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Phil Gramm and the Enron Loophole: Did he or didn't he?

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posted on Jul, 4 2008 @ 09:53 AM
This week's Washington Times National Weekly Edition has two articles, one on top of the other, the first claiming Gramm is responsible for the Enron Loophole, the second claiming he isn't. So, which is it?

Enron's lucrative energy trading business was taken over in bankruptcy by UBS, a giant Swiss bank, and energy trading has largely been dominated by banks and Wall Street firms ever since.

Many political pundits blame the enactment of the Enron loophole on former Senate Banking Committee Chairman Phil Gramm, a Texas Republican who is now vice chairman of UBS as well as co-chairman of Sen. John McCain's presidential campaign.

Mr. Gramm shepherded the bill through Congress at Enron's request, but the bill passed by lopsided margins and was signed into law by President Clinton.

Mr. Gramm's post at UBS, a major player in energy trading and the mortgage and derivatives markets governed by the Enron bill and other legislation Mr. Gramm championed, shows how he was able to cash in on his financial connections after leaving Congress in 2002.

source article one

Ok, based on this, he would have a vested interest in unregulated oil speculation, which is blamed on the Enron Loophole. Especially when you read the next paragraph of the story.

Mr. Gramm's wife, Wendy, was chairwoman of the commodity commission from 1988 to 1993 and afterward served on Enron's board of directors. She remains a fierce advocate of unregulated energy markets at George Mason University's Mercatus Center, a free-market think tank.

Its a family affair!

But wait, is there any such thing as an Enron Loophole, and did Gramm have anything to do with it if there was? The very next article, right below the one above on the same page, has a completely different take.

"It makes a hell of a story," Mr. Gramm said. "The problem is, it's not true."

Mr. Gramm and others involved with passing the Commodity Futures Modernization Act of 2000 say there is no loophole, and that the type of trading that Democrats say became deregulated under the 2000 law was actually never regulated prior to the bill's passage.

source article two

There is no loophole, and there never was, and oil speculation of this type has never been regulated. But wait, wasn't the intent of the CFMA to regulate commodity futures markets, not deregulate them? My head is starting to hurt. But it gets worse, or better, depending on what side of the issue you're on.

But Mr. Gramm on Wednesday provided documents that he said showed the so-called "loophole" language came from a House Republican - Rep. Thomas W. Ewing, of Illinois, who retired in 2001.

Mr. Ewing, now a semi-retired consultant, said in an interview Wednesday that he wrote the language of his own accord.

"No one pressured me to do anything in the bill," Mr. Ewing said.

"The Enron loophole was a loophole that was there before we passed the act in 2000. There was no regulation of the Enron-type entity before we passed the bill," Mr. Ewing said.

So, the Enron Loophole was there, and they knew it was there, and there was no regulation before the bill was passed, and no regulation after the bill regulating commodity futures speculation was passed, either. But, there is no loophole and there never was. Oh, and Phil Gramm had nothing to do with it. I think I just blew a blood vessel in my brain.

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