This advert single-handedly broke the record on youtube (I believe) as far as the number of “dislikes” to a video are concerned:
This advert single-handedly broke the record on youtube (I believe) as far as the number of “dislikes” to a video are concerned:
|with Illustrations & Pics by: KatieAnnieOakly|
I finished reading the book Gabby A Story of Courage and Hope written by Rep. Gabrielle Gifford and Mark Kelly with Jeffery Zaslow last night. I highly recommend this book to anyone who enjoys reading a true story of a couple who love, respect and truly support each other.
|This is what Love, Hope and Courage really looks like.|
|Houston, We have a problem!|
|Sarah, You are NO Gabby Gifford. Gabby will get stronger and she will be back! You Sarah are an Idiot!|
A Close look at Wendy Gramm
In this the final part of my investigation into the Gramms, I’d like to deal with Wendy’s relationship with Rick Perry and another influential power broker.
|Dr. Wendy Lee Gramm|
The Mercatus Center
Like many oil companies, Koch uses legitimate hedging products to create price stability. However, the documents reveal that Koch is also participating in the unregulated derivatives markets as a financial player, buying and selling speculative products that are increasingly contributing to the skyrocketing price of oil. Excessive energy speculation today is at its highest levels ever, and even Goldman Sachs now admits that at least $27 of the price of crude oil is a result from reckless speculation rather than market fundamentals of supply and demand. Many experts interviewed by ThinkProgress argue that the figure is far higher, and out of control speculation has doubled the current price of crude oil.
Pollution into an Arkansas waterway
A Koch Industries paper mill is violating the Clean Water Act by pumping out massive amounts of pollution into an Arkansas waterway, according to an EPA enforcement complaint to be filed tomorrow by Public Employees for Environmental Responsibility (PEER) and the Ouachita Riverkeeper.The complaint alleges that a Georgia-Pacific paper mill on the Coffee Creek in Arkansas – owned by the billionaire Koch Brothers -emits 45 million gallons of paper mill waste including hazardous materials like ammonia, chloride, and mercury each dayCoffee Creek then flows into Louisiana’s Ouachita River where the pollutants have left the formerly pristine water speckled with odorous foam, slime and black pockets of water, said Jerry Johnson, who has been visiting the Ouachita River for 35 years.”People used to swim in it,” said Johnson, who now lives along the river. “In the summertime, it was the place to go.”
And this is by no means an isolated incident. Another report from 2000 in the New York Times,
A federal grand jury returned a 97-count indictment against Koch Industries today, charging the company, a subsidiary and four employees with environmental crimes at a Texas oil refinery.The defendants were charged with violating federal air pollution and hazardous waste laws at the Koch Petroleum Group’s West Plant refinery near Corpus Christi, Tex., conspiracy and making false statements to state environmental officials, the Justice Department said.
And, one more example, which is more important perhaps -given the links to the controversial ties to Koch and Governor Walker, Wisconsin.
Koch Industries operates twelve industrial facilities in Wisconsin: Georgia-Pacific and its wholly-owned subsidiaries in Green Bay (4 plants), Oshkosh, Phillips, and Sheboygan; and Flint Hills Resources in Green Bay, Junction City, McFarland, Milwaukee, Stevens Point and Waupun… (T)he data reveal that over the course of those three years, Koch Industries’ facilities emitted over 5.4 million pounds (PDF) of toxic discharges into Wisconsin’s air and water. Of these discharges, nearly 100,000 pounds (PDF) were of substances known or suspected to cause cancer.
Thomas McGarity, a law professor at the University of Texas, who specializes in environmental issues, told me that “Koch has been constantly in trouble with the E.P.A., and Mercatus has constantly hammered on the agency.” An environmental lawyer who has clashed with the Mercatus Center called it “a means of laundering economic aims.” The lawyer explained the strategy: “You take corporate money and give it to a neutral-sounding think tank,” which “hires people with pedigrees and academic degrees who put out credible-seeming studies. But they all coincide perfectly with the economic interests of their funders.”
As a Businessweek headline proclaimed:
“Much corporate environmentalism boils down to misleading statistics and hype.”
