A Thoroughly Lousy Banking Bill (Molly Ivins, 1999)
John McCain's campaign co-chair Phil Gramm is right: We have "become a nation of whiners." But who is whining more than the bankers that former Sen. Gramm's financial deregulation legislation benefited? The very bankers, like those at UBS Investment Bank, where Gramm found lucrative employment, who now expect a government bailout.
As chair of the powerful Senate Banking Committee, Gramm engineered passage of legislation that effectively ended the major regulatory restraints applied to the financial industry in response to the Great Depression. The purpose of his co-authored Gramm-Leach-Bliley Act, passed in 1999 by a Republican-controlled Congress and signed by President Bill Clinton, was to liberate the banks, stockbrokers and insurance companies from restraints imposed on their activities more than seven decades ago. It was legislation that the financial community, which contributed heavily to Gramm's campaigns in the previous five years, desperately wanted and obviously has abused. So why now bail them out?
How's about some "tough love" for those bankers suddenly in trouble? You know, the sink-or-swim approach of "welfare reform" that Gramm and Clinton applied to poor people to end their addiction to government handouts. Or, perhaps a heavy dose of "faith-based" personal responsibility initiatives to get those knaves who messed up our entire housing market back on the straight and narrow. Sounds ridiculous, I know, because nothing but the bleeding-heart, big-government, throw-money-at-the-problem approach will do when it comes to salvaging corrupt corporations.
That is the real legacy of what has been ballyhooed as the "Reagan Revolution," which Clinton went along with, but which found its full flowering in the administration of George W. Bush. The bookends of the Bush years begin with the Enron debacle and end with the federal bailout of bankers drunk on their greed. And no two people in this country are more responsible for enabling this sordid behavior than the power couple of Phil and Wendy Gramm.
Enron, lest we forget, was their baby. Gramm sponsored the Commodity Futures Modernization Act of 2000, which allowed Enron's scamming to happen. As Ken Lay, who was chair of Gramm's election finance committee, put it quite candidly when asked for the secret to Enron's success, "basically, we are entering or in markets that are deregulating or have recently deregulated."
Part of that deregulation involved rulings of the U.S.
Commodity Futures Trading Commission, chaired by Wendy Gramm, who upon retiring became a highly compensated member of the Enron board of directors for eight years. She even served on the board's audit committee during the time of the corporation's despicable financial shenanigans. While on the Enron board, Wendy Gramm also chaired an anti-regulatory think tank that received funding from Enron and other corporations that benefited directly from the policies her institute espoused.
My point here is not to expose the dubious ethics of the Gramms' various business ventures, but rather to question why McCain turned to Phil Gramm for leadership in his campaign. Indeed, until his verbal gaffe, Gramm was highly visible and rumored to be the likely next secretary of the treasury should McCain win.
McCain has long promized voters that he learned the hard lessons provided by his participation as one of the infamous Keating Five in the nefarious savings-and-loan scandal that cost taxpayers hundreds of billions of dollars. Yet he chose as his campaign co-chair a former senator whose push for government deregulation facilitated the far deeper one we now are experiencing. Here is a man whose legislation created what financial guru Warren Buffett termed "financial weapons of mass destruction."
Why in the world would you designate as your key economic adviser someone who left the Senate to become an officer of the UBS bank that is at the very center of this mess, a former senator who not only secured highly paid employment with a banking giant that benefited from legislation he helped pass, but who then lobbied Congress for even more of the deregulatory breaks that got the bank into such deep trouble?
The answer cannot simply be that McCain doesn't care much about economics, as he himself has indicated. Perhaps that would explain his having voted for all of the measures pushed through the Senate by Gramm. Perhaps it even explains McCain's serving as chair of Gramm's own previous but failed presidential bid. But indifference to economics does not explain the prominence of Gramm in the McCain campaign as the top economic adviser during these past months of the U.S. financial crisis. Indifference to the folks losing their homes is a more plausible explanation.
© Creators Syndicate
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Albion Monitor July
18, 2008 (http://www.albionmonitor.com)
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