The crisis on Wall Street will leave the next president facing tough choices about how best to regulate the financial system, and although neither Sen. Barack Obama nor Sen. John McCain has yet offered a detailed plan, their records and the principles they have set out so far suggest they could come at the issue in very different ways.
On the campaign trail on Monday, McCain, the Republican presidential nominee, struck a populist tone. Speaking in Florida, he said that the economy’s underlying fundamentals remained strong but were being threatened “because of the greed by some based in Wall Street and we have got to fix it.”
But his record on the issue, and the views of those he has always cited as his most influential advisers, suggest that he has never departed in any major way from his party’s embrace of deregulation and relying more on market forces than on the government to exert discipline.
While McCain has cited the need for additional oversight when it comes to specific situations, like the mortgage problems behind the current shocks on Wall Street, he has consistently characterized himself as fundamentally a deregulator and he has no history prior to the presidential campaign of advocating steps to tighten standards on investment firms.
He has often taken his lead on financial issues from two outspoken advocates of free market approaches, former Sen. Phil Gramm and Alan Greenspan, the former Federal Reserve chairman. Individuals associated with Merrill Lynch, which sold itself to Bank of America in the market upheaval of the past weekend, have given his presidential campaign nearly $300,000, making them McCain’s largest contributor collectively.
Obama sought on Monday to attribute the financial upheaval to lax regulation during the Bush years, and in turn to link McCain to that approach.
“I certainly don’t fault Sen. McCain for these problems, but I do fault the economic philosophy he subscribes to,” Obama told several hundred people who gathered for an outdoor rally in Grand Junction, Colo.
Obama set out his general approach to financial regulation in March, calling for regulating investment banks, mortgage brokers and hedge funds much as commercial banks are. And he would streamline the overlapping regulatory agencies and create a commission to monitor threats to the financial system and report to the White House and Congress.