Mortgaging our future with McCain?
McCain co-chair, and potential Treasury Secretary, tied to root of subprime mortgage crisis
Plummeting property values. Job losses numbering in the hundreds of thousands. Financial institutions crumbling to their knees. Economic growth screeching to a halt.
What may have been perceived as merely an economic nightmare during the booming 90s, has quickly become all too real in the last few years as the subprime mortgage crisis has reached immense proportions.
What some people may not understand what actually spurred this current crisis.
In 1999, under direct influence from bank lobbyists, the then-existing regulatory scheme controlling the banking industry was abandoned. As economists have theorized, this de-regulation was a leading cause of the current mortgage crisis our economy faces today.
As Chairman of the Senate Banking Committee, Former Texas Senator, and current John McCain campaign co-chairman, Phil Gramm helped spearhead that shortsighted and devastatingly erroneous legislation in 1999.
Then, three years later, Phil Gramm joined Swiss bank UBS where he served as a lobbyist on legislation regarding the mortgage crisis as recently as the end of 2007. Currently, while taking time away from McCain’s camp, Gramm continues to serve as a UBS vice chairman. Given the rivaling concerns within the mortgage crisis, this relationship with a predominant banking institution calls into question whose interests that former Senator Phil Gramm aims to protect. Will he work to protect the floundering property market and strapped mortgage borrowers, or work to sure up UBS’ bottom line?
John McCain, apparently cut from the same ragged cloth as Gramm, has come out in support of further de-regulation of the banking industry, which he believes will help resolve the current mortgage crisis. This proposal stands in direct conflict with the assessment of the Secretary of the Treasury. In March 2008, Treasury Secretary Paulson remarked that it would be necessary, and beneficial, to again regulate financial sectors that were de-regulated back in ‘99.
Amazingly, it appears that Phil Gramm, despite his immense miscalculations with far-reaching ramifications, has the ear of John McCain and the inside track to become the next Secretary of the Treasury if John McCain is elected in November. For now, as Jared Bernstein of the Economic Policy Institute explained to the Washington Post, “[Senator] McCain is counting on people having very short memories and not connecting some pretty obvious dots.”
Tags: Economy, John McCain, Mortgage, Phil Gramm, Subprime