While it is unlikely that Phil Gramm will ever face the music for the crimes he has committed against mainstreet, that does not mean that we should view this man as good for America. In fact, Republican Phil Gramm, along with Democrats, took to a whole new level the raping of America through the manipulation of banking regulation. It would be amusing, if not such a dismal result to rank and file Americans, that Gramm seemed to take lessons from his buddy, Presidential candidate John McCain, in his interactions with the banking system in the Keating Five Scandal.
There probably was no single greater influence on banking, leading to the Ponzi housing scam than manifested in Gramm both by his actions and through the actions of his wife. Phil Gramm led the repeal of Glass Steagall, and his wife worked to get derivatives disconnected with gambling legal issues and the mandate that they be traded on regulated exchanges.
So, Gramm essentially broke down the barriers of banking, insurance, and mortgages, while through his wife derivatives were to be used like a casino hedge, permitting the banks to bet massively on bad mortgages. These mortgages were then securitized and sold as if they were sound AAA bonds when they weren’t. His wife Wendy used the CFTC to exempt OTC derivatives from regulation.
When Brooksley Born attempted to overturn the exemption of derivatives, three other partners in Gramm’s criminality voted to stop her. They were Robert Rubin, Alan Greenspan, and Arthur Levitt. Had she succeeded there would have been no massive securitization of mortgages by the investment banks.
Once swaps were viewed as being insurance of a sort that could be written away from a regulated exchange, the opening was created for Gramm to fuse insurance, commercial banking and the securitization of mortgages through investment banking. All these were separated in the Great Depression to protect the banking system from abuse. Gramm rolled away those protections and we got abuse, and a giant and hurtful ponzi housing bubble.
Wendy Gramm was rewarded for her role in allowing swaps to run wild by being named to the Enron board of directors.
Phil Gramm Exposed Here for Lies on Bloomberg Debate
Phil Gramm was featured on a Bloomberg Think Twice Intelligence Squared debate, fooling the supposedly intelligent audience with his loud mouthed swagger and arrogance. He was coupled with Art (trickle down) Laffer versus Nouriel Roubini and Laura Tyson. It turns out that through pure BS, Gramm/Laffer were able to sway the audience. But it was really the failure of Roubini and Tyson to counter one of Gramm’s lies that led to their defeat.
In the debate, Phil Gramm said that the subprime loan debacle was the fault of the CRA and that it was a government caused bubble. What Roubini and Tyson should have countered was that the the CRA and resulting subprime abuse was a small portion (20%) of the total subprime and no portion of the alt a and prime mortgage meltdown. But they remained silent. Indeed, I have argued that point showing that the shadow banks and the BIS, with the help of Gramm and Clinton, were more responsible for the ponzi housing bubble than the CRA.
Bear in mind that Phil Gramm left politics to get a sweet job with UBS, a major investment bank that profited from both ponzi housing and bailouts. He also would have been McCain’s treasury secretary but became unpopular for calling the American people a nation of whiners. He tried to change the story to refer to American leaders, but that isn’t what he said. And besides, the crash came just months after the statements! Phil Gramm is a borderline patriot, barely a patriot. He caused this bubble and crash and calls mainstreet a bunch of whiners!
And Fox News among others blame poor people for the housing meltdown instead of the scheming, scamming big banks.
A Look at Gramm’s Crony Deceiver John McCain
John McCain as a member of the Keating Five, intervened and attempted to interfere with regulators in an unseemly way. This certainly gave McCain a bad taste regarding regulators. I am sure that was motive for Gramm, his buddy, to circumvent regulators, making massive profits for politicians.Three years after the approval of deregulation of the Savings and Loans, the regulator, the Chairman of the Federal Home Loan Bank Board, wanted the reckless loans limited. A familiar name, Alan Greenspan, was against this careful approach. And Greenspan was not the only one.
Charles Keating, of Lincoln Savings and Loan in California, ignored the new regulations. McCain’s meetings, along with other senators, the Keating Five, kept Lincoln alive for two more years. When the bank failed, mostly seniors lost their life savings. I guess for Keating it paid off to have McCain as a close friend, vacationing with him. This lure of money corrupted McCain and was to corrupt McCain’s friend, Gramm. The credit crisis of 2007 was a repeat pattern of fraud and deceit seen in the S & L crisis.
We must understand, in looking at McCain, that he was not convicted of anything. Neither has Phil Gramm been convicted to date. However, McCain clearly abused his power in a moral sense and exacted pain upon mainstreet. The same thinking permeated Phil Gramm’s thought. McCain was on board to deregulate the Savings and Loans, and the easy mortgages that resulted destroyed the industry. That didn’t stop these two evil twins from supporting the repeal of Glass-Steagall, causing even more Ponzi loans and an even greater crash. These two mischief creators, McCain and Gramm, are simply predators upon the nation. When will we learn to hold these agents of international allegiances culpable?
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