Whatever happened to personal responsibility? http://www.bloomberg.com/apps/news?pid=20601087&sid=aHg9kn0nuzlk&refer=home McCain Says Wall Street `Villain' in Subprime Crisis (Update1) By Christopher Stern July 27 (Bloomberg) -- Senator John McCain put the blame on Wall Street for the home mortgage credit crisis that has roiled financial markets around the world. ``Wall Street is the villain in the things that happened in the subprime lending crisis and other areas where investigations and possible prosecution is going on,'' McCain said during a taped appearance on ABC's ``This Week'' program. The Arizona Republican, who has wrapped up his party's presidential nomination, said he supports the housing bill passed by Congress yesterday to stem foreclosures and aid Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, even though it may cost taxpayers as much as $25 billion. McCain, 71, said the risk of the mortgage companies' failure is outweighed by the potential cost. He also said Fannie and Freddie should be barred from lobbying Congress and their executives' compensation should be reduced. ``We should eliminate the pay and bonuses that these people rake in,'' McCain said Senator Barack Obama of Illinois, the Democratic presidential candidate, generally agreed with McCain's point of view during a taped appearance on NBC's ``Meet the Press.'' Market Liquidity ``Any assistance to Fannie Mae or Freddie Mac should not be focused on the investors and the shareholders,'' he said. ``It should not be focused on management.'' The emphasis should be on ``ensuring there is liquidity in the housing market,'' Obama said. Today in Chicago at the Unity '08 Presidential Candidates Forum, Obama said the housing bill passed yesterday is ``a good start in trying to create a floor beneath which the housing market will not sink.'' He said the U.S. has ``to do more'' and that the economy ``has worsened enough that we need a second round of stimulus.'' McCain said, if elected, he would support broad bipartisan negotiations with Democrats over the future of Social Security and other economic issues, with ``everything on the table.'' Asked if that includes payroll tax increases, which McCain opposes, he replied: ``There is nothing that's off the table.'' ``I have my positions, and I'll articulate them,'' McCain said. ``I don't want tax increases.'' Iraq Timetable McCain also sought to explain a verbal misstep last week when he appeared to endorse Obama's proposed 16-month timetable for withdrawing troops from Iraq during an appearance on CNN. ``I didn't use the word timetable,'' McCain said today on ABC. Last week McCain told CNN, ``I think it's a pretty good timetable,'' in reference to the 16-month proposal before adding that he would support the plan only if it was justified by ``conditions on the ground.'' He repeated that point today. ``Anything is a good timetable that is dictated by conditions on the ground,'' McCain said. McCain has made Obama's proposed timetable a centerpiece of his attack on his Democratic rival. The issue was highlighted last week when President Nuri al-Maliki of Iraq, during Obama's visit there, supported pulling out U.S. combat troops by the end of 2010. For his part, Obama, 46, refused to say he was wrong to oppose the Bush administration's decision to increase the number of troops in Baghdad. Decreased Violence McCain, a supporter of the so-called surge, has said that it has led to decreased violence and put the U.S. on a path toward victory in Iraq. ``There is no doubt our troops make a difference,'' said Obama, while suggesting that the current lessening of conflict isn't the result of the surge. Sunni Muslim fighters began to shift their allegiance to the U.S. from al-Qaeda even before the surge started, Obama said. Obama said at the Unity '08 forum that his timetable is ``realistic.'' ``When you've got the prime minister of Iraq, the people of Iraq, saying they are ready to take more responsibility, when we're seeing more Iraqi forces take the lead in actions, we need to take advantage of that opportunity,'' the candidate said. The issue is all the more important ``because we've got to deal with Afghanistan and we can't keep spending $10 billion a month in Iraq at a time when we've got enormous pressing needs'' in the U.S., Obama said. He added that those needs include ``taking care of veterans who are coming home with post-traumatic stress disorder, disabilities, and they are still not getting a lot of the services that they need.'' Trip Abroad Obama also responded to critics who said his trip was presumptuous for a presidential candidate. ``I basically met with the same folks that John McCain met with after he won the nomination,'' the Illinois senator said. Talking with world leaders is ``part of the job that I'm applying for, and so I was puzzled by this notion that somehow what we were doing was in any way different from what Senator McCain or a lot of presidential candidates have done in the past,'' Obama said. ``Now, I admit we did it really well. But that shouldn't be a strike against me.''