It is important that you realize who funds the Mercatus Center. Since 1985, the Mercatus Center has received 513 grants totaling $45,347,884. Their top donors have been as follows:
- Koch Family (Includes Claude Lambe Foundation): $24,258,797
- Olin Foundation: $7,530,824
- Scaife Family (includes Carthage Foundation): $5,031,000
- Bradley Foundation: $2,5544,050
- Barre Seid: $2,212,000
- Earhart Foundation: $996,348
- McKenna: $265,000
- Jacquelin Hume Foundation: $260,000
- Smith Richardson: $254,315
- The Walton Family (Wal-Mart): $120,000
- JM Foundation: $85,000
- Castle Rock Foundation (Coors Family): $75,000
Wendy and the Pious Hospital Bed Maker
Molly Ivins reports:
Leninger tends to give his PACs and foundations innocuous names — Texans for Justice, the Texas Public Policy Foundation, the Texas Justice Foundation, Children’s Economic Opportunity Foundation, Texans for Governmental Integrity, the A PAC for Parental School Choice, etc. According to the Current (a weekly alternative paper), Leininger is also a major donor to, or plays a leading role in, at least a dozen major right-wing groups. Politically, he has given not only to Christian-right school board candidates and right-wing legislative candidates but also to Sens. Kay Bailey Hutchison and Phil Gramm, and he was Rick Perry’s largest campaign contributor ($500,000) in Perry’s race for lieutenant governor.
On Jan. 13, 1995, Perry bought $38,875 worth of stock in Kinetic Concepts, a company owned by Jim Leininger, a San Antonio physician, conservative activist and major Perry campaign donor. Perry invested an additional $35,167 in the company on Jan. 24, 1996 — the same day he spoke at a luncheon that Leininger attended. Later that day, an investment firm bought 2.2 million shares of Kinetic Concepts stock, driving up its price. Perry sold his Kinetic Concepts holdings a month later for a $38,382 profit. Leininger and Perry acknowledged they spoke at the luncheon but denied discussing the stock.
Perry might never have been governor — nor now be a presidential candidate — but for James Leininger. In a game-changing 1998 race then-Texas Agriculture Commissioner Perry was elected Lieutenant Governor. That victory secured Perry’s automatic promotion to governor two years later when President-Elect Bush abandoned the Governor’s Mansion. Perry narrowly won his fateful 1998 race against Democrat John Sharp, capturing just 50.04 percent of the vote. This squeaker victory was secured by an eleventh-hour media blitz that Perry paid for with a last-minute, $1.1 million loan. Leininger and two other Texas tycoons guaranteed the loan, which supplied more than 10 percent of the $10.3 million that Perry raised for that election. Leininger’s family and company PAC contributed $62,500 to that Perry campaign. Leininger also was the No. 1 contributor at the time to the Texas Republican Party (then chaired by former Leininger employee Susan Weddington), which sank $82,760 into that Perry campaign. “I congratulate Leininger,” Perry opponent John Sharp said at the time. “He wanted to buy the reins of state government. And by God, he got them.”
… TPPF aimed to influence policy by publishing research reports on state issues; its early preoccupations mirrored several of Leininger’s own: tort reform, vouchers, and reduced government. Working in tandem with the new SBOE [State Board of Education] members, the TPPF began objecting to textbook material deemed liberally slanted or morally suspect. The Legislature retaliated in 1995, forbidding the SBOE to question any aspect of textbook content other than “factual errors.” Despite the restriction, the TPPF continued to analyze proposed books, hiring researchers to ferret out errors both of fact and of insufficient patriotism. Last winter the group helped bat down an environmental-science textbook (in large part because of a poorly written sentence linking democracy to pollution); this summer it criticized proposed social science and history textbooks for failing to disavow socialism.
The TPPF supports the predictable conservative line on a whole host of issues. The TPPF disputes the scientific evidence of climate changes and claims that the “scientific consensus has never been as broad as proclaimed,” and the compromised emails of climate scientists showed “data manipulation and fundamental errors now discredit a once broadly accepted body of science.” The “private sector can bring innovation and competition to the criminal justice system” is how the TPPF frames its advocacy of the private prison industry, despite that there has been no evidence to support that the privatization of the prison industry has provided any public savings. The TPPF even has an entire center dedicate to “Tenth Amendment Studies,” which is a favorite Constitutional Amendment among the Tea Party faithful.
Put simply, this is the wrong approach… the classroom is not a marketplace. The proposals reviewed here will not promote effective learning or the responsible use of resources inside a laboratory, library or seminar room. The University of Texas at Austin’s bottom line is to provide a first-class education while spending our resources responsibly and efficiently. Separating those two goals is like separating research from teaching: it serves the wrong bottom line. Similarly, treating students as customers, offering them a “product” designed to win positive reviews and then rewarding the most popular instructors will neither challenge students in meaningful ways nor foster the deep learning and skills they will need throughout life.
