Banking Problems

John McCain has been trying to pull off a move to the right in the past year, including boasts of being against regulation. His detractors have tried using his words against him to tie him to deregulation in the banking industry and therefore to the current credit crisis. The facts don't really back either side.

In Bush's first term, his administration attempted to enact more supervision on Fannie Mae. From the New York Times:

The Bush administration today recommended the most significant regulatory
overhaul in the housing finance industry since the savings and loan crisis a
decade ago.
Under the plan, disclosed at a Congressional hearing today, a
new agency would be created within the Treasury Department to assume supervision
of Fannie Mae and Freddie Mac, the government-sponsored companies that are the
two largest players in the mortgage lending industry.

Opposition to this plan was voiced by Democratic Congressman Barney Frank

Significant details must still be worked out before Congress can approve a
bill. Among the groups denouncing the proposal today were the National
Association of Home Builders and Congressional Democrats who fear that tighter
regulation of the companies could sharply reduce their commitment to financing
low-income and affordable housing.
''These two entities -- Fannie Mae and
Freddie Mac -- are not facing any kind of financial crisis,'' said
Representative Barney Frank of Massachusetts, the ranking Democrat on the
Financial Services Committee. ''The more people exaggerate these problems, the
more pressure there is on these companies, the less we will see in terms of
affordable housing.''

The proposal was never enacted. Republicans, including John McCain tried again three years ago to impose some control on Fannie Mae in a Senate bill. McCain stated the following:

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform
Act of 2005, S. 190, to underscore my support for quick passage of GSE
regulatory reform legislation. If Congress does not act, American taxpayers will
continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose
to the housing market, the overall financial system, and the economy as a
whole.

Once again, the bill was never enacted. Of course it is impossible to say whether this regulation would have prevented was has since happened, but it does prove that McCain was no asleep on the regulation front. He was co-sponsoring a bill to bring about more regulation.

In the Spring of 2007, Austan Goolsbee, who is now a high ranking economic advisor to Barack Obama, praised deregulation of the financial sector as good for the people.

Also, the historical evidence suggests that cracking down on new mortgages
may hit exactly the wrong people. As Professor Rosen explains, “The main thing
that innovations in the mortgage market have done over the past 30 years is to
let in the excluded: the young, the discriminated against, the people without a
lot of money in the bank to use for a down payment.” It has allowed them access
to mortgages whereas lenders would have once just turned them away.

So a Republican was pushing regulation while the Democrat was fighting it. Even Bill Clinton remarked on the trouble he had getting Democrats to help, and tied himself to Republicans.

Bill Clinton on Thursday told ABC's Chris Cuomo that Democrats for years
have been "resisting any efforts by Republicans in the Congress or by me when I
was President to put some standards and tighten up a little on Fannie Mae and
Freddie Mac" (video
available here, relevant section at 2:45).