Is McCain advocating a bankers' monopoly?
by nklein, Tue Mar 25, 2008 at 10:57:38 PM EDT
The NY Times has an interesting article this evening regarding McCain's speech on the economy and the housing crisis. McCain today described how he plans to destroy the U.S. economy through inaction, but I noticed something extremely disturbing on the second page of that the New York Times article. I'm not a lawyer and I was hoping a lawyer, especially a corporate lawyer, could let me know if the following advice from John McCain constitutes advocating for a monopoly.
The second page of that Times article begins:
In place of large-scale government assistance, Mr. McCain recommended two immediate but limited measures. He said that accountants should meet to review the system by which real estate and related assets are valued, and he urged mortgage lenders to step forward voluntarily to help credit-worthy borrowers who may be strapped for cash at the moment.
"They have been asking the government to help them out," he said. "I'm now calling upon them to help their customers and their nation out."
The description of the New York Times is extremely surprising. This is the first time I've ever heard someone with the stature of a presidential candidate call for what appears like blatant collusion. But McCain's actual words are even more surprising:
from the second page
In financial institutions, there is no substitute for adequate capital to serve as a buffer against losses. Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital.
I am prepared to examine new proposals and evaluate them based on these principals. But I think we need to do two things right away. First, it is time to convene a meeting of the nation's accounting professionals to discuss the current mark to market accounting systems. We are witnessing an unprecedented situation as banks and investors try to determine the appropriate value of the assets they are holding and there is widespread concern that this approach is exacerbating the credit crunch.
We should also convene a meeting of the nation's top mortgage lenders. Working together, they should pledge to provide maximum support and help to their cash-strapped, but credit worthy customers. They should pledge to do everything possible to keep families in their homes and businesses growing. Recall that immediately after September 11, 2001 General Motors stepped in to provide 0 percent financing as part of keeping the economy growing. We need a similar response by the mortgage lenders. They've been asking the government to help them out. I'm now calling upon them to help their customers, and their nation out. It's time to help American families.
I'm sorry I thought an industry-wide plan to improve the entire industry was the definition of the monopoly. I've tried to find the relevant law from FindLaw, but have found no answer to that question. It seems like a dangerous proposition to call for some kind of collective action from the mortgage lenders. To me, it seems foolish policy-wise and and as I said legally questionable.
Policy-wise, it seems foolish to give two industries that in the past decade have had major ethical issues. In each industry, companies have collapsed due to major violations of the law and complete mismanagement of their investors' assets. So the solution to this major crisis due to greedy and unethical behavior of investment banks is to allow them to collude to make more money off the backs of homeowners? I don't think so.
What concerns me more though is that McCain is so clueless about economic policy that he may be advocating for illegal actions. Am I way off base or is McCain actually calling for a monopoly in the banking industry?