Texas A&M University has the support of its former students that is the envy of many universities. Aggies love their alma mater and it shows in many ways. One Aggie, however, should love his school less and, in fact, should stay out of its business. Gov. Rick Perry’s obsession and interference in A&M has caused great harm, damage some observers feel could take a generation to undo. From his appointment of regents with greater fealty to him than to the university system they are supposed to represent to his constant meddling in the day-to-day operations of the flagship university to his infatuation with the Texas Public Policy Foundation — an ultraconservative think tank that seeks to insinuate itself into every corner of state government — Perry has proven not to be a friend of A&M, but rather a hindrance.Never before has a governor of Texas had such deadly influence on a major state university, and Perry’s meddling blocks the way of A&M’s oft-stated efforts to achieve greatness.The Texas Public Policy Foundation seems harmless on the surface, with its stated goals of limited government, individual liberties, free markets, personal responsibility and private property rights. Most Texans probably would subscribe to those goals. Dig below the surface, however, and you see just how radical its efforts are.Founded by arch-conservative physician James Leininger, the foundation board is chaired by Wendy Gramm, former Texas A&M regent and wife of former Sen. Phil Gramm. Current Regent Phil Adams of Bryan is a board member, a clear conflict of interest to his responsibilities to A&M.The foundations website says, “The public is demanding a different direction for their government, and the Texas Public Policy Foundation is providing the ideas that enable policymakers to chart that new course.”Unfortunately, thanks to Perry’s influence, those ideas become mandates, without discussion and input from the people of this great state….Perry has been in thrall to the Texas Public Policy Foundation and its backers since he began accepting generous contributions from them in his first statewide race. Texas cannot, however, be run by contribution and those most able to spend big bucks to help buy elections, no matter which side of the political spectrum they are on.A&M is well on its way to achieving greatness. It would be a shame to let Rick Perry and his cohorts derail that with their interference.Rick Perry can love Texas A&M more by meddling less — preferably not at all. Beyond appointing the best regents he can find — no matter who they contributed to in the last gubernatorial election — and attending football games at Kyle Field, Perry should leave A&M alone.
“All men having power ought to be distrusted to a certain degree”
“If men were angels no government would be necessary”
When she took a teaching post at A&M in 1970, she has said, Wendy Lee planned to spend only five years in Aggieland..then go teach at a small liberal arts college somewhere. That same year, she and Gramm were married. Gramm was promoted to Associate Professor in 1974 and also served as the Department’s Director of Undergraduate Programs. In all, Dr. Gramm taught economics at Texas A & M for more than eight years and has published articles in the American Economic Review and the Journal of Law and Economics.
She has regularly espoused an unfettered market as the solution to almost any of the nation’s problems you’d care to name. The answer for struggling mothers who need day care so they can support their families? Forget government programs or parental leave, she says, and look to free markets and a strong economy. What about helping minorities climb the economic ladder? Forget affirmative action or quotas, she says. The answer is free markets and a strong economy. Federal deficits? Environmental protection? Free markets and a strong economy.
On Judge Levine’s first week on the job, nearly twenty years ago, he came into my office and stated that he had promised Wendy Gramm, then Chairwoman of the Commission, that we would never rule in a complainant’s favor,” Painter wrote. “A review of his rulings will confirm that he fulfilled his vow,” Painter wrote.Painter continued: “Judge Levine, in the cynical guise of enforcing the rules, forces pro se complainants to run a hostile procedural gauntlet until they lose hope, and either withdraw their complaint or settle for a pittance, regardless of the merits of the case.”The CFTC oversees trading of the nation’s most important commodities, including oil, gold and cotton. The agency’s administrative law judges handle cases in which investors allege that trading professionals or financial firms violated the rules.
Another board Wendy Gramm sits on is that of Iowa Beef Processors (IBP), a large meat processing company. Based in Dakota City, Nebraska, IBP is a powerful corporation next door to a key election- year state, Iowa. Support for Senator Gramm at IBP came in handy last August at the Iowa straw poll in Ames. IBP sent a memo to its management level employees encouraging them to attend the straw poll, which is not restricted to Iowa residents, and informing them that $25 tickets and bus transportation would be provided by the Phil Gramm-for-President campaign. Gramm campaign buses picked up the IBP employees at eight separate locations in the states of Iowa, Nebraska, and Illinois and transported them to the straw poll, where their votes helped Gramm tie front-runner Bob Dole and gave the Gramm campaign an important boost.
In a written statement to FRONTLINE, an IBP spokesman said, “Many of the campaigns provided tickets and bus transportation to the event, some bringing in people from as far away as Kansas. While the Gramm campaign paid the way for the IBP employees who attended, our people were not told to vote for Senator Gramm or any other candidate.” FRONTLINE learned that the request for IBP’s help in the straw poll came from the late Alec Courtelis, the former finance chair of the Gramm-for-President campaign. .. Courtelis also sat on IBP’s board of directors and was responsible for bringing Wendy Gramm onto IBP’s board.While no one has accused Mrs. Gramm or anyone else of breaking any laws, the IBP case nonetheless shows how questions can arise when a candidate’s spouse is appointed to a well-paying corporate directorship and when that company helps promote the husband’s candidacy.