McCain guru linked to subprime crisis By LISA LERER | 3/28/08 2:06 PM EST The general co-chairman of John McCainâs presidential campaign, former Sen. Phil Gramm (R-Texas), led the charge in 1999 to repeal a Depression-era banking regulation law that Democrat Barack Obama claimed on Thursday contributed significantly to todayâs economic turmoil. âA regulatory structure set up for banks in the 1930s needed to change because the nature of business had changed,â the Illinois senator running for president said in a New York economic speech. âBut by the time [it] was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework.â Grammâs role in the swift and dramatic recent restructuring of the nationâs investment houses and practices didnât stop there. A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBSâs new investment banking arm. Later, he became a major player in its government affairs operation. According to federal lobbying disclosure records, Gramm lobbied Congress, the Federal Reserve and the Treasury Department about banking and mortgage issues in 2005 and 2006. During those years, the mortgage industry pressed Congress to roll back strong state rules that sought to stem the rise of predatory tactics used by lenders and brokers to place homeowners in high-cost mortgages. For his work, Gramm and two other lobbyists collected $750,000 in fees from UBSâs American subsidiary. In the past year, UBS has written down more than $18 billion in exposure to subprime loans and other risky securities and is considering cutting as many as 8,000 jobs. Gramm did not respond to an e-mail and was unavailable for comment, according to a UBS spokesman. The bank has no official position on the subprime crisis, the spokesman said, but is a member of the Financial Services Roundtable and other industry groups that are actively lobbying Congress on the issue. Now, some housing experts and economists see Grammâs thinking in the recent housing proposal from McCain, the Republican Partyâs presumed presidential nominee. Gramm is often a surrogate for the Arizona senator, particularly in meetings focused on the economy. And McCain has hinted heâd consider the former Texas senator for Treasury secretary in a McCain administration. McCain delivered an economic speech Tuesday that had Gramm's input, but it was written by domestic policy adviser Douglas Holtz-Eakin. âSen. Gramm was one of dozens of folks whom Sen. McCain has consulted on the housing issue, including Carly Fiorina and Meg Whitman from eBay," said McCain campaign spokesman Brian Rogers. "They've been friends for years, and he values Sen. Gramm's advice." In the speech, McCain rejected the type of aggressive government intervention in the economic meltdown that has been embraced by his Democratic opponents â and even some Bush advisers. âI have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers,â McCain said. âGovernment assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy.â McCainâs campaign later clarified that he would support programs for âdeservingâ homeowners and reforms that would improve transparency and accountability in capital markets. Andrew Jakabovics, a housing expert at the liberal Center for American Progress, said McCainâs interpretation of the crisis puts little blame on investment banks for their role in packaging the subprime loans into dangerously complex and ultimately hard-to-value financial instruments. âIâd characterize this as the deux ex machina theory of financial products,â Jakabovics said. âHe views this as a market problem that manifests at the local level as housing, meaning heâs more likely to argue in favor of these guys when they argue for deregulation.â Wall Street firms are increasingly under scrutiny for contributing to the economic downturn by packaging and selling risky mortgage securities. When the home loans tied to the mortgages defaulted, investors and the banks lost billions, contributing to a widespread credit crunch. âI think [McCainâs] attitude is the market can basically handle this and government doesnât need to be heavily involved,â said David Wyss, chief economist at Standard and Poorâs. McCain and Gramm have a long political history. The two became close when they worked together as senators to defeat Hillary Rodham Clintonâs 1993 health care plan, holding meetings at hospitals and clinics across the country. In 1996, McCain was national chairman of Gramm's unsuccessful presidential bid. In 2000, the duo had a rare parting when Gramm backed his home-state governor, George W. Bush, for president instead of McCain. But theyâve reunited in this presidential race. Gramm stood by his former Senate colleague in his worst days last summer when his campaign went broke and his candidacy was all but written off by political observers. Gramm, who had joined the campaign in March as a domestic policy adviser, was among those who helped cut staff and shrink the budgets. He traveled with McCain in Iowa, New Hampshire and South Carolina and stumped for him in Georgia. http://www.politico.com/news/stories/0308/9246.html
