Gramm Not to Blame, Says Gramm.

Last week UBS AG, Switzerland’s largest bank, entered into a deferred prosecution agreement on charges of conspiring to defraud the United States by impeding the IRS.
UBS agreed to pay $780 million in fines, and to release heretofore secret account information on US customers of the bank.

In June of 2008, UBS executive Bradley Birkenfeld pleaded guilty to charges of conspiracy to defraud the government. In November of 2008, UBS executive Raoul Weil was indicted on similar charges. He is now a fugitive. This indictment also referred to unindicted co-conspirators who “occupied positions of the highest level of management within the Swiss bank” that oversaw legal, compliance, tax, risk and other issues.

In 2002, Phil Gramm resigned his Senate seat, along with his spot on the Senate Banking Committee, and took a position as vice chairman of UBS Investment Bank.

Last week, Rupert Murdoch’s Wall Street Journal published an op-ed piece by Gramm titled “Deregulation and the Financial Panic,” in which he claims that loose money and politicized mortgages are responsible for the recent worldwide economic melt-down.

Gramm said that if the Gramm-Leach-Bliley Act of 1999, which removed barriers between commercial and investment banks enacted by the 1932 Glass-Steagall Act, had caused the credit crash, it would have first struck in Europe, which never had Glass-Steagall regulations.

Gramm went on to cite Bill Clinton’s defense of the Commodity Futures Modernization Act of 2000, which deregulated futures markets, and included Gramm’s “Enron loophole.” (Apparently Gramm’s down with Bubba now.)

According to Gramm, the current worldwide economic crisis happened because in 1995, the Department of Housing and Urban Development raised their quota for low and moderate- income housing loans from 30 to 40%. This brought about “GSE losses.” He means government sponsored enterprises, not grapefruit seed extract. According to the Congressional Budget Office, GSE losses will total $240 billion in 2009. Hell, the first half of the TARP could have covered that.

Gramm’s article was adapted from a talk he gave at right-wing think tank The American Enterprise Institute. I saw this on C-SPAN, and wondered what kind of nut would cross the street to hear Phil Gramm speak. I got a clue during the Q&A, when a questioner challenged his statement that “nobody foresaw a fall in home values,” saying that Lyndon LaRouche did. The next question came from a Mother Jones reporter who ambushed him with one of his own quotes, asking how he could reconcile his statement in light of the facts. Gramm blathered on for a few minutes without ever answering.

What horseshit.