General Co-Chairman of the McCain campaign Phil Gramm has been linked to critical congressional decisions in the 1990s that many believe led to the United State’s current economic crisis. Barack Obama recently put emphasis on the Senate’s reform of banking regulations in an economic speech Thursday. Obama claimed that the repeal of a Depression-era banking regulation law contributed significantly to the current economic turmoil. Former Senator Gramm (R-TX) spearheaded this repeal in 1999, and participated in other economic acts that brought him considerable profits and positions.
Lisa Lerer of Politico.com, March 28, 2008:
Grammâ€™s role in the swift and dramatic recent restructuring of the nationâ€™s investment houses and practices didnâ€™t stop there.
A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBSâ€™s new investment banking arm.
Later, he became a major player in its government affairs operation. According to federal lobbying disclosure records, Gramm lobbied Congress, the Federal Reserve and Treasury Department about banking and mortgage issues in 2005 and 2006.
During those years, the mortgage industry pressed Congress to roll back strong state rules that sought to stem the rise of predatory tactics used by lenders and brokers to place homeowners in high-cost mortgages.
For his work, Gramm and two other lobbyists collected $750,000 in fees from UBSâ€™s American subsidiary. In the past year, UBS has written down more then $18 billion in exposure to subprime loans and other risky securities and is considering cutting as many as 8,000 jobs.
Gramm did not respond to an e-mail, and was unavailable for comment, according to a UBS spokesman. The bank has no official position on the subprime crisis, the spokesman said, but is a member of the Financial Services Roundtable and other industry groups that are actively lobbying Congress on the issue.
Whether an indirect motive or not, Obama’s economic speech generated an investigation that led to one of McCain’s chief of staff. Gramm often serves as a McCain surrogate on economic issues and has been a long-term supporter and adviser to the GOP nominee. If dealt with quickly, Senator McCain might avoid any long-term ramifications from his relationship with Gramm. However, as of now this will not help Senator McCain, who is already facing criticism for his self-acknowledged lack of economic policy understanding.