McCain Proves He Really Really Really Doesn't Get It

On Tuesday, the 25th, John McCain gave a speech before the Orange County Hispanic Small Business Roundtable. (Read the text here. ) The main topic of the speech was to address the current financial crisis faced by the US., namely the aftermath of the subprime mortgage collapse.

McCain pointed the finger at a few of the parties responsible (curiously leaving out the Federal Reserve and George Bush, who both have some culpability.) He blames the homeowners who bought more house than they could afford, and the mortgage companies that loaned them the money. I agree with his assessment that those two groups are partially to blame.

He then goes on to say:

The other part of what happened was an explosion of complex financial instruments that weren't particularly well understood by even the most sophisticated banks, lenders and hedge funds. To make matters worse, these instruments -- which basically bundled together mortgages and sold them to others to spread risk throughout our capital markets -- were mostly off-balance sheets, and hidden from scrutiny. In other words, the housing bubble was made worse by a series of complex, inter-connected financial bets that were not transparent or fully understood.

While his explanation of the mortgage-backed securities scam is not complete, it will suffice. The important part is where he says these instruments "were mostly off-balance sheets, and hidden from scrutiny." And the part about "financial bets that were not transparent..." The problem is that the convoluted mechanisms that banks used to turn high-risk loans into triple-A rated securities was hidden from view and understood by very few people.

So far, I'm with him.

But then he said, "Let's start with some straight talk," so I knew the BS was to follow.

His plan to help homeowners is to do nothing to help homeowners. Any assistance that the government offers to people with mortgages must be limited to those who didn't act irresponsibly. So he wants to give aid only to those people who don't need it, because if someone signed on to a mortgage they didn't understand or couldn't afford, then they should lay in the bed they made (which will probably be in a refrigerator box under a viaduct.) "Central to those reforms," he says, "should be transparency and accountability." He wants people to be accountable. There's some straight talk.

So how would Saint McCain handle the banking industry, which has brought our economy to the very brink of collapse, requiring a several-hundred-billion dollar bailout by the Fed?

Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital.

The financial institutions that a few minutes earlier he was lambasting for using unregulated, hidden tactics to spread massive risk throughout the economic foundation of America should be allowed to do whatever they want to make money.

So to sum up: after very nearly destroying the economy (and really, the jury is still out on that) these titans of greed should be trusted to do whatever they feel is appropriate to increase their bottom line. Remember when McCain said, "The issue of economics is not something I've understood as well as I should"? Well, this is what he was talking about.

.