ECONOMY & TAXES: Finance Regulation Reform Barack Obama has said: “Congress and the President are debating a bailout of our financial institutions with a price tag of $700 billion or more in taxpayer dollars. Whatever shape our recovery plan takes, it must be guided by core principles of fairness, balance, and responsibility to one another. No Golden Parachutes—Taxpayer dollars should not be used to reward the irresponsible Wall Street executives who helmed this disaster. Main Street, Not Just Wall Street—Any bailout plan must include a payback strategy for taxpayers who are footing the bill and aid to innocent homeowners who are facing foreclosure. Bipartisan Oversight—The staggering amount of taxpayer money involved demands a bipartisan board to ensure accountability and oversight. A recovery package is just the beginning. [I] have a plan that [includes]: --tax cuts for 95 percent of families, --an economic stimulus package that creates millions of new jobs and leads us towards energy independence, and --health care that is affordable to every American.” —September 23, 2008 Campaign E-Mail “Turmoil [in our financial markets] is a major threat to our economy and its ability to create good-paying jobs and help working Americans pay their bills, save for their future, and make their mortgage payments.” —September 15, 2008 Statement “It is time for the federal government to revamp the regulatory framework dealing with our financial markets: --The Federal Reserve should have basic supervisory authority over any institution to which it may make credit available as a lender of last resort. --The nature of regulation should depend on the degree and extent of the Fed’s exposure. But at the very least, these new regulations should include liquidity and capital requirements. --There needs to be general reform of the requirements to which all regulated financial institutions are subjected. --Capital requirements should be strengthened, particularly for complex financial instruments like some of the mortgage securities that led to 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. --Transparency requirements must demand full disclosure by financial institutions to shareholders and counterparties. --We must work with international arrangements [to ensure] that financial institutions around the world are subject to similar rules of the road—both to make the system stable, and to keep our financial institutions competitive. --We need to streamline a framework of overlapping and competing regulatory agencies. --We need to regulate institutions for what they do, not what they are. It makes no sense for the Fed to tighten mortgage guidelines for banks when two-thirds of subprime mortgages don’t originate from banks. --We must crack down on trading activity that crosses the line to market manipulation. --We should create a financial market oversight commission, which would meet regularly and provide advice to the President, Congress, and regulators on the state of our financial markets and the risks that face them.” —March 27, 2008 Speech, New York City The Obama website (http://www.barackobama.com) states: Obama believes that the subprime mortgage industry, which has engaged in dangerous and sometimes unscrupulous business practices, should not be shielded by outdated federal law. —Issues: Economy: Close Bankruptcy Loophole for Mortgage Companies The Democratic National Committee (DNC) Platform (http://www.democrats.org/a/party/platform.html) states: The DNC believes government has a role to play in: --providing stable macroeconomic and financial conditions for sustained growth --demanding transparency --ensuring fair competition in the marketplace. The DNC supports: --reforming and modernizing regulatory structures --working to promote a shift in the cultures of our financial institutions and our regulatory agencies --ensuring shareholders have an advisory vote on executive compensation —Page 25 John McCain has said: “Financial firms have lost the trust of the American people. That trust cannot be regained unless we adopt some fundamental reforms. 1) I will lead in the creation of the Mortgage and Financial Institutions trust—the MFI. The MFI is an early intervention program to help financial institutions avoid bankruptcy, expensive bailouts and damage to their customers. This will get the Treasury and other financial regulatory authorities in a proactive position instead of reacting in a crisis mode to one situation after another. 2) I will propose and sign into law reforms to prevent financial firms from concealing their bad practices. 3) We need to enhance regulatory clarity by holding the same financial activity to one regulatory standard. We don't need a dozen federal agencies doing the job badly—we need the best federal agencies to do the job right. 4) We must ensure that consumers and investors are protected. Our regulatory system must protect consumers and investors by punishing individuals who engage in fraud, break contracts, or lie to customers—like the predatory lenders who know you can't afford an adjustable rate mortgage, but mislead you into signing one. 5) In cases where failing companies seek taxpayer bailouts, the Treasury Department will follow consistent policies in deciding whether to guarantee loans. 6) The Federal Reserve should get back to its core business of responsibly managing our money supply and inflation. It needs to get out of the business of bailouts. We need a strategy of economic growth. I have proposed, and will sign into law, an economic recovery plan for working Americans that is directed to the middle class.” —September 19, 2008 Speech, Green Bay, WI “In my administration, we’re going to hold people on Wall Street responsible. And we’re going to enact and enforce reforms to make sure that these outrages never happen in the first place.”
—September 15, 2008 Speech, Tampa “Major reform must be made in Washington and on Wall Street.” “The McCain-Palin Administration will replace the outdated and ineffective patchwork quilt of regulatory oversight in Washington and bring transparency and accountability to Wall Street.” —September 15, 2008 Statement “Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital.” —March 25, 2008 Speech, Orange County Hispanic Small Business Roundtable The McCain website (http://www.johnmccain.com/) states: N/A The Republican National Committee (RNC) Platform (http://www.gop.com/2008Platform/) states: The RNC does not support government bailouts of private institutions. —Section on Economy (http://www.gop.com/2008Platform/Economy.htm#6)