So John McCain wants a commission on what to do about the financial markets. I'm of two minds on this. On the one hand, John McCain is not exactly an economic genius, and I'd rather he get the opinion of some people who are. On the other hand, in Washingtonian, "set up a commission" means "Let's ignore the problem and hope it goes away." This one isn't going away.
Here's my modest suggestion: John McCain could convene a commission right now. He could get a bunch of economists and bankers together, and they could hash out the problem and present him with a plan. Then he could tell us what it is. Then we could decide if we liked it. It would be almost like this election was about selecting someone who will make good policy.
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Lovely suggestion. I'm afraid the people making decisions for John McCain might not be in favor of the opinions of outside economists, though.
It would be almost like this election was about selecting someone who will make good policy.
It isn't for you, is it? You've already ruled out voting for McCain, so presumably whatever policy he recommends would be irrelevant to you.
A commission is a great way to go about appearing to do something without actually doing anything. Look nobody likes raining on the parade. In this case it would have been hiking interest rates to keep people from over-lending, over-spending, in short slowing down the freight train that is growth. Even then failure always finds a way.
This election is about who can out-Huey Long the other fella.
"Hope!"
"Change!"
"Reform!"
"Every man a king!"
I'm sorry for paraphrasing Obama on this, but don't we already know what is the problem with all of this? And - when was the last time a 'commission' gave a solution that was followed, rather than get used for stump speeches and arguments?
Commissions appear to exist for two reasons:
(a) to sift through a lot of information in complex situations to clearly identify a plan of action that will solve the situation once and for all (aka, not just fire off a bunch of random policy prescriptions that might do more harm than good)
(b) to come to a bipartisan consensus, such that the blame is laid at the specific policies and not the party not writing the report (aka, not politicizing the process)
Note that the two items are not mutually exclusive.
I think the commission suggestion is to keep the politics out of it until after the election, such that cooler heads can completely understand and rationally react; all-in-all, a good thing. When dealing with fundamental reform, it’s better to be right than quick, as you seldom get a second shot at these things.
McCain would probably appoint Carly Fiorina to run it. Just the big brain that we need, a failure who halved her company's value before being bribed to leave.
I would be fun to see the candidates' plans for this crisis. I have a dark sense of humor.
I don't know what's the right thing to do, but I agree with Megan 100%. I'm tired of hearing about what the candidates are going to do. There are a number of extremely important issues on the table right now, notably energy and finance collapse. Let them work out detailed plans and present them.
Commissions are basically community organizers, but for much nicer communities.
I think there could be a reasonable fear on the part of either Presidential candidate that base partisanship would distort the views and suggestions of any group advising either candidate. Regardless of who wins, I would much rather the group were appointed after the election and included people from both sides. I don't want either one locking themselves into policies without meeting with the other side.
McCain should ask Phil Gramm to chair it. Maybe Charles Keating could co-chair.
And what economic heavyweight should he consult, Barack Obama? If either party put real stock in that sort of policy competence, we'd be looking at Richardson vs., well, McCain.
I think that this would be a great idea as well, but I'm also noting that regardless of McCain's solution, Meagan has already sworn not to vote for him, so his positions don't matter.
The reason why candidates don't do this is that it's easier to criticize a plan than to come up with one.
Obama's outlined his plan in brief. I don't fully understand what it all means, but it sounds sensible to me and I'd be interested in Megan's analysis of it:
"Our capital markets cannot succeed without the public's trust. It’s time to get serious about regulatory oversight, and that’s what I will do as President. That starts with the core principles for reform that I discussed at Cooper Union.
"First, if you’re a financial institution that can borrow from the government, you should be subject to government oversight and supervision. When the Federal Reserve steps in as a lender of last resort, it is providing an insurance policy underwritten by the American taxpayer. In return, taxpayers have every right to expect that financial institutions with access to that credit are not taking excessive risks.
"Second, we must reform requirements on all regulated financial institutions. We must strengthen capital requirements, particularly for complex financial instruments like some of the mortgage securities and other derivatives at the center of our current crisis. We must develop and rigorously manage liquidity risk. We must investigate rating agencies and potential conflicts of interest with the people they are rating. And we must establish transparency requirements that demand full disclosure by financial institutions to shareholders and counterparties. As we reform our regulatory system at home, we must address the same problems abroad so that financial institutions around the world are subject to similar rules of the road.