Lessons of the Past and for the Future
In an apparent response to a 1992 plea from Enron, Dr. Wendy Gramm, then chair of the federal Commodity Futures Trading Commission, moved to exempt the company’s energy-swap operation from government oversight. By then, the Houston-based Enron was a major contributor to Senator Gramm’s campaign.
On the final day of the [George H.W.] Bush administration, January 21, 1993, [CFTC chairwoman] Wendy Gramm … approved the rule exempting key energy futures contracts from government regulation and returned a great chunk of the energy market to the grand old days of unregulated futures trading,” writes author Antonia Juhasz in the book Tyranny of Oil. The move mirrored the demands made by Koch’s lobbying coalition, The Energy Group.
A few days after she got the ball rolling on the exemption, Wendy Gramm resigned from the commission. Enron soon appointed her to its board of directors, where she served on the audit committee, which oversees the inner financial workings of the corporation. For this, the company paid her between $915,000 and $1.85 million in stocks and dividends, as much as $50,000 in annual salary, and $176,000 in attendance fees, according to a report by Public Citizen, a group that has relentlessly tracked Enron, which in turn has called the report unfair.
Meanwhile Enron had become Phil Gramm’s largest corporate contributor—and according to Public Citizen, the largest across-the board donor in its industry. Between 1989 and 2001, the company tossed Gramm just under $100,000. In 1998, Wendy Gramm cashed in her Enron stock for $276,912. There’s nothing unusual about a Washington regulator quitting the government and going to work for a private company she was regulating. And people often get rich in the process. Wendy Gramm, whose office didn’t return Voice calls, has told reporters she sold the stock expressly to avoid any hint of a conflict of interest.
When Enron went over the cliff, the Gramms even portrayed themselves as victims: Wendy’s stand on her imaginary moral high ground led her to sell before Enron’s price peaked, they whined, so she forfeited some potential profits. Enron employees lacking Gramm’s finely tuned ethics, and the rest of the investing public lacking her inside knowledge of the company’s twisted finances, were left holding worthless paper.
Astounding, isn’t it? But the Voice article has even more:
But that’s not the end of the story. In June 2000, Senator Gramm co-sponsored the Commodity Futures Modernization Act, a measure aimed at deregulating certain kinds of futures trading, but not energy futures. That bill never made it to the floor, and thus quietly died.
Six months later, on December 15, Gramm curiously turned up as co-sponsor of a bill with the same name, the Commodity Futures Modernization Act, which did deregulate energy futures and which, without undergoing the usual committee hearings and preliminary votes, was immediately attached as a rider to an 11,000-page appropriations bill. It passed and was signed into law by President Bill Clinton six days later. Few lawmakers had likely perused the rider carefully, if they even knew it was there. And at any rate, Enron had given to the campaigns of over 200 legislators.
The US set up the Securities and Exchange Commission to regulate companies’ financial reporting. “At the time, regulatory practices were set in force to avoid its repetition,” Mr McCullough said. “Their enforcement has been eroded over the intervening years, and today we are almost exactly reproducing that scandal. That regulation had been chipped away to the point where it is no better than it was in the 1920s, Mr McCullough said.
|Enron’s Compensation (courtesy of Public Citizen)|
|Joshua Lee, wife and children|
Before 1946, Hawai‘i’s economy, politics and social structures were completely dominated by a corporate elite known as the Big Five (Alexander & Baldwin, American Factors, Castle & Cooke, C. Brewer, & Theo. Davies). The leaders of these factor companies exercised absolute control over Hawai‘i’s plantation workers and the majority of the islands multi-ethnic workforce. The 1946 strike forever changed the balance of power between workers and the plantations. No longer would living and working conditions be set unilaterally by the plantation owners or their parent corporations..
The legacy of the great Hawaiian sugar strike of 1946 is the success we can see today of Hawai‘i’s multi-ethnic workforce to bridge ethnic differences and build trust based on worker solidarity. Hawai’i’s diverse workforce united in 1946 and began for the first time to form a single working class culture, unique to Hawai’i. Like today, the issues of housing, medical care, pensions and wages were key issues for the 1946 sugar workers. Previously the quality of housing, medical care and old-age pensions depended upon the whim of individual plantations. As a result of the 1946 sugar strike, the ILWU negotiated a new era for labor relations, establishing these important issues as contractual rights of workers, rather than as favors the plantations could wield to force worker compliance. Thus, the 1946 sugar strike is an event whose impact reaches beyond the sugar fields, into the lives of every worker in Hawai‘i.
In the fourth- and last part of this investigation, we shall be taking a close look at Wendy’s ties to Rick Perry, their shared friends and shared interests.
