Texas homeowners in default? Blame Phil Gramm

Former Sen. Phil Gramm, looking as smarmy as ever in this picture, bears chief responsibility for the deregulation of CDOs, CDSs, SIVs and related subprime mortgage-driven investment “vehicles,” says David Corn.

The story of how this same bit of 2000 legislative legerdemain benefited Enron has already been told. But, unknown to anybody else in Congress at the time, it would also benefit the Bear Sterns of the world, as well as Gramm’s current employer, Swiss über-bank UBS.

Can you really imagine the idea of economics wingnut as the next Secretary of the Treasury?

Read the whole story for more on his shenanigans and a thumbnail sketch of how the process worked for investment banks.

Barack Obama should directly ask Gramm if he feels any guilt over Enron’s actions and his abetting of them.

Then, ask if Gramm feels any guilt over the subprime bubble.

Texas Observer has more on this issue.

University of Texas economist James Galbraith says Gramm is “not against government at all. His career has been finding ways to make money for his friends. It’s a predator relationship. (Government) is his food supply.”

And Hilzoy has a good roundup of the life and times of Phil Gramm.

That said, let me once again state one other thing.

For Democrats to pile on Gramm about the Gramm-Leach-Bliley Act of 1999 is hypocritical. A majority of Democrats in both House and Senate voted for the bill. President Clinton was behind it from the start.

And, as the Observer story notes, Clinton Treasury Secretary Robert Rubin was a strong supporter of the Commodity Futures Modernization Act’s provisions.

That said, for loyal Texas GOP voters in default, there is a bit of schadenfreude in all this, if not more than a bit.