Oh no! It's Veep-vetting-gate!
Or is that "Veep-vetter-gate?"
In a achingly obvious case of the pot calling out the kettle and attacking it for its darkened hue, the McCain Camp is criticizing one of Team Obama's veep selection members, James Johnson, based on an article that appeared in Saturday's Fox Street Journal.
The article mentions that Mr. Johnson made some money off of "special loans" while CEO of Fannie Mae:
Countrywide Financial Corp. makes mortgage loans through a vast network of offices, brokers and call centers. But a few customers have gotten their loans a special way: through Countrywide Chief Executive Angelo Mozilo.
These borrowers, known internally as "friends of Angelo" or FoA, include two former CEOs of Fannie Mae, the biggest buyer of Countrywide's mortgages, say people familiar with the matter.
One was James Johnson, a longtime Democratic Party power and an adviser to Sen. Barack Obama's campaign, who this past week was named to a panel that is vetting running-mate possibilities for the presumed nominee. Another was Franklin ...
Per Pebbles, McCain advisor and multipurpose mouthpiece Doug Holtz-Eakins opined:
Obama "entrusted the single most important decision in his campaign, the choice of a vice presidential running mate, to a gentleman, Mr. Johnson, who benefited from preferential lending at Countrywide... and is thoroughly entangled in the subprime housing mess."
First off, the Obama campaign has dismissed this as "overblown and irrelevant," and points to the very same FSJ article, which claims it's "impossible" to know what all went into these loan arrangements.
Second, yo, Douggie! A bit of advice for you: People in glass houses ought not start a rock-tossing contest, eh? I don't think you want to start down that whole "Look whose campaign has the worst ties to the biggest sub-prime culprit!" path. Really.
Yes kids, we're back to Phil Gramm again. Here's a cut from a David Corn article in Mother Jones that should tell you about all you need to know. If you want more, just go read the dang article!
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. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered dead—even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. "Nobody in either chamber had any knowledge of what was going on or what was in it," says a congressional aide familiar with the bill's history.
It's not exactly like Gramm hid his handiwork—far from it. The balding and bespectacled Texan strode onto the Senate floor to hail the act's inclusion into the must-pass budget package. But only an expert, or a lobbyist, could have followed what Gramm was saying. The act, he declared, would ensure that neither the sec nor the Commodity Futures Trading Commission (cftc) 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."
It didn't quite work out that way. For starters, the legislation contained a provision—lobbied for by Enron, a generous contributor to Gramm—that exempted energy trading from regulatory oversight, allowing Enron to run rampant, wreck the California electricity market, and cost consumers billions before it collapsed. (For Gramm, Enron was a family affair. Eight years earlier, his wife, Wendy Gramm, as CFTC chairwoman, had pushed through a rule excluding Enron's energy futures contracts from government oversight. Wendy later joined the Houston-based company's board, and in the following years her Enron salary and stock income brought between $915,000 and $1.8 million into the Gramm household.)
But the Enron loophole was small potatoes compared to the devastation that unregulated swaps would unleash. Credit default swaps are essentially insurance policies covering the losses on securities in the event of a default. Financial institutions buy them to protect themselves if an investment they hold goes south. It's like bookies trading bets, with banks and hedge funds gambling on whether an investment (say, a pile of subprime mortgages bundled into a security) will succeed or fail. Because of the swap-related provisions of Gramm's bill—which were supported by Fed chairman Alan Greenspan and Treasury secretary Larry Summers—a $62 trillion market (nearly four times the size of the entire US stock market) remained utterly unregulated, meaning no one made sure the banks and hedge funds had the assets to cover the losses they guaranteed.
Then two paragraphs later, Corn leads with a quote by Michael Greenberger, former director of the CFTC's division of trading and markets, saying These unregulated swaps have been at "the heart of the subprime meltdown."
So really, Mr. Holtz-Eakins & your Camp McCain cronies . . . do you really want to start playing this game? Because you will win, but not in the "Aa ha we scored with the voters!" kind of way. You will win in the "Oh shit! When it comes to economic arsebuggery no one in the current campaign for president can top Phil Gramm!"
So please, do shut up.