fbpx
Politics Foreign Affairs Culture Fellows Program

McCain Gets Something Right (Sort Of)

So it seems that not all of McCain’s advisors are as confused as Scheunemann.  Today McCain has come out swinging against the SEC and SEC Commissioner Cox in particular for signing off on lax rules concerning short-selling, and particularly for allowing the kind of short-selling that permits those who don’t borrow the stock to short it.  This was the […]

So it seems that not all of McCain’s advisors are as confused as Scheunemann.  Today McCain has come out swinging against the SEC and SEC Commissioner Cox in particular for signing off on lax rules concerning short-selling, and particularly for allowing the kind of short-selling that permits those who don’t borrow the stock to short it.  This was the kind of short-selling that drove Lehman’s stock price into the ground.  The crisis has compelled the SEC to start enforcing old rules that prevent the sort of runs on a stock that we have seen this week, and so McCain called them on their previous failure.  

The Wall Street Journal reports:

Sen. McCain also criticized Mr. Cox for eliminating a trading rule that acted as a speed bump to prevent short-sellers from pounding a stock. The rule, known as the uptick, said traders could only place short-sales following a higher bid in a stock price. The SEC eliminated the rule in July 2007, and market participants have been urging the SEC to reinstate the rule ever since [bold mine-DL]. Mr. Cox has said the rule is ineffective today since markets have changed since it went into effect around the Great Depression.

Cox has been wrong, and whoever is telling McCain to say this has McCain on the right track.  Of course, a commissioner of the SEC cannot be removed by the President, so McCain did mess that up rather impressively. 

Update: In some fairness to Cox, he and the SEC had started developing regulations against naked short-selling that were put into effect this week, but they had started on this rather late in the game and only after eliminating the rule mentioned above.  However, he did not oversee the agency’s loosening of rules on how much debt the broker-dealers could take on that directly contributed to the current meltdown.  Then again, those rules obviously remained in force throughout his tenure. 

It should be added that McCain is, of course, being utterly opportunistic here, since he has probably never concerned himself with the intricacies of the stock market until this week and, no, these short-selling rules are not the cause of the current crisis.

Advertisement

Comments

The American Conservative Memberships
Become a Member today for a growing stake in the conservative movement.
Join here!
Join here