Remarkably, the things I came to Washington to do are done. Now, I know that no victory is ever final…I will leave the Senate in 15 months, being very proud that I came, and extraordinarily proud in what I’ve done while I’ve been here… But I feel comfortable with this decision. I believe I’m making the right decision for me, for the 20 million people I represent, and for the things I believe in.
We are troubled by the recent appointment of former U.S. senator Phil Gramm as a Vice Chairman of UBS. Mr. Gramm’s professional and personal connections to Enron have disgraced his reputation. We believe that UBS’s association with Gramm seriously undermines your company’s professed commitment to corporate responsibility. At a time when investors and the general public need reassurance that our financial institutions are scrupulous, we ask UBS to place Mr. Gramm on leave until all criminal and civil investigations into Enron’s wrongdoing are complete. During his tenure in Congress and as a member of the Senate Banking Committee, Senator Gramm was the most vocal advocate for Enron, pushing legislation that removed government regulatory authority over the company and exposing it to negligence and fraud..
Together, the Gramms facilitated Enron’s misdeeds, which victimized thousands of U.S. consumers. Ethical leadership was clearly lacking as well in that company. Especially in these economically beleaguered times, UBS has a duty to both promote and demonstrate corporate ethics—to truly make, as Mr. Ospel says on the UBS website, “corporate responsibility part of our culture and part of our identity.” As consumer advocates, civil society groups, and unions, we urge UBS to disassociate itself with the corporate deceit which Phil Gramm represented in Congress. We urge you, Mr. Ospel and Mr. Wuffli, to renew your company’s commitment to corporate integrity by removing Mr. Gramm from his position as Vice Chairman until he is cleared of any involvement in Enron’s transgressions.
In addition to obtaining the business, UBS Warburg acquired two Enron skyscrapers and took aboard 650 former Enron employees, including executives John Lavorato and Louise Kitchen, who had taken the company’s largest bonuses after the bankruptcy ($5 million and $2 million), and Greg Whalley, Enron’s former president.
Led by Wendy Gramm, Governor Perry collected more than $2 million from 14 of the 18 people he tapped as A&M Regents. Other A&M regents who gave the governor more than $200,000 apiece are:
- Clear Channel Communications founder Lowry Mays (father-in-law of Congressman Michael McCaul),
- insurer Phil Adams,
- Ex-TXU Corp. chief Erle Nye, and
- the late Dallas car dealer J.L. Huffines.
“Dead peasant” insurance is such a deal that Wal-Mart and lots of big companies do it. See, a company like Wal-Mart takes out life insurance on low-wage employees (that would be Texas teachers), then it gets to deduct the premiums from its taxes. And when the employee dies, the company gets a benefit between $64,000 to more than $250,000…Under the UBS plan, the Retirement System would buy annuities and life insurance policies on retired teachers and keep the proceeds when they die. Of course, the investment and insurance industries would profit from the premiums and brokerage fees.
The meeting notes show Insurance Commissioner Jose Montemayor, a Perry appointee … claiming that “this arrangement” was already being utilized by “some very rich people” who had set up similar plans to benefit the University of Texas and Texas A&M….The source says the claim involving a similar program benefiting the Texas universities turned out to be untrue… Montemayor, as insurance commissioner, would have had to waive “insurable interest” regulations to allow the schools to buy life insurance on their professors. There is no public record that he did so. The University of Texas and Texas A&M did not return requests for comment.
His role in the scheme had the appearance of banal corruption and cronyism. Although Gramm wasn’t in on the first meeting with teacher groups, he played an active role in subsequent efforts to push the scheme. It was Gramm who could make the plan a financial reality. He left the U.S. Senate in November 2002 for a lucrative vice president post at UBS. After Morrissey, Montemayor and Perry budget aide Brian Guthrie first articulated the plan on Nov. 12, Gramm came to Austin to help push the deal. That move eventually prompted Texas Democrats to file an ethics complaint against Gramm for making a the pitch without registering as a lobbyist.
Gramm was hoping to put together a new package of complex assets for speculators to gamble on. Corporations had been using mass purchases of life insurance policies on their employees for years as part of an elaborate tax avoidance scheme (the government doesn’t tax insurance premiums or death benefits). The employees themselves — affectionately referred to as “dead peasants” among insurance experts — received no benefit. Only the companies who bought the policies would receive payouts when these “peasants” died. Gramm wanted to convince investors to bet on peoples’ lives by purchasing pools of life insurance and annuities taken out on individuals.
It should be noted that the Perry-Gramm scheme is a take-off on similar private-sector plans… These private sector schemes also have come under fire from critics who note that they work only because of the tax breaks that accrue to the companies when they buy the life insurance. In effect, the companies are using the taxpayers to fund their benefit programs rather than using their corporate profits.It doesn’t take much imagination to realize that if the Perry-Gramm scheme is adopted, the Texas taxpayers will end up footing the bill not only to shore up the retirement system health plan, but also to pay millions of dollars in commissions and fees to UBS.
