Phil Gramm and the Subprime Financial Crisis

[Care4all]

found this article that talks about what Gramm did to help cause this mess...

granted it can be slanted.....but this DOES NOT NEGATE the TRUTH....McCain needs to stay as far away from this guy as possible....

Here is a quip from it that might help all of you begin your own google searches to find out more:

The Subprime Mess and Phil Gramm: An Experiment in Deregulation | InjuryBoard Los Angeles
In 1933, a few years following the stock market crash, Congress passes the Glass-Steagall Act, in hopes that regulating banks will help prevent market instability, particularly amongst Wall Street banks. The purpose of the act is to separate commercial banks that focus on consumers from investment banks, which deal with speculative trading and mergers.

The Glass-Steagall Act provided the proper oversight and entity separation that would prohibit banks and other financial companies from merging into giant trusts (conflict of interests) -- giant trusts or corporations being more powerful, naturally, and having the seemingly limitless capital to lobby their corporate interests, however, with a very myopic scope (particularly when it comes to factoring in potential losses -- most banks, as seen in contemporary times, chose not to anticipate losses in the mortgage market; they presumed home prices would continue to appreciate).

In 1999, former Senator Phil Gramm (who is, incidentally, Senator John McCain's economic adviser and cochairs his presidential campaign) set out to completely gut the Glass-Steagall Act, and did so successfully, replacing most of its components with the new Gramm-Leach-Bliley Act: allowing commercial banks, investment banks, and insurers to merge (which would have violated antitrust laws under Glass-Steagall). Sen. Gramm was the driving force behind the Gramm-Leach-Bliley Act, as he had received over $4.6 million from the FIRE sector (Finance, Insurance and Real Estate donations) over the previous decade, and once the Act passed, an influx of "megamergers" took place among banks and insurance and securities companies, as if they had been eagerly awaiting the passage of Gramm's Act. Everything in between Glass-Steagall and Gramm-Leach-Bliley (i.e. Savings and Loan crisis/bust) was, in large part, the incubation period for what would take place over the nine years that would follow the passage of Gramm's Act: an experiment in deregulation.

Shortly after George W. Bush was elected president, Congress and President Clinton were trying to pass a $384 billion omnibus spending bill, and while the debates swirled around the passage of this bill, Senator Phil Gramm clandestinely slipped a 262-page amendment into the omnibus appropriations bill titled: Commodity Futures Modernization Act. It is likely that few senators read this bill, if any. The essence of the act was the deregulation of derivatives trading (financial instruments whose value changes in response to the changes in underlying variables; the main use of derivatives is to reduce risk for one party). The legislation contained a provision -- lobbied for by Enron, a major campaign contributor to Gramm -- that exempted energy trading from regulatory oversight. Basically, it gave way to the Enron debacle and ushered in the new era of unregulated securities. Interestingly enough, Gramm's wife, Wendy, had been part of the Enron board, and her salary and stock income brought in between $900,000 and $1.8 million to the Gramm household, prior to the passage of the Commodity Futures Modernization Act.

 

[Care4all]

here some more pertinent info:

In 2003, Gramm left the Senate to join UBS, which had acquired investment house PaineWebber due to his deregulation bill. At UBS, Gramm lobbied Congress, the Fed and the Treasury Department. During Gramm's tenor at UBS and as a lobbyist, Congress passed the Responsible Lending Act, billed as an anti-predatory-lending measure, but was called the "Loan Shark Protection Act" by consumer advocates, as it was designed to preempt stronger state laws against anti-predatory lending. The Fed largely ignored the underlying and growing problems within the subprime mortgage/housing markets, as Bernanke famously acknowledged the housing market in April, 2007 as, "[showing] signs of softening," but said that a "sharp slowdown," is unlikely. Then, according to Mother Jones magazine, Henry Paulson became the Treasury Secretary in July, 2007, when, "In 2005, [at] Goldman [he] securitized $68 billion in residential mortgages and $23 billion in 'other assets' primarily related to CDOs," (Mother Jones, August, 2008). With such self-interest, and a lack of the nation's interest, we can see how this subprime mess was allowed to escalate to such great proportions.

