New Orleans Phil Gramm, the former Texas Senator and head of the Senate Banking Committee from 1995-2000, wrote a “pin the tail on the donkey” piece in the Wall Street Journal trying to find someone other than himself to blame for the Great Recession. The piece was almost unintelligible, though the headline and the first shot fired tried to blame Bill Clinton, not for when he was President, but for a campaign position paper urging more pension investment in affordable housing while he was a candidate. Wow! Who knew as old as Gramm must be that he can still do such a somersault?
If he had good judgment or listened to good advice, Gramm would have kept his head down in whatever bunker he calls home. This is the man who might rightly be called the “father of the sequester” for his leading role in the Reagan era passage of the Graham-Rudman-Hollings budget bill setting automatic deficit reduction targets. The US Supreme Court in a more enlightened pre-Roberts era held that bill unconstitutional, because Congress was overstepping its authority on budgeting matters. I know that almost sounds unbelievable since that seems to be the only way Congress steps these days. Nonetheless Gramm saddled up and got the bill passed later with some changes and the sons of Gramm-Rudman to this day are what led to the painful sequester.
Gramm can probably live more easily with that ignominy than the fact that he is also on the shortlist with a bunch of criminal conspiracy bankers as the Father of the Great Recession thanks to his work steering through the elimination of the Glass-Steagall bill, passed after the Great Depression, that had forced banks to separate their basic consumer banking operations from their no holds’ barred wild investing when commercial operations and securities were allowed to comingle under the same roof. Many economists believe this was the trigger that led to the housing bubble that created the recent recession. Make a note that Larry Summers who is trying to run the Federal Reserve was also deep in that do-do, which should disqualify him for the job, while Janet Yelsin, argues we need more bank regulation.
With a record like that, Gramm obviously needs to find someone else to shoulder the blame he has earned. Not surprisingly he wants to shift it to the poor. His almost incoherent argument is that the government started pushing affordable housing goals for about 25 years from the Community Reinvestment Act forward and though it moved home ownership in the country to almost 70%, Gramm believes that the process of the government setting such a goal intoxicated bankers and private wealth so much that they essentially lost their heads. He says, “…wealth cannot serve two masters and …the government was the dominant master.” He also argues a couple sentences before that the government regulators were asleep at the switch and not doing their job. The master wasn’t mastering I guess, so the low-and-moderate income people getting a chance to build citizen wealth through home ownership with a favorable governmental policy somehow conned the rich and the banks into creating the recession.
It all just makes your head spin, but once you get a grip, this kind of cockamamie policy irrationality reminds us why Phil Gramm, father of the sequester and the great recession, should be on the short list of folks who have almost killed the country and economy over the last 30 years.