Phil Gramm: From US Senator to UBS Banker

Preface: My dad was raised on a farm in Arkansas by a very strict father. My dad was one of those guys who had been raised during the Great Depression and had to walk five miles to school barefooted. After he left the family farm he spent his whole life serving this country, first in the Navy during the Korean War, and then a few years later he transferred into the Air Force. While he was serving in Germany, my parents were divorced. I was 10 years old and very bitter.

While my father was serving in the Vietnam War in 1969, and while the rest of my immediate family was living in southern California, my little sister and I became latchkey kids. I had become a very incorrigible kid - skipping school, smoking cigarettes, roaming the streets late at night, shoplifting, and drinking. This was when I first started smoking "bud". I was 14 years old and very bitter.

My mom found out (from either a phone call, a letter, or a neighbor) that I had been truant from most of my first semester of high school and had me placed in juvenile hall. Three months later after spending my fifteenth birthday locked up in a little brick room, and when my father had returned from the war, he got me out and drove me back east to Massachusetts to live with him, where he had been newly stationed at Westover Air Force Base. But I was just a teenager and I didn't handle that very well either, so I continued to be an incorrigible kid - drinking, skipping classes, getting high, and running away from home. But unlike my mom, my dad had kicked my ass.

Finally my drive for independence (or was it self-destruction?) had led to me "running away" one last time while I was still a senior in high school. I had no money, no job, no car, and nowhere to go. I just craved freedom. I was 17 years old and very bitter.

But for those two years while I lived with my dad I learned some very valuable life-lessons. My dad, being a strict career military man, taught me to always be honest, work hard, and to get an education....and if I did, I would do well in life. I only wish I had listened better to him. I did manage to get my GED, and for the most part I was honest with people, and I always busted my ass at work. For the next 38 years after leaving home I tried to live a respectable life.

But here I am after all these years, and I've seen how the real world works. I've seen the political and corporate corruption, and how billions of people like myself were being put through meat grinders to enrich the very few. I learned how our elected officials were bribed and beholden to BIG BUSINESS and the BIG BANKS.

I realized that the "American Dream" was nothing more than a patriotic slogan, invented by the wealthy to have us strive ever more, leading us all to believe that we all had a fair chance at the brass ring...if we just worked harder. They patted us on the back, bragging that we Americans were the hardest working people in the world. Panting like trained lap dogs we gave ever-increasing "worker productivity", working longer hours and more days than anyone else. We took less time off for vacations. The powers-that-be fooled us all into thinking that this was the American way, capitalism at its best, American "exceptionalism". They patted us on the heads and told us what good little workers were. We lapped it up, grateful for the occasional biscuit they threw our way.

But I've since learned...it's not WHAT you know, but WHO you know. It's not how hard you work, but who you work for. It's not if you're honest, but it's about what lines are you willing to cross. It's not about being empathetic or kind to others, it's about how cold and ruthless one can be. It's not about integrity, it's about corruption and bribes. It's not about character, but lack thereof. That's how you get ahead in this world, lying and cheating - taking from those to do without to enrich yourself, and you too can rule the world.

Silly me, but isn't that common knowledge now? Our politicians tell us how hard they worked to get to where they are today, and that they are entitled to their power and wealth...they EARNED it. John A. Boehner: " I started out mopping floors, waiting tables and tending bar at my dad’s tavern. I poured my heart and soul into [my family's] business." Or Paul Ryan. putting himself through college on his father's Social Security death benefits, even though the family's construction business (Ryan Incorporated Central) gave him other means. Now he wants to push his Path to Austerity on the rest of us.

But now I know. We, regular working people, were all just run through the meat grinders to enrich the few. When they didn't need me any longer, they tossed me out like litter. They don't even want me to have access to Medicaid and food stamps now. I'm 55 years old and I'm STILL very bitter. But now I have a legitimate reason to be.

Prologue: As a Republican U.S. Senator and chairman of the Senate Banking Committee, Phil Gramm introduced the Gramm-Leach-Bliley Act, deregulating banks in 1999. Three years later after leaving office in 2002 Senator Phil Gramm served as Vice Chairman and a member of the Swiss banking giant UBS AG. In May 2009 the company completed the acquisition of the bailed-out AIG Financial Products Corp., including AIG’s rights to the DJAIG Commodity index. Current Market Cap: $71 billion. Phil Gramm was also John McCain’s presidential senior economic adviser in 2008. Economist Paul Krugman named Phil Gramm as #2 man of the economic crisis. Alan Greenspan was #1. (Personally, I would have also named Goldman Sachs CEO and U.S. Treasury Secretary Hank Paulson as #3.)

Phil Gramm (L) with John McCain (R)

 
The Road to America's Ruin

"The regulation of derivatives transactions that are privately negotiated by professionals is unnecessary. Regulation that serves no useful purpose hinders the efficiency of markets to enlarge standards of living." - Alan Greenspan, chairman, Federal Reserve, 1987-2006 Greenspan opposed the regulation of derivatives on free market grounds and thought the U.S. Commodity Futures Trading Commission had no legal authority to do so. After all the financial mass destruction, in 2011 the Republicans are still demanding less regulation.

