Phil Gramm, who was working for the banks even before he was working for the banks (if you know what I mean), tries to do retroactive damage control after statements by Sanford Weill that it was a mistake to repeal the Glass-Steagall Act – you know, the one that was replaced by the legislation Phil Gramm helped write?
Phil Gramm, the former U.S. senator who helped write the 1999 law that enabled the creation of financial giants such as Citigroup Inc. and Bank of America Corp., said his legislation didn’t make the system any riskier.
Pause here for belly laughs. Okay, I’ll give him this: The Commodity Futures Modernization Act he rammed through in the 2000 budget showdown between Congress and Clinton was much worse. In fact, it had even more to do with the 2008 crash. It made sure that the credit swaps market was unregulated, and that banks and hedge funds didn’t need a minimum reserve to back their casino bets.
The Gramm-Leach-Bliley Act repealed the 1933 prohibition against federally insured depository institutions combining with securities firms and insurers. While his law allows deposit-taking banks to affiliate with securities firms through holding companies, depositors and taxpayers are protected because affiliates can’t take capital out of the banks, Gramm said in a telephone interview yesterday.
“I don’t see any evidence that allowing them to affiliate through holding companies had anything to do with the financial crisis nor has anybody ever presented any evidence to suggest that it did,” said Gramm, 70. Companies that failed such as Lehman Brothers Holdings Inc. “tended to be narrowly focused.”
See, Gramm’s long history as a fighter against banking regulation makes him what passes for an economic expert – for a Republican, I mean. The man is a weasel. Always was, always will be.
John Reed, who helped found Citigroup with Weill, and former Merrill Lynch & Co. CEO David Komansky have said they regretted fighting to overturn the Depression-era Glass-Steagall Act. Richard Parsons, speaking two days after ending his 16-year tenure on the board of Citigroup and one of its predecessors, said the repeal contributed to the financial crisis.
“To some extent what we saw in the 2007-2008 crash was the result of the throwing off of Glass-Steagall,” Parsons said in April at a Rockefeller Foundation event in Washington. “Have we gotten our arms around it yet? I don’t think so because the financial-services sector moves so fast.”
[…] Former U.S. Senator Byron Dorgan, a North Dakota Democrat who warned in 1999 that repealing Glass-Steagall could lead to “massive taxpayer bailouts” in 10 years, said in a telephone interview that the so-called firewalls that exist between regulated banks and affiliates are like “tissue paper.”
“It’s just absurd for anybody now to make the case that having these entities under the same corporate umbrella doesn’t pose substantially greater risk,” said Dorgan, who retired from the Senate in 2011 and is a senior policy adviser at law firm Arent Fox LLP. “Phil is just wrong about this. He was wrong 13 years ago and he’s wrong now.”
I think the word you’re looking for is “lying,” not “wrong,” Sen. Dorgan. Phil Gramm is what the nuns used to call a “bold brazen article.” I’m not as nice. I’d call him a lying sack of excrement.