McCain’s economic advisors

The lucrative Bear Stearns guarantee in March was not the first time favor bestowed on the J.P. Morgan by the Federal Reserve Bank. Nine years prior to the 1999 Gramm-Leach-Bliley Act which effectively repealed the Glass-Steagall law separating regulation of commercial and investment banks,

In 1990, J.P. Morgan becomes the first bank to receive permission from the Federal Reserve to underwrite securities, so long as its underwriting business does not exceed the 10 percent limit.

One of McCain’s economic advisers is none other that the bill’s namesake, Phil Gramm, who as chairman of the Senate Finace Committee led the call for deregulation. The former Senator is
is a vice-chair of the UBS investment bank, which on April 1, announced continuing losses of billions of dollars because of sub-prime mortgage investments. Makes one wonder, huh?

But the Republicans were actually doing the Clinton Administration’s bidding. Back in 1995, Treasury secretary told the House that the regulations

“conceivably impede safety and soundness by limiting revenue diversification.” Rubin also said many legitimate concerns were addressed adequately outside the act, including the numerous steps taken to safeguard against risky and abusive bank transactions and to protect the deposit insurance fund.

As James A. Wilcox, Chief Economist, Office of the Comptroller of the Currency, wrote with two co-authors in 2000,

How regulators will in practice coordinate their efforts so that the safety and soundness of the banking system is maintained efficiently remains to be seen.

Evidently, not at all, at least according to Robert Kuttner, who in “The Bubble Economy,” argued in September 2007 that deregulation has turned the economy into a “casino” with repeated bail-outs.

Another McCain adviser: Carly Fiorina, former CEO of Hewlett-Packard, forced to step down in 2005, who authorized spying efforts to uncover the source of boardroom leaks.

And, it’s not like Barack Obama would bring back such regulations. As he said ,

The argument is not to go back to the regulatory framework of the 1930’s because, as I said, the financial markets have changed substantially.

*
Today I headed backvia Roanoke to run some errands and then back to Blacksburg.

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