cuomo, the Democratic attorney general of New York.... Conservatives who insist that electing McCain is crucial usually start, and increasingly end, by saying he would make excellent judicial selections. But the more one sees of his impulsive, intensely personal reactions to people and events, the less confidence one has that he would select judges by calm reflection and clear principles, having neither patience nor aptitude for either...
McCain on Golden Parachutes:
Steve Benen:
The Washington Monthly: GOLDEN PARACHUTES.... The only consistent element of John McCain's recent rhetoric on economic issues is that he's just not thinking things through. In the latest example, McCain has been, in true populist style, railing against "golden parachutes" for CEOs.
The more lavish compensation packages are part of McCain's economic pitch, the more likely he'll face questions about former Hewlett-Packard CEO Carly Fiorina's golden parachute. And yet, as of this morning, he was apparently caught completely off guard. On NBC's "Today," Meredith Vieira told McCain, "You have said, senator, that there are a lot of reasons for this financial crisis, but you have said, bottom line, it's those fat cats. It's the greed of Wall Street. And you said, you promised ... to crack down on CEOs who walk away with huge severance packages. And yet the person that up until recently was your public face really on your economic policies was Carly Fiorina.... She was fired in 2005. But she left with what I think was a $45 million golden parachute while 20,000 of her employees were laid off. She's an example of exactly the type of person you say is at the root of the problem."
McCain replied, "I don't think so." When pressed, he added, "I think she did a good job as CEO in many respects. I don't know the details of her compensation package." Reminded that Fiorina received a $45 million golden parachute after being fired while 20,000 of her employees were laid off, McCain stumbled a bit before concluding, "I don't know the details of what happened." Hewlett-Packard didn't exactly excel under Fiorina's leadership. The company's stock fell 55% during her tenure, and as Vieira emphasized, she was fired. As "punishment," she walked out the door with $45 million and, soon after, became an advisor to a leading Republican presidential campaign.
This certainly seems like the kind of greed and mismanagement the new McCain should disapprove of, doesn't it?
Glass-Steagall Repeal and the Financial Crisis:
Justin Fox:
While the Regulators Fiddled...: Bank of America's takeover of Merrill Lynch and JP Morgan Chase's of Bear Stearns underscored a truth that was already becoming apparent on Wall Street — super-banks (more commonly known as universal banks) are, for all their flaws, a lot more stable and secure than un-super investment banks. If you didn't have commercial banks ready to step in, you'd have a vastly bigger crisis today," says Jim Leach, a Republican former Congressman from Iowa (and current Barack Obama supporter) whose name is on the Gramm-Leach-Bliley Act that repealed Glass-Steagall. Leach is no neutral observer, and there can be no proving that Glass-Steagall repeal has made the world safer. But amid the predictable debate now underway about how much new financial regulation is needed, it just doesn't make a very convincing scapegoat for the crisis...
FNMA AND FHLMC Are Not Responsible for the Housing Bubble:
Deregulation:
Justin Fox:
While the Regulators Fiddled...: [U]nconvincing is the claim... that the... Community Reinvestment Act... caused the subprime mortgage lending binge.... [W]hen the subprime lending binge really took off from 2003 to 2006, financial institutions subject to CRA weren't the ones leading the way. Neither were government-sponsored behemoths Fannie Mae and Freddie Mac. No, starting in 2003, as a long boom in house prices and mortgage lending that had at least some foundation in economic reality (lower interest rates, higher incomes) gave way to an orgy of ever-sharper price increases fueled by ever-dodgier loans, the folks in the drivers' seat were the mortgage brokers that made the loans and the Wall Street investment banks that packaged them into private-label mortgage-backed securities. And these people were barely regulated at all.... "You had a regulatory mechanism that was targeted very narrowly to prudential regulation of the banking industry," says Gene Ludwig...
For Lobbying Before He Was Against It:
From the New York Times:
Loan Titans Paid McCain Adviser Nearly $2 Million: By DAVID D. KIRKPATRICK and CHARLES DUHIGG Senator John McCain’s campaign manager was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations.... Mr. McCain, the Republican candidate for president, has recently begun campaigning as a critic of the two companies and the lobbying army that helped them evade greater regulation.... [T]he McCain campaign stepped up a running battle of guilt by association when it began broadcasting commercials... charging that [Obama] takes advice from Fannie Mae’s former chief executive, Franklin Raines....
Incensed by the advertisements, several current and former executives of the companies came forward to discuss the role that Rick Davis, Mr. McCain’s campaign manager and longtime adviser, played in helping Fannie Mae and Freddie Mac beat back regulatory challenges when he served as president of their advocacy group, the Homeownership Alliance.... “The value that he brought to the relationship was the closeness to Senator McCain and the possibility that Senator McCain was going to run for president again,” said Robert McCarson, a former spokesman for Fannie Mae.... Mr. Davis “didn’t really do anything,” Mr. McCarson, a Democrat, said.... Mr. Davis did draw Mr. McCain to a 2004 awards banquet that the companies’ Homeownership Alliance.... The organization printed a photograph of Mr. McCain at the event in its 2004 annual report....
[C]urrent and former executives, however, said the Homeownership Alliance was set up mainly to defend Fannie Mae and Freddie Mac by promoting their role in the housing market, and the two companies paid almost the entire cost of the group’s operations. “They were financed largely, possibly exclusively, by Fannie and Freddie,” said William R. Maloni.... “We thought it would be helpful to have someone who was a broadly recognized Republican to be the face of the organization, and that person became Rick Davis.” Mr. Maloni added, “Rick, for that purpose, turned out to be quite good.”...
At the time that Fannie Mae and Freddie Mac recruited Mr. Davis to run the Homeownership Alliance in 2000, they were under new pressure from private industry rivals and deregulation-minded Republicans who argued that the two companies’ federal sponsorship gave them an unfair advantage and put taxpayers at risk...
Dow 36000:
[T]hose of us unlucky enough to own Dow 36000: The New Strategy for Profiting from the Coming Rise in the Stock Market can go to our bookshelves, pull it down, and read that "the Dow should rise to 36000 immediately"--i.e., in October, 1999. But Hassett and Glassman say, they are going to be cautious and conservative. They "believe the rise will take some time, perhaps three to five years..." (p. 18). They acknowledge that they might be wrong: the rise might come much quicker. They tell investors not to delay but to "seize the opportunity now [i.e., in 1999] to profit from the rise in the Dow to 36000 (p. 125)."
On pages 18 and 19 they sneer at one of their American Enterprise Institute colleagues who back in 1998 gave a cynical laugh and said, "As long as you don't say when [the Dow will reach 36000], I suppose it is all right." Glassman and Hassett's response: "we aren't laughing. The case is compelling.... 36000 is a fair value for the Dow today... stocks should rise to such heights very quickly. As you read on, you will... learn to invest in ways that take advantage of a remarkable time in financial history..."
