The Phil Gramm Rehabilitation Tour Is Underway
The Phil Gramm Rehabilitation Tour Is Underway
Today, Phil “mental recession” Gramm has an op-ed in the Wall Street Journal disputing the notion that the deregulation he promoted while in the Senate had anything to do with the financial crisis. Gramm — the poster child for a movement defending deregulation and blaming Clinton-era housing programs for the meltdown — relied on a series of tired conservative tropes in an attempt to exonerate himself from well deserved culpability.
Gramm: It was the Community Reinvestment Act!
No it was not. Only six percent of the subprime loans made by CRA-covered lenders went “to lower-income borrowers or neighborhoods.” It was non-bank mortgage companies — not covered by CRA — that originated 50 percent of subprime loans.
Gramm: Fannie and Freddie encouraged the poor people!
This is a favorite of the right, but Fannie and Freddie “had nothing to do with the explosion of high-risk lending.” The two undeniably fueled the securitization fire, but it was their chief regulator — the Office of Federal Housing Enterprise Oversight — that utterly failed to prevent them from investing in toxic mortgages, while the Bush administration appointed supervisors who made it clear that they planned to deliver less supervision over the financial services industry.
Gramm: Credit default swaps are fine!
No, they’re not. In his finest moment, Gramm shielded swaps from regulatory oversight by slipping a rule into an unrelated budget bill in 2000. The unregulated swap market reached a peak of $62 trillion. Taking advantage of this, AIG issued over $40 billion in swaps that it couldn’t honor, necessitating a government rescue.
The rescue of AIG and the collapse into bankruptcy of Lehman Brothers are the two defining moments of the current financial market meltdown, and Gramm’s fingerprints are all over both. Incidentally, Gramm is not through messing with the banking system. Just yesterday, the bank that he helps run, UBS, was sued by the American government for helping American clients “use secret accounts to evade U.S. taxes.” Old habits evidently die hard.
11 Responses to “The Phil Gramm Rehabilitation Tour Is Underway”
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UBS #14 on Obama donor list–$505,017
UBS #3 on Rahm Emanuel’s lifetime donor list-$86.100
WaPo says UBS got off light on the fine and the pittance of names revealed. That open and transparent Obama administration sealed the settlement agreement with UBS. It won’t be on a website anytime soon.
February 20th, 2009 at 2:01 pmIn 2006 Executives talked aobut UBS’s illegal activity. They decided not to stop the practice as it sent $200 million annually to their coffers. Gramm headed up UBS’s American operations.
Phil Gramm should be indicted and in jail.
February 20th, 2009 at 2:04 pmGramm remains free to participate in Obama’s $1 trillion public-private partnerships.
Taxpayer money already went to serial ethics abuser UBS. The Fed routed the funds through the European Central Bank. How much more will Gramm’s corrupt group get?
February 20th, 2009 at 2:06 pmUhhh…stateofthedivision? You do realize that the WaPo has no credibility don’t you? That being the case, why are you using them as your source? It doesn’t reflect highly on what ever you want to say….that’s all I’m sayin’.
February 20th, 2009 at 4:18 pmOpen Secrets is the source on the donations, not WaPo.
February 21st, 2009 at 12:08 amThe good news is the Podesta Group got none of the $990,000 UBS spent on lobbying in 2006.
February 21st, 2009 at 12:10 amOther sources for information on the UBS settlement include Bloomberg and Reuters.
February 21st, 2009 at 5:13 pmPhil Gramm is public enemy #1 for lighting the match that set this country’s – and arguably the western world’s – economy ablaze. He championed that legislation that brought it on. Go back and read the legislative history for yourself.
After getting these “reforms” rammed through Congress, he left the Senate and jumped to UBS Bank….that’s right. The outlaw bank with public enemy #1 as a vice chairman, where he remains to this day. With wonderful poetic justice, the mortgage meltdown that he spawned has played a major role in the demise of his present employer, UBS (which tried to take advantage of his legislative effort).
February 21st, 2009 at 6:02 pmPhil Gramm’s connections to the financial industry (and his conflict of interest wife) should be throughly investigated. Gramm’s only “comeback” should be to go to jail. For years, Phil “Nation of Whiners” Gramm lobbied for deregulation of the banking, mortgage, and insurance industries, particularly Fannie Mae, Freddie Mac, and AIG. All three have been granted bailouts since being ruined by high risk and greed. After dismantling regulations in the 90s, Gramm was McCain’s partner in the push for deregulation in the Ownership Society Republican domestic policy under Bush. McCain’s top campaign financial advisor, Gramm, was fully aware of AIG’s soft money donations to McCain’s non-profit, established after McCain’s failed 2000 presidential bid. AIG’s reward for donations over 75,000/yr? Two bailouts. A stink rises from the global economic crisis, and it wafts of Phil Gramm.
February 21st, 2009 at 6:41 pmWell, who is going to bell the cat? Someone has to get the evidence, solid evidence that will convict Gramm. Then present it to some proper legal venue that will take action against him. Sorry, I think the scumbag is guilty as sin, but I don’t think anyone will do anything until after he is dead.
February 22nd, 2009 at 5:58 pm“No it was not. Only six percent of the subprime loans made by CRA-covered lenders went “to lower-income borrowers or neighborhoods.”
But that is to miss the point. Point being: it was only a matter of time before the relaxation of regulations at CRA moved to the *prime* market. That is where the real damage was done. No one that I’ve spoken to has suggested the aggregate sum of CRA loans caused the housing collapse. That’s absurd. But what is not in question is the fact that the tendency to relax guidelines (which is what got us in trouble) has its genesis with CRA.
As Gramm points out, “(CRA) requirements led regulators to foster looser underwriting and encouraged the making of more and more marginal loans. Looser underwriting standards spread beyond subprime to the whole housing market.” The NY TIMES (that bastion of conservatism) has reported much the same thing. It was a culture of regulatory neglect that allowed too many folks to purchase homes they could not afford.
February 24th, 2009 at 5:08 pm