Am I the only one who remembers four years ago when flip-flopping was considered a bad thing?
Now, as then, I think the ability to re-evaluate one’s position on an issue and determine that a change in stance is in order is a sign of thoughtful intelligence, not weakness. Unfortunately, I’m more than a bit skeptical that John McCain is really ready to hop on the regulation train. Such an alteration in one’s fundamental ideology is rare, and often involves other noticeable changes, such as going from the name Saul to Paul.
Even if McCain were truly ready to embrace the kind of regulation he’s eschewed throughout his career, it’s probably too little, too late. 4 years too late, to be specific. 2004 is when the SEC decided that it was o.k. for 5 firms (Bear Stearns, Lehman Brothers, Merrill Lynch, Goldman Sachs, and Morgan Stanley) to increase their debt-to-net-capital ratios from the legal limit of 12:1 up to as high as 40:1. While that isn’t the only bad decision leading to the current descent of the U.S. economy to the level of a steaming pile of poo, you really have to consider that maybe it’s the biggest one. How many of those firms are now defunct? And what will their demise cost us? It looks like about $2.300 per person if this bailout goes through.
I’m a pretty average middle-class kind of guy, and $2,300 sounds like a lot of coin to me. That’s $6,900 for my little family of 3. Perhaps we need to find a job for the 2-year-old. Yet, our contribution to that $700 billion bailout is chump change to the very people who will benefit from it. What’s wrong with this picture? And why, when my wife and I have made sure that we haven’t taken on more debt than we can handle, are we as taxpayers expected to bail out lenders who couldn’t use the same sound judgment?
Yes, more regulation is needed. We’ve needed it all along, not just at this critical time. Deregulation of financial markets breeds greed, and that greed leads to incredibly unsound decision-making. It’s like getting a gambling addict drunk, handing him a couple of Benjamins, and walking him in to Harrah’s. The chances of him striking it rich and sharing the wealth with you are pretty slim because the odds are stacked against him from the get-go, plus you’ll likely never get your initial investment back, either.
Lastly, here’s the biggest reason why I honestly can’t buy John McCain’s conversion to the Church of Regulation: The Keating Five scandal. The deregulation leading to the S&L failures of the 80s helped to get McCain in some very hot water. If that scandal didn’t make him think twice about the importance of regulatory oversight, I don’t think anything will.