Liberty Maven

On Friday, February 20th, 2009, the nefarious Phil Gramm published an “article” in the Wall Street Journal entitled “Deregulation and the Financial Panic:Loose money and politicized mortgages are the real villains.” Although he utilizes most of the article blaming Bill Clinton, the Community Reinvestment Act (CRA), Alan Greenspan and the Federal Reserve and “politicized mortgage lending” in general, what Phil Gramm is really trying to do is distract everyone from Corky Siemaszko’s  “Time Magazine’s 25 people to blame for the financial crisis” released the previous Friday.

Although many of the Talking Heads like to gutlessly blame the current financial crisis on the previous administration, or simply on the subprime real estate market, the truth is that this was only a small part of the political corruption, centered around lobbying, which constantly threatens to destroy our economy and our liberty.  We always seem to find Phil Gramm right in the middle of these snafus.  His Commodity Futures Modernization Act of 2000 which kept credit default swaps unregulated and also lead to what many refer to as the “The Enron Loophole”:

The Commodity Futures Modernization Act of 2000 has received criticism for the so-called “Enron loophole,” 7 U.S.C. §2(h)(3) and (g), which exempts most over-the-counter energy trades and trading on electronic energy commodity markets. The “loophole” was drafted by lobbyists for Enron working with senator Phil Gramm^[3] seeking a deregulated atmosphere…

But Phil Gramm did not accomplish this on his own:

But Gramm wasn’t sneaking anything past the White House, which had hammered out the details in lengthy negotiations with the senator. And one of the men charged with shepherding the bill through Congress was none other than the Treasury’s under secretary for domestic finance, Gary Gensler.

Not only is Gary Gensler an Obama financial adviser, he also spent 18 years at Goldman-Sachs, the now “non-bank” which has received protection from the Federal Reserve and been allowed to transition from an investment bank to a “bank holding company”.  Now, before we move past Goldman-Sachs, let’s not forget their former Chairman and CEO is none other than Henry Paulson.  Although many associate Paulson with his hard-selling of recent federal bailouts, what many do not realize is that, in conjunction with Phil Gramm, he managed to enable investment banks to perpetuate excessive leverage credit bubbles without any true oversight by Congress or the SEC:

In 2004, at the request of the major Wall Street investment houses, including Goldman Sachs, then headed by Paulson, the U.S. Securities and Exchange Commission agreed unanimously to release the major investment houses from the net capital rule, the requirement that their brokerages hold reserve capital that limited their leverage and risk exposure. The complaint that was put forth by the investment banks was of increasingly onerous regulatory requirements — in this case, not U.S. regulator oversight, but European Union regulation of the foreign operations of US investment groups. In the immediate lead-up to the decision, EU regulators also acceded to US pressure, and agreed not to scrutinize foreign firms’ reserve holdings if the SEC agreed to do so instead. The 1999 Gramm-Leach-Bliley Act, however, put the parent holding company of each of the big American brokerages beyond SEC oversight. In order for the agreement to go ahead, the investment banks lobbied for a decision that would allow “voluntary” inspection of their parent and subsidiary holdings by the SEC…

So, in the end, we see that both high-level Republicans and high-level Democrats all have had a hand in creation of the current financial crisis. What is even scarier is that the same people who created it are the same people currently in charge of fixing it.  Bailouts and stimulus packages aren’t what we need.  What we need are the parties above to be removed from power before they make this much worse for all of us.

One last little shot at Gramm’s article: Not once does he talk about how the poor or the Middle Class might be spared from further suffering or how we might alleviate this crisis, but he does take the time to put his two cents in regarding caps on executive compensation:

Restrictions on executive compensation are good fun for politicians, but they are just one step removed from politicians telling banks who to lend to and for what. We have been down that road before, and we know where it leads.

Folks, this is an evil, greedy man.  This is a man who needs to go to prison for a very long time for his crimes against our country and our people.