"Third, we need to streamline our regulatory agencies. Our overlapping and competing regulatory agencies cannot oversee the large and complex institutions that dominate the financial landscape. Different institutions compete in multiple markets - Washington should not pretend otherwise. A streamlined system will provide better oversight and reduce costs.
"Fourth, we need to regulate institutions for what they do, not what they are. Over the last few years, commercial banks and thrift institutions were subject to guidelines on subprime mortgages that did not apply to mortgage brokers and companies. This regulatory framework failed to protect homeowners, and made no sense for our financial system. When it comes to protecting the American people, it should make no difference what kind of institution they are dealing with.
"Fifth, we must crack down on trading activity that crosses the line to market manipulation. The last six months have shown that this remains a serious problem in many markets and becomes especially problematic during moments of great financial turmoil. We cannot embrace the administration's vision of turning over the protection of investors to the industries themselves. We need regulators that actually enforce the rules instead of overlooking them. The SEC should investigate and punish market manipulation, and report its conclusions to Congress.
"Sixth, we must establish a process that identifies systemic risks to the financial system like the crisis that has overtaken our economy. Too often, we end up where we are today: dealing with threats to the financial system that weren't anticipated by regulators. We need a standing financial market advisory group to meet regularly and provide advice to the President, Congress, and regulators on the state of our financial markets and the risks they face. It’s time to anticipate risks before they erupt into a full-blown crisis.
These six principles should guide the legal reforms needed to establish a 21st century regulatory system. But the change we need goes beyond laws and regulation. Financial institutions must do a better job at managing risks. There is something wrong when boards of directors or senior managers don't understand the implications of the risks assumed by their own institutions. It's time to realign incentives and CEO compensation packages, so that both high level executives and employees better serve the interests of shareholders. "
On the other hand, in Washingtonian, "set up a commission" means "Let's ignore the problem and hope it goes away." This one isn't going away.
AKA No Responsibility Nancy calling hearings as usual after the fact.
Nice. The one advantage of a post-election commission is that in the best case, it establishes some bi-partisan "facts on the ground" - e.g., people can basically rely on a few essential points in the homeland security debate because the 9/11 commission said them. There's also something to be said for not rushing into major structural reform at a moment of panic.
Whatever McCain comes up with now will be pilloried by Obama as not nearly as good as Obama's plan, but that's no reason not to do both.
Correct me if I'm wrong, but aren't these two guys both U.S. Senators? (Three, counting Biden.) Were they too busy running for president to notice these problems until now? If not, what measures did they and their Senatorial staffs take to introduce bills, lobby their colleagues, etc.? What bi-partisan efforts did both make? What advice has Sen. Obama given to Sen. Chris Dodd, the Democrat who has been head of the Senate Banking Committee for the last two years?
I'm tired of candidates acting like they just plopped in from Mars to lead us to some promised land.
creech -
Here's what Obama had to say to your question yesterday:
"In February of 2006, I introduced legislation to stop mortgage transactions that promoted fraud, risk or abuse. A year later, before the crisis hit, I warned Secretary Paulson and Chairman Bernanke about the risks of mounting foreclosures and urged them to bring together all the stakeholders to find solutions to the subprime mortgage meltdown. Senator McCain did nothing.
"Last September, I stood up at NASDAQ and said it’s time to realize that we are in this together – that there is no dividing line between Wall Street and Main Street – and warned of a growing loss of trust in our capital markets. Months later, Senator McCain told a newspaper that he’d love to give them a solution to the mortgage crisis, “but” – he said – “I don’t know one.”
"In January, I outlined a plan to help revive our faltering economy, which formed the basis for a bipartisan stimulus package that passed the Congress. Senator McCain used the crisis as an excuse to push a so-called stimulus plan that offered another huge and permanent corporate tax cut, including $4 billion for the big oil companies, but no immediate help for workers.
"This March, in the wake of the Bear Stearns bailout, I called for a new, 21st century regulatory framework to restore accountability, transparency, and trust in our financial markets. Just a few weeks earlier, Senator McCain made it clear where he stands: “I’m always for less regulation,” he said, and referred to himself as “fundamentally a deregulator.”"