Washington Times: SEC chairman rebuke distances McCain from Bush

Washington Times
Friday, September 19, 2008
SEC chairman rebuke distances McCain from Bush
Ralph Z. Hallow (Contact)
ANALYSIS/OPINION:

John McCain on Thursday found yet another way to separate himself from President Bush, this time by throwing fellow Republican Christopher Cox under his Straight Talk Express for not regulating Wall Street enough as chairman of the Securities and Exchange Commission.

"The chairman of the SEC serves at the appointment of the president and, in my view, has betrayed the public's trust," Mr. McCain, now losing ground in some polls to Barack Obama, told a Cedar Rapids rally in Iowa. "If I were president today, I would fire him."

Quickly responding, White House press secretary Dana Perino said Mr. Cox has Mr. Bush's confidence.

Mr. Cox, 55, was a sometimes-favorite of conservatives during his 16 years as a U.S. House member from Southern California before Mr. Bush named him to the SEC in 2005.

The question is this: Is there any sound policy behind Mr. McCain's unloading on Mr. Cox? Or is it presidential election politics, pure and simple?

Rather than answering the question, reaction in Mr. McCain's own party was conflicted, going off in different directions simultaneously as Republicans attempted to reinforce the maverick image of their standard bearer while showing partisan loyalty to Mr. Cox - and to the Bush presidency, which is in the midst of writing its last chapters.

"Chris Cox is the most capable person I've ever known," James C. Miller III, director of the Office of Management and Budget in the second Reagan White House, told The Washington Times. "I wish Senator McCain would focus on the getting President Bush's other appointees to the SEC confirmed by the Senate."

But other Republicans offered the predictable swell of contradictory populist sentiment for "taking action," finding a scapegoat (however implausible) and letting capitalism be capitalism - letting the markets sort it all out.

"I sure think Cox needs to do some answering to Congress," said Rep. John Mica, Florida Republican. "One of the things I heard from my constituents is they want somebody held responsible for the collapse of some of these markets - and executives walking way from Fannie Mae and others with tens of millions of dollars."

Speculators and "short sellers" - an integral part of the operation of free markets - once again have become the evildoers who were allowed to do their worst because lazy or industry-influenced regulators let them get away with it.

"Banks and brokers took on huge amounts of debt, and they hid the riskiest of all investments," Mr. McCain said. "Mismanagement and greed became the operating standard while regulators were asleep at the switch. The regulators were asleep, my friends, they were not working for you."

The first casualty was pretty clearly Mr. Cox.

"I don't know whether firing Cox is called for, but if I were Chris, I think I would be circulating some resumes," Mr. Mica said, then turned his fire on the other side of he aisle. "Democrats are supposed to be bigger regulators. Last time I checked, Bush hasn't had a vote on floor for the last 18 months - Democrats have controlled the process."

Mr. Miller said Mr. Cox had been forced to operate without other Senate-confirmed members of his commission for some time. "Chris heads a commission, not a dictatorship, and for a time was without a quorum for a long time," he said.

One Republican official managed to defend Mr. McCain and Mr. Cox.

"It shows McCain is not afraid to take on fellow Republicans at any time," said Shawn Steel, a Republican National Committee member and former California Republican Party chairman. "On the other hand, I don't see how Chris Cox is responsible."

Democrats and some Republican critics have said that the roiled financial markets this week have shaken public confidence and upset the surge that the McCain-Sarah Palin ticket was enjoying.

No question, the financial mess played into the Obama/Democratic Party line that a McCain presidency would mean a continuation of what Democrats and Mr. McCain have called the failed Bush policies at home and abroad.

Mr. McCain is counterattacking by blaming the SEC as one of the government's best-known regulators that was blind to a financial "crisis" that saw Lehman Brothers file for bankruptcy, Bank of America swallow up Merrill Lynch and the federal government in effect nationalize the American International Group Inc. (AIG) insurance corporation, as well as Fannie Mae and Freddie Mac, the two quasi-governmental mortgage giants.

A past proponent of deregulation, Mr. McCain on Thursday did not utter Mr. Cox's name but said the SEC has "kept in place trading rules that let speculators and hedge funds turn our markets into a casino."

"We cannot wait any longer for more failures in our financial system," Mr. McCain added.

He said he wants to see a new regulatory "mortgage and financial institutions trust" created for the sake of investor confidence.

He also took a whack at his opponent, saying, "Senator Obama has never made the kind tough reform we need today."

While in charge of the SEC, Mr. Cox watched the federal government choreograph the sell-off of famous Wall Street firms Merrill Lynch and Bear Stearns in order to prevent their collapse. Lehman Brothers, meanwhile, filed for what is believed to be the biggest bankruptcy ever.

Mr. Cox, who some Republicans said was on the shortlist to be Mr. McCain's running mate, was an attorney in the Reagan White House's Office of Legal Counsel and used to fighting off attacks, including those identified as friendly fire.

"While I have great respect for Senator McCain, we have sometimes disagreed, and this is one such occasion," he said in a statement Thursday. "History will judge the quality of our response to this economic crisis, but now is not the time for those of us in the trenches to be distracted by the ebb and flow of the current election campaign."