Foreclosure Phil: Journalist David Corn on How McCain Campaign Adviser Phil Gramm Helped Create the Subprime Mortgage Crisis In the latest issue of Mother Jones magazine, David Corn writes, âWhoâs to blame for the biggest financial catastrophe of our time? There are plenty of culprits, but one candidate for lead perp is former Sen. Phil Gramm. Eight years ago, as part of a decades-long anti-regulatory crusade, Gramm pulled a sly legislative maneuver that greased the way to the multibillion-dollar subprime meltdown. Yet has Gramm been banished from the corridors of power? Reviled as the villain who bankrupted Middle America? Hardly. Now a well-paid executive at a Swiss bank, Gramm cochairs Sen. John McCainâs presidential campaign and advises the Republican candidate on economic matters.â http://www.democracynow.org/2008/7/9/foreclosure_phil_journalist_david_corn_on
Phil Gramm, the Subprime Mortgage Guy in McCain's Campaign When is an economic advisor a liability? When he's linked to the country's biggest economic disaster, and has ethical issues gong back to the Enron collapse. Along with Barack Obama, Lisa Lerer at Politico is taking a critical look at key McCain advisor and friend, Phil Gramm: Former Senator Phil Gramm of Texas is general co-chairman of John McCainâs presidential campaign, and he led the charge in 1999 to repeal a Depression-era banking regulation law that Democrat Barack Obama claimed on Thursday contributed significantly to todayâs economic turmoil. âA regulatory structure set up for banks in the 1930s needed to change because the nature of business had changed,â the Illinois senator running for president said in a New York economic speech. âBut by the time [it] was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework.â http://www.politico.com/news/stories/0308/9246.html * * * And Lerer reports, upon leaving Capitol Hill Gramm did some serious lobbying, to great effect: Grammâs role in the swift and dramatic recent restructuring of the nationâs investment houses and practices didnât stop there. A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBSâs new investment banking arm. Gramm lobbied Congress, the Federal Reserve and the Treasury Department about banking and mortgage issues in 2005 and 2006. During those years, the mortgage industry pressed Congress to roll back strong state rules that sought to stem the rise of predatory tactics used by lenders and brokers to place homeowners in high-cost mortgages. For his work, Gramm and two other lobbyists collected $750,000 in fees from UBSâs American subsidiary. In the past year, UBS has written down more than $18 billion in exposure to subprime loans and other risky securities and is considering cutting as many as 8,000 jobs. ... McCain and Gramm have a long political history. The two became close when they worked together as senators to defeat Hillary Rodham Clintonâs 1993 health care plan, holding meetings at hospitals and clinics across the country. In 1996, McCain was national chairman of Gramm's unsuccessful presidential bid. BuzzFlash reader Anne Desh shared the following mortgage industry notice from 2002, which boasts of Gramm's heavy influence in the banking deregulation of the 90s: Sen. Phil Gramm, R-Texas, a one-time chairman of the Senate Banking Committee, is joining UBS Warburg as its vice chairman. Sen. Gramm ... co-authored the Gramm-Leach-Bliley Act, which eliminated legal barriers that separated banks from securities firms. A frequent critic of Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System, Sen. Gramm will be joining a firm that has made quite a bit of money the past two years off the mortgage market, especially in regard to subprime lending/securitization. http://www.nationalmortgagenews.com/premium/archive/?ts=1034092803 * * * Now Gramm says, "I Didn't Cause the Subprime Crisis" (US News and World Report). He says the Fed did, by easing credit. http://www.usnews.com/blogs/capital...-gramm-i-didnt-cause-the-subprime-crisis.html * * * Go to Slaying the Subprime Vampires for further clarification and the back story on Phil Gramm. That report also includes this side remark about a possible mortgage problem for Clinton's campaign team: Maggie Williams, Clintonâs campaign director, sat on the board of directors for Delta Financial Corporation for 7 years. Sheâd still be on the board, but Delta Financial went belly-up in December. Delta Financial was not a bank. It was a wholesale mortgage vampire, marketing mortgages with usury interest rates to low-income borrowers and Maggie Williams was in charge of developing best practices procedures and crisis management when they started to fail. Imagine that. http://politics.drumsnwhistles.com/2008/03/slaying-the-subprime-vampires/
The Mortgage Crisis, Phil Gramm, and John McCain Compassionate Conservatism in Action "Bubble", the WaPo series explaining how the mortgage mess came to be from the vantage point of the guys who did the selling, is excellent and you ought to read it if you want to understand just how big a part standard corporate greed - the everyday kind that Reagan told us over and over again didn't exist any more - played in the downfall of our shaky Bush economy (whole series here: http://www.washingtonpost.com/wp-srv/business/creditcrisis/ ). But I was struck by what they left out because they followed it from the floor - the critical part played by a rip-off enabling Republican Congress. Without them clearing the way for the brokers' fraud and theft, it wouldn't have - couldn't have - happened. Then, quite by accident, following an entirely different link, I stumbled on this story at Campaign for America's Future in a blog by Terrance Heath that names names - mainly Phil Gramm's - and