Some justice was served, however, this spring, as UBS became one of the subprime debacle's biggest losers, having to write down $37 billion -- the same amount as their previous four years of profits combined. UBS also made the public aware that two-thirds of its losses were due to reckless investing in collateralized debt obligations (CDOs).

 

[editec]

The legislative and accounting forensics leading to this disaster will show us

1. The rush to dergulation was the problem;

2. The Republicans were the primary, but not the sole, enablers of these STUPID politicies;

3. That, sans regulations to prevent it, WALL STREET can no more control its addiction to easy money that costs the commonweal money, than a meth addict can stop smoking ICE.

GREED unharnessed by regulation does NOT lead to a better world for all, folks.

You libertarians, you objective libertopians, you Ayn Ranian nitwits do NOT understand economics.

Atlas is NOT shrugging, ATLAS is falling down drunk from money ATLAS did not EARN but instead has been STEALING from the working classes for the last 40 years.

 

[Diuretic]

The legislative and accounting forensics leading to this disaster will show us

1. The rush to dergulation was the problem;

2. The Republicans were the primary, but not the sole, enablers of these STUPID politicies;

3. That, sans regulations to prevent it, WALL STREET can no more control its addiction to easy money that costs the commonweal money, than a meth addict can stop smoking ICE.

GREED unharnessed by regulation does NOT lead to a better world for all, folks.

You libertarians, you objective libertopians, you Ayn Ranian nitwits do NOT understand economics.

Atlas is NOT shrugging, ATLAS is falling down drunk from money ATLAS did not EARN but instead has been STEALING from the working classes for the last 40 years.

Damnit! I can't rep ya!

 

[Care4all]

i realize that both sides have hands in this mess, but what i posted above, and this amendment that Gramm COVERTLY SLIPPED IN to an Appropriations bill, IS THE SINGLE ITEM that allowed this mess to happen....without it, NONE of what has just happened to us, COULD have happened...

Let the sun shine.....let the sun shine in.

This amendment for deregulation that Gramm snuck in to this appropriation bill needs to be REVERSED.

 

[Diuretic]

i realize that both sides have hands in this mess, but what i posted above, and this amendment that Gramm COVERTLY SLIPPED IN to an Appropriations bill, IS THE SINGLE ITEM that allowed this mess to happen....without it, NONE of what has just happened to us, COULD have happened...

Let the sun shine.....let the sun shine in.

This amendment for deregulation that Gramm snuck in to this appropriation bill needs to be REVERSED.

That's a horrible stain on your democracy that bills can be "stuffed". You need to get rid of that, it doesn't happen here, I simply don't understand how your system allows it.

 

[Care4all]

That's a horrible stain on your democracy that bills can be "stuffed". You need to get rid of that, it doesn't happen here, I simply don't understand how your system allows it.

That's a good question Diuretic....

and as i mentioned, this article was a biased article so I need to continue my google on this Gramm-leach-biley amendment to get the full story....

be back in a bit!

Care

 

[Care4all]

Well, found out one thing...

President Clinton, is absolutely not to blame on this...because it was a veto proof bill....they had enough votes in the senate and house to over ride a veto from Clinton.

 

[Care4all]

ok, here is some more less biased than the article i posted info on....from Wiki....

