If someone ever honored former Sen. Phil Gramm for his belief in free markets, it would be the U.S. banks' top guns who were in control of the excessive mortgage accumulation two years ago.
Gramm was as feisty as any university professor could get with his ideologies, as detailed in a recent report by Eric Lipton and Stephen Labaton of <a href="http://www.nytimes.com/2008/11/17/business/economy/17gramm.html?pagewanted=1&ref=business">The New York Times</a>. The 66-year old senior economic adviser to Sen. John McCain's presidential bid has not expressed any remorse for his laissez faire championing in the senate.
Infamous for his Gramm-Leach-Bliley Act that deregulated the activities of banks and insurance firms, he was the principal architect in deregulating derivatives and credit swaps that gave new meaning to "risky investments". He earned the support of bankers and investors - including the National Bankers Association - when he endorsed their goal of liberalizing their financial product offerings.
Rewarding culprits with fat paychecks. Gramm was aware of the dangers that came with his stubborn push, but he did what he had to do. Indeed, it paid off when he was hired by UBS to assume a senior management post that continues to lobby for the bank's interests. Gramm sought refuge in an industry to which he performed large favors for at the expense of the global economy. How can culprits be rewarded with fat paychecks? The answer lies in Gramm's unceasing advocacy - free markets. Only private firms can do such.
Another tormenting part of the report in The New York Times was the revelation that other members of Congress repaid major campaign contributors by supporting deregulating measures for financial firms. Gramm could very well attest to this. Some politicians have become mere puppets of private interests.
After the collapse of the housing market, Gramm can't do much to fix the problem. But there should be measures to prosecute the people behind the burst of the housing bubble, including Gramm. In fact, there should be no room to allow political maneuvering for the sake of private profiteering.
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