Economic Meltdown: John McCain and the “Old Boy’s Network”

Published on political affairs, by Joel Wendland, Sept. 19, 2008.

The labor movement sharply criticized the Bush administration’s and John McCain’s responses to the failure of two major US financial institutions this week. In a statement for the press, Sept. 17th, AFL-CIO President John Sweeney charged George W. Bush with rushing to come to the aid of Wall Street, while ignoring the ongoing crisis that working families face.

Lehman Brothers failed to open its doors early this week after it became clear that it could not cover its nearly $1 trillion debt.

American International Group Inc. (AIG), a large insurance and banking institution, also prepared to fail until a Federal Reserve bailout package totaling nearly $85 billion kept it open. According to the details of the agreement, the US government will have a controlling interest of close to 80 percent and power to fire senior management.

A third major bank, Merrill Lynch, avoided failure only after a hasty buyout deal with Bank of America. These major financial calamities caused the US stock markets and others around the world to crash, erasing hundreds of billions in value …

… Obama ridiculed McCain’s claim that he would take on special interests, or as McCain himself put it, “the old boy’s network.” Obama replied, “In the McCain campaign that’s called a staff meeting.” By some estimates, 177 lobbyists work for the McCain campaign in some capacity.

Subsequently, Barack Obama released a campaign memo to the media this week outlining several key reforms needed to stabilize the markets. He called for an economic stimulus package for working families, including direct investment in rebuilding the country’s infrastructure and creating new jobs quickly.

He also called for several reforms targeting the housing crisis. He wants legislation passed that would assist homeowners re-negotiate their defaulting loans in order to stay in their homes – a measure that John McCain has opposed.

Mortgage-lending reforms, the Obama campaign added, should ensure home loans are clarified for buyers and made secure for lenders, as well as cracking down on predatory lenders. Bankruptcy reforms would help people in debt adjust the terms of their debt in order to avoid losing their homes.

In the markets themselves, Obama called for modernizing and streamlining the regulatory agencies, first, and then imposing oversight over markets where speculation and market manipulation – the causes of much of the current collapse – are taking place.

In assessing Obama’s plan, the AFL-CIO’s Sweeney emphasized, “We need transparency and effective regulation of Wall Street. If we’re going to bail them out, at least we must hold them accountable.”

Sweeney added, however, relief for working families must come now as “Americans can’t wait until November.” (full text).

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