"McCain is trying to..desperately avoid what I think he's entitled to, BLAME for BEING PART OF this philosophy of no regulation that's

McCain Using Cox as `Scapegoat' for Market Turmoil, Frank Says

By Lorraine Woellert

Sept. 19 (Bloomberg) -- Representative Barney Frank accused John McCain of using the nation's top securities regulator as a ``scapegoat'' for his own role in supporting a lax regulatory environment that helped lead to the financial crisis.

Frank was reacting to McCain's comment yesterday that he would fire Securities and Exchange Commission Chairman Christopher Cox for failure to properly oversee the regulation of financial markets.

``I think this is an effort to scapegoat one individual for the failure of a philosophy,'' Frank, the chairman of the Financial Services Committee, said today in an interview to be broadcast this weekend on Bloomberg Television's ``Political Capital with Al Hunt.''

``Mr. McCain is trying to kind of desperately avoid what I think he's entitled to, blame for being part of this philosophy of no regulation that's led us into this situation,'' Frank, a Massachusetts Democrat, said.

McCain said yesterday that the SEC was ``asleep at the switch'' during the market turmoil, blaming the commission for keeping in place ``trading rules that let speculators and hedge funds turn our markets into a casino.''

``The chairman of the SEC serves at the appointment of the president, and in my view has betrayed the public's trust,'' the Republican presidential nominee said at a rally yesterday in Cedar Rapids, Iowa. ``If I were president today, I would fire him.''

McCain has been a consistent advocate of deregulation, arguing in February for the need to ``keep government out of these issues and policies,'' in providing new market supervision.

Glass-Steagall

In 1999, McCain supported comprehensive legislation deregulating the financial-services industry, including the repeal of the Glass-Steagall Act, which separated commercial an investment banking and was one of the hallmarks of President Franklin Roosevelt's New Deal economic program.

Today McCain took further steps to set himself apart from the financial policies of the Bush administration. In a speech in Green Bay, Wisconsin, McCain condemned ``lax'' regulation of banks and said the president and his Democratic opponent, Senator Barack Obama, did ``nothing'' to impose tougher rules on mortgage-finance companies Fannie Mae and Freddie Mac, which were nationalized earlier this month.

In his speech today, McCain reiterated his vow to remove Cox from the chairmanship of the SEC.

SEC Powers

``I haven't agreed with everything Chris Cox has done; he's much more conservative than I am,'' Frank said. ``But the SEC was never given the full powers to do what needed to be done.''

Cox attended a meeting last night between administration officials, led by Federal Reserve Chairman Ben S. Bernanke, Treasury Secretary Henry Paulson, and congressional leaders on putting forth a plan to cleanse banks of troubled assets.

Frank said that McCain voted to confirm Cox, a Republican and former congressman who was appointed by President George W. Bush in 2005 and approved by a unanimous vote in the Senate. Cox's term expires in June.

``They've had Chris Cox come to the meeting,'' Frank said. ``I guess John McCain hadn't yet gotten to them with his word that he wanted him fired.''

To contact the reporters on this story: Lorraine Woellert in Washington at [email protected]

Last Updated: September 19, 2008 13:07 EDT

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