WASHINGTON (Reuters Breakingviews) - John McCain was a financial maverick for a Republican. The Arizona senator, who died on Saturday after battling brain cancer, was famous for his independent streak. His last major contribution in Congress, before his illness forced him to stay close to home, was to help block his party’s push to repeal Obamacare. McCain refused to toe the line on Wall Street, including on reining in firms from Goldman Sachs to Credit Suisse after the financial crisis.
McCain was the odd one out in the Grand Old Party Among, which has long counted big finance as key donors and allies. For several years until the end of 2014, he was former Democratic Senator Carl Levin’s right-hand man in investigating Wall Street wrongdoing in the wake of the 2008 crash. Levin used his chairmanship of the Permanent Subcommittee on Investigations to target Goldman Sachs, JPMorgan Chase, Credit Suisse, hedge fund Renaissance Technologies and others. McCain’s involvement added the all-important bipartisan support that lent the panel more credibility.
The Vietnam war veteran and prisoner of war wasn’t as skilled as Levin in methodically taking down a bank executive, but McCain never minced words. During a 2010 hearing on Goldman’s conflict of interest in betting against the housing market, McCain said there was no doubt that the bank’s behavior was “unethical.” Later, McCain dubbed JPMorgan’s $6 billion London Whale trading loss in 2012 “another shameful demonstration” of a bank engaging in wildly risky behavior.
To Wall Street’s annoyance, McCain also co-sponsored a bill with liberal Democrat Elizabeth Warren to reinstate the 1933 Glass-Steagall act. The proposal never got far, but kept the issue of separating a bank’s commercial and investment-banking activities alive. He did vote against the Dodd-Frank legislation in 2010, but because, he argued, it enshrined Wall Street bailouts.
His career was not unblemished. His reputation took a hit in the late 1980s when he became embroiled in the Savings and Loan scandal as part of the so-called Keating Five. McCain was eventually cleared by a Senate Ethics Committee but was rebuked for showing “poor judgment” for being involved in the failed Lincoln Savings and Loan Association’s efforts to fend off regulators.
But his standing recovered. He lost the 2000 Republican presidential primary to George W. Bush and then became the party’s presidential nominee challenging Barack Obama in the 2008 election. His choice of Alaska Governor Sarah Palin as his running mate, though, arguably opened the GOP’s doors to the Tea Party and other populist voices.
He will probably be remembered more, though, for his independent streak both before and after that election. That will be missed as his Congressional party colleagues and the White House champion regulatory rollbacks cheered by the financial-services industry.
Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.
Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.