Phil Gramm's Culpability, Acknowledged
| Fri Feb. 20, 2009 1:25 PM PST
Phil Gramm won't be able to wash this stink off of him.
Time magazine has published a list called "25 People to Blame for the Financial Crisis" and second on the list is our buddy Phil, the man who headed the Senate Banking Committee during the federal government's deregulatory bonanza in the late '90s. Gramm passed or affected two key pieces of legislation that eventually helped create the financial meltdown we are experiencing today. The first of the two was the 1999 Gramm-Leach-Bliley Financial Services Modernization Act, which repealed the Depression-era Glass-Steagall Act and allowed financial institutions to merge like crazy and ignore longtime regulations and limitations. The second was something that Mother Jones uncovered in summer 2008. Here's Time:
[Gramm] also inserted a key provision into the 2000 Commodity Futures Modernization Act that exempted over-the-counter derivatives like credit-default swaps from regulation by the Commodity Futures Trading Commission. Credit-default swaps took down AIG, which has cost the U.S. $150 billion thus far.
Right. As David Corn reported for Mother Jones, Gramm's sly move gave rise to an entire industry of financial products, like credit default swaps, that acted like insurance for the toxic mortgage-backed securities that got passed around Wall Street. Investors who thought they were protected made more and more and worse and worse financial bets, all away from regulatory oversight. Eventually, it caught up with them.
The result is the mess we're in today. And it appears the public is able to trace culpability all the way back to Gramm, because in voting on Time's website, Gramm has been fingered by readers as the most guilty party in this disaster. To read more about credit default swaps and how "Foreclosure Phil" created our crisis, see David's article here.
Advertisement
Advertisement
Comments
Foreclosure Phil needs to go
Submitted by another lib (not verified) on Fri Feb. 20, 2009 3:29 PM PST.
Foreclosure Phil needs to go to jail.
The Buck?
Submitted by Anonymous Bosh (not verified) on Fri Feb. 20, 2009 4:20 PM PST.
Harry Truman famously kept a sign on his Presidential Desk that read: The Buck Stops Here
Which president's signature was on the laws that Gramm is getting blamed for, BTW?
Who had the final say?
Umm, credit default swaps
Submitted by Sally (not verified) on Fri Feb. 20, 2009 6:37 PM PST.
Umm, credit default swaps were already legal before the CFMA was passed. The CFMA affected no change in the legal status of CDSs: swaps (which includes CDSs) were exempt before the CFMA was passed, and they were exempt after the CFMA was passed. David Corn clearly didn't understand what the CFMA actually did (not much), or what role CDSs have played in the financial crisis (a bit part), so I wouldn't promote his article too hard. Reactionary journalism, at best.
Typo
Submitted by Godless Heathen on Fri Feb. 20, 2009 6:46 PM PST.
The role CDS have had in the financial crisis: a big part
It's understandable though, what with the t right above the g...
Both Parties Are Equaly Responsible
Submitted by Ark (not verified) on Sat Feb. 21, 2009 7:54 AM PST.
Both parties are corrupt beyond repair. Derivatives were illegal under the New Deal. Reagan legalized them in 1982. After that anti-usury laws and other provisions were gradually dismantled by both parties. The process was completed by 2000 when Glass-Steagall was repealed with solid bi-partizan backing and the repeal was signed by smiling Clinton. "Great Depression 2" was only a matter of 8 years.
Obama was asked only once about Glass-Steagall and he said he wants it to stay repealed. Meet the new boss... same as the old boss.
The GOP Culture of Greed and Hate Just Keeps Rolling Along
Submitted by Anon92107 (not verified) on Sat Feb. 21, 2009 1:03 PM PST.
Jonathan, Phil Gramm is a worst case scenario role model for GOP Greed regardless of consequences. And the last eight years plus the stimulus debates prove the GOP doesn’t give a damn about America as long as they can perpetuate the GOP Ponzi Scheme.
So America is now experiencing the most hellacious consequences of their paramount GOP cultural value of greed that gave Wall Street every opportunity to bankrupt America after selling out America to Chinese communism because they never gave a damn how many American heroes died in Korea and Viet Nam to protect America from communism.
The other paramount cultural value is GOP Hate which was most hideously exposed during McCain’s election campaign designed by their KKK state core constituency.
And proven again this week when four GOP KKK state governors (Sanford of S.C., Perry of Texas, Jindal of Louisiana, Barber of Mississippi) are still trying to send black Americans back into slavery with their 2009 GOP Depression as another hell on earth consequence of GOP Hate and Greed combined.
Who Knew?!?!
Submitted by We Were Warned (not verified) on Sat Feb. 21, 2009 2:54 PM PST.
Who tried to warn us?
Who was laughed off as a "kook"?
Who was right all along?
(hint: It was nobody who's in charge of economic policy in Today's Administration, or in the one before, or the one before that.)
Economic Crisis Looms - Oct. 1998
Greenspan For 4th Term., How Long Can Business As Usual Last? - Jan. 2000
Manipulating Interest Rates - May, 2000
Economic Problems Ahead - Nov. 2000
Fed Cannot Create Prosperity - Sep. 2001
Gov't Mortgage Schemes Distort Housing Mkt. - Jul. 2002
Gov't Policy & False Prosperity - Jan. 2003
Fannie Mae and Freddie Mac Subsidies Distort the Housing Market - Sept. 2003
Greenspan Ignores Dangerous Trends - Feb. 2004
Will Rising Interest Rates Burst The Housing Bubble? - May 2004
Zero Down For The American Dream - Jun. 2004
Reject Taxpayer Bank Bailouts - May 2005 "...this legislation increases the possibility of future bank failures. Therefore, I must oppose this bill."