The bills were introduced in the Senate by Phil Gramm (R-TX) and in the House of Representatives by James Leach (R-IA). The bills were passed by a 54-44 vote along party lines with Republican support in the Senate[1] and by a 343-86 vote in the House of Representatives[2]. Nov 4, 1999: After passing both the Senate and House the bill was moved to a conference committee to work out the differences between the Senate and House versions. Democrats agreed to support the bill only after Republicans agreed to strengthen provisions of the Community Reinvestment Act and address certain privacy concerns.[3] The final bill resolving the differences was passed in the Senate 90-8-1 and in the House: 362-57-15. This veto proof legislation was signed into law by President Bill Clinton on November 12, 1999. [4]

The banking industry had been seeking the repeal of Glass-Steagall since at least the 1980s. In 1987 the Congressional Research Service prepared a report which explored the case for preserving Glass-Steagall and the case against preserving the act.[5]

 

[editec]

i realize that both sides have hands in this mess, but what i posted above, and this amendment that Gramm COVERTLY SLIPPED IN to an Appropriations bill, IS THE SINGLE ITEM that allowed this mess to happen....without it, NONE of what has just happened to us, COULD have happened...

Let the sun shine.....let the sun shine in.

This amendment for deregulation that Gramm snuck in to this appropriation bill needs to be REVERSED.

Yes, this was an important bit of data that we needed to read.

but understand that our CONGRESSPERSONS either voted FOR this, or didn't know THEY WERE VOTING FOR IT.

Either way, they should ALL be stripped office and run out of Washington a rail.

I am sick to fucking death of Congress voting for crap they haven't even READ.

For god's sakes I often understand bills before Congress better than people making six figures who have STAFFS whose sole job is to explain what these bills mean!

Our congressmen are so damned busy lining up bribes so they can elected next term, they don't know what they're even voting on half the time.

And that isn't just a slam at Rs, that's a slam at the whole damned CORRUPT system they ALL enjoy.

 

[Chris]

Phil Gramm and George Bush have almost bankrupted America. Gramm with the deregulation ammendment that he slipped into the appropriations bill, and Bush with his tax cut and borrow occupation of Iraq. I hope the American people are wise enough to vote Democratic this time and end this madness.

 

[Paulie]

The legislative and accounting forensics leading to this disaster will show us

1. The rush to dergulation was the problem;

2. The Republicans were the primary, but not the sole, enablers of these STUPID politicies;

3. That, sans regulations to prevent it, WALL STREET can no more control its addiction to easy money that costs the commonweal money, than a meth addict can stop smoking ICE.

GREED unharnessed by regulation does NOT lead to a better world for all, folks.

You libertarians, you objective libertopians, you Ayn Ranian nitwits do NOT understand economics.

Atlas is NOT shrugging, ATLAS is falling down drunk from money ATLAS did not EARN but instead has been STEALING from the working classes for the last 40 years.

Do me a favor, editec. Explain why borrowers aren't culpable in this mess.

Explain why we should just blame the banks, and deregulation, and not also blame the idiots who should never have been showing up to a bank to get a loan anyway.

Explain how if consumers were smarter about their finances and understood how to properly manage their credit, that the deregulation would still have been a problem.

Because as I see it, if these consumers didn't flock to the banks in droves this past decade, due to artificially low interest rates enticing them like a piece of raw steak dangling in front of a starving lion, there wouldn't be this mess. All the deregs in the derivatives market wouldn't have gotten us to this extreme, because there wouldn't BE this massive pile of bad debt on the banks' hands.

You're starting to get very elitist these days. No one knows economics more than you, right?

You're usually on the money with your views, and I usually agree with you. You're only downside is that you constantly try to push blame off the citizens and make excuses for their stupidity.

We get it. The banks are evil. Hopefully EVERYONE gets that by now. No one more than I, believe me. But it's high time we started taking responsibility for ourselves.

Managing your finances is simple fucking math, mixed in with just a wee bit of common sense. Here's what you MAKE, and here's what you can afford to SPEND without going bankrupt. It's fucking SIMPLE.

 

[editec]

Do me a favor, editec. Explain why borrowers aren't culpable in this mess.

They are not solely responsibile for this mess like soem of you nitwits keep inisisting.

Explain why we should just blame the banks, and deregulation, and not also blame the idiots who should never have been showing up to a bank to get a loan anyway.

Do you know that the corporate debt load (also at risk) is 50 time bigger than the mortgage crises?

You do now.

Are you going to blame the corporations for borrowing money, too?

