Bring It On!

Guilty By Association? Well In This Case Yes.

October 6th, 2008 | by Cranky Liberal |

I was going to write on this very topic today, but Harold Meyerson of WaPo did it so much better than I could. I love reminding Republicans who scream this is all Bill Clinton’s fault (as if Bill were running) that it was Phil “whiney”  Gramm who wrote and championed the legislation that got us into this mess. Oh yeah, Phil is McCain’s economic advisor….nuff said!

But if the McCain people want to rummage through presidential candidates’ associations, real or imagined, to turn up figures who threaten to pull down this proud republic, they should begin in-house. Chief among those to whom responsibility attaches for the financial crisis that is plunging the nation into recession is former Texas senator Phil Gramm, McCain’s own economic guru.

Gramm was always Wall Street’s man in the Senate. As chairman of the Senate Banking Committee during the Clinton administration, he consistently underfunded the Securities and Exchange Commission and kept it from stopping accounting firms from auditing corporations with which they had conflicts of interest. Gramm’s piece de resistance came on Dec. 15, 2000, when he slipped into an omnibus spending bill a provision called the Commodity Futures Modernization Act (CFMA), which prohibited any governmental regulation of credit default swaps, those insurance policies covering losses on securities in the event they went belly up. As the housing bubble ballooned, the face value of those swaps rose to a tidy $62 trillion. And as the housing bubble burst, those swaps became a massive pile of worthless paper, because no government agency had required the banks to set aside money to back them up.

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