McCain, Obama & Wall Street "Reform": The Good, Bad & Ugly

With the presidential campaigns issuing competing press releases [1] about the weekend's Wall Street meltdown, it's instructive to step back from the partisan sniping, take a look at the empirical record, and therefore try to get a handle on who, in fact, would be better equipped to handle the crisis as president.

There are indeed good sides to both John McCain and Barack Obama's record when it comes to the issues this crisis involved - and there are, as well, bad and ugly sides, too. But once you look at the whole picture, it is clear who would be in a better position to deal with the meltdown.

THE GOOD: Both Candidates Have, At Times, Confronted Corporate Power

Though controversial to acknowledge among progressive circles, McCain has displayed fleeting flashes of populist courage at times during his career. As the Washington Post [2] reported in January, McCain "Over the past decade, McCain has annoyed, aggravated and nearly destroyed some of the most powerful members of Washington's Republican establishment." That includes tangling with corporate lobbyists over campaign finance reform and prescription drug reimportation, and going head-to-head with Grover Norquist, who leads one of the most powerful corporate front groups inside the Beltway.

Put another way, the best thing about McCain heading into this crisis is that he has - at times - shown some modicum of courage in making the right enemies. And you better believe that in order to handle this economic catastrophe, the next president is not going to be able to make everybody - Wall Street bankers, shareholders, lobbyists and taxpayers - all happy. He is going to have to make some enemies.

Obama, in a shorter career, has shown more populist strength, and far more consistently than McCain who has subsequently tacked back to the Royalist Right in the 2008 presidential campaign (more on that below). As opposed to McCain, Obama has backed up his populism with Senate votes, racking up a reliably progressive record on economic issues and sponsoring legislation attempting to curb the influence of lobbyists. He also is far more comfortable publicly championing the cause of regulation than McCain, who during one of the first aftershocks of the credit crisis, initially proposed doing nothing at all [3].

That said, McCain has, at times, shown a stronger rhetorical zeal for discussing the crisis in accurately pugilistic terms than the more professorial Obama. Whereas the Illinois senator often tries to avoid full-throated populist language [4] out of a DLC-ish desire to avoid confrontation with Big Money, McCain - ever the rhetorical junkyard dog - actually said, "Wall Street is the villain" [5] in a nationally televised interview just a few months ago.

Most often, action and votes like those of Obama's are more important than McCain's mere words. But a presidency is nothing if not a bully pulpit, so it is at least good that both McCain and Obama are talking more tough.

THE BAD: Both Candidates Are Swimming In Wall Street Cash

The political ingredient that inhibits rhetorical populism from becoming legislative action is, of course, money. And both McCain and Obama have raked in an enormous amount of cash from the industries and specific companies at the center of the financial meltdown. The front page of the Washington Post's business section today [6] tells the story better than anything: Next to coverage of the Wall Street meltdown, is a story [7] about about how both campaigns are relying on corporate executives to "bundle" millions of dollars in campaign checks.

According to the Center for Responsive Politics, McCain has raised $6.8 million [8] from "Securities & Investment" sources to Obama's $9.8 million [9]. In fact, Obama has raised more than twice as much cash [10] as McCain from employees of Lehman Brothers, the latest Wall Street firm to exacerbate the economic crisis.

That both candidates are so financially tied to the interests at the heart of this crisis bodes is both unsurprising, and disturbing - unsurprising in that Wall Street has long underwritten both parties, and disturbing in the persistence of the truism that says politicians typically hesitate to seriously regulate their biggest donors.

THE UGLY: Both Candidates Relying on Corporate Insiders As Top Advisers

What should worry us the most is how both candidates have decided not only to build campaign warchests with Wall Street cash, but to personally surround themselves with the very insiders who helped create the current financial crisis in the first place.

McCain's campaign, for example, employs an army of lobbyists representing the specific companies now helping pull down the American economy. As the Center for American Progress [11] reports, McCain "has the former lobbyists of AIG, Merrill Lynch, Lehman Brothers, and Bank of America on his campaign staff."

Obama is far better than McCain in that he doesn't employ lobbyists who helped create the culture of corruption that compelled Washington to sit idly by as the economy tanked. However he does rely on a cadre of people who may be ideologically opposed to the forceful kind of New Deal populism that is going to be necessary to address the crisis.

For instance, Obama's top economic adviser is Jason Furman [12], a protege of Bob Rubin, the top executive of Citigroup - one of the main companies involved in the meltdown. Obama also continues to rely on Rubin for economic advice.

McCain's top economic adviser may be UBS vice-president Phil "Nation of Whiners" Gramm, but Obama's economic guru is UBS's Robert Wolf [13] - Gramm's boss. It was Obama, in fact, who initially appointed [14] a former Fannie Mae chairman and lobbyist, Jim Johnson, to spearhead his vice-presidential selection committee.

CONCLUSION: Obama Better Positioned, But Will Need Pressure

Despite the two candidates sharing similar ties to Wall Street, Obama is nonetheless better positioned to confront the crisis ahead, both because of his party structure, and his own personal history.

The central organizing force of the Republican Party is fealty to Big Business. While corporate front-groups have certainly impacted the Democratic Party, the party's progressive wing is ascendant. If that wing administers real pressure on Obama, it can successfully provide the political space and capital for Obama to pursue the more aggressive regulatory policies needed to quell this crisis.

Likewise, Obama's roots as a community organizer, civil rights lawyer and progressive lawmaker signal that at some deep level, he appreciates the value of confronting corporate power. By contrast, McCain's most famous experience dealing with the financial industry was his involvement in the Keating Five scandal. As the New York Times [15] reports:

"Several former company executives, as well as current and former Senate Republican staff members, said Mr. McCain seemed to avoid matters related to the financial industry after the last major financial crisis -- the savings and loan crisis of the late 1980s. He was one of the 'Keating Five' senators investigated by the Senate, accused of interceding with federal regulators for the operator of a failing thrift."

Obama may not yet be as forceful as FDR and may not have yet articulated a New Deal, but McCain and his Keating Five past all but guarantees that the Arizona senator is no Teddy Roosevelt. While both candidates could be better than the current administration (that's not saying much), one is clearly better equipped to tackle this burgeoning emergency.