Finger Pointing

Like others discussing the current U.S. financial meltdown, NotionsCapital may have over-emphasized the fault of the Gramm-Leach-Bliley Act, legislation championed by Senator Phil Gramm (R-TX). That law aggravated the situation, but the situation was created by the Commodity Futures Modernization Act of 2000 or CFMA, Public Law 106-554, §1(a)(5), championed by . . . Senator Phil Gramm (R-TX), then chairman of the Senate Committee on Banking, Housing and Urban Affairs, now Vice-Chairman of Union des Banques Suisse (un établissement financier mondial).

The nickname of the CMFA, the “Enron Loophole Law,” has distracted us from it’s primary role in causing the current financial meltdown. Granted, the failure of Enron was a pretty big distraction, especially since the Enron Board Member responsible for financial oversight was a former Bush White House staffer, Wendy Lee Gramm, PhD. Some years prior to her husband’s introduction of CMFA, and before she joined Enron, Dr. Wendy chaired the Commodity Futures Trading Commission (CFTC) and introduced a rule excluding energy futures contracts, Enron’s big money-earner, from government oversight.

The Commodity Futures Modernization Act repealed the Shad-Johnson Jurisdictional Accord and allowed unregulated trade in securitized mortgage debt and Credit Default Swaps (CDSs). When then-Senator Gramm slipped the CFMA into the December 2000 Omnbnibus Spending Bill, he bragged that ir would “protect financial institutions from overregulation” and “position our financial services industries to be world leaders into the new century.”

Even back on November 12, 1999, when the Gramm-Leach-Bliley Act was signed into law, Senator William Philip Gramm, PhD., Republican of Texas, soon to be a Swiss banker, said:

In the 1930s, at the trough of the Depression, . . . it was believed that government was the answer. It was believed that stability and growth came from government overriding the functioning of free markets.

 We are here today . . . because we have learned that government is not the answer. We have learned that freedom and competition are the answers. We have learned that we promote economic growth and we promote stability by having competition and freedom.

I am proud to be here because this is an important bill; it is a deregulatory bill. I believe that that is the wave of the future, and I am awfully proud to have been a part of making it a reality.

 Got that, fellow whiners?

Image by Mike Licht. Download it here.Creative Commons license; credit Mike Licht, NotionsCapital.com