Explain how if consumers were smarter about their finances and understood how to properly manage their credit, that the deregulation would still have been a problem.

See above

Because as I see it, if these consumers didn't flock to the banks in droves this past decade, due to artificially low interest rates enticing them like a piece of raw steak dangling in front of a starving lion, there wouldn't be this mess. All the deregs in the derivatives market wouldn't have gotten us to this extreme, because there wouldn't BE this massive pile of bad debt on the banks' hands.

Perhaps if we hadn't been deinsutrializing america (thanks to people like yuou who think FREE TRADE is a good idea) millions of americans wouldn't have tapped into the equity on their homes i order to get going, eh?

Too complex for you? sorry, pal, but economics is complex because vverything is related to evertything else.

You're starting to get very elitist these days. No one knows economics more than you, right?

Oh no! I'm an elitist? You think I care if you think I know more about this mess than you do?

You're usually on the money with your views, and I usually agree with you. You're only downside is that you constantly try to push blame off the citizens and make excuses for their stupidity.

No I do not.

I just refuse to blame the people for acting stupidly given that they mostly had no choice BUT to do stupid things just to survive given how badly the masters of economic made it for them.

You seem to be under the impression that the only problem is people who wilding gambled on the price of real estate.

You are misinformed, pal.

We get it. The banks are evil. Hopefully EVERYONE gets that by now. No one more than I, believe me. But it's high time we started taking responsibility for ourselves.

Evil? No. Selfish indifferent to a tragedy of the commons that they were warned about, yes.

Managing your finances is simple fucking math, mixed in with just a wee bit of common sense. Here's what you MAKE, and here's what you can afford to SPEND without going bankrupt. It's fucking SIMPLE.

Talk to me about how clever are at managing your math when you've lost you job because you company can't continue becuase it can't borrow enough money because there is no money to be had, sport.

Right now I can't stand the stink if your smug hubris.

 

[Paulie]

They are not solely responsibile for this mess like soem of you nitwits keep inisisting.



Do you know that the corporate debt load (also at risk) is 50 time bigger than the mortgage crises?

You do now.

Are you going to blame the corporations for borrowing money, too?



See above



Perhaps if we hadn't been deinsutrializing america (thanks to people like yuou who think FREE TRADE is a good idea) millions of americans wouldn't have tapped into the equity on their homes i order to get going, eh?

Too complex for you? sorry, pal, but economics is complex because vverything is related to evertything else.



Oh no! I'm an elitist? You think I care if you think I know more about this mess than you do?



No I do not.

I just refuse to blame the people for acting stupidly given that they mostly had no choice BUT to do stupid things just to survive given how badly the masters of economic made it for them.

You seem to be under the impression that the only problem is people who wilding gambled on the price of real estate.

You are misinformed, pal.



Evil? No. Selfish indifferent to a tragedy of the commons that they were warned about, yes.



Talk to me about how clever are at managing your math when you've lost you job because you company can't continue becuase it can't borrow enough money because there is no money to be had, sport.

Right now I can't stand the stink if your smug hubris.

If consumers' finances were already so bad because of the greed in corporate America, then why PRAY TELL, would mortgaging your equity, or simply buying a house, be a good idea?

Tell me Editec. Tell me WHY people supposedly had no other choice but to mortgage their already high debt? Tell me how that is in ANY WAY responsible.

You don't make a bit of fucking sense. You are basically saying that people had not other choice but to get MORE in debt, because they were already in too much debt, or weren't making enough money.

If you're having problems with employment, if your money isn't right, then HOW THE FUCK is buying a house a good idea? HOW THE FUCK is mortgaging your equity a good idea?

My smug hubris.

Here's some smug hubris for you: enjoy your heating costs this year up there in Maine.

 

[editec]

If consumers' finances were already so bad because of the greed in corporate America, then why PRAY TELL, would mortgaging your equity, or simply buying a house, be a good idea?

