Former Iowa Congressman Jim Leach says Wall Street grew more sophisticated than federal bureaucrats and that’s one reason the nation’s in the midst of a financial system meltdown.
Leach is a professor at Princeton these days, but he’s carefully watching the debate in Washington over the bailout bill for Wall Street. "There is, obviously, bad judgment in the private sector and obviously there has been inappropriate attention to regulation on the federal and state regulatory regime side, but that has nothing to do with this legislation," Leach says. According to Leach, congress must act because it failed to adequately oversee mortgage giants Fannie Mae and Freddie Mac. Leach says that’s the primary reason the country’s financial system is in the crisis today.
However, Leach, a Republican who once led the House Banking Committee, says there’s no reason for Iowans to panic about their local banks. "One of the great ironies of today’s challenge is that only the biggest and what some people reputedly used to think were the very smartest guys on Wall Street are in solvency-threatening situations," Leach says. "The Iowa community banking system is very well regulated, it is very well capitalized and it is very able to meet the demands of Main Street in the state of Iowa."
Republican presidential candidate John McCain recently said the chairman of the Securities and Exchange Commission should be fired. "I believe in accountability, but I’m not one that wants to personalize it," Leach says. "But I think judgmentally, I think accountability is key and so you can read that as you might."
Leach made his comments this week during an appearance on Iowa Public Radio’s "Talk at 12" program. Leach is due in Iowa today for a series of "Republicans for Obama" events. Leach, as you recall, endorsed Democratic presidential candidate Barack Obama in August. Leach spoke at the Democratic National Convention, too. Leach will appear at an 11:30 a.m. "Republicans for Obama" discussion in Ames today, then Leach will appear at an Obama event in West Des Moines at five o’clock. On Friday, Leach has stops for Obama scheduled in Cedar Rapids and Bettendorf.
Leach spent the past 12 months as interim director of the Institute of Politics at Harvard University. He’s now back at Princeton where he is a visiting professor of public and international affairs. Leach spent 30 years in congress, representing parts of eastern Iowa, before his lost his re-election bid in 2006.