A Republican 8 years ago has caused todays financial crisis. Phil Gramm - Advisor to John McCain

As Mother Jones reported in June, eight years ago, Gramm, then a Republican senator chairing the Senate banking committee, slipped a 262-page bill into a gargantuan, must-pass spending measure. Gramm's legislation, written with the help of financial industry lobbyists, essentially removed newfangled financial products called swaps from any regulation. Credit default swaps are basically insurance policies that cover the losses on investments, and they have been at the heart of the subprime meltdown because they have enabled large financial institutions to turn risky loans into risky securities that could be packaged and sold to other institutions.

Rest of Article.


[edit on 15-9-2008 by AtlantaInsider1]

[edit on 15-9-2008 by AtlantaInsider1]

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[edit on 15/9/2008 by Mirthful Me]

Anyone care to debate this research?

Dude, I made my post about Phil Gramm here: www.abovetopsecret.com...

I'm glad that someone else is realizing what impact he has had on the problem. I hope you get a chance to read the article I looked at, it might give you some more info about him.

reply to post by ChrisJr03


Thanks for the response and your research. This has to get out. Everyone is scratching their heads wondering how we got here. The answer is simple: Former Republican Senator Phil Gramm.

It was Phil Gramm's legislation. Own it.

I want the Republicans to get on the TV and say the government should not regulate free markets. I have heard their bullsh!t for the last 8 years and now they need to own it and let the public decide.

reply to post by Crakeur


You beat me to the punch Absolutely ! Here comes the fall guy, the face of the enemy to focus on so all the other guilty parties can hide in the dark. Phil Gramm was NOT alone.

We might as well add the entire corporate culture that fostered this whole shell game.

[edit on 15-9-2008 by maudeeb]

What caused the current crisis is the congress who a few years ago demanded that home loans be made easy for poor people, namely minorities with no money, to get. It was bound to implode. Blame the liberal democrats who demanded it be done.

reply to post by Fromabove


OK - I'll play this game

What caused this crisis is the near stagnation of wages/ earnings in this country for ten years due to tax loopholes that allowed more and more manufacturing to be outsourced to third world countries. In order to keep the "service economy" afloat costs for essentials were kept artificially low using increasing riskier financial shell games. Rather than face the facts that greed based corporations destroyed most of this countries' real industry they tried to hide the fact with a better "standard" of living. Unfortunately the con game has now run it’s course. Thanks for listening !

Next taker ?

I'm going to stand firm on this one I'm afraid. Obviously at the time Phil Gramm had influence in his party which led to him garnering votes for this. Phil Gramm proffited from Enron from his wife being on their board; we all know how that went.

I think this quote from my article sums it up pretty well:

In 1994, Mr. Gramm single-handedly killed a bill that would have required credit bureaus to quickly fix errors on a person's credit report. Mr. Gramm called it a "bad bill" that imposed costs on the credit bureaus.

"He was very focused on cost to financial institutions and not very focused on costs suffered by consumers," said Travis Plunkett, legislative director for the Consumer Federation of America.

I think that is pretty profound in affecting us and the situation now. This was all about the financial institutions, the AIG's, the Banks of Americas, the Goldman Sachs. The only people benefitting from this are the financial institutions.

And you have to remember, some of these bills, the one from 1994 in example, happend right after the 1980's banking crisis when laws where put in place to keep this from happening again. I didn't go sit through Money and Banking in college to have it go to waste. From everything that I learned, this was not, and I must stress NOT, supposed to happen again.

This quote also speaks volumes:

Some banking experts have also questioned Mr. Gramm's legislative landmark, the Gramm-Leach-Bliley Act. In 1999, Mr. Gramm predicted the deregulatory law would presage a new era of financial innovation and create financial supermarkets for consumers.

But deregulation has coincided with a precipitous fall in the performance of many banks, while one-stop financial shops haven't flourished in the way Mr. Gramm envisioned.

Instead of having different institutions for the different areas of finance, you know have the "one stop shop" which I know is convieniant. But the laws of the 1980's were supposed to prevent this, supposed to prevent banks and other financial institutions from investing in these type of risky investments. Phil Gramm looks to be a big cause of why those laws did not help us. It could be that we might be in the mess we are now anyways, but I still blame Gramm.

Here is the link for the 1980's stuff: www.fdic.gov...

It's from the FDIC so it's legitimate.

In the long run, I think you will see that things will be just fine, but in the mean time, they could get bad. Lehman Bro's was allowed to fail, and not just fail, but reportedly the biggest bankruptcy in US history. The government it seems is pushing Bank of America to buy Merrell Lynch. JP Morgan and Goldman Sachs hopefully will get the $70-75billion they need to keep running. If AIG failed it would be worse than bad so hopefully they will stay afloat.

