Phil Gramm: I Didn't Cause the Subprime Crisis

phil gramm

Phil gramm is a pathetic self centered, deluded specimen who cannot accept his pivotal role and immense culpability for today's economic mess. Not entirely his fault, but he's certainly at the head of the parade of lobbyists and special interest as they waddled, grunting, toward the free lunch trough. Gross! be a man and take your medicine, Philly.

Richard Kanes of CA @ Feb 16, 2009 22:37:22 PM

The whole congress is infected

The 'corporate' free US-world free trdade agreements and the deregulation policies have morphed into special interest political cronyism and has infected our entire congress.

We need ALL POLITICIANS thrown out NEXT ELECTION.

WE NEED A VOTER REVOLUTION. NO MORE DEMOCRATS OR REPULICANS.

WE NEED TO START ALL OVER AGAIN WITH AN EMPHASIS UPON WE THE PEOPLE.

DID OUR WONDERFULL MEDIA discuss WHO it was that engineered the 2000 deregulation of leverage limits on our institutions ?

WOULD YOU BELIEVE IT WAS HENRY PAULSON !!!! FOLKS. WE HAVE TO PUT THESE CROOKS IN JAIL AND START ALL OVER AGAIN WITH A COMPLETELY NEW CONGRESS.

JOE REED of CA @ Oct 27, 2008 00:10:38 AM

Cause of Subprime Crisis

Although the crisis has its roots in Gramm's Act, it was really the Bush Administration and Republican Congress' policies between 2001 and 2006 that caused the crisis.

As Gramm indicated, the Administration and Republican Congress looked to stimulate housing to stave off a recession. Bush's "America's Homeownership Challenge" pushed the private sector to loosen credit standards and make more minority and low interest loans through "creative" loan products. They pushed the riskiest loan products on the riskiest purchasers.

Next, the Bush Administration and Republican Congress pushed Fannie and Freddie to make more low income and minority loans. Bush said that Fannie and Freddie were "trailing the private sector" and that he would hold them accountable if they did not make more low income and minority loans. Bush threatened to rewrite their charters when they were set to expire in 2003. Fannie and Freddie said that they would meet Bush's challenge and increase low income and minority loans by 66 percent to 700 billion dollars. That was not enough for the Bush Administration and the Republican Congress, they mandated that Fannie and Freddie make available the same creative loan products that were available in the private sector. Bush pushed a "Zero-downpayment" initiave and mandated through HUD that they offer 3, 5, and 7 year adjustible rate arms. Congress also passed "America's Dream Downpayment Act of 2003" that gave low income and minority purchasers with "blemished credit" and no savings downpayments to purchase homes.

Through these programs, the Bush Administration pushed homeownership to its highest rate in our history as well as low income and minority homeownership. Bush often took credit for this huge increase in homeownership, saying that it was through his "leadership" that he created the highest number of low income and minority homeowners. The problem with this was that these low income and minority homeowners were pushed into the riskiest loan products. When their 3, 5, or 7 year arms came due, many did not have the savings to pay the closing costs of refinancing and their interest rates shot up under their arms to such a high rate that they could no longer afford their homes. Many others found that they could not refinance because their home values dropped and they now owed more on their homes than what they were worth. You have the bad policies of the Republican party to blame for the current crisis. You can confirm this all yourself by reading the actual White House, Fannie Mae, HUD, and Freddie Mac documents by searching their archives for "America's Homeownership Challenge."

Rachel O. of OH @ Oct 05, 2008 10:30:40 AM

There is plenty of blame to spread around for the current mess. By the time Glass-Steagall was repealed, there wasn't much left to repeal. It was pretty much eroded down to nothing. Everyone wants to blame Gramm, but there was plenty of calls for the repeal from folks like Rubin and Greenspan. By the way, Bill Clinton signed it into law. Gramm just has the unfortunate distinction of having his name on the bill that signed the final death knell for Glass-Steagall.

Kevin of ID @ Sep 26, 2008 17:24:00 PM

Commodity Futures Modernization Act

This is how Gramm created the subprime mess. We still do not know where some of the derivatives begin or end as they were packaged for sale with mortgage money, behind the investments sold.

Gramm slipped the Commodity Futures Modernization Act Act into the 2003 ominbus spending bill so that Enron would be exempt from regulatory oversight of it's energy trading. Subprime derivatives were exempt, Bush signed the bill, and the rest is history.

Don Longava of VA @ Sep 17, 2008 13:00:10 PM

it's the atmosphere of free-for all anything goes that the repeal created. business lenders where giving money to those who don't deserve them with the view that they can EASILY sell the securitized assets. If the Glass-Steagall was not repealed, they will not have this ability of passing on or selling risks and avoiding responsibility for their decisions.

he acknowledged "Housing prices rose faster than at any time except right after World War II"...and this can only happen if the environment allows it to and the repeal of Glass steagall allowed it to.

jose rizal of FL @ Sep 12, 2008 15:04:07 PM

Silly Charges

the whole subprime mess is brought on the 40-yr low interest rate, the chief responsible for that is none other than Alan Greenspan. The low rates, the mortgage industry relentlessly underwriting folks who with bad credits, and banks look the other way thinking they are not holding the bag because of the securitizations of the loans are all responsible. Glass-Steagall repeal being responsible is just pure garbage. IF the campaign want to lay blame on the sponsors of the bill, should the president who signed the bill into the law just as responsible, and he ain't GWB. Look at the banks with the most trouble in this subprime mess, folks will find CitiGrp is right at the top...and yeah, Bob Rubin was there the whole time when Citi got itself into all these garbage loans, debts, and CDOs..you know what is really funny - HRC is proposing to have Greenspan and Rubin to come back and fix the problem...LOL...couldn't find two culprits being more responsible than the repeal of Glass-Steagall.

Mika of NJ @ Apr 05, 2008 19:48:02 PM

Both the subprime crisis and its political fallout will be huge

Gramm essentially ushered in the age of unregulated derivative trading, without which the current credit crisis would not be possible. This crisis will continue to grow in magnitude -- in fact, it may well be the worst of its kind since the Great Crash, which resulted from a similar orgy of deregulated speculation. The political fallout, most likely, will be comparable as well.

I would expect Gramm to be thrown under the bus before the Republican convention.

Adam Holland of NY @ Apr 03, 2008 21:24:34 PM