There was clearly a systemic failure in our finance system, but it required people like Angelo Mizolo to fully exploit it in order to make it collapse. Hopefully this is only the beginning (I'd still like to see Phil Gramm go down):

Angelo R. Mozilo, the self-made man from the Bronx who built Countrywide Financial into the nation’s largest mortgage lender before the credit squeeze hit, has been charged with securities fraud and insider trading in a civil suit brought by the Securities and Exchange Commission.

Citing e-mail messages in which Mr. Mozilo referred to Countrywide loan products as “toxic” and “poison,” S.E.C. officials said that he had misled investors about growing risks in the company’s lending practices from 2005 through 2007. During this time he also generated $140 million in profits by selling stock in the company, the S.E.C. said.

“This is the tale of two companies,” said Robert Khuzami, enforcement director at the S.E.C. “Countrywide portrayed itself as underwriting mainly prime-quality mortgages, using high underwriting standards. But concealed from shareholders was the true Countrywide, an increasingly reckless lender assuming greater and greater risk.”

At a news conference announcing its filing of the suit, the most prominent against an executive involved in the mortgage crisis, Mr. Khuzami said the S.E.C. had made it a priority “to pursue cases at the root of the financial crisis.” As the nation’s largest mortgage lender, Countrywide helped fuel the housing boom by offering loans to high-risk borrowers.

As the crisis of the American financial system deepens, former Texas Senator Phil Gramm is a consensus choice as one of its chief culprits. In recent weeks, the New York Times, Time and Nobel prize-winning economists alike have suggested a warm seat awaits Gramm in Dante's inner circle. Which is why on the very day the UBS vice-chairman's firm was sued by the Justice Department for its role in a mushrooming tax evasion scandal, Gramm took to the pages of the Wall Street Journal to blame others for the economic calamity he helped create.

As ThinkProgress noted, Gramm in his extreme makeover pointed the finger at the right-wing's usual suspects. In Gramm's revisionist history, Fannie and Freddie, the Community Reinvestment Act and, above all, the poor are responsible for the nation's economic plight. Three months after the New York Times concluded "deregulator looks back, unswayed," Gramm insisted the 1990's deregulation crusade he led had nothing to do with it:

"I believe that a strong case can be made that the financial crisis stemmed from a confluence of two factors. The first was the unintended consequences of a monetary policy, developed to combat inventory cycle recessions in the last half of the 20th century, that was not well suited to the speculative bubble recession of 2001. The second was the politicization of mortgage lending."

Gramm's fingerprints, of course, have been all over the financial meltdown and steep downturn gripping the U.S. economy over the past year. In his role as an adviser to John McCain's presidential campaign, Gramm famously decried the "mental recession" and mocked the United States as a "nation of whiners." But it was his "Enron Loophole," codified in the 2000 Commodity Futures Modernization Act, which not only enabled the Enron disaster but opened "the door to unregulated trading of credit default swaps, the financial instruments blamed, in part, for the current economic meltdown." And the Texas Senator's machinations in the Senate to create the 1999 Gramm-Leach-Bliley Act helped produce the subprime mortgage cataclysm, including catastrophic losses at UBS since joining the company in 2002.

Which brings us to a final irony of Gramm's extreme makeover. As it turns out, before he became a UBS vice-chairman in 2002, a company which this week agreed to pay a $780 million criminal fine and admitted to conspiring to defraud the IRS, then Senator Phil Gramm helped lead the 1990's Republican war to gut the Internal Revenue Service. Perrspectives has the details.

With his latest ad, John McCain committed a double-fraud in 30 seconds. In a spot featuring ersatz plumber and best friend for this week Joe Wurzelbacher, McCain called Barack Obama's tax plan for working families "welfare." As his duplicitous spot reveals, John McCain apparently knows very little about payroll taxes. And as it turns out, the self-proclaimed "foot soldier in the Reagan revolution" knows even less about the earned income tax credit (EITC), hailed by the Gipper himself as "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress."

Predictably regurgitating the bogus Republican talking point proliferated by the Wall Street Journal, the Washington Times, Townhall and mouthpieces of the right, McCain claimed that Barack Obama wants to give tax cuts as welfare to the undeserving:

Leading papers call Obama's taxes "welfare"..."government handouts".

Obama raises taxes on seniors, hard working families to give "welfare" to those who pay none. Just as you suspected, Obama's not truthful on taxes.

Of course, McCain and his acolytes are willfully wrong.

Continue reading »

  The implosion of Wall Street last week resulted in a near-death crisis for John McCain's presidential campaign. His post-Palin bump eviscerated, McCain was staggered by the re-emergence of the economy as the dominant issue in the 2008 election. His daily-changing positions revealed that McCain, a man who has repeatedly admitted his ignorance of economics, is struggling to cope with his diminished presidential prospects. Armchair psychologists might call the process John McCain's five stages of grief over the economy.

Denial. McCain's refusal to confront the realities of the failing Bush economy has long roots and was again on display last Monday. McCain, who has frequently described the economic slowdown as "psychological," for at least the 18th time proclaimed the "fundamentals of our economy are strong." As the Dow plummeted over 500 points, McCain reacted to the white-hot crisis on Wall Street by comically announcing his support for a 9/11-style commission to study the causes of and make recommendations to address the meltdown. Willing to kick the can down the road with his since forgotten 9/11 panel idea, McCain also took a head-in-the-sand position in opposing the government rescue of teetering insurance giant AIG:

"We cannot have the taxpayers bail out AIG or anybody else."

