Fear, haste and political gamesmanship won't fix America's financial mess. Fairness paired with the kind of transparency and accountability that ensure confidence in markets and government might.
Capping off a remarkable day of posturing -- by Congress, by the presidential candidates, and ultimately by the president -- George Bush on Wednesday evening became visible again only to do what he usually does in time of crisis. He told Americans that they should be very, very afraid if Congress doesn't pass his bail-out plan. Instead of Saddam Hussein raining nukes on American cities, or Osama bin Laden unleashing more 9/11s, "the value of your home could plummet. Foreclosures would rise dramatically. More businesses would close their doors and millions of Americans could lose their jobs."
Where's he been?
Bush wasn't describing something millions of Americans haven't been experiencing going back to 2006, when the housing bubble Bush's policies helped create burst and foreclosures began slamming families across the country. Home values have been plummeting for two years. They're at four-year lows in Volusia and Flagler counties. More than 700,000 jobs have been lost since January. Personal income is plummeting. Household income never returned to its Clinton-era levels following the 2001 recession. The Bush years gamed the system to seem healthier than it was. Dogmatically opposed to regulation, Bush blunted efforts in 2002 by then-Treasury Secretary Paul O'Neill and Federal Reserve Chairman Alan Greenspan to prevent companies from manipulating earning statements. That's what Enron had done before its collapse. That's what mortgage giants Fannie Mae, Freddie Mac and other financial houses did subsequently, although fictional earning statements are only a symptom of a sicker system.
This is not a surprising crisis. Nor does it have much to do with a 21st century global economy "regulated largely by outdated 20th century laws," as Bush put it Wednesday. Deregulation since 1981 has been systematically removing accountability rules and firewalls that once prevented banks, investment brokers, insurers and mortgage houses from morphing into each other to manufacture paper profits while hiding gaping risks. That's what the 1933 Glass-Steagall Act once prohibited. That's what the 1999 Financial Services Modernization Act sponsored by Phil Gramm, repealed. Gramm was John McCain's chief financial adviser until a few weeks ago, when he called Americans complaining of tough economic times "a nation of whiners."
Regulation wasn't the heart of New Deal reforms. Transparency was. "Outdated" laws aren't what's hurting markets now. Pretending that corporations can police themselves is. So is shielding markets from cleansing sunshine. That's what was missing from the $1 trillion plan Bush wants Congress to pass, with barely a few days' deliberations. Think about that for a moment. A $1 trillion plan that overnight increases the size of the federal government by a third and turns it into the world's largest financial institution in a bleak market, all with taxpayer money, plus a "trust us" sign as government's only collateral.
By Thursday afternoon, key lawmakers -- without McCain or Barack Obama -- appeared to have reached a deal on the plan, which would then wend its way through House and Senate debates and votes over the weekend. Public opposition is reportedly fierce. It should be. This is the USA Patriot Act of financial rescues -- a plan that will remake the economy's landscape, but without a public airing, without hearings, without due consideration. Fears of another market collapse are exaggerated. Fears of a bail-out for rich firms that do little to protect ordinary homeowners and little to repair the flaws at the heart of the financial system aren't.
McCain's "suspension" of his campaign is a stunt. Neither he nor Obama, beyond encouraging bi-partisanship together, can do more than what 433 other members of Congress are tasked to do, especially since McCain doesn't sit on any of the committees handling the legislation and hasn't been part of the exhausting negotiations over it to date. Swooping in for a little credit at the tail end isn't presidential. It's opportunistic -- and demeaning to those who've spent the past week in round-the-clock negotiations. What the two candidates should do themselves (and, of course, their running mates) is make their program for the nation transparent. Their place is the campaign trail. Their place is the debating hall at the Ford Center in Oxford, Miss., tonight, explaining why Main Street is being forced to absorb costs and changes far more than anything on Wall Street and in Washington.