Unbelievable. John McCain claims that the current financial "turmoil" is the result of a "lack of regulation." Well, guess who authored the bill to reduce government regulation over the banking industry? None other than McCain economic adviser Phil Gramm. What's more, "Foreclosure Phil" also slipped in legislation in December 2000 called the Commodity Futures Modernization Act that arguably has led to the current subprime and securities crises with Bear Stearns, Lehman Brothers, Merrill Lynch and AIG. Read on.
David Corn wrote an enlightening article in the July/August issue of Mother Jones revealing how Phil Gramm pushed through legislation that many lawmakers didn't understand could potentially lead to the current crisis. It makes me sick hearing Carly Fiorina or other McCain surrogates claiming that McCain now wants "more regulation" of the SEC and financial markets when Phil Gramm was, and arguably still is, McCain's primary economic adviser.
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.
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The act, he declared, would ensure that neither the SEC nor the Commodity Futures Trading Commission 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."
Really? And now McCain claims that a "lack of regulation" has brought on this economic crisis and that "the old boy network and the corruption in Washington is directly involved." Really? Joe Conason also has a great piece in Salon about Gramm's role in igniting the current financial crisis.
He [Gramm] took hundreds of thousands of dollars from energy and financial interests as a congressman and then as a senator, rising to the chairmanship of the Senate Banking Committee, where he could really perform major favors. He is famed for slipping in an amendment desired by Enron Corp. back when his wife was on that doomed company's board.
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Over and over again, from the savings-and-loan fiasco to the Enron shock to the global banking meltdown, the golden promises of deregulation have turned to leaden ruin. Perhaps nobody cares about the lobbyists surrounding McCain, but someone should ask him why he would cherish the advice of a man whose devotion to ideology has already done us so much damage.
I don't understand why this information isn't making the headlines and the MSM is giving McCain a free pass when it comes to his "lack of regulation" line. I mean, what are we talking about here? McCain is now railing against corporate lobbyists who have deregulated our financial institutions? Are you serious? He has absolutely no credibility on this subject given the influence that Gramm has had in forming his economic policies. Olbermann alluded to this on the 9/15 Countdown (Krugman segment), but he didn't really hammer it home. Somebody out there needs to call McCain on this in a big way.
Deregulation has been a fiasco and who do we have to thank for it? Foreclosure Phil Gramm, McSame's primary economic advisor.
Update: So today McCain said the following:
And there are so many of those regulators that the responsibility for oversight is scattered, unfocused and ineffective. Among others, we've got the SEC, the CFTC, the FDIC, the SPIC and the OCC. But for all their big and impressive sounding names, the fact is they haven't been doing their job right, or else we wouldn't have these massive problems on Wall Street.
Oh, I see now. The problem isn't deregulation of the markets and inadequate funding for the regulatory agencies. It's the agencies themselves. They "haven't been doing their jobs." Right. Don't blame the bad policy, it's the bad regulators not doing their jobs. Nice one.
Update (2x): More from McCain's remarks today:
Too many practices on Wall Street have been kept hidden from public view, to buy time and postpone the inevitable reckoning. Bad investments were made even worse, and risks allowed to multiply, by keeping them off the books. Derivatives, mortgage backed securities, and other complicated instruments often disguised foolish investments and were sold to insurance companies, pension funds, mutual funds, banks and individuals.
Absolutely unbelievable. The gall of this man to claim that he's going to reform a system created by his foremost economic adviser...