That’s Right Nate

Thoughts from a right thinker.

McCain’s Economic Secret Weapon

with one comment

One reason that John McCain is the candidate who is most capable of lifting us from our current economic woes is because of his economic adviser Phil Gramm.  Gramm’s belief in McCain is so strong that he gave up his position as a registered lobbyist with UBS for him.  UBS is the Swiss bank where Gramm is a highly sought after executive and where he was registered as a lobbyist until June 18th.

In the 1990s, as chairman of the Senate banking committee, he showed shrewd fiscal management routinely turning down Securities and Exchange Commission chairman Arthur Levitt’s requests for more money to police Wall Street; during this period, the sec‘s workload shot up 80 percent, but Gramm kept an eye on the bottom line and the staff grew only 20 percent. Gramm also opposed an sec rule that would have prohibited accounting firms from getting too close to the companies they audited—at one point, according to Levitt’s memoir, he warned the sec chairman that if the commission adopted the rule, its funding would be cut. And in 1999, Gramm pushed through a historic banking deregulation bill that helped ease outdated Depression-era firewalls between commercial banks, investment banks, insurance companies, and securities firms—helping to usher in the prosperity of some large bank mergers.

Perhaps Gramm’s finest moment was in December of 2000 when Gramm with the help of Richard Luger and several friends in the industry wrote the Commodity Futures Modernization Act.  This act was so technical that Gramm was one of the few people who could even understand it. “Nobody in either chamber had any knowledge of what was going on or what was in it,” says a congressional aide familiar with the bill’s history.

The act, he declared, would ensure that neither the sec nor the Commodity Futures Trading Commission (cftc) got into the business of regulating newfangled financial products called swaps—and would thus “protect financial institutions from overregulation” and “position our financial services industries to be world leaders into the new century.”

Part of the act helped protect American companies like Enron from over-regulation of energy trading and of course a lot of people will tell you that the act was at the heart of the subprime mortage meltdown.  Who can say? 


Written by thatsrightnate

May 29, 2008 at 5:05 pm

One Response

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  1. I think that the people McCain is working does a lot to clarify exactly who he is and what we could expect from him. I hope it’s coming clear to everyone.


    May 29, 2008 at 7:30 pm

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