The CFMA provided protection for such clever creations as the Credit Default Swap, fostered a huge and growing market for derivatives of all types, and explicitly wrote into law the "Enron loophole" that allowed energy traders to manipulate the price and availability of electricity in California a few months later. In exchange, the banks poured more than $1 million into Gramm's campaign coffers.
A year after that, UBS got it's special agreement with the IRS, and a few months later Phil Gramm stepped down from the Senate early to take his spot as a vice-chairman for investment banking with UBS. While still in his position at UBS, Gramm would become a registered lobbyist for additional changes in banking law. In 2007, he became chief economic adviser and co-chair of the campaign for his long time friend, John McCain. Gramm also wrote McCain's economic plan. Had McCain won the election, Phil Gramm might very well be Secretary of the Treasury today, if he was willing to take the pay cut, were it not for a couple of unfortunate comments.
"We have sort of become a nation of whiners. You just hear this constant whining, complaining about a loss of competitiveness, America in decline," the former Texas senator said. "You've heard of mental depression; this is a mental recession."
Gramm was defended for his statements by that favorite non-economist of the right, Amity Shlaes, who is always so dead right in her analysis of the economy.
...to liken the current moment to the Great Depression, or even the early 1980s, as Campaign Economists have, is to whine, just as Gramm said.
However, Americans in general weren't so quick to accept that the misery they were experiencing, and the grim forecast looming over the country, was just in their heads.
Gramm was unrepentant. Just this past summer Phil Gramm sat down for a friendly chat about the economy that he, more than any other single person, helped to create. Though he was proud of his actions, there were certainly things going on that Gramm didn't like. In particular, he was upset because CEOs and Wall Street bankers were underpaid.
Most of his former colleagues probably can't fathom why Wall Street bankers make tens of millions of dollars in salaries and bonuses each year. How would he justify these fat pay days? "It's simple," he lectures, sounding very much like the Texas A&M economics professor that he was in the 1970s: "In economics, we define labor exploitation as paying people less than their marginal value product. I recently told Ed Whitacre [former CEO of AT&T, who retired with a $158 million pay package] he was probably the most exploited worker in American history because he took Southwestern Bell, which was the smallest of the former Bell companies, and he turned it into the dominant phone company on earth. His severance package should have been billions."
Ladies and gentlemen, Phil Gramm. Exemplar of Republican economic policy and the author of our economy.
If leaders are so completely responsible for corporate success that they deserve all the credit (and money) when a company succeeds, does the same apply when they are abject failures? If so, UBS should send Gramm the bill for leading their investment wing into massive losses.
When they're done, can we send Gramm the bill for our economy?
Original published on Daily KOS