Thanks for the Subprime Meltdown, Phil Gramm! Part 2

Keith Olbermann on Phil Gramm's conflicts of interest lobbying on behalf of UBS Bank while advising McCain on his economic platform: listen at around 4:06 in.

Back in March, I opened up a can of whupass with former senator Phil Gramm's name on it in a post laying the subprime mortgage crisis largely at his feet. Gramm was one of the main architects of the Gramm-Bliley-Leach Act under the Bill Clinton administration, which undid a law that kept a firewall between the activities of commercial banks and investment banks. Gramm was responsible for loosening regulations spurred by the Great Depression that kept banks and their customers from being subjected to the dangers of banks collapsing. Gramm-Bliley-Leach threw the doors open wide for banks to issue junky subprime loans (often using fraudulent, questionable tactics to calculate the risk for buyers and close home loans at all cost) and then to make Frankenstein-monster investment products by rolling these dicey loans into Collateralized Debt Obligation (CDO) vehicles that other entities--like giant pension funds--then bought.

You know how E. coli will sometimes cause a recall of tainted beef because manure gets into a batch of ground beef made up of thousands of cows? Well, let's just say that Gramm helped unleash investment vehicles flecked with bad loans that were no longer secured by the properties that were supposed to act as collateral. Yes, I'm comparing Phil Gramm's legislative, lobbying, and McCain economic input to poo.

Because now it seems that Gramm only formally de-registered himself as a lobbyist for UBS Bank on April 18, 2008, well into McCain's campaign season and overlapping the period when Gramm assisted McCain in crafting his economic and foreclosure rescue policies. This follows in the wake of huge scandals dogging a handful of McCain's lobbyist-cum-campaign staffers.

Why is this bad? Lobbyists represent large industry interests. They should not be crafting law and should not be actively working as lobbyists while advising or helping to craft planks in a publicly-elected candidate's platform. In an ideal world, policy should serve the people first, not the highest corporate bidder. Even Rick Davis, McCain's campaign chair, agrees on this point--he's alienated quite a few lobbyists with the onset of sudden "no conflict of interest rules for lobbyists" he's instituted for McCain campaign staffers. (Only because the scandals pressured him to do so.)

While not technically a lobbyist now, Gramm was one until about a month ago. Perhaps his presence can explain McCain's "do-nothing"/"do damn little" philosophy regarding individuals facing foreclosure. If so, how is this in the public's best interest?

Gramm needs to go, or if he stays as economic advisor to McCain's campaign, he needs to start thinking as the legislator he once was and not a lobbyist. In any case, McCain's judgment in selecting as an advisor the very person who helped create conditions that led to the mortgage meltdown should be questioned. We don't need Gramm anywhere near the White House again; it's just one more reason why McCain is unfit for the office of president.

H/t SoftBulletin's DailyKos diary.

Cynematic blogs at P i l l o w b o o k.

Comments

[PunditMom]

'Cause you know you can trust the markets and the marketplace to be honest and not take advantage of consumers. Next consumer/financial crisis -- more problems with Wall Street as lobbyists try to further pick apart Sarbanes/Oxley.

[Debbie]

a) BRILLIANT, Cyn. thank you.

b) what PunditMom said aabout picking apart Sarbanes/Oxley.

dude. the genius, it blindeth me. a blindness I welcome.

[cynematic]

@ PunditMom: "trust the markets and the marketplace" BWAHAHAHAHAHAHA, I laughed til I cried. What YOU said.

@ Debbie: not me who's brilliant. I just followed the breadcrumbs Obama left in plain sight in his Cooper-Union economic speech.