Before it did, some reporters—in the NYT and the WSJ (“Out of Reach: The Enron Debacle Spotlights Huge Void In Financial Regulation,” Michael Schroeder and Greg Ip, Dec. 13, 2001), for example—widened their view, to address the problem of deregulation beyond the energy market. But the job of piecing together Gramm’s role in broader financial deregulation would largely fall to later reporters. Like Hart in The Texas Observer and Galbraith and Corn in Mother Jones.
All this is to say that while Gramm’s role in deregulation has not received the attention it deserves, neither has it gone away. Rather, it forms an undercurrent to the press’s effort to present the larger story of financial collapse.
And lastly, we come full circle: Another place the story has popped up again in recent days is on Mother Jones’s website, where David Corn returned to the topic September 15. He elaborated on suspicions about an ongoing connection between Gramm and McCain:
Gramm is responsible for the rise of the wild and wooly $62 trillion swaps market. And he was chairman of the McCain campaign and a top economic adviser for McCain—until he dismissed Americans worried about the economy as ‘whiners.’ After that comment, McCain dumped Gramm. But was Gramm truly excommunicated from McCain land?
This is pretty much a rhetorical question. And to back up his point, Corn goes on to offer evidence that Gramm appears to be “back in the good graces of the McCain campaign.”
All the more reason why the press needs to keep Gramm in its sights.
can anyine explain to me in a clear
example the meaning of swarps
thank you
pete giuliano
Posted by pete giuliano on Fri 26 Sep 2008 at 11:13 AM
Burning Down The House: What Caused Our Economic Crisis?
Says it a hell of alot better than the "alternative press" or a "fact checker" from the Nation magazine could.
Posted by TDC on Fri 26 Sep 2008 at 09:04 PM
Thank you for giving credibility to the Mother Jones articles. I am trying to look at this as impartially as possible and as you say, MJ is an alternative source. I appreciate your giving the weight of your expertise to those of us "amateur" readers.
Why aren't there bigger headlines about this? Why isn't the Obama campaign capitalizing on this?
Posted by MaryBeth Strassel on Sat 27 Sep 2008 at 10:55 AM
Gramm was important, but so was Robert Rubin. So was Chris Dodd. Thanks for mentioning the alt press. But some of them--with help from the excellent and hardly-ever-quoted Jane D'Arista--predicted this outcome eight years ago. It was all there to see then: systemic risk, OTC derivatives, over-leveraging, moral hazard.
http://www.alternet.org/story/658/one_bank_under_god/
Posted by Edward Ericson on Sun 28 Sep 2008 at 09:29 PM
Pete Giuliano: A credit default swap is like an insurance policy. If I invest in, say, mortgage-backed securities, I can buy a CDS from you. If the MBS goes bad, you take it from me and assume liability for it.
Posted by John B. on Fri 17 Oct 2008 at 03:05 PM
While Phil Gramm may be at the center of this storm, I doubt he was powerful enough to get the CFMA of 2000 enacted all by himself. Deregulation of credit default swaps and everything else was the mood of the time, and, as in most situations gone bad, there is usually plenty of blame to spread around. I strongly suspect CFMA did not get attached to the 2000 Senate and House appropriations bills absent committee referrals and hearings without some prior consultation with the other side of the aisle, from which we might infer consent or a wink from the administration. Have any reporters done the work to find out where Robert Rubin, Lawrence Summers, the SEC, CFTC and Alan Greenspan stood on regulating CDSs and other derivatives when this law was passed? Let's dig up everyone who helped in this matter so that Gramm doesn't have to be unjustifiably buried alone.
Posted by Bob Neufeld on Fri 14 Nov 2008 at 01:18 PM