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How this financial mess started: Phil Gramm, adviser to John McCain

Before the total melt down of our financial markets this week, way back in May of 2008, the Texas Observer recounted the progression of events that led to the “shadow banking system” that is about to screw the taxpayers into $700 Billion of corporate welfare, while we still don’t approve of helping ourselves.

Reading the complete article will show you how we got into this mess. Reading the end of this post, will tell you how we can get out of this mess.

The chief author of this mess, John McCain’s campaign adviser, Phil Gramm. The whole article is well worth a look:

Friday, December 15, 2000, with Christmas break only hours away, the U.S. Senate rushed to pass an essential, 11,000-page government reauthorization bill. In what one legal textbook would later call “a stunning departure from normal legislative practice,” the Senate tacked on a complex, 262-page amendment at the urging of Texas Sen. Phil Gramm.

There was little debate on the floor. According to the Congressional Record, Gramm promised that the amendment—also known as the Commodity Futures Modernization Act—along with other landmark legislation he had authored, would usher in a new era for the U.S. financial services industry.

“The work of this Congress will be seen as a watershed where we turned away from an outmoded Depression-era approach to financial regulation and adopted a framework that will position our financial services industry to be world leaders into the new century,” Gramm said.

John McCain’s Gramm Gamble by Patricia Kilday Hart – The Texas Observer [1].

Enron should have been the wake-up call, but, of course, since our political process is so polluted with lobbyists money, Congress has conveniently looked the other way while keeping their hands out for table scraps of the pillaging of the American financial system.

This November, you have a choice to choose the course of our country- to go with a top Harvard scholar, Barack Obama [2], or a man who graduated fifth from the bottom of his class at Annapolis (John McCain [3]). Their choices of Vice Presidential candidates also vary as much, the Harvard man picking a seasoned politician [4] who at one point challenged his credentials, and the other picking a beauty queen who went to five different colleges [5] to earn a degree in broadcast journalism. If you are wondering how loopholes as big as this entered our system, one only has to look at the caliber of our elected leaders. We’re getting exactly what we should expect as long as we keep voting for candidates based on things like skin color, stands on hot button issues like abortion and gun control- which are often used as a distraction while we’re robbed blind.

There is a reason there are only four members of Congress who aren’t millionaires. Us.

You are about to let your legislators put our country forever in the hole to save the asses of people who’ve never cared one iota for your welfare. You’ve been relegated to life as a cash cow- to be milked for all you’ve got, so they can get rich and poweful, while we struggle. Until we fix campaign finance- taking the money out of politics, the Phil Gramms of this Country will continue to get rich, while screwing you, your kids, your grandkids and their grandkids into trillions of dollars of debt.

I’ve yet to hear position statements from our local Congressional choices, Mike Turner (R) or Jane Mitakides (D), on how we should proceed with this bail out, and it’s highly unlikely we will. Both are well moneyed, political simpletons who believe that serving in Congress is akin to joining a country club, instead of representing your interests.

This bailout is either going to be a turning point in American history, or our final chapter. It all depends on how you vote this November.

If you enjoyed this post, make sure you subscribe to my RSS feed [6]! If you wish to support this blog and independent journalism in Dayton, consider donating [7]. All of the effort that goes into writing posts and creating videos comes directly out of my pocket, so any amount helps!
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Then we appoint the fox to the henhouse, as Treasury Secretary Henry Paulson spent decades on Wall Street, chiefly as the CEO of Goldman Sachs. On a side note, individuals from many of these firms were a significant percentage of the dead at the WTC. How strangely intertwined are the events that have shaped the Bush administration.

Billy Jackson

I find many things irrelevant to this discussion. One, the number of colleges that Palin went to. Yes, it was five. And what does this mean? Absolutely nothing. Second, Barack being Harvard educated. That is correct. He is a very intelligent man. Knows a great deal about the constitution. Once again, writing laws and interpreting laws seem to be done best by legislators and judges. As President, that Harvard education might not come in as handy as having real executive experience (of course, Barack does beat out McCain in that regards. Didn’t he serve on some board that was created, in part, by notable terrorist William Ayers?)

Anyways, great post. I would go back a little bit further in time, though, when Clinton and his administration, fearing lawsuits, told these mortgage and lending companies to start lending to low-moderate income people who would definitely have trouble making payments on mortgages and loans.

Julija Zonic

Hey David! Just wanted to show you a little video…I thought you’d like it…


Greetings from California!!!!


It started well before all of this, back with J Carter, and when Clinton came to office it was again promoted, that being the lending practices to people who really could not afford it. Funny, bc B Obama was one who used to sue on behalf of these poor folks, making the situation worse. But this is only half the story. Poor folk yes, but really the average guy who could afford $150K but went for the $400K house so he could turn a profit. Blame the poor. Blame the Democrats. Blame the Republicans. Blame the “bigger” house guy. Blame realtors who inflated housing prices. Blame consumers for buying into this shit. Blame the lender AND the borrower. DON’T BLAME ME, my house is in order – and so are other people. Don’t make me pay for this shit. Don’t make me pay for losers and poor people and greedy people. I am sick of paying and not seeing anything in return. At least they could give me a reach around, but they are not even that nice. It is not Bush’s fault, or McCain’s, or Republicans. Rather a whole mess off losers, leaches, greedy fux, that “bigger house” guy, the poor who should have stayed put, the “second house” guy, the “flip house” guy, etc. REAL INVESTMENT takes time, patience, elbow grease – not crappy paint jobs, inflated prices, flippin’ dis to dat, two years here, two years there BS. A lot of people treated this situation and this country like a toilet. Now it smells like shit. I am just about to pull every last cent out, move to Canada or Mexico after I sell my properties abroad and in the south and treat the good ole USA as a vacation spot. It is a joke to place the blame on ONE GUY, ONE PARTY. They are all, pardon my French, fucking guilty.


