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Sep. 17th, 2008 12:43 amSo, goddammit, writing my take on this whole disastrous financial shambles is actually requiring research, fuck it all. Research! For a blog post. Pah, it'll never take on. I mean, hell, you can get a gig writing on the opinion pages of pretty much any Murdoch paper without doing the slightest bit of research.
Annnnyway, it's going to take a few days. I hope to give you some good stuff - I can promise you baffling acronyms, terrifyingly large numbers, and villains. Oh, this tale has villains a-plenty. Regrettably for the children, it features vanishingly few people that could be considered the good guys. Turns out that when a lot of money and politics intersect, bad things happen. I know, I know, who could have guessed?
For those who want to read ahead, I'll point you to someone I consider one of the bigger villains. One William Philip "Phil" Gramm, who managed to pass a number of terrible laws in his time as a Republican Senator but in this case we're talking about the Financial Services Modernization Act of 1999. Amongst other things, this repealed the Depression-era rules keeping commercial banks, investment banks and insurance companies separate.
The result of this was that a bunch of banks suddenly got into the game of high-risk, high-return investments. Preventing this was actually the goal of the original fricking Depression-era act, of course, because it's, well, stupid. The banks that have your savings in them are insured by the US government so that you don't lose everything if the bank crashes. So allowing that bank to put your money on what the bank would call "a high risk, high return investment" (but which might as well be called "horse number 7 in race 4 at Flemington on Saturday") is, well, retarded. If the bank's investment pays off, it's mega-bonuses for all involved. If the pony falls at the first corner, well, screw it, the government bails them out, and they get to keep last year's bonus as compensation.
After leaving the Senate, Gramm went on to work for ... go, on, guess. That's right, a huge bank. Working for them, he lobbied successfully to rollback restrictions on predatory mortgage tactics - you know, where you convince someone to borrow more money than they can afford. But hey, don't feel bad for him - he pulled down a cool $750K for that bit of work. I'm sure that helps him sleep at night.
Of course, you'd rightly expect someone like this to keep his head down in the current world of financial turmoil. Which would be why he's advising the McCain campaign on economic issues, and god help us, as potential future Treasury Secretary in a McCain government. (It was in the former role he made his famous recent proclamation that the economy was fine, Americans were just "a nation of whiners".)
As a twofer on the Gramm front, his wife, Wendy Gramm, is also a bit of an all rounder, riding the happy merry-go-round of intertwined government and corporate jobs. In the 90s, she was on the US government panel that regulated commodities and more esoteric financial toys. While she was there, they exempted something called "energy derivatives" from regulation. This was something that a little company called Enron was mad keen for. (Her husband later helped out there, too, with the infamous "Enron Loophole"). After leaving that government job she moved to a position on the board of - Alright, who just yelled out Enron? Did you peek ahead at the ending? Shame on you. Yes, that's right, she ended up on the Enron board. We all know how that ended up, don't we. A triumph for the argument of reducing government regulation.
Oh, and lest you think oh, look, another Republican scandal (albeit without hookers, secretive gay sex, or secretive underage gay sex - so a bit unusual), I should point out that it was Clinton who signed these bits of legislation. Round of applause for the Big Dog, there.
Finally, as a note for the future - that note above about the Enron Loophole? That's by far not the worst thing in that piece of legislation. But we'll come back to that, later.
Annnnyway, it's going to take a few days. I hope to give you some good stuff - I can promise you baffling acronyms, terrifyingly large numbers, and villains. Oh, this tale has villains a-plenty. Regrettably for the children, it features vanishingly few people that could be considered the good guys. Turns out that when a lot of money and politics intersect, bad things happen. I know, I know, who could have guessed?
For those who want to read ahead, I'll point you to someone I consider one of the bigger villains. One William Philip "Phil" Gramm, who managed to pass a number of terrible laws in his time as a Republican Senator but in this case we're talking about the Financial Services Modernization Act of 1999. Amongst other things, this repealed the Depression-era rules keeping commercial banks, investment banks and insurance companies separate.
The result of this was that a bunch of banks suddenly got into the game of high-risk, high-return investments. Preventing this was actually the goal of the original fricking Depression-era act, of course, because it's, well, stupid. The banks that have your savings in them are insured by the US government so that you don't lose everything if the bank crashes. So allowing that bank to put your money on what the bank would call "a high risk, high return investment" (but which might as well be called "horse number 7 in race 4 at Flemington on Saturday") is, well, retarded. If the bank's investment pays off, it's mega-bonuses for all involved. If the pony falls at the first corner, well, screw it, the government bails them out, and they get to keep last year's bonus as compensation.
After leaving the Senate, Gramm went on to work for ... go, on, guess. That's right, a huge bank. Working for them, he lobbied successfully to rollback restrictions on predatory mortgage tactics - you know, where you convince someone to borrow more money than they can afford. But hey, don't feel bad for him - he pulled down a cool $750K for that bit of work. I'm sure that helps him sleep at night.
Of course, you'd rightly expect someone like this to keep his head down in the current world of financial turmoil. Which would be why he's advising the McCain campaign on economic issues, and god help us, as potential future Treasury Secretary in a McCain government. (It was in the former role he made his famous recent proclamation that the economy was fine, Americans were just "a nation of whiners".)
As a twofer on the Gramm front, his wife, Wendy Gramm, is also a bit of an all rounder, riding the happy merry-go-round of intertwined government and corporate jobs. In the 90s, she was on the US government panel that regulated commodities and more esoteric financial toys. While she was there, they exempted something called "energy derivatives" from regulation. This was something that a little company called Enron was mad keen for. (Her husband later helped out there, too, with the infamous "Enron Loophole"). After leaving that government job she moved to a position on the board of - Alright, who just yelled out Enron? Did you peek ahead at the ending? Shame on you. Yes, that's right, she ended up on the Enron board. We all know how that ended up, don't we. A triumph for the argument of reducing government regulation.
Oh, and lest you think oh, look, another Republican scandal (albeit without hookers, secretive gay sex, or secretive underage gay sex - so a bit unusual), I should point out that it was Clinton who signed these bits of legislation. Round of applause for the Big Dog, there.
Finally, as a note for the future - that note above about the Enron Loophole? That's by far not the worst thing in that piece of legislation. But we'll come back to that, later.
