Whether fortunate or unfortunate, our biggest economic meltdown in generations is occurring during a heated presidential race. And both sides are pointing fingers if not at each other, at least their parties. Who is really to blame?
In short, the blame falls on former Republican Senator Phil Gramm of Texas. It may seem harsh to assign blame primarily to Gramm, but if you look at the facts, you’ll agree that he does appear to not only be directly responsible for the current financial breakdown, but also the problem of Enron.
Assuming that you agree this whole problem stems from the banking collapse that accompanies the sub-prime mortgage problems, you’ll appreciate the fact that it was then Senator Gramm who, with the help of Republican Senator Richard Lugar of Indiana, introduced the Commodity Futures and Moderation Act. If you do some research on this act, you will find that it is indeed the catalyst for much of the financial woes we have today.
The first interesting note here is that the legislation contained provisions exempting energy trading companies from regulatory oversight. Much like John McCain claims to be, Phil Gramm is a “deregulator”. This provision was lobbied for by Enron, a major campaign contributor to Phil Gramm.
It’s also interesting that Wendy Gramm, the Senators’ wife and at one time the CFTC chairwoman, also did Enron’s dirty work by pushing through a similar oversight exemption.
This piece of legislation also allowed for credit default swaps to go unregulated. This means that no one was authorized to verify that banks and hedge funds had the assets to cover the losses they may suffer from something like a whole bunch of sub-prime mortgages going into default.
Former Senator Gramm went on to become a lobbyists for the mortgage company with a very nice payday.
Well, maybe Phil Gramm looks back at his mistakes of voting along lobby desires instead of public interest, and feels bad. Maybe he has grown wiser through his mistakes. Unfortunately, that’s not the case. It’s Phil Gramm who has recently said we are in a mental recession, and that America is a bunch of whiners. Clearly we just need to use The Secret, and be more positive about the economy. Or maybe it’s just that Phil Gramm doesn’t feel any financial pressure, so he’s not concerned.
So what does Phil Gramm have to do with John McCain? It’s Phil Gramm who wrote the economic policies for John McCain. In an article published by Fortune magazine back in February entitled “McCain’s Econ Brain,” the author states, “On the economy, McCain’s most daring manifesto is his health care plan. Not surprisingly, it bears the Gramm imprint. In fact, McCain has been heeding Gramm’s ‘power-to-the-consumer’ approach for more than a decade. The two senators bonded when they linked arms to fight Hillary Clinton’s ill-fated healthcare program in 1993. ‘We couldn’t get any press coverage in Washington, DC, so we traveled all over the country, to the regional media markets,’ says Gramm. In 150 meetings at hospitals and clinics, McCain and Gramm relentlessly pounded the Clinton plan, helping fire the voter outrage that killed the plan in 1994.”
The fact is that John McCain doesn’t understand economics, that is clear from watching him debate, and he has even admitted as much in person. That in itself is a little dangerous, but no president is going to be an expert in all areas. But it’s the people he plans on continuing to advise him that should concern us. It’s widely known that John McCain plans on appointing Phil Gramm to a high level cabinet position to head up the U.S. economy. This is the same type of judgment he has used to select a near illiterate as his running mate.
So is John McCain listening to Phil Gramm? McCain has just suggested a plan where we will buy all the bad mortgage from banks at full market value, so the banks don’t lose any money. And who eats the loss? We do, of course. Country Banks First.
Other Resources:
Fortune Magazine:
http://money.cnn.com/2008/02/18/news/newsmakers/tully_gramm.fortune/index.htm?postversion=2008021917
Mother Jones:
http://www.motherjones.com/news/feature/2008/07/foreclosure-phil.html
Wikipedia page on Phil Gramm:
http://en.wikipedia.org/wiki/Phil_Gramm
Wikipedia page on Glass-Steagall:
They look like Grumpy Old Men
I’m more interested in the Keating 5 stuff. McCain obviously looks out for banks.
Where you find financial chaos, you find Phil Gramm and John McCain. I hope Obama nails McCain with his Keating friendship on the last debate.