lays out the whole maddening story with commendable clarity, considering how confusing it is. And who do you suppose Phil's advising on financial policy? You guessed it. Who's to blame for the biggest financial catastrophe of our time? There are plenty of culprits, but one candidate for lead perp is former Sen. Phil Gramm. Eight years ago, as part of a decades-long anti-regulatory crusade, Gramm pulled a sly legislative maneuver that greased the way to the multibillion-dollar subprime meltdown. Yet has Gramm been banished from the corridors of power? Reviled as the villain who bankrupted Middle America? Hardly. Now a well-paid executive at a Swiss bank, Gramm cochairs Sen. John McCain's presidential campaign and advises the Republican candidate on economic matters. He's been mentioned as a possible Treasury secretary should McCain win. That's right: A guy who helped screw up the global financial system could end up in charge of US economic policy. Talk about a market failure. â¦But Gramm's most cunning coup on behalf of his friends in the financial services industryâfriends who gave him millions over his 24-year congressional careerâcame on December 15, 2000. It was an especially tense time in Washington. Only two days earlier, the Supreme Court had issued its decision on Bush v. Gore. President Bill Clinton and the Republican-controlled Congress were locked in a budget showdown. It was the perfect moment for a wily senator to game the system. As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered deadâeven by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. "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. *** In essence, Wall Street's biggest players (which, thanks to Gramm's earlier banking deregulation efforts, now incorporated everything from your checking account to your pension fund) ran a secret casino. "Tens of trillions of dollars of transactions were done in the dark," says University of San Diego law professor Frank Partnoy, an expert on financial markets and derivatives. "No one had a picture of where the risks were flowing." Betting on the risk of any given transaction became more importantâand more lucrativeâthan the transactions themselves, Partnoy notes: "So there was more betting on the riskiest subprime mortgages than there were actual mortgages." Banks and hedge funds, notes Michael Greenberger, who directed the CFTC's division of trading and markets in the late 1990s, "were betting the subprimes would pay off and they would not need the capital to support their bets." These unregulated swaps have been at "the heart of the subprime meltdown," says Greenberger. (emphasis in the original) Why? Because they allowed and led directly to this: Zimmer saw the mounting problems as head of the department that worked with Wall Street to package mortgage loans into securities to be sold to investors. Such securities had fueled the housing boom by pumping trillions of dollars into the mortgage market. *** Now he was trying to make sure People's Choice could continue to raise money by pooling subprime loans. Zimmer and some other executives urged the company to tighten its lending standards. That could lower the rate of defaults. And the better the quality of the loans, the more investors would want them, he figured. But "there was always push back" from sales executives when he advocated more conservative lending, Zimmer said. Like most big lenders, well over half of the loans made by People's Choice came not from its own employees but from independent mortgage brokers. If the company stopped taking the brokers' riskier loans, the brokers might take both those and their higher-quality loans elsewhere. What's more, People's Choice's own loan sales force -- at about 1,000 employees, the bulk of the company -- worked largely on commissions from loans they made. *** As his team analyzed the individual loan files, Zimmer said he was struck by evidence of fraud, such as doctored bank statements. "Fraudulent loans were a big part of the subprime mess," he said. Mortgage brokers forged borrowers' signatures and pumped up their income, he said. People seeking to buy and sell a home for a quick profit lied that they were going to live in the home -- qualifying for a lower interest rate. But People's Choice calculated that it would have been too complicated and expensive to go after fraud, Zimmer said. (emphasis added) And, of course, they wouldn't have made as much money if they could just sell off the bad paper before anybody figured out the scam. Only they couldn't. Even as People's Choice sought to preserve its business, the housing climate continued to deteriorate. Many borrowers were defaulting so quickly that the company did not have time to pool those mortgages and sell them off as securities. Heath's got a good point: Gramm and the whole wretched Republican Congress deserve to have it known that without their legal connivance to shoot down the laws that protected us from financial scavengers and bottom-feeders, none of this would have - could have - happened. http://casadelogo.typepad.com/factesque/2008/06/the-mortgage-cr.html
walter, please go back to Obama headquarters and tell them you need another assignment. Everyone here sees through you, and your long cut and pastes from infantile sources like Mother Jones are getting very tiresome. Maybe stick to sites like DailyKoolaid and Huffingandpuffing.com.