Breaking news on Tuesday's Countdown, as Keith Olbermann reveals that former Senator Phil Gramm, a general co-chair of Senator John McCain's campaign, actually lobbied Congress on behalf of financial giant UBS to try and stop legislation aimed at installing industry regulations that could have prevented the current mortgage foreclosure crisis. As with many issues, McCain has done a full flip flop on the mortgage crisis and the gaffe filled train wreck that is his campaign continues to fall deeper into the muck. Can you imagine the outrage from the right and McCain's media if Gramm worked for a Democratic candidate's campaign?
Gramm officially joined the McCain campaign on March 12, 2007... but as early as October, 2006, RealClearPolitics reported that McCain was already relying on Gramm for fundraising help... McCain's top political operative at the time saying, Gramm, quote, "obviously gives us advice on economic issues."
At the same time he was giving that advice, federal disclosure forms reviewed by Countdown show that Gramm was simultaneously being paid by UBS to lobby the U-S Senate about the mortgage crisis... opposing government regulation... helping to kill a 2006 anti-predatory lending bill that would have tightened consumer protections, and might have mitigated the current crisis...
As recently as Dec. 31st of last year, still working for Swiss bankers specifically to help kill the "Emergency Home Ownership and Mortgage Equity Protection Act" and the "Helping Families Save Their Homes in Bankruptcy Act," a bill that would have let bankruptcy judges adjust mortgage terms so American families facing foreclosure could repay their loans, and keep their homes.
(Transcript below the fold...)
Three months later, McCain gave his broadest statement to date on the mortgage crisis...
"Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments"
"Removing regulatory impediments," a Gramm mantra... Politico dot-com writing, "some housing experts and economists see Gramm's thinking in the recent housing proposal."
The McCain campaign confirmed that Gramm had input on the speech and that McCain consulted Gramm specifically on the housing issue.
Some economists blame Gramm in part for the crisis itself.
As Senate Banking Chairman, Gramm consistently weakened federal regulations... his deregulation of energy commodities first helped his wife's employer... then killed it.
In 1999, the Gramm-Leach-Bliley Act, which McCain voted for, broke down the decades-old wall separating commercial banks, heavily regulated... from the wild and woolly world of investment banking... a wall erected in 1933 to prevent a repeat... of the Great Depression.
One month after Gramm knocked that wall down, UBS bragged to investors that his bill would "liberalize restrictions."
UBS bought Paine Weber the very next year... and hired Gramm before he even left the Senate.
Gramm's deregulation helped set the stage for an explosion of banks slicing up subprime mortgages, bundling them with other mortgage slices to hide the credit risks, and selling mortgage stew to other investment firms.
That gave lenders powerful incentive to make as many loans as possible, regardless of risk... because they could turn around and sell those mortgages almost immediately.
Gramm himself said he was "totally unaware" just how many bad mortgages his own company bought.
At last count, UBS had lost 37 billion in the mortgage crisis, and plans to lay off 55-hundred people next year, primarily in the US.
McCain has hinted he might make Gramm his Treasury Secretary.
But Gramm's economic track record worries even McCain's own advisors... one of them telling the Washington Post last month, "I, for one, have thought about it a lot."
One economist said, "McCain is counting on people having very short memories and not connecting some pretty obvious dots here."
Two weeks after that report, UBS removed Gramm from its list of registered lobbyists.
But federal lobbying forms show at least two other McCain staffers... congressional liaison John Green... and national finance co-chairman Wayne Berman... were both still lobbying on behalf of the mortgage industry as recently as the first quarter of this year.