Phil Gramm, Architect of Sequester and Recession, Looks for Someone Else to Blame

blame_25_grammNew 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.

Facebooktwitterredditpinterestlinkedinmail

Debit Charges and Senate Hucksters

Dodd-Frank Bill
Dodd-Frank Bill

New Orleans The Dodd-Frank Financial Reform Act called for the Federal Reserve to put an end to the debit card surcharge padding when that retailers were paying to banks and credit card companies, usually amounting to 44 cents a transaction.  New Fed proposals would cap the amounts at 7 to 14 cents, about an 80% reduction.  Hooray!

But banks and card issuers are crying like babies at losing this opportunity to scam consumers on the swipe.  Visa lost 10% of its value on the market yesterday.  Bank of America and Wells Fargo record as much as 2.5% of their revenue from this scam, according to the Wall Street Journal.

I love this not only because it is a win for the biscuit cookers, but also given ACORN International’s Remittance Justice Campaign, this is another indication of what at least one authority – the United States Federal Reserve – believes is the actual cost-plus profit of such a transaction.  With enough indirect data, eventually we will understand real costs, not just predatory pricing strategies.

This is also a boost for citizen wealth, if it turns out right:

“A $100 transaction today, for example, means merchants currently pay banks as much as $1.30 in debit interchange fees, according to figures provided by the Nilson Report. Under the proposals, the merchant would pay no more than 12 cents, said David Balto, a fellow with the left-leaning Center for American Progress.”

Hey, let’s have that buck back!

Here’s the head scratcher though, thirteen (13) United States Senators wrote a letter to Fed Chair Bernacke complaining that the card companies and banks were getting stiffed.  I badly want to know who these 13 are, since their names probably comprise something that will be as close as we can come to a list of the Banking and Credit Senators or Anti-Consumer Senators, someone should come up with a better name.  I have to admit to having been foiled even after a half-hour of searching since I was only able to come up with 7 of the 13 names, so anyone who knows speak up:

  • Richard Shelby (R-AL) (Senate Banking Committee)
  • Mark Warner (D-VA) (home state of Capital One!) (Senate Banking)
  • Chris Coons (D-DE) (corporate registry state for many of these companies)
  • Tom Carper (D-DE) (see above)
  • David Vitter (R-LA)  (WTF?)
  • Judd Gregg (R-NH)
  • Evan Bayh (D-IN)  (looking for a goodbye present?)
Facebooktwitterredditpinterestlinkedinmail