“This crisis serves as a stark reminder of the failures of crony capitalism and an economic philosophy that sees any regulation at all as unwise and unnecessary. It’s a philosophy that lets Washington lobbyists shred consumer protections and distort our economy so it works for the special interests instead of working people; a philosophy that says we should give more and more to those with the most and hope that prosperity trickles down to the rest.

Instead, the pain has trickled up – from the struggles of Main Street all the way up to the crises on Wall Street.

Despite his eleventh hour conversion to the language of reform, Senator McCain has subscribed to this philosophy for twenty-six years in Washington and the events of this week have rendered it a colossal failure. It is time for a new economic strategy, guided by the principle that America prospers when all Americans prosper, where common-sense rules of the road ensure that competition is fair, open, and honest. That is the strategy I will pursue as President, and I will bring the change we need to restore confidence in our financial markets and strength to our economy.”

“One thing we should have learned from this experience of the financial crisis is if we ignore risk building in the system, that risk will get much more difficult to manage than if we recognize it and tackle it early. We have seen the consequences of ignoring risk in the current economic and financial crisis. It has already led to negative growth in rich countries. The risk consequences of ignoring climate change will be very much bigger that the risk consequences of ignoring risk from the financial system.”

Barack Obama: “There’s been an ideological predisposition that says regulation is bad; so, stay out of the marketplace. I am a strong believer in the free market. I am a strong believer in capitalism. But I’m also a strong believer that there are certain common goods – our air, our water, making sure that people are safe – that require us to have some regulation. Now it has to be well designed. But the financial system is a classic example of deregulation philosophy run amok. And now you see the consequences. And ironically, had we had some sensible regulation we would not have now a much closer approximation of socialism in the banking system than anything Democrats have been proposing over the last several years. When you don’t guard against excess, then a lot of times government has to step in anyway in a much more burdensome way.

Have you heard someone reclaiming regulation recently? Send quotes to Anna Fahey: [email protected].

Return to Flashcard No. 13 — Talking Regulation, Post-Meltdown>>

November 3, 2008