April 1, 2008
Column: Financial markets need more than a patch-up
Last week I berated the presidential candidates for ignoring the US financial meltdown. I withdraw that charge: all three have now given speeches on the subject. Whether they have advanced the discussion is another matter.
As always, Barack Obama and Hillary Clinton are saying much the same thing and quarrelling over little differences. Both blame deregulation for the mess and call vaguely for it to be reversed. Both seek mortgage restructurings through persuasion and subsidies. Mrs Clinton gestured towards a bolder approach by saying the Federal Housing Administration should “stand ready” to buy and write down bad mortgages – but stopped short of calling for that right now, saying an expert working group should think about it first.
John McCain, also conforming to type, said it is not the job of government to bail out the imprudent, whether banks or borrowers. He too is for voluntary restructurings. He rightly says banks need more capital, but proposes to achieve this not with stronger regulation but “by removing regulatory, accounting and tax impediments”. Even Mr McCain, though, is not opposed to all new regulation: he proposes closer supervision of mortgage originators, for instance.
The remainder of this column can be read here. Please post comments below.