Anger. Sadly, McCain's denial of the obvious produced an immediate backlash from the press and the public alike. Literally within hours last Monday, McCain reversed course on the underlying strength of the American economy and declared the fundamentals of the economy to be "at great risk."

Then John McCain did what he does best - he got mad.

Continue reading »

The Conservatives are out in force trying to bail John McCain out from Phil Gramm's ridiculous comments---you know---about calling us all a bunch of whiners.

Download | play Download | play

Think Progress:

"Phil Gramm was right of course," Will declared. "Absolutely

WILL: On two points. ... We're not in a recession as commonly defined. That is two consecutive quarters of negative growth.

STEPHANOPOULOS: We may be running there though. Even Bernanke says so.

WILL: We're not however. Unemployment is just about the post-war average at 5.5 percent. His second point that we're a nation of whiners: we are the crybabies of the western world. In fact, we have an extraordinarily low pain threshold.

Heather says:

Stengel follows with saying that no one wants to be called a whiner and cites one of their polls on the public perception of the economy and says those statements weren't helpful. You, think? Brazile notes that McCain had to distance himself from Gramm and says Phil is mental. Roberts follows with saying that it's just the old harsh style of politics and it's the wrong year for that. Oh, and the public doesn't understand McCain's jokes.

  In an interview with the Washington Times, top McCain economic adviser Phil Gramm (yes, that Phil Gramm) has some comforting words for the millions of Americans struggling to pay their bills.

Washington Times:

"You've heard of mental depression; this is a mental recession," he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. "We may have a recession; we haven't had one yet."

"We have sort of become a nation of whiners," he said. "You just hear this constant whining, complaining about a loss of competitiveness, America in decline" despite a major export boom that is the primary reason that growth continues in the economy, he said.

So after eight years of disastrous Republican policies, all the McCain campaign has to offer is a blame-the-victim, suck-it-up attack on average Americans. I'm sure a continuation of George Bush's tax cuts -- ya know, the ones that used to offend McCain's conscience -- will get us back on the right track. Then we can all stop "whining" about losing our homes and altering our lifestyles.  Christy at FDL has more...

UPDATE:  (Nicole)  McCain's been caught on tape saying that recession is a "psychological problem" too.  I tell you, McCain's surrogates sure are on the pulse of America now, aren't they? (/snark)  Let's recap:

*   Charlie Black says that another terrorist attack would be a "big advantage" for McCain;
*   Phil Gramm lectures us that our economic problems are mental and we're just a nation of whiner;
*   Carly Fiorina lies about Barack Obama's (D) record and then shows her complete cluelessness about McCain's own record on women's issues;
*   Rudy Giuliani says Obama is "capturing" an "anti-American feeling" that exists in Europe, where Obama is "popular." (Links courtesy of The Political Base) and just yesterday, Gramm trashed the middle class on Kudlow:

And yet, Obama is supposed to be the "elitist?

UPDATE II: Obama responds: "Let's be clear. This economic turndown is not in your head; America already has one Dr. Phil" 

McCain camp initially stood by the remarks. Now they don't.

Kos: "Clinging" versus "whining". Guess which one makes big news, and which one doesn't.

UPDATE III: Too good to pass up:

A cheery guy, that Phil Gramm. According to Newsweek, he brought his zest for life into his work as a banking industry lobbyist, and no, we're not just talking about the subprime mess and tax evasion he and UBS pioneered. From Newsweek, via Progress Ohio:

McCain's campaign is already distancing itself from some of Gramm's other work for UBS: his involvement in attempts to sell financial products known as "death bonds," which BusinessWeek described last summer as one of "the most macabre investment scheme[s] ever devised by Wall Street." Not long after joining UBS, the Houston Chronicle reported, Gramm helped lobby Texas officials, including Gov. Rick Perry, to sign on to a UBS proposal in which revenue would be generated for a state teachers' retirement fund by selling bonds, whose proceeds would in turn be used to buy annuities and life-insurance policies on retired teachers. UBS would advance money to the retirement fund, then repay itself, compensate bondholders and pocket profits when insurance companies paid off on retirees who died. According to a banking-industry source, who asked for anonymity when discussing a sensitive matter, Gramm was involved in efforts to pitch similar UBS products to other financial institutions.

Gramm's office declined NEWSWEEK's request for comment. A source familiar with the bank's current business, who also asked for anonymity, said UBS no longer markets the kind of plan that Gramm was allegedly trying to sell to Texas. Hazelbaker said that McCain, who has been critical of the financial industry's performance in the subprime market, disapproves of death bonds and "supports increased accountability, transparency and capital backing in our financial markets as a solution to these problems." Death bonds, she continued, "move markets away [from]—not toward—these goals."

It's good to know McCain disapproves of just about every type of business in which his economic advisor engaged.

And hey, I remember Jill Hazelbaker! That chipper young lady and hearty sock puppet called me a "trash journalist." Which of course is only slightly preferable to "death bond salesman" or economic advisor to Team McCain (oops, redundant).

Just perhaps, and I am spitballing here, this kind of cynical attempt to cash in off of the exploitation of legislative loopholes and their fellow countrymen, is why-- as my friend David Sirota puts in his new barnburner of a book "The Uprising,"-- there is a populist revolt brewing around the country (see the 82% who think we are headed in the wrong direction).

Cross-posted at Cliff Schecter's Campaign Silo