It bought them time, of course. People strapped for cash often do things that they would NOT do if they had a better choice, Paul.

Tell me Editec. Tell me WHY people supposedly had no other choice but to mortgage their already high debt? Tell me how that is in ANY WAY responsible.

Look paul, back when the hidden tax of inflation really started to crank up, people (this is my father's generation by the way) started working longer hours. then they sent their women to work. Then when that wasn't enough to keep up, they started borrowing, first on credit cards, then on the equity in their homes to keep current on their bills.

Understand that once committed to a course of action, most people can't just throw up their hands and say to hell with it because most people are not well paid 20 somethings just starting out with no debt, no responsibility and no long term committments for things like houses and cars and so forth.

People try to make do, hoping things will get better so they can pay their way out of debt in the future. They are GOING CONCERNS, you see?

But things have NOT gotten better for MOST americans over the last thiry, now nearly 40 years!

You don't make a bit of fucking sense. You are basically saying that people had not other choice but to get MORE in debt, because they were already in too much debt, or weren't making enough money.

See above.

If you're having problems with employment, if your money isn't right, then HOW THE FUCK is buying a house a good idea? HOW THE FUCK is mortgaging your equity a good idea?

See above

My smug hubris.

Here's some smug hubris for you: .

Yeah, well lad, you sound like a young man just starting out.

You're probably making decent living, probably one not yet committed to the kinds of long term investments that most Ameircan middle class people were committed to, commmittments that make just dropping everything and starting over impossible for them.

As such you can easily avoid all the pitfalls we have fallen into.

Don't buy a home, don't have kids, don't ever get really sick, and for god's sakes never lose you job for any reason.

Just do all that and you will be rich.

Now the reality is that most people aren't in that situation, they never had the chance to be in that situation, and they never will.

enjoy your heating costs this year up there in Maine

While it is very possible I will freeze to death this winter in my home..

what you think is a merely cutting remark, one spewed because...well you're a youngster probably, still wet behind the vicisitudes of life ears, you rancor leads me to think that you're scared shitless and seeking to kill the messager.

I'm sorry. pal,

The things that frighten you are things that I have been warning people about for many years. many of us "liberals" have, you know.

GREED kills people, often the people who do not have it, too.

GREED is not a virtue, pal, it is a disease of the mind that infects whole populations with it siren call

I got mine GET YOURS.

It is very common to find young people just starting out who do not understand its effects on society as whole.

]When I was a 20 something making a good living for the fist time I was a kind of libertarian dipshit, too.

Its very common to feel that way.

 

[Paulie]

It bought them time, of course. People strapped for cash often do things that they would NOT do if they had a better choice, Paul.



Look paul, back when the hidden tax of inflation really started to crank up, people (this is my father's generation by the way) started working longer hours. then they sent their women to work. Then when that wasn't enough to keep up, they started borrowing, first on credit cards, then on the equity in their homes to keep current on their bills.

Understand that once committed to a course of action, most people can't just throw up their hands and say to hell with it because most people are not well paid 20 somethings just starting out with no debt, no responsibility and no long term committments for things like houses and cars and so forth.

People try to make do, hoping things will get better so they can pay their way out of debt in the future. They are GOING CONCERNS, you see?

But things have NOT gotten better for MOST americans over the last thiry, now nearly 40 years!



See above.



See above



Yeah, well lad, you sound like a young man just starting out.

You're probably making decent living, probably one not yet committed to the kinds of long term investments that most Ameircan middle class people were committed to, commmittments that make just dropping everything and starting over impossible for them.

As such you can easily avoid all the pitfalls we have fallen into.

Don't buy a home, don't have kids, don't ever get really sick, and for god's sakes never lose you job for any reason.

Just do all that and you will be rich.

Now the reality is that most people aren't in that situation, they never had the chance to be in that situation, and they never will.



While it is very possible I will freeze to death this winter in my home..

what you think is a merely cutting remark, one spewed because...well you're a youngster probably, still wet behind the vicisitudes of life ears, you rancor leads me to think that you're scared shitless and seeking to kill the messager.

