McCain's relationship with Phil Gramm prime example of lack of judgment

[kentuck]

Need any more proof that John McCain knows absolutely nothing about economics??
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http://www.motherjones.com/mojoblog/archives/2008/07/8960_as_mccain_disav.html

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On Thursday, Portfolio magazine released an interview with Carly Fiorina, the former Hewlett-Packard CEO who is now a top adviser and surrogate for McCain. In that article interviewer Lloyd Grove asked Fiorina "who and/or what is to blame for the souring economy?" Her answer:

Well, I think there was a situation where there was greed on Wall Street, there was a lack of transparency around a new set of financial instruments, there were a whole new set of financial instruments, there were a whole new set of financial players who were less regulated than banks, and all that together created a situation, which now is rippling through the economy.

She added: "in this particular case, the financial instruments that were being used, when I say they lacked transparency, people didn't understand all the connections."

Today's economic troubles, Fiorina was saying, were caused in part by insufficient regulation and lack of transparency regarding the latest financial instruments. And who bears some responsibility for that? Phil Gramm.

It was Gramm who used a sly legislative maneuver in late 2000, when he chaired the Senate banking committee, to pass the Commodity Futures Modernization Act--to which practically no one but financial industry lobbyists were paying attention in Washington. This bill prohibited federal agencies from regulating financial products called swaps, which have been used to back up the mortgaged-based securities that caused the subprime crisis. Michael Greenberger, who directed the Commodity Futures Trading Commission's division of trading and markets in the 1990s, says these unregulated swaps have been at "the heart of the subprime meltdown." He and others point to Gramm as being chiefly culpable for their deregulation.

So here is one top McCain adviser (touted as a possible running mate for McCain) suggesting that another top McCain adviser (touted as a possible Treasury secretary in a McCain administration) is partly to blame for the current economic downslide, which is not recognized by that second top McCain adviser. Seems as if Fiorina and Gramm need to get on a conference call with McCain and work things out.

...more

[flpoljunkie]

1. McCain chose Gramm as his major economic adviser and has touted him for his Sec Treas!

This goes directly to McCain's 'judgment.' McCain is the real elite in this race, and treats the economy like he approaches the very complicated situation in Iraq--by the seat of his pants.

It's who McCain is. No attention to detail, no real study of the very difficult problems we face in this country. He's having too much fun regaling the 'good' reporters on the "Lap Dog Express."

[kentuck]

2. More from a 2002 article in Mother Jones..

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Gramm, the great crusader against government spending, has spent his entire life on the government tit. He was born at a military hospital, raised on his father's Army pay, went to private school at Georgia Military Academy on military insurance after his father died, paid for his college tuition with same, got a National Defense Fellowship to graduate school, taught at a state-supported school, and made generous use of his Senate expense account. In 1987, a Dallas developer named Jerry Stiles flew a construction crew to Maryland to work on Gramm's summer home. Stiles spent $117,000 on the project but was kind enough to bill Gramm only $63,433. When Stiles got in trouble for misusing funds from a savings and loan he owned, Gramm did him some "routine" favors with regulators. Stiles was later convicted on 11 counts of conspiracy and bribery.

As a member of the Senate Finance Committee and the recipient of enormous banking contributions, Gramm did an even bigger favor for the financial industry in 1999 when he sponsored the Financial Services Modernization Act allowing banks, securities firms, and insurance companies to combine. The bill weakened the Community Reinvestment Act, which requires banks to help meet the credit needs of low- and moderate-income neighborhoods. Gramm described community groups that use the CRA as "protection rackets" that extort funds from the poor, powerless banks. The bill is also a disaster for the privacy of bank customers and weakens regulatory supervision. As Gramm proudly declared, "You're not going to find a single bank, insurance company, or securities company that will say they were hurt financially by this bill."

To be fair, Gramm occasionally found it in his heart to assist the poor -- like the time he suggested that mothers on welfare would be better off working for $2.50 an hour. A more typical Gramm vote, though, came on an energy bill that benefited oil and gas companies at the expense of consumers. "There are winners and losers in every economic decision," Gramm said portentously. He was then getting more oil and gas money than any other member of the Senate. So much for Dicky Flatt.