Deregulation message favors Obama

September 18, 2008 7:05:08 PM PDT
The stock market turmoil is now a focal point on the campaign trail. Republican presidential nominee Sen. John McCain says if he were president, he would fire the head of the Securities and Exchange Commission -- a conservative, Republican, Bush administration appointee. This follows McCain's sharp words about Wall Street greed and corruption.

On the surface it looks to be a risky strategy. If you attack the head of the SEC, it leads to questions about who that person is and how he got there.

At a rally in Iowa on Thursday, McCain put the blame for the financial meltdown of several major U.S. financial institutions squarely on the head of one man.

"The chairman of the SEC serves at the appointment of the president, in my view, has betrayed the public trust. If I were president today, I would fire him," McCain said.

McCain says federal regulators ignored warning signs of the impending financial crisis. The campaign continues to tar Democratic presidential nominee Sen. Barack Obama for taking campaign contributions from mortgage giants Fannie Mae and Freddie Mac before they had to be rescued with a government bailout.

"Sen. Obama isn't change. He's part of the problem in Washington," McCain said.

However in the past few days, McCain has been slipping in the polls, and the suspicion is the slide is due to support for deregulation which many believe led to a lack of government oversight and resulting financial abuse.

McCain's former chief economic advisor, Phil Gramm, was a principal architect of deregulating the financial markets. And it goes back even further. According to a Wall Street Journal report, Gramm's wife pushed through oversight exemptions for Enron when she was head of the Federal Commodities Futures Trading Commission.

"You may remember Phil Gramm. He's the guy who said that we're going through a mental recession -- i's all in your head," Obama said at a campaign rally.

ABC7's political analyst and head of UC's Washington Center, Professor Bruce Cain, says most voters will not follow the details, but they will get the Democrats' drift.

"The party that appointed the regulators is the Republican Party, and the party that was pushing for deregulation was the Republican Party, so I think on balance I the Democrats would rather have this fight and the Republicans would rather not have this fight," Cain said.

Professor Cain says the financial crisis threatens to split the Republican party, pitting fiscal conservatives who are upset over the bailouts against social conservatives who like the populist message of greedy CEOs.

"This is what's happening. Reckless CEOs, they're walking off with multi-million dollar severance through for all this," said Alaksa Gov. Sarah Palin, the Republican vice presidential nominee.

Professor Cain says that greedy CEO message appeals to white working class voters, but there is another wing of the Republican Party -- the CEOs and those who aspire to be CEOs. If McCain continues to demonize the business wing of his party, it could hurt him.


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