Grrrrrrrrrramm!
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| Sun, 09-21-2008 - 11:26pm |
Ugh! Phil Gramm, the person rumored to be the likely Treasury Secretary in a McCain administration, is tied to this mortgage mess in a number of ways. The bill he cosponsored, Gramm-Leach-Bliley, effectively overturned Glass-Steagall, so commercial and investment banks could merge and buy and sell bundles of (subprime) mortgages to get the ball rolling in the damage to the housing and mortgage industries. Well...now Gramm's company, UBS, may benefit from some those bailout dollars:
http://www.nytimes.com/2008/09/22/business/22global.html?_r=1&hp&oref=slogin
Foreign Banks Hope Bailout Will Be Global
PARIS — The financial crisis that began in the United States spread to many corners of the globe. Now, the American bailout looks as if it is going global, too, a move that could raise its cost and intensify scrutiny by Congress and critics.
Foreign banks, which were initially excluded from the plan, lobbied successfully over the weekend to be able to sell the toxic American mortgage debt owned by their American units to the Treasury, getting the same treatment as United States banks.
On Sunday, the Treasury secretary, Henry M. Paulson Jr., indicated in a series of appearances on morning talk shows that an original proposal introduced on Saturday had been widened. “It’s a distinction without a difference whether it’s a foreign or a U.S. one,†he said in an interview with Fox News.
The prospect of being locked out of the bailout set off alarm bells among chief executives of overseas banks whose American affiliates also hold distressed mortgage-related assets, like Barclays and UBS. The original text provided access to the $700 billion bailout for any financial institution based in the United States.
As the day wore on, some raised their concerns with the Treasury Department, arguing that foreign institutions were both big employers and major players in the American capital markets. By Saturday evening, the language had been changed to allow any financial institution “having significant operations†in the United States.
While Mr. Paulson has agreed with that argument, the Bush administration is also leaning on foreign governments to pitch in with bailout programs of their own as needed. “We have a global financial system and we are talking very aggressively with other countries around the world, and encouraging them to do similar things, and I believe a number of them will,†Mr. Paulson said on Sunday.
(snip)
UBS, the Swiss giant, has been among the hardest-hit institutions in the world; both its chairman and chief executive left amid more than $40 billion in write-downs. Even so, it still retains roughly $20 billion more in potential exposure to the troubled American housing market.
If a battle does develop in Congress over foreign participation, UBS, among others, is poised to make just these arguments. Officials at the Zurich-based giant point out the bank employs more than 30,000 Americans, is listed on the New York Stock Exchange, and owns two broker-dealers registered under United States laws, UBS Securities and UBS Financial Services, better known to Americans as the former Paine Webber unit. >>>>full extensive article at the link above
More on Gramm:
http://www.politico.com/news/stories/0308/9246.html
McCain guru linked to subprime crisis
“A regulatory structure set up for banks in the 1930s needed to change because the nature of business had changed,†the Illinois senator running for president said in a New York economic speech. “But by the time was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework.â€
Gramm’s role in the swift and dramatic recent restructuring of the nation’s investment houses and practices didn’t stop there.
A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBS’s new investment banking arm.
Later, he became a major player in its government affairs operation. According to federal lobbying disclosure records, Gramm lobbied Congress, the Federal Reserve and the Treasury Department about banking and mortgage issues in 2005 and 2006.
For his work, Gramm and two other lobbyists collected $750,000 in fees from UBS’s American subsidiary. In the past year, UBS has written down more than $18 billion in exposure to subprime loans and other risky securities and is considering cutting as many as 8,000 jobs. >>>full article at the link above

Phil Gramm is an utter and complete disgrace to this country. He's done more to gut regulation and the efficient functioning of our economic system than perhaps any other Republican. It's the height of folly that John McCain actually