The debate still is ongoing as to why and how our nation’s economy was almost destroyed during the Bush years. In fairness to President Bush, the problems began even before he took office in 2001. There were also some key legislative leaders involved who must share the blame with the Bush Administration on this issue. One of them is former Senator Phil Gramm, the architect of a number of measures that became law, that were special-interest created and driven. Senator Gramm would be near the top of any list of suspects when you attempt to figure out what led to the economic meltdown.
Most economists agree that the economic crisis facing this country wouldn’t have happened but for the Gramm-Leach-Bliley Act. The banking deregulation bill eliminated the structural restraints that had prohibited commercial banks from the speculation that brought the United States perilously close to a major depression last year. Interestingly, it was the same Senator Gramm who was a co-sponsor of the Commodity Futures Modernization Act of 2000. That legislation exempted over-the-counter derivatives from regulation. The unregulated trading of derivatives – especially credit default swaps – directly resulted in the $181 billion bailout of AIG (the insurance giant that was too big to fail) and the collapse of Lehman Brothers (the investment bank which most felt couldn’t sink). But Senator Gramm didn’t stop there.
Gramm was the author of the so-called “Enron Loophole” in the futures deregulation bill. That resulted in exempting the trading of energy, metals and electricity from federal regulation and wound up causing the eventual collapse of Enron. If you don’t recall the rolling blackouts in California in 2001, I guarantee you that the people in that state do. If you are interested, you might check to see where Dr. Wendy Lee Gramm (the Senator’s wife) was hanging out during the time her husband was at work in the Senate and where she wound up. I suspect you will be shocked to learn that Dr. Gramm became a vice-president at Enron in charge of audits. She was also a stockholder in the company.
Some say that Phil Gramm would win an award for being the architect of financial failure if they gave such an award for that dubious honor. While there were others who helped him, Gramm would most likely get the top award. Interestingly, Gramm wound up working in the banking industry after his days of “public service” came to an end. I have often wondered why the national news media has never bothered to delve into the involvement of Phil Gramm and his wife relating to the Enron debacle.
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