The Foreclosure Guru – Phil Gramm

Posted on September 8, 2008
Filed Under Repo Homes |

Phil Gramm can rightly be nicknamed the foreclosure guru considering his important role in the present housing crisis.

Today Phil Gramm is one of the campaign advisors of McCain and a strong lobbyist for a certain Swiss bank involved in the vortex of the home repos crisis. But many years ago he laid the seeds of the foreclosure crisis by a shrewd and sly move in the Senate. Senator Gramm can be considered to be one of the prime causes of the foreclosure crisis.

Today, far from being exiled from the power corridors or becoming a subject of revile, Gramm enjoys a cushy job in a Swiss bank and is a vital part of McCains’ presidential campaign. The Republicans seek his economic homilies. His name is making the rounds as the future treasury secretary. The irony of fate is that the one individual who paved the way for the foreclosure tsunami is going to be king of the country’s economic affairs.

Phil Gramm has been dabbling in big finance and knew what he was doing that resulted in the foreclosure catastrophe. In 1990 Gramm was chairperson of the banking committee of the Senate. In that capacity he regularly turned down the requests of Arthur Levitt, the chairperson of Securities and Exchange Commission regarding sanction of more funds for policing Wall Street.

Gramm also revoked another plan that would have disallowed accounting firms from getting too close with the firms they audited. Levitt has mentioned in his memoirs that Gamm categorically warned Levitt that if he went ahead with this prohibitory measure then funds would be curtailed.

In 1999 Gramm presided over a banking deregulation bill that broke down the dividing lines between commercial banks and investment banks and insurance and securities companies. It triggered off a hysterical mood of mergers. The foundations were being laid for the foreclosure crisis that was to follow.

Gramm’s masterstroke was benefiting his friends (who were highly demonstrative in their thanks towards Gamm) was in December 2005. The country and the government were going through a tense time. The verdict favouring Bush versus Gore had just been given. Clinton was locked with the Senate in a budget showdown. It was the perfect time for a wily hand to strike. The lengthy Commodity Futures Modernization Act did away with protection of financial institutions from over regulation. The next chapter of the saga was the inevitable foreclosure crisis wherein authority turned a Nelson’s eye to the sub-prime goings on.