John McCain's speech on economy and financial Markets
Article added on September 19, 2008
Prepared remarks about the financial markets, the
economy, taxes, health care and more by
Senator John McCain for delivery at a campaign appearance in Green Bay,
Wisconsin, scheduled for 9:00 a.m. ET Friday September 19, 2008.
Thank you all very much. It's a great pleasure to be introduced by Governor
Sarah Palin - and I can't wait to introduce her to Washington.
If Governor Palin and I are elected in 46 days, we are not going to waste a
moment in changing the way Washington does business. And we're going to start
where the need for reform is greatest. In short order, we are going to put an
end to the reckless conduct, corruption, and unbridled greed that have caused a
crisis on Wall Street.
Here and all across our country, people are wondering what exactly is
happening on Wall Street. And with good reason, they want to know how their
government will meet the crisis. Clear answers are hard to come by in
Washington.
As Senator Obama's leader in Congress memorably put it the other day -- and I
quote -- "no one knows what to do." Perhaps given that reaction, it shouldn't
surprise us that the Congressional leaders of this do-nothing Congress also said
that they weren't going to take action until after the election, claiming that
it wasn't their fault. I am hopeful that last night's discussions are a sign
they have changed their mind and will take action soon. But any action should be
designed to keep people in their homes and safe guard the life savings of all
Americans by protecting our financial system.
There are certainly plenty of places to point fingers, and it may be hard to
pinpoint the original event that set it all in motion. But let me give you an
educated guess. The financial crisis we're living through today started with the
corruption and manipulation of our home mortgage system. At the center of the
problem were the lobbyists, politicians, and bureaucrats who succeeded in
persuading Congress and the administration to ignore the festering problems at
Fannie Mae and Freddie Mac.
These quasi-public corporations lead our housing system down a path where
quick profit was placed before sound finance. They institutionalized a system
that rewarded forcing mortgages on people who couldn't afford them, while
turning around and selling those bad mortgages to the banks that are now going
bankrupt. Using money and influence, they prevented reforms that would have
curbed their power and limited their ability to damage our economy. And now, as
ever, the American taxpayers are left to pay the price for Washington's failure.
Two years ago, I called for reform of this corruption at Fannie Mae and
Freddie Mac. Congress did nothing. The Administration did nothing. Senator Obama
did nothing, and actually profited from this system of abuse and scandal. While
Fannie and Freddie were working to keep Congress away from their house of cards,
Senator Obama was taking their money. He got more, in fact, than any other
member of Congress, except for the Democratic chairmen of the committee that
oversees them. And while Fannie Mae was betraying the public trust, somehow its
former CEO had managed to gain my opponent's trust to the point that Senator
Obama actually put him in charge of his vice presidential search.
This CEO, Mr. Johnson, walked off with tens of millions of dollars in salary
and bonuses for services rendered to Fannie Mae, even after authorities
discovered accounting improprieties that padded his compensation. Another CEO
for Fannie Mae, Mr. Raines, has been advising Senator Obama on housing policy.
This even after Fannie Mae was found to have committed quote "extensive
financial fraud" under his leadership. Like Mr. Johnson, Mr. Raines walked away
with tens of millions of dollars.
Senator Obama may be taking their advice and he may be taking their money,
but in a McCain-Palin administration, there will be no seat for these people at
the policy-making table. They won't even get past the front gate at the White
House.
My friends, this is the problem with Washington. People like Senator Obama
have been too busy gaming the system and haven't ever done a thing to actually
challenge the system.
We've heard a lot of words from Senator Obama over the course of this
campaign. But maybe just this once he could spare us the lectures, and admit to
his own poor judgment in contributing to these problems. The crisis on Wall
Street started in the Washington culture of lobbying and influence peddling, and
he was square in the middle of it.
The financial services industry -- and there are many honest and honorable
people who work in it -- plays a vital role in our economy. Mutual fund
companies help Americans save for retirement. Banks and lending companies
provide the mortgages that help us buy our homes. Investment firms supply the
seed money that helps entrepreneurs create tomorrow's jobs. Insurance companies
protect us against unknown risks.
Yet as the financial crisis continues and bailouts and bankruptcies mount,
it's clear financial firms have lost the trust of the American people. That
trust cannot be regained unless we adopt some fundamental reforms. Government
has a clear responsibility to act and to defend the public interest. That is
exactly what I intend to do.
First, to deal with the immediate crisis, I will lead in the creation of the
Mortgage and Financial Institutions trust -- the MFI. The underlying principle
of the MFI or any approach considered by Congress should be to keep people in
their homes and safe guard the life savings of all Americans by protecting our
financial system and capital markets. This trust will work with the private
sector and regulators to identify institutions that are weak and fix them before
they become insolvent. The MFI is an early intervention program to help
financial institutions avoid bankruptcy, expensive bailouts and damage to their
customers. This will get the Treasury and other financial regulatory authorities
in a proactive position instead of reacting in a crisis mode to one situation
after another.
The MFI will restore investor and market confidence, build sound financial
institutions, assist troubled institutions and protect our financial system
while minimizing taxpayer exposure. This is an important step, but it is not
enough. I will also take the additional actions needed to make sure a crisis
like this is never allowed to build and break over the American people again.
Second, I will propose and sign into law reforms to prevent financial firms
from concealing their bad practices. An inexcusable lack of financial
transparency allowed Wall Street firms to engage in reckless behavior that
padded their profits and fattened executive bonuses when times were good, but
now imperil the financial security of millions of Americans when their bets
turned sour.
So much of the damage to our economy could have been avoided if these
practices had been exposed to the light of day. Americans have a right to know
when their jobs, pensions, IRAs, investments, and our whole economy are being
put at risk by the recklessness of Wall Street. And under my reforms for the
financial sector, that fundamental right will be protected.
