OLEAN -- Republican senator John McCain has taken several false steps in his presidential quest so far, but I was pleased at his display of rapid decision-making two weeks ago when he quickly sacked his campaign co-chairman, former senator Phil Gramm, for outrageously insulting all Americans who can count to three and don't have to wear a bib when they eat.
For those of you who've been on vacation, the persnickety Gramm had told the Washington Times in a mid-July interview that our economic slowdown was a "mental recession" instead of a real one, and had complained that the United States is "a nation of whiners."
Instead, Gramm blithely told the conservative newspaper, this country is in fine shape: "We've never been more dominant; we've never had more natural advantages than we have today."
Please pause here for about five seconds while I break a rib laughing, go broke paying off my gasoline bill, and inject this commentary:
The problem is we haven't been whining enough. As a nation, we all act like dumb sheep. Those of us with offspring should be screaming daily to the heavens and grinding our teeth into powder about the dire outlook for their futures. America is in a terrible mess, and any sentient citizen who can fog up a mirror with a breath knows it.
In the ensuing uproar after his stupid remarks, Gramm tried to make it look like he was doing the honorable thing in stepping down voluntarily as McCain's chief economic adviser because he was a "distraction" to the presumptive GOP nominee's explanations of how he'd save our financial future.
But anyone who covered and reported on Phil Gramm in his prime realizes the stubborn, self-righteous and arrogant Texan wouldn't depart an influential post like that unless McCain figuratively threw him under the wheels of the Straight Talk Express, his campaign bus, which McCain did with the comment, "Phil Gramm does not speak for me -- I speak for me."
Gramm, a former Texas Republican senator who in the '90s chaired the powerful Senate Banking Committee, wanted to be appointed secretary of the Treasury should McCain win. He probably would have been. We should all thank the deity this blunder occurred.
Gramm's political acumen has always been suspect. He announced for president himself in 1996, but he was stopped cold before he even got started. He finished a poor fifth in the Iowa caucuses. Thank you, Iowa. The down-to-earth Midwesterners saw him as a pompous windbag. Just as well. Bill Clinton would have thundered him.
The Texas senator was infamous for several behavioral improprieties, but two stand out -- his crude responses to tough citizen questions, and his reliable routine of loudly taking credit for the many federal projects that ended up in Texas, even if other members of Congress did all the hard spadework. He was so notorious for this political bragging upon final approval of some pork-barrel windfall he had little to do with that the very act itself became known in Washington as "Grammstanding."
Once, in a town hall meeting with Texans, when Gramm heard an elderly widow remark that cutting Medicare would make it more difficult for her to remain independent, the senator shot back, "You haven't thought about a new husband, have you?"
Some legacy.
The late and much-missed Texas columnist Molly Ivins probably described him best in a 2002 piece about his standard response to reportorial questions. If you asked him a tough one on this or that policy or vote, he would usually refer to one of his constituents in Mexia, Texas, a printer named Dick Flatt, as his Everyman, the typical American.
"What would Dicky do?" Gramm would always ask.
"In fact," wrote the plain-spoken and observant Ivins, "Gramm has been an assiduous servant of large corporate interests, routinely supporting legislation that screwed the Dicky Flatts of the world."
Nowhere is this more evident than in the supreme irony surrounding Gramm's complaint about the current economic downturn being a figment of the American public's imagination. The reality is this: Not only do our economic troubles actually exist -- Gramm was a key figure in causing them.
Gramm was one of the big, persistent "deregulators" in Congress who played a key role in "reforming" securities trading so that complicated debt-trading mechanisms and reliance on arcane "derivatives" formulas that not even devotees understand became common practice. These made the current subprime lending crisis possible. Globally, banks have seen more than $340 billion go up in smoke since the crisis started almost a year ago.
Arkansas syndicated columnist Gene Lyons -- one of the best writers in that state, and there are a bunch of them -- notes in a recent column that Democrats and Republicans alike have been pushing the "fallacious notion that the financial industry needs no regulation, because free markets correct themselves, and because wise investors invariably exercise due diligence in advancing loans."
In reality, Lyons continued, "money lenders no longer care about repayment." They make their profit on fees and charges generated when the easy-to-get, unresearched loans are made. Then they cleverly repackage the shaky loans as "securities" and sell them to clueless investors, who are "just now waking up to the fact that they're worthless."
The relationship of bankers and other lenders to the common over-extended homeowner who borrows and borrows and pyramids debt, Lyons notes, "is that of a coyote to a chicken."
Gramm made all this possible. In the Senate, he was one of three sponsors of the "banking reform" Gramm-Leach-Bliley Act -- dressed up as a financial "modernization" bill -- that was passed and signed into law in 1999. As Lou Dubose writes in the August issue of the Washington Spectator newsletter, the act dismantled landmark regulation that for almost 70 years had successfully regulated banking in the United States.
The Glass-Steagall Act of 1933 -- passed in reaction to the Great Depression and numerous bank failures -- had "maintained a wall between investment banks and the commercial banks at which most Americans did business," writes Dubose. "When it passed in 1999, Gramm-Leach-Bliley eliminated that wall. The law Gramm co-sponsored in 1999 was the most important revision of banking law since the New Deal, allowing the creation of enormous transnational commercial banks and holding companies, such as Citibank."
These multinational firms, run by greedy international gamblers who don't give a fig for America's future, are only interested in growth and bonus figures. They make a show of "protecting shareholder interests," but are more focused on self-enrichment.
"Gramm's dereg legislation is a critical factor in the current international banking crisis," concluded Dubose.
The Gramm-Leach-Bliley Act was filled with loopholes that allowed American investment banks to bypass federal regulations governing futures trading. It is part of the reason why the investment banks were able to falsely inflate the prices of oil, wheat, corn and other commodities through massive futures trading. It essentially killed good, logical laws written after the Great Depression to protect us from another Wall Street/Banking industry collapse.
Since leaving the Senate, Gramm has become vice-chairman of U.S. operations for the Swiss banking giant UBS, once a rock-ribbed, reliable, conservative, discreet investment house.
Apparently his advice didn't stop UBS from losing $38 billion of its asset-based securities as a result of the credit crisis that began in 2007. UBS stock lost 70 percent of its value since Gramm came aboard. Its chairman has been fired.
It may be easy for a former "public servant" like Phil Gramm -- with his cushy federal pension and free health care and taxpayer-paid benefits -- to view the nation's current dismal state through rose-tinted spectacles. But he shouldn't even be pretending to objectively comment on the state of an obvious crisis he helped fashion.
And it is disconcerting to see John McCain -- who showed so much promise eight years ago, before he was smeared and screwed by Dubya's political henchmen -- to now rely on such benighted and nationally tone-deaf people as Gramm for key advice. Loyal Republicans should fall on their knees and pray in thanks that McCain got rid of him with at least three months left until Election Day.
| Niagara Falls Reporter | www.niagarafallsreporter.com | Aug. 5 2008 |