GRAMM SHOULD NOT BE ALLOWED OUT TO PLAY…. Time magazine, highlighting some of those most responsible for the economic crisis, recently singled out former Sen. Phil Gramm (R-Texas), and for good reason. Few deserve as much blame as the former chairman of the Senate Banking Committee.
Gramm “played a leading role in writing and pushing through Congress the 1999 repeal of the Depression-era Glass-Steagall Act, which separated commercial banks from Wall Street,” Time explained. “He also inserted a key provision into the 2000 Commodity Futures Modernization Act that exempted over-the-counter derivatives like credit-default swaps from regulation by the Commodity Futures Trading Commission. Credit-default swaps took down AIG, which has cost the U.S. $150 billion thus far.”
More recently, as part of his audition to be John McCain’s Treasury Secretary, Gramm said the nation was only in a “mental recession,” and that the United States is really a “nation of whiners.” Soon after, Gramm quietly disappeared for a while.
Now, however, Gramm seems to believe he’s a credible public figure again. He had an op-ed in the Wall Street Journal yesterday, explaining how twisted worldview and painful culpability isn’t such a big deal.
His defense was as predictable as it was tiresome:
[M]ortgage lending was becoming increasingly politicized. Community Reinvestment Act (CRA) requirements led regulators to foster looser underwriting and encouraged the making of more and more marginal loans. […]
Countrywide Financial Corp. cloaked itself in righteousness and silenced any troubled regulator by being the first mortgage lender to sign a HUD “Declaration of Fair Lending Principles and Practices.” Given privileged status by Fannie Mae as a reward for “the most flexible underwriting criteria,” it became the world’s largest mortgage lender — until it became the first major casualty of the financial crisis. […]
Yet it is amazing how well the market for credit default swaps has functioned during the financial crisis.
Yes, Gramm’s pitch includes discredited Republican talking points about CRA and Fannie Mae, followed by a defense of credit default swaps.
Two things. First, Gramm’s completely wrong.
Second, Gramm’s return from exile is entirely too soon. For a man principally responsible for helping destroy our economy, we’d all benefit if Gramm just went away for a very long while.