Archive for the ‘Phil Gramm’ Category

No-Talk Express — Re-Doubled

September 25, 2008

No-Talk Express -- Re-Doubled

Keep your mouth shut and wave the flag. Period. That is the McCain-Palin campaign in a nutshell.

John: Don’t debate Obama. No questions from reporters. Deliver the canned speech. Read it off the teleprompter.  No questions from reporters. Pose with the Legion and AmVets. Don’t remind voters that your record of financial experience is limited to membership in the Keating Five and sleeping with a millionaire, you think the poverty limit is $3 million, that Phil Gramm, the Swiss banker who pushed the finance laws that caused this world finance meltdown,  was your campaign co-chair, you have all those unforclosed houses, and you’ve been in Washington for 26 years, voting with George W. Bush over 90 percent of the time. And remember: no questions from reporters.


Finger Pointing

September 23, 2008

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).


Bush Housing Crisis Policy 4 — Too Big to Ignore

September 21, 2008

Bush Housing Crisis Policy --- Too big to Ignore

Continued from Inventive Interventions

September 2008.

Uh-oh. What’s that rumbling noise? The very earth is shaking! An earthquake? The sound of stomachs on the floor of the New York Stock Exchange? No. It’s AIG.

is an AIG? American International Group, a collection of businesses. Some sell insurance. Some sell conventional investment instruments. But the biggest business of AIG is selling something kinda like insurance, kinda like a security. Not insurance or equities, of course; those are regulated. Who can make big bucks off those? AIG sells credit default swaps, CDSs, agreements that AIG will buy your debt-based securities if they lose money.

Now that’s a relief. Who cares if the subprime mortgages underlying securities go bad just because loan officers are giving mortgages to anyone who breathes and claims to have a job? In a world of skyrocketing housing and securities prices, AIG swaps pieces of paper called CDSs for money and prospers.

AIG credit default swaps fan the flames of the hot housing and finance markets. Build more houses; sell more houses with subprime mortgages; bundle bales of mortgages; sell slices of mortgage bundles as securities; trade mortgage-backed securities to each other, union and government retirement funds, mutual funds, world markets, world governments. U.S. Mortgage-backed securities are hot! They can’t go bad; they’re guaranteed by AIG-issued CDSs, and those AIG swaps are backed by . . . um, backed by . . . uh-oh.


US Nationalizes AIG

September 17, 2008

US Nationalizes AIG

The insurance-reinsurance-investment-Fortune-500-Too-Big-to-Fail giant financial lemon AIG was purchased by the government of United States of America in the dark of the night. You own 80 percent of it. Don’t try to kick the tires; you’ll hurt your toes.

This is a regulatory as well as a financial nightmare, since the core company of American International Group is set up as a bunch of insurance companies, and U.S. insurance companies are under state, not federal, regulations. You know all those weird mortgage deals and hedge-derivative-lotto investments going bad all around you? Guess who insured them? New answer: you, the U.S. taxpayer. AIG also took the money from insurance clients and made its own weird investments.

How could such a thing happen? There ought to be a law! Oh, there was? Right: the Glass-Steagall Act (1933) that prohibited financial institutions from making insane risks with the general public’s money. Only those who could afford to lose huge sums could play high-risk games with their own money.

But Glass-Steagall was repealed by the Gramm-Leach-Bliley Act (1999) that knocked down those firewalls. Hmm . . . Gramm. Where have we heard that name before?


Bush Housing Crisis Policy — The Early Years

September 10, 2008

Bush Housing Crisis -- The Early Years 

After his appointment to the presidency by his father’s Supreme Court (kinda the way he always got jobs), President George W. Bush thought about the economy, and recalled waking from a nap in Business School and hearing that “they aren’t making real estate anymore, heh-heh.” He decided that housing would be a top priority of his administration. Housing business, anyway.

Economic whiz and fellow patriot Senator Phil Gramm (R-TX) had just composted the Glass-Steagall Act (before leaving U.S. government to work for Union des Banques Suisse, un établissement financier mondial). What could the President do besides hire Dr. Wendy Gramm (future Enron boardmember) on to the White House staff to help slash those pesky regulations?

When the latest Wall Street bubble burst, the smart money left stocks and bonds and bought up real estate. The smarter money bought up mortgages, then bundled, mashed, and sliced them, selling the slabs as securities. The securities sold like hotcakes, mooncakes, schnitzel, sushi, and tahini; they were gobbled up by investors, banks, funds and governments worldwide. Debt as our greatest U.S. export! The mortgage debts of Americans, held by investors around the world. Free Trade at its finest!


Bush Nationalizes Housing Finance Industry

September 8, 2008

Bush Nationalizes Housing Finance Industry

Treasury Secretary Henry M. Paulson, Jr. got annoyed by all the whining about foreclosures and other petty matters, and took over Fannie Mae and Freddie Mac, the mortgage insurance “entities” that keep U.S. housing prices from skyrocketing and plunging. Oh, they did? Despite all that deregulation that President Bush decreed so prices could be stabilized by the Wisdom of the Market?  Golly.

For those of you unfamiliar with the fine points of the American financial system, Freddie and Fannie are quasi-governmental public-private partnerships that package mortgage-backed securities from housing loans. That means they are not really the government, except when they are. The current administration allowed Fannie and Freddie to trade shares on the New York Stock Exchange.  Why? Just because.


Phil Gramm Aboard Foundering Swiss Bank

August 14, 2008

Phil Gramm Aboard Foundering Swiss Bank

What could be more secure than a Swiss bank? Perhaps a Swiss bank without former Republican Senator (and McCain economic adviser) Phil Gramm on the board.


Who’s Whining Now?

July 20, 2008

Who's Whining Now?

Former Senator William Philip “Phil” Gramm, PhD., has stepped down as co-chairman of Senator John McCain’s Republican presidential campaign. As Larry Rohter of the New York Times explains:

Mr. Gramm, a multimillionaire banker, has been under fire since last week, when he dismissed concerns about the troubled economy by referring to “a mental recession.” He also said the United States had become “a nation of whiners . . . .”

Senator McCain distanced himself from those remarks, and Professor Gramm resigned from the campaign. “It is clear to me that Democrats want to attack me rather than debate Senator McCain on important economic issues facing the county,” he whined in a written statement.