Gramm-Leach-Bliley Act - The banking industry had been seeking the repeal of the 1933 Glass–Steagall Act since the 1980s, if not earlier. In 1987 the Congressional Research Service prepared a report that explored the cases for and against preserving the Glass–Steagall Act.

The Gramm-Leach-Bliley Act was signed into law by President Bill Clinton in 1999 and it repealed part of the Glass–Steagall Act of 1933, opening up the market among banking companies (i.e. Goldman Sachs), securities companies (i.e Enron) and insurance companies (i.e. AIG). The Glass–Steagall Act had prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and an insurance company.

Respective versions of the legislation were introduced in the U.S. Senate by Phil Gramm* (R- Texas) and in the U.S. House of Representatives by Jim Leach * * (R-Iowa). The third lawmaker associated with the bill was Rep. Thomas J. Bliley, Jr.* * * (R-Virginia). All Republicans.

* William Philip "Phil" Gramm served as a Democratic House Congressman (1978–1982). Just days after being re-elected in 1982, Gramm was thrown off the House Budget Committee for supporting Reagan's tax cuts. In response, Gramm resigned his Democratic House seat on January 5, 1983. He then ran as a Republican for his own House vacancy in 1983. He became the first Republican to represent the district since its creation until 1985.

From from 1985 to 2003 he was the Republican Texas Senator. Gramm served on the Senate Budget Committee from 1989 until leaving office in 2003. Between 1995 and 2000, Gramm was also the chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs. During that time he spearheaded efforts to pass banking deregulation laws, including the landmark Gramm-Leach-Bliley Act in 1999, which removed Depression-era laws separating banking, insurance and brokerage activities.

Most economists state that the 1999 legislation spearheaded by Gramm and signed into law by President Clinton — the Gramm-Leach-Bliley Act — was significantly to blame for the 2007 sub-prime mortgage crisis and 2008 global economic crisis, the act that was widely known for repealing portions of the Glass–Steagall Act, which had regulated the financial services industry.

Gramm's support was later critical in the passage of the Commodity Futures Modernization Act of 2000, which kept derivatives transactions, including those involving credit default swaps, free of government regulation.

In its 2008 coverage of the financial crisis, The Washington Post named Gramm one of seven "Key Players In the Battle Over Regulating Derivatives".

2008 Nobel Laureate in Economics Paul Krugman, a supporter of Barack Obama and former President Bill Clinton, described Gramm during the 2008 presidential race as "the high priest of deregulation," and has listed him as the number two person responsible for the economic crisis of 2008 behind only Alan Greenspan.

Gramm had joined the bank UBS AG in 2002 immediately after retiring from the Senate (but of course!!!) And this is precisely why banks and corporations should NOT be allowed to contribute to political campaigns.

February 19, 2009 -  New York Times: Swiss on defensive in bank confidentiality settlement with U.S. - "Switzerland bowed to pressure from the U.S. government, and in an unprecedented step gave up the details of about 250 wealthy American clients of UBS who were suspected of using the bank's accounts to evade taxes."

According to the information filed in the criminal case against UBS, some UBS executives are being treated as unindicted co-conspirators. “These executives occupied positions at the highest levels of management within UBS, including positions on committees that oversaw legal, compliance, tax, risk and regulatory issues related to the United States cross-border business.”

So the question is: Did Phil Gramm serve on any of these UBS committees?

If you were a company that had hired the former chairman of the Senate Banking Committee that designed the regulatory system under which your company operates, wouldn’t if be a breach of your fiduciary obligation to your shareholders NOT to have him on the legal, compliance and regulatory committees?

June 6, 2008 - "Investigators estimate that the bank’s customers may have hidden as much as $20 billion in assets from the IRS."

Phil Gramm later became a senior economic adviser to John McCain's presidential campaign from the summer of 2007 until July 18, 2008. While Shaping McCain Economic Policy, Phil Gramm Simultaneously Lobbied Congress on Mortgage Crisis for Swiss Bank UBS. Phil Gramm, vice chairman of Swiss-based UBS and McCain campaign general co-chair and advisor "was being paid by a Swiss bank to lobby Congress about the U.S. mortgage crisis at the same time he was advising McCain about his economic policy, federal records show." Gramm, who was reported to have been advising McCain on economic policy back in October 2006, "had an input on McCain's March 26 policy speech about the mortgage crisis which recommended further deregulation of the banking industry as his response" to the ensuing mortgage meltdown.

In a July 9, 2008 interview on McCain's economic plans, Gramm explained that the nation was not in a recession, stating, "You've heard of mental depression; this is a mental recession." He added, "We have sort of become a nation of whiners, you just hear this constant whining, complaining about a loss of competitiveness, America in decline."

