McCain's Phil Gramm - responsible for $$ MELTDOWN.

by enthusiast, Sun Sep 14, 2008 at 03:47:27 PM EDT

Bloomberg Radio has had an extraordinary, 2 hour commercial free coverage of the economic crisis unfolding today.  Lehman is going bankrupt, Merrill Lynch is up for sale, Washington Mutual is likely to go under, and AIG is going through a major reorganization.  

The most common comparisons are with the stock market crash of 1929.

Many institutions, such as the Glass-Stiegel act and the Federal Reserve were put into place in order to prevent another meltdown on the same scale, also FDIC to prevent bank runs.

Phil Gramm, McCain's top economic adviser, sponsored a bill that made the Glass-Stiegel act much less than it was, by making it possible for large brokerage firms to act like banks, without the Glass-Stiegel regulations, leading to the chaos we have today.

Tags: Economy, mccain, Phil Gramm (all tags)

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8 Comments

Shadow_head_small
THE GOP IS LOOTING AMERICA..

Isn't that obvious..

They are systematically dismantling what few protections we have and then STEALING us blind, and LYING about it with no limits on how big the lies.

We can't let them cover this up again..

by architek 2008-09-14 03:59PM | 0 recs
Shadow_head_small
correct - and where is the outrage?

Where are the muckrakers of today?  The investigative reporters who will tell us like it is?

The GOP is busy, now, you can bet, trying to find some way to evade their responsibility for this disaster.

by enthusiast 2008-09-14 04:04PM | 0 recs
Shadow_head_small
Where are the muckrakers?

Sadly, they were fired by their corporate bosses when they tried to turn their "news" divisions into profit-making machines.

by atdleft 2008-09-14 07:53PM | 0 recs
Shadow_head_small
How very true...

Except that the GOP has ALREADY LOOTED AMERICA, and they're now expecting us the taxpayers to bail them out now that their risky investments have crapped out. Isn't that ironic? They always whine about "leaving the markets alone"... But when their deregulation leads to a market panic, they cry to the government to bail them out & calm the markets.

As Alanis Morrisette would sing: "Isn't it ironic... Don't you think?"

by atdleft 2008-09-14 07:58PM | 0 recs
Shadow_head_small
Re: McCain's Phil Gramm, $$ MELTDOWN.

This is all true, but Obama won't make Glass-Stiegel an issue. Remember that Obama is largely funded by the people who benefited from Gramm's efforts, and who are now going bankrupt:

Employees of New York-based Goldman Sachs, the biggest U.S. securities firm by market value, were Obama's top donors among all companies through June. McCain's top backers work at New York-based Merrill Lynch, according to the center.

The mortgage industry also favors Obama over McCain after supporting Bush over Kerry. Employees in the industry, including those working for Freddie Mac and Fannie Mae, gave $278,937 to Obama and $133,475 to McCain. In 2004, they gave Bush $867,169 and Kerry $294,252.


by souvarine 2008-09-14 05:55PM | 0 recs
Shadow_head_small
It's a failure of deregulation

by missliberties 2008-09-14 07:33PM | 0 recs
Shadow_head_small
Gramm really had very little to do with this

In 2004, the SEC lowered the capital reserve requirements for major brokerage houses (Bear Stearns, Lehman, Merril, etc), making them highly leveraged relative to the large money center banks. Essentially, that's why these players are going away.

I think the issue is sloppy regulation; the SEC also relaxed "short selling" rules, enabling packs of short sellers to move from one institution to the next, destroying capital. If Chris Cox does not reinstate these regulations tomorrow---the uptick rule and naked shorting--people should scream bloody murder.

I don't agree with another comment that the GOP is looting America, and can guarantee you that the Lehman/Bear Stearns shareholders wouldn't agree, either. But I do think it's clear that Bush administration incompetence and a "laissez faire" approach to regulating financial markets is taking its toll, and destroying wealth.

In the meantime, we should be grateful for Hank Paulson and Ben Bernanke...they're doing as good a job as anyone could at cleaning up a mess they inherited.

by BJJ Fighter 2008-09-14 06:25PM | 0 recs
Shadow_head_small
Yes, you are right...

In 2004, the SEC lowered the capital reserve requirements for major brokerage houses (Bear Stearns, Lehman, Merril, etc), making them highly leveraged relative to the large money center banks. Essentially, that's why these players are going away.

I think the issue is sloppy regulation; the SEC also relaxed "short selling" rules, enabling packs of short sellers to move from one institution to the next, destroying capital.

Thank you for reminding us. HOWEVER, I also agree with the diarist that the Phil Gramm/GOP led effort to dismantle Glass-Stiegel in the 1990s started the ball rolling. By blurring the lines between savings banks and institutional investment banks and loosening regulations on the financial industry, they started a problem that only worsened when the Bush Administration rolled back regulations some more (as you correctly noted) in 2004. IMHO, Obama should mention BOTH has he ties both Bush & Gramm to McCain & his plan to continue this destructive deregulation scheme in place.

by atdleft 2008-09-14 07:51PM | 0 recs

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