I wonder if Phil Gramm will become the financial sector's Thomas Midgley, Jr.
If you aren't familiar with Thomas Midgley, Jr., he's the chemist that invented both leaded gasoline and chlorofluorocarbons. How's that for a legacy? From the wikipedia article:
One historian remarked that Midgley "had more impact on the atmosphere than any other single organism in Earth history."
Phil Gramm isn't to far behind in terms global financial mass destruction. His hand in the current and past financial meltdowns is pretty stark:
The Commodity Futures Modernization Act of 2000 has received criticism for the so-called "Enron loophole," 7 U.S.C. §2(h)(3) and (g), which exempts most over-the-counter energy trades and trading on electronic energy commodity markets. The "loophole" was drafted by lobbyists for Enron working with senator Phil Gramm seeking a deregulated atmosphere for their new experiment, "Enron On-line."
Senator Phil Gramm, the second largest recipient of campaign contributions from Enron, succeeded in legislating California's energy commodity trading deregulation. Despite warnings from prominent consumer groups which stated that this law would give energy traders too much influence over energy commodity prices, the legislation was passed in December 2000.
As Public Citizen reported, "Because of Enron's new, unregulated power auction, the company's 'Wholesale Services' revenues quadrupled—from $12 billion in the first quarter of 2000 to $48.4 billion in the first quarter of 2001."
Before passage of the deregulation law, there had been only one Stage 3 rolling blackout declared. Following passage, California had a total of 38 blackouts defined as Stage 3 rolling blackouts, until federal regulators intervened in June 2001.
So the Commodity Futures Modernization Act of 2000 led to Enron, but it doesn't stop there. If you've been following the current meltdown in the financial industry you will eventually learn about Credit Default Swaps as a major cause the instability. Credit Default Swaps are an unregulated insurance market and were also created by Gramm in that very same Act. That too might be bad enough, but that isn't all, realize that the year before, in 1999, Gramm spearheaded the repeal of the Glass-Steagall Act, the depression era reforms that regulated the financial services industry.
The math savvy of you will note that it only took 8 years for the financial sector to go from the removal of depression era regulations to driving the country into yet another depression. At least they're efficient.
But Gramm's most cunning coup on behalf of his friends in the financial services industry - friends who gave him millions over his 24-year congressional career - came on December 15, 2000. It was an especially tense time in Washington. Only two days earlier, the Supreme Court had issued its decision on Bush v. Gore. President Bill Clinton and the Republican-controlled Congress were locked in a budget showdown. It was the perfect moment for a wily senator to game the system. As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered dead - even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. "Nobody in either chamber had any knowledge of what was going on or what was in it," says a congressional aide familiar with the bill's history.
It's not exactly like Gramm hid his handiwork - far from it. The balding and bespectacled Texan strode onto the Senate floor to hail the act's inclusion into the must-pass budget package. But only an expert, or a lobbyist, could have followed what Gramm was saying. The act, he declared, would ensure that neither the SEC nor the Commodity Futures Trading Commission (CFTC) got into the business of regulating newfangled financial products called swaps - and would thus "protect financial institutions from overregulation" and "position our financial services industries to be world leaders into the new century."
Phil Gramm, the financial sector's Thomas Midgley, Jr.