Irony abounds....

Cross-posted at South Shore Progressive

"Mental recession."
 
"Nation of whiners."

Sen. Phil Gramm uttered those contemptible sentiments this week.

Ahhh, the smell of irony during election season.....

It's especially ironic from where I sit, since most of my working life has been centered around the mortgage industry. I'm in the unenviable position of watching the housing market implode, watching my property value drop virtually every day, and earning my living by helping other folks finance a home!

So, to hear those words from the mouth of the very person who was instrumental in engineering this mess (among others) to feather his own nest is beyond belief.

Gramm’s role in the swift and dramatic recent restructuring of the nation’s investment houses and practices didn’t stop there.

A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBS’s new investment banking arm.

Later, he became a major player in its government affairs operation. According to federal lobbying disclosure records, Gramm lobbied Congress, the Federal Reserve and the Treasury Department about banking and mortgage issues in 2005 and 2006.

During those years, the mortgage industry pressed Congress to roll back strong state rules that sought to stem the rise of predatory tactics used by lenders and brokers to place homeowners in high-cost mortgages. [Ed: emphasis mine]

Source: McCain Guru Linked to Subprime Crisis

Gramm was one of the major players in aggressively removing regulations keeping predatory lending in check. And now, as co-chair of the McCain campaign, is actively helping structure the Republican Party's economic agenda.  Although Gramm has been shuffled off center-stage, he has not been cut loose from the campaign – despite McCain's disavowals of Gramm's words.  You can bet your last dollar that should the White House again go to the Republicans (just typing that hurts...), that Gramm will again be a key player in undercutting what little is left of our literal foundations.  

Am I over-reacting? Maybe. But I don't think so. Just look at IndyMac. They were a huge investor in the sub-prime market. At one point, I dealt with them every day, so I know what kind of loans they were approving.  Loans with no money down, interest-only, no income or asset verification, and questionable or non-existent credit. Sometimes all those things applied to the same borrower!  And we couldn't close them fast enough. It was (and some places, still is) all about the bottom-line, ethics be damned.  

Well, that house of cards is now being shown for what it is. Still don't think it's that bad?  Did you know:

IndyMac Bancorp, Inc. was the holding company for IndyMac Bank, FSB, the largest savings and loan in the Los Angeles area and the seventh largest mortgage originator in the United States. IndyMac Bank, operating as a hybrid thrift/mortgage banker, provided financing for the acquisition, development, and improvement of single-family homes. IndyMac Bank also provided financing secured by single-family homes and other banking products to facilitate consumers' personal financial goals. Its collapse on 11 July 2008 was the second or third largest bank failure in United States history, and the largest regulated thrift failure. [Ed: emphasis mine]

[snip]

IndyMac announced the sale of its Retail Lending Group to Prospect Mortgage. That day, the bank's shares closed at $0.44 in trading on the New York Stock Exchange, a loss of over 98% from its high of $50 in 2006. Additionally, analyst Paul J. Miller Jr. cut his price target on IndyMac to $0 from $1, rating the company's share price "Underperform". On July 9, Standard & Poor's cut IndyMac's counterparty credit risk rating to "CCC", just a few steps above default, from "B", the fifth highest junk level, and said it may cut them again. The following day, the bank's shares reached a 52-week closing low of $0.31.

Source: Wikipedia

Now, I'm no market expert like bonddad. I'm a cubicle-dweller who pushes papers, crunches numbers, and hopes that we'll be past the worst of this nightmare in a year to eighteen months. Of course, should the worst befall us and we're faced with another (heaven help us) four years of these manipulations, I shudder to think where we'll end up.

In the meantime, I think old Phil needs to get his hearing checked and have a conscience installed.