Third, we need regulatory clarity. The lack of transparency in our financial
markets went unnoticed by the regulatory agencies scattered throughout
Washington charged with protecting the common good. We've got the SEC, the FDIC,
the CFTC, the SIPC, the OCC, the Fed. At best, this confusing assortment of
regulators and institutions was egregiously lax in carrying out their
responsibilities. At worst, they engaged in the old Washington game of guarding
their bureaucratic turf, instead of safeguarding the public interest and
protecting investors.
Many in the financial services industry also either forgot or neglected their
duty to act ethically and honorably. This shortcoming was aided and abetted by
the creation of financial instruments that allowed lenders to escape any
responsibility for the risk of their loans. In the past, lenders had to pay a
price if they made a bad loan. Today, Fannie Mae and Freddie Mac worked with
Wall Street to bundle together all these dicey subprime loans and then pushed
them off on investors who didn't have the tools of transparency needed to assess
or even understand the risk.
The current system promotes confusion, encourages bureaucratic infighting and
creates incentives for financial firms to cut corners. We need to enhance
regulatory clarity by holding the same financial activity to one regulatory
standard. We don't need a dozen federal agencies doing the job badly -- we need
the best federal agencies to do the job right.
Fourth, we must ensure that consumers and investors are protected. Our
regulatory system must protect consumers and investors by punishing individuals
who engage in fraud, break contracts, or lie to customers -- like the predatory
lenders who know you can't afford an adjustable rate mortgage, but mislead you
into signing one. These actions are criminal and the people who commit them
should be behind bars. And corporate governance rules will be reformed so that
shareholders have a clear say in determining the pay of CEOs and other senior
executives. On my watch, the consequences for corporate abuse will not be more
enrichment, but more likely an indictment.
Fifth, in cases where failing companies seek taxpayer bailouts, the Treasury
Department will follow consistent policies in deciding whether to guarantee
loans. It must have well developed remedies for a financial crisis. With
billions of dollars in public money at stake, it will not do to keep making it
up as we go along.
Finally, the Federal Reserve should get back to its core business of
responsibly managing our money supply and inflation. It needs to get out of the
business of bailouts. The Fed needs to return to protecting the purchasing power
of the dollar. A strong dollar will reduce energy and food prices. It will
stimulate sustainable economic growth and get this economy moving again.
All of these measures will calm and help us to avoid future panics and
disasters in the financial markets. But to get through this tough time for
America, and to come out stronger, we need a strategy of economic growth. And
the massive new tax burden that my opponent plans for the American economy is
exactly the wrong answer. His tax increase -- along with the enormous new
federal programs he proposes -- are the surest way to turn a recession into a
depression. In every respect, the Obama tax hikes would make things even worse
for the working people of this country.
I have proposed, and will sign into law, an economic recovery plan for
working Americans that is directed to the middle class. It will grow this
economy, create millions of jobs and bring opportunity back to Americans. You
will get a tax policy that creates family prosperity and allows you to save for
the future. I will not raise your taxes on income or investments. And we will
simplify the tax code so people can understand it and do their tax returns
themselves.
I will give every family a $5,000 credit to buy their own health insurance
policy and let them chose their own doctor. This will make insurance affordable
to every American.
I will double the child exemption from $3,500 to $7,000 to help families pay
for the rising cost of living.
Under my plan, a married couple with two children making $35,000 will get
$5,000 to pay for health insurance and additional medical expenses. This family
would get another $1,050 from my child exemption. That adds up to over $6,000.
That is a lot more than what any hardworking middle class family, gets under the
Obama plan.
Business taxes will be cut from the second highest in the world at 35 percent
to 25 percent. Tax incentives will spur investment in new plants and equipment.
Research and development incentives will keep companies on the cutting edge of
their industries. Healthcare costs will diminish. Companies will stop sending
jobs overseas to low-cost, low-tax countries and start creating jobs here in
America.
I will expand markets for our goods and services. A one in five of all jobs
in this country are linked to world trade. In five states alone Pennsylvania,
Ohio, Michigan, Wisconsin and Colorado over 5 million jobs depend on trade. My
economic recovery plan will create millions of jobs in America instead of
driving them overseas.
I will adopt an "all of the above" energy policy which expands our use of
oil, natural gas, clean coal and nuclear facilities. We will embark on a
national mission to build an alternative energy base, creating millions of new
jobs. We will create the most diversified energy economy in the world. And, I
will return to the American economy the $700 billion dollars we send overseas
every year to buy oil.
My opponent offers a very different economic future. He has continuously
shifted his position on taxes. At the beginning of this campaign he promised to
raise taxes on your savings and investments. He said he won't raise taxes for
most people but he has voted 94 times in his short Senate career for tax
increases and against tax cuts. He said he would only tax the rich, but he voted
this year to raise taxes on those making just $42,000. Senator Obama has simply
not given Americans good reason to trust him with your tax dollars.
My opponent is against lowering taxes on businesses which are the second
highest in the world. He will impose mandated health insurance on businesses
that would cost up to $12,000 per employee. He opposes free trade. He also wants
to take away the fundamental right of workers to have a secret ballot when
voting to be part of a union.
Now is not the time for these destructive policies that will cripple business
growth, destroy jobs and hurt the middle class. Now is the time to take action
to address this crisis and take action to put our economy back on a path of
growth.
Even though Democratic leaders say they don't know what to do, I believe the
deep problems afflicting our financial system won't be solved by one political
party. There is only one candidate in this race who has a record of reaching
across the aisle to work out the bipartisan solutions needed to move our country
forward in times of crisis -- and I will bring that same spirit of bipartisan
cooperation to the White House. It took members of both parties to get America
into this mess, and it will take all of us, working together, to lead the way
out.
