Now that the Democratic primary race is over, will the mainstream media start to scrutinize John McCain?
Let’s hope they begin looking beyond the “maverick” mythos he has woven around himself and that much of the press has been all too willing to propagate. They could start with his campaign co-chair and economic adviser Phil Gramm, whose record during his Senate tenure includes support for legislation that set the stage for the subprime debacle.
According to “Foreclosure Phil,” a piece by David Corn in Mother Jones:
…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…
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.
MSNBC’s “Countdown with Keith Olbermann,” has been hammering away in recent weeks about the former Texas senator, who worked as a lobbyist for UBS up until April 17 and in that role sought to block reform and ramped-up regulation of the lending industry in the wake of the subprime mortgage crisis.
In an article on MSNBC’s Web site, Olbermann producer Jonathan Larsen and Olbermann write:
‘Countdown with Keith Olbermann’ reported Tuesday night [May 27] that lobbying disclosure forms, filed by the giant Swiss bank UBS, list McCain’s campaign co-chair, former Texas Sen. Phil Gramm, as a lobbyist dealing specifically with legislation regarding the mortgage crisis as recently as Dec. 31, 2007.
Gramm joined the bank in 2002 and had registered as a lobbyist by 2004. UBS filed paperwork deregistering Gramm on April 18 of this year. Gramm continues to serve as a UBS vice chairman.
Kudos to Olbermann, Talking Points Memo, Daily Kos, and Mother Jones for digging into and staying with this story.
As to the implications of his connections with Gramm for McCain’s approach to the housing crisis, check out Joe Conason’s Salon column titled “McCain’s scary economic advisor.”
As advocates for a progressive national housing policy, NHI and Rooflines can contribute to shining a light on this story as the general election campaign gets underway.
What do you know about the Gramm scandal? Let us know.