In a speech this morning at the U.S. Chamber of Commerce, Treasury Secretary Henry Paulson forced conservatives everywhere to take a long, hard look in the mirror.
As Paulson laid out his prognosis for America’s mortgage crisis and last week’s disaster on Wall Street, he tossed aside the dogmatic, decades-long conservative tradition of promoting market deregulation:
”This latest episode has highlighted that the world has changed as has the role of other nonbank financial institutions and the interconnectedness among all financial institutions,” Paulson said. ”These changes require us all to think more broadly about the regulatory and supervisory framework that is consistent with the promotion and maintenance of financial stability,” he added.
While some conservatives grasp the failures of deregulation, John McCain wants more of it. In McCain’s major housing crisis speech last Tuesday, he continued to highlight an inadequate plan to resolve the problems on Wall Street by making this assertion:
“Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital.”
Perhaps McCain’s archaic logic comes from his advisers (as we all know that McCain is no expert on the economy). Paul Krugman rightly notes that “his chief economic adviser is former Senator Phil Gramm, a fervent advocate of financial deregulation.” “I’d argue that aside from Alan Greenspan, nobody did as much as Mr. Gramm to make this crisis possible,” Krugman writes.