Gramm's comments immediately became a campaign issue. McCain's opponent, Senator Barack Obama, stated, "America already has one Dr. Phil. We don't need another one when it comes to the economy. This economic downturn is not in your head." McCain strongly denounced Gramm's comments and on July 18, 2008 Gramm stepped down from his position with the McCain campaign.

As of 2009, Gramm had been promoted by UBS AG as a Vice Chairman of the Investment Bank division. UBS states that a Vice Chairman of a UBS division is "...appointed to support the business in their relationships with key clients." (I have been trying to find SEC filings to determine his compensation from UBS.)

His son Marshall Gramm is a professor of economics at Rhodes College, so if you hear his name nominated for economic adviser, start stockpiling canned food, gold, and bullets.

* * Phil Gramm's co-sponsor of the Gramm-Leach-Bliley Act Jim Leach (R-Iowa) broke party ranks to endorse Democrat Barack Obama over fellow Republican John McCain in the 2008 U.S. presidential election. He spoke at the 2008 Democratic National Convention in Denver, Colorado, on the night of August 25, 2008. On June 3, 2009, President Obama announced that he intended to nominate Leach as chairman of the National Endowment for the Humanities. The appointment was confirmed in August, 2009.

* * * The 3rd co-sponsor of the bill, Tom Bliley, was elected Chairman of the House Commerce Committee, a position he held for six years. In that influential role he was a principal author of several important laws including the Telecommunications Act of 1996, the Food and Drug Administration Modernization Act of 1997, the Private Securities Litigation Reform Act and of course, the Financial Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act.

Senate vote - Gramm-Leach-Bliley Act was primarily voted along party lines.

The final bill was passed by the Senate 90-8, and by the House 362-57. This legislation was signed into law by President William Jefferson "Bill" Clinton on November 12, 1999.

Republicans - all Yea and 1 Independent Vermont Jeffords, James [I] - Not Voting Oklahoma Inhofe, James [R] Not needed to pass - Voted Present Illinois Fitzgerald, Peter [R] Not needed to pass.

Democrats - all Nay (Exception - South Carolina Hollings, Ernest (D), the lone Democrat. Ernest "Fritz" Hollings retired in 2005 and continues to write opinion editorials for newspapers around South Carolina and is a regular contributor to the Huffington Post. He attacks free trade policies as inherently destructive, suggesting that certain protectionist measures have built the United States, and only a few parties actually benefit from free trade, such as large manufacturing corporations. In his latest article at the Huffington Post he writes, "This is the real world. It doesn't pay to produce in the United States. We're getting rid of production and jobs as fast as we can. We're in a trade war and disarming."

See this related and very powerful music video by Pete Rivera, former lead singer & drummer of Rare Earth, regarding the outsourcing of jobs and closed factories.

In Conclusion: After doing much research for the last two years for my previous websites and for this blog, and being a former Republican and Fox News fan before becoming an Independent, I can now say unequivocally and with certainty that it's primarily because of Republican deregulation, union busting, free market polices, and tax favoritism that's put our economy where it is today.

The Republicans allowed for depressed wages, the outsourcing of jobs, tax shortfalls for our treasuries, and the recent financial collapse of the stock market. And what's so frustrating is, today in 2011 they haven't learned a damn thing. The GOP and Tea Party STILL advocates for less taxes on the wealthiest among us, free trade agreements, and less governmental regulation. I learned the hard lessons (I'm bitter, remember?), now when will the rest of the voters?

And I'm not just speaking to those earning less than a million dollars a year. If you want to sell your goods, talent, and services in the American market, then average Americans need jobs paying a "living wage" to have the "discretionary income" to spend.

Since the Great Recession began, millions of Americans lost their jobs, their homes, their cars, and many, their lives. There are more Americans unemployed today than there were at the height of the Great Depression. If were not for unemployment insurance, food stamps, and Medicaid - and with only one job available for every five people out of work - where would they all be today? And the Tea Party and GOP want more of the same.

In his recent Wall Street Journal article (owned by Rupert Murdoch of Fox News, the propaganda arm of the GOP) on April 15, 2011, as a banking regulator that ruined the American housing market and collapsed our economy, Phil Gramm is now politicking as an economist...blaming Obama for everything while praising Ronald Reagan. He takes no blame for anything, and like the rest of the GOP, he too wants more of the same. His arguments are so one-sided and skewed, and won't even bother itemizing them. I'd like to tell him to crawl back into his private jet and crash.

If you vote for a religious social conservative Republican, and you're not a banker, politician, or CEO, and if you end up like me (without a job, a car, or a bank account), then you deserve everything you DON'T get. And you too will end up bitter like me.

Epilogue

I may or may not end up dying a lonely and bitter old man. But one thing I know for sure: Because of our politicians, the bankers, and the corporations, I will live out the rest of my life in poverty - and NOT because I made bad decisions, or wasn't honest and worked hard.

The End

READ: Inside Job: The Film that Cost Over $20 Trillion to make! 

READ: When Corporations Rule the World