David Corn: Foreclosure Phil (Gramm)

[marmar]

from Mother Jones:



Foreclosure Phil

Years before Phil Gramm was a McCain campaign adviser and a lobbyist for a Swiss bank at the center of the housing credit crisis, he pulled a sly maneuver in the Senate that helped create today's subprime meltdown.

By David Corn

May 28, 2008


Who's to blame for the biggest financial catastrophe of our time? There are plenty of culprits, but one candidate for lead perp is former Sen. Phil Gramm. Eight years ago, as part of a decades-long anti-regulatory crusade, Gramm pulled a sly legislative maneuver that greased the way to the multibillion-dollar subprime meltdown. Yet has Gramm been banished from the corridors of power? Reviled as the villain who bankrupted Middle America? Hardly. Now a well-paid executive at a Swiss bank, Gramm cochairs Sen. John McCain's presidential campaign and advises the Republican candidate on economic matters. He's been mentioned as a possible Treasury secretary should McCain win. That's right: A guy who helped screw up the global financial system could end up in charge of US economic policy. Talk about a market failure.

Gramm's long been a handmaiden to Big Finance. In the 1990s, as chairman of the Senate banking committee, he routinely turned down Securities and Exchange Commission chairman Arthur Levitt's requests for more money to police Wall Street; during this period, the sec's workload shot up 80 percent, but its staff grew only 20 percent. Gramm also opposed an sec rule that would have prohibited accounting firms from getting too close to the companies they audited—at one point, according to Levitt's memoir, he warned the sec chairman that if the commission adopted the rule, its funding would be cut. And in 1999, Gramm pushed through a historic banking deregulation bill that decimated Depression-era firewalls between commercial banks, investment banks, insurance companies, and securities firms—setting off a wave of merger mania.

But Gramm's most cunning coup on behalf of his friends in the financial services industry—friends who gave him millions over his 24-year congressional career—came on December 15, 2000. It was an especially tense time in Washington. Only two days earlier, the Supreme Court had issued its decision on Bush v. Gore. President Bill Clinton and the Republican-controlled Congress were locked in a budget showdown. It was the perfect moment for a wily senator to game the system. As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered dead—even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. "Nobody in either chamber had any knowledge of what was going on or what was in it," says a congressional aide familiar with the bill's history.

It's not exactly like Gramm hid his handiwork—far from it. The balding and bespectacled Texan strode onto the Senate floor to hail the act's inclusion into the must-pass budget package. But only an expert, or a lobbyist, could have followed what Gramm was saying. The act, he declared, would ensure that neither the sec nor the Commodity Futures Trading Commission (cftc) got into the business of regulating newfangled financial products called swaps—and would thus "protect financial institutions from overregulation" and "position our financial services industries to be world leaders into the new century." ......(more)

The complete piece is at: http://www.motherjones.com/news/feature/2008/07/foreclosure-phil.html

[Bolo Boffin]

1. KICK!

Phil Gramm being this close to John McCain is something that every American should know.

Ads about him should be on those gas pump televisions, telling people all about how he's responsible for the energy market manipulations.

[marmar]

2. "Phil Gramm being this close to John McCain is something that every American should know."

Agreed. .... And I've always despised that scumbag.

[catzies]

3. Don't forget his wife Wendy was head of the CFTC

and was on Enron's board!

[ProgressiveFool]

4. K & R and off to Greatest

Seems like the first thing I've read by Corn in a while...

[DCKit]

5. I didn't realize there was any one person responsible...

but if there were, he's it.

PBS has been running a documentary series on the Presidents recently. The two parter on FDR last week was an incredible education on how badly the regulatory systems have been trashed (hell, the IDEA of regulation) under our latest three Republicon pResidents.

I guess you don't miss it till it's gone.