I still think Citi is going to write off $5-7billion in the future; if not that, at least something. Wachovia will probably lose more, Washington Mutual. Normally I would think I'm forgetting some firm, and I might be, but the trouble makers seem to be takne over or out of business.

I would be very suprised to see Bank of America post a loss from bad investments. Out of the companys I think they are pretty clean; it is too bad that their stock is taking a hit from the rest of the finnacials. I think you'll see Goldman Sachs make it out alright too. I don't believe I've read of them writing off money either from bad investments but I could be wrong, there is a lot to digest.

The man to blame, Phil Gramm...even though greedy bankers and irresponsible people helped, he inacted the laws to set it in motion.

If we take anything from this, let us hope that the people of our country get there act together and get some morals and values back; lets hope that we can clean up our mess and get that in order.

In the short term, it could be rough, but in the long run, I don't see a "depression". The market will come back, it was due for a correction anyways and it seems to be about what me and a few others expected: some where between 15-60%; even though right now its closer to 70% loss from its high if I did the math right.

Point being, things will be bad, but probably not as bad as we think, and in a few years things will smooth out.

reply to post by ChrisJr03


Well put. Have to agree here, but it's important to recognize that Gramm wasn't the cause as much as a symptom of a much bigger and systemic problem.

reply to post by Fromabove


Seriously...what a load of crap. What you are referring to is the Fair Lending Act. At least that is what I think you meant, it means that two people with equal income and credit metrics, banks can not discriminate on color. Because banks did until this was passed. Thanks for summing it up as Congress passed a law to give poor houses.




[edit on 16-9-2008 by AtlantaInsider1]

reply to post by maudeeb


Did you even read the first post and the attached article? If you did, you would see you have it completely backwards. Phil Gramm caused the legislation that allowed several companies and individuals to profit handsomely and ultimately fail and hand the bill to YOU (the taxpayer). Seriously wake up.

Banks prior to Phil Gramm's legislation made a home loan and kept the loan for the duration of the term. Seldom were loans sold to other banks. Banks verified income, credit history, etc... With Gramm's legislation, banks didn't care about lending standards and made these risky loans and packaged them into exotic financial instruments that were in Gramm's legislation and sold them to the highest bidder.

If I am wrong, please point to where I am off base. Because from my perspective, you need to start with nailing one person that cause it and then go down the line.

No, it was not one man. It was A LOT of them, and they weren't all republicans. In fact one of the biggest contributors to this mess was legislation written to allow CitiGroup to become the conglomerate it is today. This required legislation, and Sandy Weill - head of Citi at the time was best buddies with Clinton, who helped it get through.

I have a big post on this somewhere, but for now, this will have to suffice.

Glass Steagall Act

reply to post by Relentless


Although I agree with your opinion, this had absolutely nothing to do with this mess. Companies that are bigger doesn't always mean evil.

What Phil Gramm allowed started a black market of financial instruments that nobody has an idea how pervasive they are in the financial system. Phil Gramm and the Republican party stand for less government, less regulation and free markets. Now own your philosophy as hundreds of thousands lose jobs, Trillions in saving lost and Trillions in Federal debt are incurred. Own it!

[edit on 16-9-2008 by AtlantaInsider1]

reply to post by AtlantaInsider1


I'm not sure what bill you are talking about, but what happened with the Glass-Steagall Act is that all the protections put in place to prevent the Great Depression from ever happening again were reapealled.

Now, anyone who wants to bury their heads in the sand and think only one party is responsible for any of this mess (let alone one person), well, I think this is just a distraction from the big problem, which is that they are all responsible and none of the beholden to anyone.

what are people smoking. The credit default swaps were bad and Clinton signed the bill with democrat support. And if the Democrats would have not forced banks to lend, yes they forced banks to give bad loans. Search and find Andrew Cuomo forcing banks to lend and Janet Reno following up with Redlining charges if they did not lend. Why are you Democrats supporting the party first instead of what is best for the country. Why use hate to attack others as evil, just because they are rich and republican. Both parties have problems but for some reason more Democrat lawmakers are the worst. The Democrats even admit using economic stimulant checks help the economy, could you imagine how much it would help the economy if they just reduced taxes and people keep their money. The Democrat and some Republican lawmakers think the American people and helpless and stupid. They believe government can solve every problem. Our government work best for a majority. Democrats think they can make everyone benefit, but in reality nobody can. The government needs to be small, to benefit the majority that can take care of themselves. It may sound cold, but its fact no government can ever take care of the people better than they can take care of themselves. GOD BLESS AMERICA. Let's support a smaller government that works for the people.