“I am just about to pull every last cent out, move to Canada or Mexico…”

Good riddance


At the very least I have money to pull out……. I hope everyone enjoys their coffee can of change and most shall soon be walking the streets to find coins. Those who don’t care have nothing to lose. They have nothing, and for the most part are worth nothing and deserve nothing. The NADA class is the new term for losers in our society.


What makes you think that Canada or Mexico would take you? Recent US policies have not exactly won us many friends. Having been a landed immigrant in another country, I can tell you its not all that easy to do. But, should you try your chances, well, good luck.


You are about to let your legislators put our country forever in the hole to save the asses of people who’ve never cared one iota for your welfare. You’ve been relegated to life as a cash cow- to be milked for all you’ve got, so they can get rich and poweful, while we struggle.

Well, duh. Why do you think it’s called “collateral damage”? All we serfs are is just collateral on our government’s loans, nothing more, nothing less.

But as the government accrues more debt (Iraq War already adding $700 billion, this bailout for another $700 billion, and who knows how much both will be when the end comes), we’ll soon be finding out if Russia, China, et al are acting just like these investment banks and giving us lines of credit that our government just plain doesn’t deserve…

And that’s before we even start fearing how much McCain would run up, considering that he completely supports the Iraq War and the deregulation that led to this bailout and, thusly, would be more than happy to add even more debt to the pile…


It seems “Guns and Butter” has been updated to “Iraq and Shacks”.

J.R. Locke

This is so far beyond this Presidential election. There are many strands of choices America has made on both sides of the aisle. Here is just one. The Dem’s pushed for more home ownership for people on financial shaky ground, as energy prices rose from continued bad policies from mostly Republicans lacked of support for alternatives these mortgages failed. The way in which deregulated “investment” firms sold bad debt caused a failure akin to the great depression bank runs.

It is all intertwined and so much more than left-right politics. The thing that is becoming political is how we fix the situation. That is what will be deplorable and John McCain’s action the last two days is exactly what is wrong with this kind of politics. Be a leader if you want to be a leader but don’t pretend to be a leader to postpone a debate. Bushleague stuff right there. Especially when you consider that Mr. McCain has missed 60% of his senate roll call votes http://blog.washingtonpost.com/capitol-briefing/2008/05/mccain_leads_in_missed_votes.html


Both candidates roll call voting records suck, Barack Obama has missed 295 votes (45.9%) during the current Congress. http://projects.washingtonpost.com/congress/members/o000167/

If I did not perform 60% ( McCain ) or even 45.9% ( Obama ) I would not have a job at the end of my next evaluation!

Still undecided. “I continue to learn the truth so that I can not be lied to”

Greg Hunter

Gene (NED Squeal like a pig), I would be honored to give you a “reach around”. :)

It is amazing how far back one has too stretch to blame it on the Demos, when Alan Greenspan was the ADULT that could have squelched the bubble. We need to abandon the Wall Street model and develop a Regional economy before Wall Street, Washington and our local elected Realtors ruin us.

Bruce Kettelle

The commodities act you mention is just the tip of the deregulatory iceberg. The repleal of the 1933 Glass-Stegall Act which provided sensible rules for banks to follow made much of this crisis possible. This quote from wikipedia should make it clear how this was undone. Clinton could not stop the ‘Contract With America’.

“The bill that ultimately repealed the Act was introduced in the Senate by Phil Gramm (R-TX) and in the House of Representatives by James Leach (R-IA) in 1999. The bills were passed by a 54-44 vote along party lines with Republican support in the Senate[7] and by a 343-86 vote in the House of Representatives[8]. Nov 4, 1999: After passing both the Senate and House the bill was moved to a conference committee to work out the differences between the Senate and House versions. The final bipartisan bill resolving the differences was passed in the Senate 90-8-1 and in the House: 362-57-15. Without forcing a veto vote, this bipartisan, veto proof legislation was signed into law by President Bill Clinton on November 12, 1999. [9]”

John Ise

To get a great lowdown on this mind-boggling financial meltdown, I recommend Steven Pealstein with the Washington Post (visit: http://www.washingtonpost.com/wp-dyn/content/linkset/2005/03/24/LI2005032400138.html for his columns).

For the YouTube circuit (or illiterate), see his appearance on Hardball: http://www.youtube.com/watch?v=m7PFcI1p5AM

Money quote: “Life is unfair. This whole thing is unfair.”…Get over it.

Ice Bandit

…This November, you have a choice to choose the course of our country- to go with a top Harvard scholar, Barack Obama, or a man who graduated fifth from the bottom of his class at Annapolis (John McCain)…
…yessir, dear David, we can officially declare Esrati.com a Non-Prophet organization. Anybody for a do-oover?…