[UpInArms]

6. things everyone should know about Gramm

http://www.famoustexans.com/philgramm.htm

During that 1984 campaign, the Federal Election Commission (FEC) began investigating Gramm's campaign finances. He had paid Jerry Stiles, a Texas builder, $63,000 to complete his waterfront house in rural Maryland. The builder also ran three troubled savings and loans. The cost of the work he did on the house was $117,000. FBI agents who later investigated Stiles on S&L-related charges found this discrepancy suspicious. Gramm was involved with the owners of at least three Texas S&Ls that later failed at a cost to taxpayers estimated at $160 million, and had previously contacted federal regulators on behalf of Stiles and his savings and loan.

When the Gramm learned of the probe, he quickly sent the builder $50,000 to cover the difference, then took back the check when the Senate Ethics Committee noticed. Gramm, who later advocated full disclosure of embarrassing records by President Clinton, sued the FEC and waged a costly fight to seal his own records. In 1987, the Senator was fined $30,000, one of the largest ever handed down by the FEC. Stiles' corrupt S&L deals collapsed in 1989, costing taxpayers an estimated $200 million. Stiles was sentenced in Texas to 55-years on 11 counts of conspiracy and fraud. The investigation originally began as the result of a complaint filed by Donna Mobley of Austin, a crusader for economic justice, civil liberties and good government who met an untimely death ten years later.

In 1985, Gramm was linked to a campaign contribution shakedown run out of a Small Business Administration (SBA) office in El Paso. He was never subjected to a complete investigation or negative press coverage, however, because on February 19, 1988, a leased Rockwell Aero Commander 680 crashed and exploded shortly after taking off from El Paso International Airport. All aboard, the pilot, his wife and son, were killed. The pilot was local businessman Don McCoy who, a day earlier, had agreed to give testimony in an FBI investigation that had threatened both Senator Gramm's protégé at the SBA, and some of the city's most prominent business leaders.

Gramm was re-elected in 1990 with the highest vote percentage of any Senate candidate in a Texas general election in over three decades.

Gramm's legislative record includes such bills as the Gramm-Latta Budgets and the Gramm-Rudman Act. Gramm-Latta mandated the Reagan tax cut. Gramm-Rudman placed the first supposedly binding constraints on Federal spending. Gramm was chairman of the National Republican Senatorial Committee during the return of a Republican majority in the Senate in 1994. With that majority in place, Gramm, as chairman of the Banking Committee, led passage of the Gramm-Leach Act, making changes in the banking, insurance and securities laws which Congress had kept at bay for sixty years.

Gramm also led the fight against President Clinton's Health Care Bill, authored changes in the welfare system, and initiated the doubling of forces in the Border Patrol. He and Senator Robert Byrd of West Virginia won passage of a highway bill that mandated use of the entire gasoline tax for road construction. Gramm has also worked to invest Social Security funds in the stock market.

[Califooyah Operative]

7. K&R - nt

[Wilms]

8. K&R n/t

[KharmaTrain]

9. And Let's Not Forget Phil's Days As A Porn Producer...

http://www.realchange.org/gramm.htm#porn

Gramm's brother-in-law, George Caton, says he watched a film called "Truck Stop Women" with Gramm back in 1974, which got our champion of family values interested in investing in this kind of movie. Gramm admits that $7,500 of his money somehow wound up financing a never-completed, R-rated movie called "Beauty Queens" but he denies that he had any interest in funding pornography.

That may be true. They press hyped this up as supporting a "porn" film, which is a ridiculous overstatement. The fact is, Gramm got taken; "Beauty Queens" was never made, and the money went to finance a raucous and stupid anti-Nixon movie (which never made a dime.) (Gramm is said to have watched and like the result.)

But it is clear that Gramm had no compunctions about making money off an off-color film. This makes his current sucking up to the Christian right all the more offensive. And his evasive responses when asked about this scandal are disturbingly typical of Gramm's responses to other charges and allegations.

Gramm needs to stick around a bit longer...a good punching bag is hard to find and there's not enough people paying attention...YET. He and Charlie Black are gifts that keep giving right now.