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McCain Adviser Gramm Lobbied for UBS Illegally in 2004, Complaint Said
By Jason Leopold (about the author) Page 3 of 3 page(s)
Galvin alleged that Bear Stearns and UBS violated a 2003 settlement barring self-interested stock research, an agreement that followed the Nasdaq crash of 2000. Wall Street firms also paid hefty fines after regulators accused analysts of writing biased research reports to win lucrative investment deals from companies the analysts covered.
As part of the global settlement, firms promised to keep their sell-side operations away from the investment banking side.
"Recent revelations that research analysts issued positive reports on mortgage lenders...even as those companies faced more and more defaults suggests that the commitment of 2003 has not been met," Galvin said in a prepared statement.
Gramm’s Baggage
There’s still more baggage that comes with Gramm’s connection to the McCain campaign, especially as it tries to reestablish McCain’s reputation as a maverick opposed to the corrupt ways of Washington.
As chairman of the Senate Banking Committee in 1999, Gramm pushed through legislation undoing the Depression-era Glass-Steagall Act by eliminating the wall between heavily regulated commercial banks and lightly regulated investment banks.
Some economists blame this deregulation for contributing to the rapid growth in sub-prime mortgage lending, its securitization into investment bundles and thus the recent crisis in the mortgage markets that has pushed the U.S. economy to the brink of a major recession.
In 2000, Gramm shepherded through another anti-regulatory law that lightened up government oversight of energy-commodity trading. Houston-based Enron and other energy traders exploited the changes in a scheme to drive up California energy prices and gouge consumers out of an estimated $40 billion. [See Consortiumnews.com’s “McCain Defends Enron Loophole.”]
Nevertheless, McCain has made clear he won’t throw his old friend over the side. There’s even talk that Gramm could expect an appointment as Treasury Secretary in a McCain administration.
Plus, there are positive political aspects. Gramm’s anti-regulatory and pro-business record has bolstered McCain’s standing with economic conservatives, an important Republican constituency.
So, despite Gramm’s troublesome connections to UBS lobbying, the sub-prime mess and the Enron scandal, McCain’s “econ brain” appears to remain firmly in place.
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