Montemayor was happy to bend the law. He agreed to grant a special waiver on insurance regulations that would allow the deal to go through, according to meeting notes.”There was some worry about the legality,” recalled the attendee. “[Montemayor] said ‘Don’t worry about it.’ He could take those questions off the table as the insurance commissioner.”
Another scheme Gramm as a federally registered lobbyist for UBS, attempted to foist on the good people of Texas was the sale of the Texas lottery to a private company. According to the New York Times,
Called “Project Lonestar” within UBS, a long-term lease of the Texas lottery could generate at least $10.1 billion for the state, according to an internal UBS document obtained through a Freedom of Information Act request from The New York Times.
The billions of dollars that investors would pay to run the Texas Lottery would come out of the pockets of Texas families. While some of the proposals that the governor’s office received say that they would target the middle class rather than the poor, the state has repeatedly failed to accomplish such a shift. Last year the Texas Lottery Commission introduced a $50 scratch-off ticket to attract higher-income players. Subsequent studies by the Houston Chronicle and the San Antonio Express-News showed that people residing in zip codes with median incomes of $20,000 or less were 22 percent more likely to buy these tickets than those who lived in zip codes earning more than $90,000.The bulk of the billions of dollars that Texas would make privatizing the Texas Lottery would come out of the pockets of Texas’ poorest families. And these Texans are the ones most likely to require additional public services when their pockets are picked.
Wall Street firms, which already enjoy close relationships with state governments nationwide as underwriters of municipal bonds, stand to earn at least $100 million in fees from leasing the California lottery alone — which is why they have quietly emerged as prime architects of the idea.
As this one-year chart shows, UBS’s stock lost nearly 70 percent of its value and now stands at levels not seen since 2002, when Gramm signed up.
Critics have charged that Gramm’s action as a senator helped lay the groundwork for some of the problems in the housing and oil markets. But it’s hard to pin any of the UBS debacles on the former Texas senator. At UBS, Gramm held the post of vice chairman, a position Michelle Leder dubbed in these pages as “the greatest job in business” for its combination of high status and low work rate. Gramm was a lobbyist and adviser, not an operating executive. And he had nothing to do with the forces that impelled banks and banking executives into foolish behavior in recent years; cheap money, greed, and a bubble mentality are far bigger than Gramm. But UBS’s continuing travails should lead us to wonder how effective Gramm is as an elder statesman. As an adviser, an economist, an expert in the ways of Washington and in the American financial system, part of Gramm’s job surely was to advise the bank how to stay out of investment and regulatory trouble.
UBS AG, Switzerland’s biggest bank by assets, received a capital injection of 6 billion Swiss francs ($7.12 billion) from the Swiss government in October 2008. The next month, the Zurich-based lender borrowed $77.2 billion from the Federal Reserve after customers removed a net 83.6 billion francs from its money-management units in the hree months through September… A UBS spokeswoman declined to comment on whether the bank also tapped the Swiss National Bank or other central banks for liquidity.
The trial of George Ryan, a former governor of Illinois charged with fraud and racketeering, got a jolt on November 17th, thanks to the testimony of a former senator. In 1995, Mr Ryan, then Illinois’s secretary of state, endorsed the presidential campaign of Phil Gramm, a Republican senator from Texas. Prosecutors charge that Mr Gramm’s campaign paid Mr Ryan an $11,000 “consulting fee” in exchange for his endorsement; Mr Ryan claims he earned the fee by introducing Mr Gramm to local political figures. In court, Mr Gramm testified that he did not know his campaign was paying Mr Ryan for consulting, nor would he have approved such a payment, because, he explained, “it’s sort of like the difference between love and prostitution. You don’t pay people to like you.”The comment caused a ruckus in the courtroom and beyond: the judge asked Mr Gramm to curb his thoughts on prostitution, while Mr Ryan lashed out by telling television crews that Mr Gramm may have been involved in the scandal over Enron, adding testily, “If Senator Gramm wants to use the word prostitute, perhaps he should look within.”
“Why are you just so afraid to say this whole system is bankrupt and the whole thing should just be reorganized?” someone from the audience asked after Gramm finished his lecture. “Why don’t you just let it go?”
“First of all I think that’s a good question,” Gramm responded. But then he offered something of a personal credo: “I would be a little concerned about letting capitalism go, because it made me prosperous and free and it made my country prosperous and free.”
“In a state filled with tales of legendary statesmen, Sen. Phil Gramm stands in a league of his own. It’s hard to imagine where this state would be without the fearless, dedicated service of this man. He has been a spirited protector of the men and women of this state and the ideas they hold dear. I have been proud to call him my senator, and even prouder to call him my friend. I know without a doubt that even though Sen. Gramm is leaving his role in the U.S. Senate, he will continue to work for the greater benefit of our state and our nation.”
