Washington Post John McCains record on Wall Street oversight gets some misleading spin

from Barack Obama

By Washington Post Editorial, The Washington Post

September 19, 2008

TO LISTEN to Sen. Barack Obama, Sen. John McCain is a Johnny-come-lately to the cause of
regulating financial markets. "He has consistently opposed the sorts of common-sense
regulations that might have lessened the current crisis," Mr. Obama said in New Mexico
yesterday. "When I was warning about the danger ahead on Wall Street months ago because of
the lack of oversight, Senator McCain was telling the Wall Street Journal -- and I quote -- 'I'm
always for less regulation.' "

But the full quotation from Mr. McCain's March interview with the Journal's editorial board
belies Mr. Obama's one-sided rendition. The Republican candidate went on to say, "But I am
aware of the view that there is a need for government oversight. I think we found this in the
subprime lending crisis -- that there are people that game the system and if not outright broke the
law, they certainly engaged in unethical conduct which made this problem worse. So I do believe
that there is role for oversight."

It's fair to say that Mr. McCain has dramatically ramped up the regulatory rhetoric in the wake of
the meltdown on Wall Street. Mr. Obama made the argument about the need for increased
oversight much earlier. And Mr. McCain has generally taken an anti-regulatory stance, although
not in all cases -- his support for federal regulation of tobacco and boxing being prominent
counter-examples. Mr. McCain backed a moratorium on all new federal regulation in 1995,
saying that excessive regulations were "destroying the American family, the American dream."
On the campaign trail in 2000, he touted his record of voting "for smaller government, for less
regulation."

However, when it comes to regulating financial institutions and corporate misconduct, Mr.
McCain's record is more in keeping with his current rhetoric. In the aftermath of the Enron
collapse and other accounting scandals, he was a leader, with Sen. Carl M. Levin (D-Mich.), in
pushing to require that companies treat stock options granted to employees as expenses on their
balance sheets. "I have long opposed unnecessary regulation of business activity, mindful that
the heavy hand of government can discourage innovation," he wrote in a July 2002 op-ed in the
New York Times. "But in the current climate only a restoration of the system of checks and
balances that once protected the American investor -- and that has seriously deteriorated over the
past 10 years -- can restore the confidence that makes financial markets work."

Mr. McCain was an early voice calling for the resignation of Securities and Exchange
Commission Chairman Harvey Pitt, charging that he "seems to prefer industry self-policing to
necessary lawmaking. Government's demands for corporate accountability are only credible if
government executives are held accountable as well."

In 2006, he pushed for stronger regulation of Fannie Mae and Freddie Mac -- while Mr. Obama
was notably silent. "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," Mr. McCain warned at the time.

One element of the Obama campaign's brief against Mr. McCain is that he supported repeal of
the law separating commercial banks from investment banks. "He's spent decades in Washington
supporting financial institutions instead of their customers," Mr. Obama said yesterday. "Phil
Gramm, one of the architects of the deregulation in Washington that led directly to this mess on
Wall Street, is also the architect of John McCain's economic plan." Would it be churlish to point
out that another author of the Gramm-Leach-Bliley law is former congressman Jim Leach, a
founder of Republicans for Obama? Or that Obama advisers Lawrence H. Summers and Robert
E. Rubin supported the repeal -- which was signed by President Bill Clinton?

It's a reasonable question which candidate has been more attentive to the brewing problems on
Wall Street and which has a better prescription for them. But Mr. Obama's attack does not give a
fair reading of the McCain record.