I'm sorry. pal,

The things that frighten you are things that I have been warning people about for many years. many of us "liberals" have, you know.

GREED kills people, often the people who do not have it, too.

GREED is not a virtue, pal, it is a disease of the mind that infects whole populations with it siren call

I got mine GET YOURS.

It is very common to find young people just starting out who do not understand its effects on society as whole.

]When I was a 20 something making a good living for the fist time I was a kind of libertarian dipshit, too.

Its very common to feel that way.

Editec I have two children, one 4.5 years and one 14 months. I'm 28, relatively debt-free, and saving to buy a house in the next couple years.

No matter HOW bad my finances got, I would NEVER borrow to pay bills. I'd cancel cable, I'd cancel phones, I'd bundle up inside and avoid using the heat unless it was MANDATORY. I'd get hired at McDonalds if I had to, because there's no shortage of SOME kind of job in this country.

You do what you have to do to provide. Borrowing to pay bills is the stupidest thing a person can do, and under no circumstances should it be considered NECESSARY.

There's a bull market SOMEWHERE, editec. There's employment that's in demand SOMEWHERE.

For ANYONE in the early part of this decade when money was not exactly hard to come by, to have thought that borrowing money to pay bills was a good idea, is PATHETIC.

I'm not saying every single person could have made do. I'm saying MOST COULD HAVE.

My friend, every single bit of economic wit you have around here is completely flushed down the toilet by suggesting that anyone could have been better off by indebting themselves more to pay bills. That is the epidome of ridiculous.

 

[bush lover]

Man I hate having to reply once again to the Communist class-warfare crowd on this board. You people are Communists. Our President Bush and our Vice President Cheney have transferred government money to the PRODUCTIVE class of our great country. The productive class PRODUCES. The government WASTES. The Democrat Party Messiah wants to take these taxpayer grants away from the productive class and hand it over to the indolent class, just like in Communism. Our next President McCain will accelerate the transfer of government funds to the productive class so that he can finally wind down all of the Socialist programs that the Democrat Party has put in place since the Socialist Roosevelt. Our next President McCain will start with privatizing Socialist Security, and high time. He will also abolish the minimum wage, death tax, and regulations of any kind and privatize our roads and bridges so that we can pay down debt with the proceeds. Then finally, we will have small government.

 

[Gunny]

Man I hate having to reply once again to the Communist class-warfare crowd on this board. You people are Communists. Our President Bush and our Vice President Cheney have transferred government money to the PRODUCTIVE class of our great country. The productive class PRODUCES. The government WASTES. The Democrat Party Messiah wants to take these taxpayer grants away from the productive class and hand it over to the indolent class, just like in Communism. Our next President McCain will accelerate the transfer of government funds to the productive class so that he can finally wind down all of the Socialist programs that the Democrat Party has put in place since the Socialist Roosevelt. Our next President McCain will start with privatizing Socialist Security, and high time. He will also abolish the minimum wage, death tax, and regulations of any kind and privatize our roads and bridges so that we can pay down debt with the proceeds. Then finally, we will have small government.

*yawn*

You were funny once ... about 3-4 years ago. That's all. Your act is stale.

 

[Care4all]

The mortgage brokers were selling mortgages to people who could not afford it when the adjustable rate goes up....they TOLD these people that when the adjustable rate goes up, they could refinance in to a conventional mortgage.

I heard mortgage brokers at least 10 TIMES on the show house hunters on hgtv tell this to young white couples that were buying their first home the last 3 years....talking the home owners in to going in to the adjustable rate mortgage or a baloon morgage for the first few years of their ownership.

New home buyers HAD TRUST IN THEIR BANKS AND BROKERS, that the mortgage companies would NOT lend to people that they knew would fail.

 

[Care4all]

These people did not come in to banks on their own to buy a house, the mortgage lenders ADVERTISED HEAVILY to bring these people in to get a mortgage for a home.