In the next posts, we will turn our spotlight upon Phil Gramm’s wife, Wendy, whose own extraordinary achievements, while nothing to be be proud of, at least, prove her to be a worthy match to her husband.
Former senator and current banker Phil Gramm of Texas — well-connected to big donors but controversial for his role in preventing tighter regulation of Wall Street — told The Huffington Post …that he is endorsing his former student and political protege, Texas Gov. Rick Perry…”I’m for Rick and I will do what I can to help,” Gramm said in an interview in Detroit. “He has been an effective governor. He is a determined guy from a small town who knows how to get things done.”
This kind of back slapping- a milder term than I would prefer- is merely an exchange of favorable reviews. Back in February of 1995, when Perry was the commissioner of agriculture in Texas, he stood at Phil Gramm’s side during his unsuccessful run for the presidency. Mother Jones states:
Years later, Perry would claim that the country “made a huge mistake” by not electing Gramm president. “I can’t fathom,” Perry said, “where we would be as a country had Phil Gramm led this country for eight years.”
There’s a ten gallon hat’s worth of irony in that statement to be sure. In any event, getting Gramm into the White House was unnecessary. As far as the power brokers of the 1% were concerned, Phil Gramm and others like him didn’t need to to be president at all. They had George W. Bush to manage things for them, thank you very much. For them, Gramm found his place in a slightly less high-profile (but critically important) role. As any Texan would tell you, there was more than one way to skin a cat.
First some biographical notes:
From 1967 to 1978, he taught economics at Texas A&M University, where Rick Perry was his “back of the class” student. Gramm found a kindred spirit in Perry and eventually made him his protege in the raw world of realpolitik. In Texas that world is all about who you know and how low you plan to go for them. In Perry’s case, it was a bit lower than everybody else. Gramm would be instrumental in setting Perry up with the right contacts who would, later fund, Perry’s campaign for Lieutenant Governor in 1998. Texas multi-millionaire James Leininger: Leininger contributed generously to that and to later Perry campaigns (We will throw a little more light on that man a bit later.)
In addition to teaching, Gramm founded the economic consulting firm Gramm & Associates (1971–1978) Ambitious Gramm had his eyes set on a much larger prize. In 1976, he challenged Texas Democratic Senator Lloyd M. Bentsen, in the party’s senatorial primary and lost but ran successfully two years later as a Democrat for Representative from Texas’s 6th congressional district.
As chairman of the Senate Banking Committee from 1995 through 2000, Gramm was Washington’s most prominent and outspoken champion of financial deregulation. He played the leading role in writing and pushing through Congress the 1999 repeal of the Depression-era Glass-Steagall Act.
In 1985, Gramm was linked to a campaign contribution shakedown run out of a Small Business Administration (SBA) office in El Paso. He was never subjected to a complete investigation or negative press coverage, however, because on February 19, 1988, a leased Rockwell Aero Commander 680 crashed and exploded shortly after taking off from El Paso International Airport. All aboard, the pilot, his wife and son, were killed. The pilot was local businessman Don McCoy who, a day earlier, had agreed to give testimony in an FBI investigation that had threatened both Senator Gramm’s protégé at the SBA, and some of the city’s most prominent business leaders.
Laying the Foundation
“Tonight we have laid the foundation to make history.”
The new law would repeal parts of the 1933 Glass-Steagall Act, which prevented banks from moving into the securities business, and was considered an archaic symbol of government regulation no longer relevant in a high technology world.
As chairman of the Senate Banking Committee from 1995 through 2000, Gramm was Washington’s most prominent and outspoken champion of financial deregulation. He played the leading role in writing and pushing through Congress the 1999 repeal of the Depression-era Glass-Steagall Act.
Of course, there was a very good reason why those regulations had existed and why they once were considered paramount. Furthermore, as an economist, Phil Gramm also knew the history of the Glass-Steagall Act and why it had been created in the first place. He simply didn’t care.
|Franklin Roosevelt Signs The Glass Steagall Act -1933
In the days after the Great Depression, when one out of every five banks in the US closed, the survivors of the crash began taking a sober look at the factors that led to this economic collapse. Unregulated market speculation by banks, it was decided, was the chief cause and in 1933, Senator Carter Glass (D-Va.) and Congressman Henry Steagall (D-Ala.) drafted historic legislation in order to prevent a disaster like this from ever happening again. It was known at that time as the The Banking Act of 1933. Investigative hearings revealed conflicts of interest and fraud in some banking institutions’ securities activities. A formidable barrier to the mixing of these activities was then set up by the Glass–Steagall Act.
