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Dems spotlight Toomey’s support for risky derivatives

After getting push-back from fact-checkers over their recent ad against Pat Toomey, Democrats are staying on the offensive this week, spotlighting a 1999 floor speech in which then-Congressman Toomey voiced support for credit default swaps, the risky derivatives that would later be blamed by many as contributing to the 2008 financial crisis.

Democrats were circulating a video of the floor speech Monday, embedded at bottom, as they sought to bolster their argument that Toomey led the charge for Wall Street deregulation and is now trying to distance himself from that legacy.

In the speech, Toomey said of the legislation that eventually repealed the regulatory framework of Glass-Steagall: “I am particularly pleased that this bill includes an important provision regarding certain derivative transactions, especially credit and equity swaps. These somewhat obscure products are actually very important tools used by businesses, including financial service firms, to manage a variety of risks that they face. This bill reaffirms that swap contracts are legitimate bank products that can be executed and booked in banks and are adequately regulated by and will continue to be regulated by banking supervisors.”

Though Democrats have tried to paint Toomey as a trader of these very derivatives, they weren’t developed until after he left the financial industry. But his support for their deregulation seems clear from the video.

“Funny, despite the all the spin from his current Senate campaign, that looks like Pat Toomey in the video, carrying water for the Wall Street derivatives industry and working to loosen regulations on credit swaps,” Jared Leopold, a spokesman for the Democratic Senatorial Campaign Committee, told The Post-Gazette. “Now Pat Toomey’s trying to run from his record, but it appears he’s been caught on tape.”

Toomey’s campaign once again sought to turn the focus back toward Democratic nominee Joe Sestak’s support for the 2008 bank bailouts.

“Once again, Joe Sestak’s Washington cronies have been caught making false statements in their ads, and they’re just trying to cover themselves,” Toomey spokeswoman Nachama Soloveichik said. “There is only one candidate in this race who voted to spend $700 billion of taxpayer money bailing out Wall Street and that candidate is Joe Sestak.”

Sestak’s campaign also pounced on the video.

“Congressman Toomey’s floor speech supporting credit swaps once again confirms who he wants to fight for in the Senate,” Sestak said in a statement. “Despite his campaign’s rhetoric, his record on the side of Big Banks and Wall Street, at the expense of working families, is clear. I intend to fight to practical solutions that create jobs for the average Pennsylvanians not windfalls for Wall Street.”

August 17, 2010 at 9:14 am

--pa2010.com Staff

Tags: Democratic Party, Joe Sestak, Pat Toomey

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