Lightweights at the Top of the Tickets

There’s a wave of bank consolidation coming, and both major presidential candidates are financial lightweights.

John McCain has tried to get mileage from criticizing “investment bankers and their mortgage-backed securities.”

What he doesn’t realize is that if he has mortgages on any of his seven homes, there are probably in these securities.

Wall Street has used the MBS for at least a generation, and they are integral to housing finance.

McCain went around the bend Oct. 7 when he suggested that the federal government buy individual mortgages that were under water. It’s apparent he doesn’t understand what the Emergency Economic Stabilization Act of 2008 is supposed to do, namely buy packages of distressed assets.

McCain wants the government to do double the work.

Barack Obama wants Christopher Cox, chairman of the Securities and Exchange Commission, to suspend mark to market accounting. This simply delays the reckoning, like Japanese banks did with their bad loans in the 1990s.

There needs to be some stick with the carrot of regulatory relief, and that’s the point of the EESA. If banks get to buy time with loose accounting standards, why sell your bad loan packages to Uncle Sam?

As a potential builder of a biofuels plant, you might want more banks around, since one might lend to you. But do you want more weak banks simply going through the motions, like they are today?