The Coming Category 5 Financial Hurricane - Sep. 2005
The Perils Of Economic Ignorance - Mar. 2006
High Risk Credit - Aug. 2007
Why are the media and the rest of the people in our Gov't. acting as if the One Guy in Federal Gov't who could see what was coming and tried to warn us, doesn't exist??
We Were Warned, you are
Submitted by Anon92107 (not verified) on Sun Feb. 22, 2009 9:16 AM PST.
We Were Warned, you are right.
And today they are doing the same marginalizing about the absolute fact that we are now into the Great GOP Depression of 2009, just ask the rapidly increasing millions who have lost their jobs with many, many more millions at risk unless President Obama is allowed to perform a miracle.
One thing is absolutely certain after eight years of GOP betrayals and obfuscations that caused the GOP Recession that they finally admitted but not until it was then headed into the GOP Depression, the GOP will continue to do it's best to betray America about their Great GOP Depression of 2009 +++.
After all, Betrayal of American Democracy is what the GOP does best. Even Bush had to admit at the end when he refused to pardon Libby for Cheney's treason against the CIA, the American Military, American Democracy and Humanity.
The final bill was passed
Submitted by Matt (not verified) on Mon Feb. 23, 2009 2:35 PM PST.
The final bill was passed bipartisanly, it's true, and signed by Clinton, but the original bill was sponsored by only Republicans and supported in the Senate almost only by Republicans. The only reason it finally passed was because Democrats shortsightedly saw an opportunity to make it a Christmas tree to hang ornaments on.
This is the ultimate case for us all, though. We were all shortsighted. Does the left really, genuinely believe that Republicans would have wanted to come anywhere close to risking the recession we have today? America simply has that complex a system that no one could see enough of it to predict it correctly, even in academe and Wall Street where all the brains supposedly are. And it's easy nowadays for what socialists there are on the left to sit on their high horse and criticize capitalism, but capitalism, even with all its faults, has done people far more good than socialism ever could. And it will again.
matt: Few, if any,
Submitted by koyaanisqatsi (not verified) on Mon Feb. 23, 2009 3:00 PM PST.
matt: Few, if any, congressmen read either Act. The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 was rammed through quickly at the end of a session. The second, 2000 Commodity Futures Modernization Act, was slipped into a much larger spending bill. People bitch when congress act irresponsibly, but the want fast action...these are incompatible goals. Sure, Gramm's goal was not the current recession, but he had little concern for the consequences of those two Acts that be (co)sponsored. Gramm still has no regrets; Clinton has said he should not have signed the bills.
Socialism no good? Name a socialist state that the U.S. has allowed to stand or fall _on its own_. The U.S. has attempted to destroy every one that has popped up.
OK then, what good has
Submitted by DaveD (not verified) on Tue Feb. 24, 2009 5:25 AM PST.
OK then, what good has capitalism done for "people". Capitalism is a system that is unconcerned with the condition of "people". The purpose of capitalism is to provide good for the few; those who control the means of productions. When left to their own devices, those who control the means of production do all they can to maximize their own incomes, at the expense of others. If you are referring to the standard of living that we have enjoyed in this "capitalistic society", then you have to realize that most of what we enjoy (8 hour work days, vacation time, paid holidays, fringe benefits, etc) are the result of "socialist" pressure. Capitalists never provided these benefits willingly. Mostly these are the result of the labor movement (labeled as socialist when it was formed, and even today) fighting the capitalists (literally) to wrest these concessions from them, and to improve the working conditions of all.
Saying that capitalism has done more good than socialism ever could is a ridiculously broad statement. How can you possibly know what socialism *could* accomplish if it were allowed. After all, the root of socialism is social, which says that socialism is about what is good for society; "One for all and all for one". Capitalism is about what is good for the investors; "Buyer beware".
Fault?
Submitted by koyaanisqatsi (not verified) on Mon Feb. 23, 2009 2:45 PM PST.
I think the voters at the Time web site got it right. No single person did more harm to our financial system than Phil Gramm. The GOP, as a whole, has certainly done great harm to us. But it was the American people voted to give us about 30 years of GOP dominated government. Who really thought lowering taxes would result in balanced budgets and ever-lasting prosperity? The immense national debt simply limited our ability to deal with important problems. Let's not forget the all the personal debt carried by most people. And who really thought deregulation was a good idea? We deregulated the S & Ls in the 1980s and, soon thereafter, had to bail them out. Then take a look at our auto and steel industries, for example...they still can't compete with foreign manufacturers, and spend more energy fighting changes and lobbying Congress than innovating. Yeah, Gramm is a real villain here. But the American people, even excluding those who cannot do so, don't bother carry there own weight anymore. The American dream? Most Americans end up where their parents did in life, and they get that far only because their parents left them all they had worked for.
Post new comment
MoJo Comments: Send Us Your Feedback
We changed our spam software to better filter comments. Should you encounter any issues, please let us know.
