The Department Of Justice arrested the two principle Bear Stearns investment executives and about 300 others in the Real Estate Foreclosure fiasco recently. While this makes the Justice Department appear to be addressing the problem, it is merely a dog and pony show designed to distract public attention and avoid going after the real culprits of the disaster. Phil and Wendy Gramm, two central conservative movement players, are as much to blame for creating the conditions that removed safeguards and federal oversight from energy and credit banking instruments as those who took advantage of their deregulatory loopholes.
David Corn in Mother Jones points out Gramm's maneuvering in his article "Foreclosure Phil",
"Who's to blame for the biggest financial catastrophe of our time? There are plenty of culprits, but one candidate for lead perp is former Sen. Phil Gramm. Eight years ago, as part of a decades-long anti-regulatory crusade, Gramm pulled a sly legislative maneuver that greased the way to the multibillion-dollar subprime meltdown."
Phil himself profited from the moves becoming a highly paid shill for UBS. It is poetic justice that UBS took a bath on its exposure to the unregulated financial instruments called Collateralized Debt Obligations (CDOs). Lisa Lerrer in Politico pointed out Gramm's effect on banking regulations as a Senator and as a lobbyist since his Senate retirement.
"The general co-chairman of John McCain's presidential campaign, former Sen. Phil Gramm (R-Texas), led the charge in 1999 to repeal a Depression-era banking regulation law that Democrat Barack Obama claimed on Thursday contributed significantly to today's economic turmoil."
"Gramm's role in the swift and dramatic recent restructuring of the nation's investment houses and practices didn't stop there. A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBS's new investment banking arm."
Wendy Gramm, Phil's wife, as chairperson of the Commodity Futures Trading Commission under Presidents Regan and George H.W. Bush pushed deregulation of financial packaging for energy traders. This deregulation allowed Enron to set up many of the schemes it used to defraud California energy consumers and after its collapse, its employees and investors.
The two most influential advisors to McCain at present are Phil Gramm and Charlie Black. From the day Gramm arrived at the nadir of McCain's presidential bid and righted his financial ship, using federal matching funds as loan collateral then rejecting those funds, McCain has seemed to morph into a typical right wing demagogue. That type of financial manipulation has a Gramm-like slickness to it, and exploiting the Federal Election Commission vacancy, which prevented ruling against the finance abuse, smacks of Charlie Black savvy.
On an issue vital to our very survival, the economy, Senator McCain defers to Phil Gramm. CNN in February stated.
"If McCain follows Gramm's counsel, and most of his current positions are vintage Gramm indeed, his policies as president would represent not just a sharp departure from the Bush years, but an assault on government growth that Republicans have boasted about, but failed to achieve, for decades."
McCain uses the same rhetoric the Republicans have always employed, diminution of big government while they set up and control the private firms the federal government subcontracts to. While CNN attempts to give McCain cover from Bush's Economic strategy, or lack of one, they expose the linkage to Gramm.
Gramm in an OpEd piece from last year, forwards McCain's military expertise as the critical factor qualifying McCain for election, going so far as to state,
"He might not be the right president for all times, but he is the right president for these times."
I believe that instead of a future as Treasury Secretary Phil Gramm should get a long vacation in the Federal Penitentiary, with him and Wendy occupying adjoining cells.