On Wall Street there are two principal kinds of bankers: Commercial bankers and investment bankers. The commercial banks, such as Chase and National City, make loans, accept deposits, finance foreign credits, buy government and state bonds. They also usually have a trust department which executes wills and acts as trustee. The investment bankers, such as Morgan Stanley and Kuhn, Loeb underwrite and distribute new security issues for corporations. They also have a brokerage department which buys and sells securities.
The Banking Act of 1933 made it illegal for one firm to act both as a commercial act and investment banking house. Until then, the two were often combined. In his triumphant days, J.P. Morgan, a banker, merged railroads and steel companies into nationwide corporations. In the 1920s, Wall Street made idols of men like Charlie Mitchell, chairman of National City Bank, who was also the greatest securities salesman in history and an adroit market manipulator. The 1929 crash exposed the dangers of these dual functions, With one hand, banks were taking deposits. With the other, they were financing new securities. When the business they were promoting failed, the depositors, security holder and the bank itself were in trouble. Today the very nature of Wall street bankers has changed. In place of the speculators and market manipulator there are sound, deliberate investors who by choice as well as by law are more interested in government bonds than in a flier in market.
In addition to the Banking Act of 1933- now known as Glass-Steagall, the Bank Holding Company Act was passed in 1956 which extended the restrictions on banks. According to this, bank holding companies owning two or more banks could no longer engage in non-banking activity and could not buy banks in another state. This prohibited banking institutions from becoming “too big to fail.” The law generally prohibited a bank holding company from engaging in most non-banking activities or acquiring voting securities of certain companies that are not banks. (Another protection that Gramm was responsible for repealing.)
On November 12, 1999, the US Congress passed the Gramm-Leach-Bliley Act, which overturned the mandatory separation of commercial banks and investment banks required by the Glass-Steagall Act of 1933. The original reason for the separation was the concern that depositors’ holding would be used aggressively in risky endeavors by the investment banking side of the firms. The argument for joining the two types of firms is that it would provide a more stable business model irrespective of the economic environment.Another argument.. was that non US headquartered universal banks, such as Deutsche Bank, UBS and Credit Suisse, were not encumbered by the Glass Steagall Act. The banks had a competitive advantage over US-headquartered banks, such as Citigroup, JP Morgan, and stand-alone investment banks, such as Goldman Sachs and Morgan Stanley, because the non US headquartered banks could participate in both commercial banking and investment banking activities.
But it didn’t take a genius to predict the possible problems. Back in 2000 only a few months following the bill’s passage, J. Alfred Broaddus, president of the Hampton Roads Chapter of the Robert Morris Associates, a risk management firm, writing an analysis of the legislation, observed:
This brings me to the question of regulating and supervising the new structure the Gramm–Leach–Bliley Act (GLBA) will create. I think it’s worth noting at the outset that GLBA broadens the opportunities for diversification for large financial companies. Therefore, not all of the Act’s fallout will necessarily increase risks. But the potential size and complexity of at least some of the new financial holding companies could well increase risks in some cases, including not only risk to the company and its shareholders, but broader risks to the financial system and the economy. Too-big-to-fail is already a major public policy issue – perhaps the major public policy issue in banking and finance – and GLBA is not likely to change this.
On that occasion, the jubilant Phil Gramm declared to the American public:
We are here today to repeal Glass-Steagall because we have learned that government is not the answer. We have learned that freedom and competition are the answers. We have learned that we promote economic growth and we promote stability by having competition and freedom.
In part two of the series, I will examine Gramm’s adventures in the private sector, following his retirement as Senator.
“Think Progress” reports about more insanity by Rick Perry – President Obama’s decision to withdraw the troops from Iraq is “putting our kids lives in jeopardy”, according to Perry:
PERRY: The idea that a commander-in-chief would stand up and signal to the enemy a date certain of when we’re going to pull our troops out I think is irresponsible. You need to be talking to your commanders in the field. You need to be working with the experts who understand what is going on in those countries, for instance. We need to finish our mission in Iraq and Afghanistan. You better believe I want out kids home as soon as we can and safe. But to give that signal that we’re pulling them out is bad public policy and, more importantly, it’s putting our kids lives in jeopardy[…]
He has lost his standing from the standpoint of being a commander-in-chief who has any idea about what’s going on in those theaters. He’s making mistakes that are putting our kids that in theater and I think future issues dealing with whether it’s in the Middle East or the south China Sea with our allies, putting all of that in jeopardy because of this unwavering, or I should say this wavering or this aimless approach to foreign policy which he has.
Watch the clip:
Maddow did an excellent in-depth piece about Perry’s speech:
Jon Stewart presented a shorter segment, combined with the news about Herman Cain, and of course it’s as funny as expected:
Saturday Night Live is also on the case: