When a UBS lobbyist wrote McCain’s housing policy

May 28, 2008

I honestly thought the McCain campaign’s reliance on high-priced corporate lobbyists couldn’t be any more ridiculous. I obviously underestimated the McCain campaign’s propensity for wrongdoing.

Republican presidential candidate Sen. John McCain’s national campaign general co-chair was being paid by a Swiss bank to lobby Congress about the U.S. mortgage crisis at the same time he was advising McCain about his economic policy, federal records show.

“Countdown with Keith Olbermann” reported Tuesday night that lobbying disclosure forms, filed by the giant Swiss bank UBS, list McCain’s campaign co-chair, former Texas Sen. Phil Gramm, as a lobbyist dealing specifically with legislation regarding the mortgage crisis as recently as Dec. 31, 2007.

Gramm joined the bank in 2002 and had registered as a lobbyist by 2004. UBS filed paperwork deregistering Gramm on April 18 of this year. Gramm continues to serve as a UBS vice chairman.

Given the spate of controversies surrounding McCain and the legion of lobbyists running his campaign, this is probably not welcome news for the Republican presidential hopeful. It’s one thing to offer voters an awful housing policy in the midst of a mortgage crisis. It’s altogether worse to offer an awful housing policy written by a lobbyist representing a foreign bank that would make a fortune as a result of the awful policy.

Keep the timeline in mind, too. Gramm was registered as a lobbyist for UBS through April 18, despite having signed on as McCain’s chief economic advisor months earlier. This necessarily means Gramm, the former senator from the great state of Enron, shaped McCain’s housing policy and lobbied for UBS at the same time.

Wait, it gets worse.

Josh Marshall adds some context to the extent of UBS’s role in the subprime mortgage fiasco.

TPM Reader KB sends in articles Businessweek and Forbes that show just how big a player UBS was. Forbes says that UBS is among the banks worst hit by the global credit crisis, particularly in their direct exposure to the US subprime market. According to Forbes, UBS has some $37 billion in write-downs on assets tied to bad US mortgages. In other words, the bank’s very life appears to be on the line in how the US government chooses to handle the matter.

As MSNBC reported, UBS deregistered Gramm as a lobbyist for the company on April 18th, though he continues to serve as a vice chairman of the bank. But that was fully a month after McCain’s speech outlining his own approach to the crisis.

Many of the lobbying connections the press has dug up on McCain have been embarrassing. But I’m not sure any have really had teeth until this one. After all, how much does the average voter care that Charlie Black represented a lot of foreign dictators? A stench, yes? But finding out that McCain had a major subprime lender bank lobbyist whispering in his ear when McCain told the public that it was basically tough luck if they lost their houses?

I was trying to come up with the perfect comparison here, but it looks like hilzoy beat me to it: “What’s next: the revelation that McCain’s policy on Iran is being written by a lobbyist for the makers of cruise missiles? Or that he has outsourced his health care policy to a lobbyist for the National Funeral Directors Association?” (I was going to go with taking advice on fire safety from an arsonist, but hilzoy’s are funnier.)

In any case, the truth is, McCain picking Gramm to be his chief economic policy advisor was always a spectacularly stupid thing to do. Some of the key factors contributing to the mortgage crisis and credit crunch are the direct result of Phil Gramm’s work in the Senate. Paul Krugman noted in March that most reasonable people seem to realize that we’re in serious need of financial reform and expanded regulation. That is, except, Gramm, who’s championed financial deregulation for years. “I’d argue that aside from Alan Greenspan, nobody did as much as Mr. Gramm to make this crisis possible,” Krugman said.

And now, the story is even worse. Remind me again how any serious person would consider voting for McCain?

Move-On, where are you? We need a commercial now, clips of Phil Gramm (a particularly smarmy gooper) praising the great god Deregulation intercut with clips of the staggering number of foreclosures and the housing market meltdown, ending with “John McCain’s economic advisor works for the banking industry. McCain’s plan to solve the mortgage crisis is LESS regulation, not more. He says homeowners are responsible for their own mistakes in taking out mortgages they couldn’t afford. Will John McCain take responsibility for his mistake in picking Phil Gramm as his economic advisor? Or will he continue to have his economic policies written by the banking industry? How about some straight talk on this, Senator McCain?”

  • Whenever I think of Hon. Sen. Phil “The Professor” Gramm, I recall him on the Senate floor opposing country of origin labeling for, among other foodstuffs, catfish. Apparently there is a species of fish in Thailand, or some such place that, while in no way related to American caught catfish, shares some superficial resemblance, and is therefore shipped (on the cheap, of course) to be sold in American markets as catfish. The professor was arguing that this Asian fish looked like catfish, ergo it might as well be catfish, ergo American fishmongers should be barred from distinguishing their real catfish from the Asian ersatz. It was as mendacious a piece of flawed reasoning that I’ve ever witnessed (aside from the “purple people eater” argument against fuel efficient autos), and I can only imagine that his prescriptions on the economics are equally as facile.

  • Kieth Olbermann and his team showcased great journalism last night on this – I hope other network and cable news channels watch and learn.

  • McPhony isn’t depending on the votes of serious people. He’s depending on the votes of silly people, undereducated people, easy-to-scare people, and every last bloodsucking leech that can make a buck off of his presidency.

  • Another thing that makes this story huge is that it connects the housing crisis with the accounting scandals that were far, far wider than Enron and Worldcom. This philosophy of removing barriers to conflicts of interest in the banking and investment communities is attributable to Gramm more than any other single person. The fact that he works for USB, and that his wife was on the board of Enron while he was on the Senate Banking Committee is just gravy on the potatoes.

  • Conventional wisdom in Texas once held that the most dangerous real estate on the planet was standing between Sen. Gramm and a news camera. I’m sure he will relish the opportunity to explain to the American people on camera how his advice to McShithead on the mortgage crisis was in their best interest.

  • This is such old news, I sometimes despair for the electorate. Not that I’m not glad that it’s coming out, I am. But honestly, there are those who’ve been astounded at the connection between McCain and Gramm for several years now. Gramm was chiefly responsible for ensuring that Enron Corp’s amdts in the overhaul of the Commodity Futures Exchange Act were adopted that ensured the weakest form of regulation for commodity futures traders, all while his wife was the head of the regulatory agency. The defeat of the adoption of those amdts. would not have ensured that Enron would not go greedy and collapse but it certainly would have provided more oversight and at least an ounce of prevention. Keep up the good work.
    The fascinating thing to me about Gramm’s UBS job is that it’s the first time in the life of Mr. Capitalism-Private is Better that he’s actually working in the private sector and not for the govt.

  • Couldn’t happen to a better guy. Just another anchor to tie to John McCain.

  • If used properly the association of McCain with Gram, and his swallowing and parroting Gramm’s BS, will hurt far worse with thinking voters than Obama listening to Wright sermons. Even some of the non-thinkers will wise up by election day. I’m still not convinced McCain will be ultimate foe, unless the thugs consider 2008 a write-off due to impending economic doom.

  • And now, the story is even worse. Remind me again how any serious person would consider voting for McCain?

    Once more, with feeling —

    Few will vote for McCain. Tens of millions, however, will vote against whichever lousy no good lib’rul socialist pinko elitist effete egghead the Democrats put up, and to do that, they’ll pretty much have to pull the lever labeled ‘McCain’.

    And it’s not like the rest of us grown ups haven’t done much the same during nearly every election we’ve ever voted in, so I don’t understand why this is so hard for anyone to grasp…

  • I think most of us consider MSNBC to be part of the MSM – more properly called corporatocracy media – so it did touch this story by breaking it. Question is – will any others pick it up? The silence since the NYT (another element of the corporatocracy) expose of Pentagon propaganda hucksters argues for the spirit of Eric’s prediction, if not the precise facts.

  • I’ve thought since he first appeared on the horizon that Phil Gramm was a putz without equal. What I remember most about him was the dismantling of the Texas supercollider. It was estimated to cost about $12B, half of which had been spent and Gramm was so incensed at this monumental waste of taxpayer dollars that he had it shoveled under. At a cost of over $2B. What an economics wizard!

  • “I’d argue that aside from Alan Greenspan, nobody did as much as Mr. Gramm to make this crisis possible,” Krugman said.

    Anyone know the basis for this slam?

    Everyone bitched at him when he spoke of the dot com boom as “irrational exuberance”.
    He called the housing market “frothy”.

    You can lead a horse to water, folks….

    Unless someone has data, I call “foul”
    Gramm can’t hide behind Greenspan

  • And then there’s this little bit of intrigue:

    ” UBS has told members of its former private banking team responsible for rich US clients not to travel to America, the Financial Times reported.

    “The Swiss bank has also made lawyers available to the more than 50 bankers involved, many of whom have left UBS since it decided last November to wind down its cross-border private banking business for US customers.”

    Daily Kos has more about tax evasion and other nastiness coming home to roost for Phil Gramm’s other employer – http://www.dailykos.com/story/2008/5/28/71936/7339/767/524023

  • I think this Gramm story may get some traction in the mainstream media, simply because the so-called “mortgage crisis” and associated housing issues impact so many people.

    I’d argue that aside from Alan Greenspan, nobody did as much as Mr. Gramm to make this crisis possible,” Krugman said.

    Anyone know the basis for this slam?

    Because Phil Gramm was one of the leading proponents of deregulating markets. He notably helped craft the Gramm-Leach-Bliley Act, which replaced the Glass-Steagall Act and opened up competition in the financial services industry. Many experts have tied the repeal of Glass-Steagall to the so-called mortgage crisis (which I’d call more of a Greedy Bastards Reap What They Sow Crisis) — the new legislation made financial industry consolidation easier, and paved the way for securitization of mortgages.

  • The problem with the person who wrote the policy is not so much that he was hired by USB — even though this makes a stronger story. The problem is that he was Senator Phill Gramm. After all, Gramm has been consistent — and consistently wrong — in his push for deregulation since the Reagan days. He would have given the same bad advice whether he had been hired by USB or not.

    I hope Obama will hit McCain on the ‘surrounded by lobbyists’ part, but I also hope he will also show how bad Gramm-style deregulation has been, Almost every financial scandal since the Reagan era has come from this, and we forget how many there have been, starting with Penn Square. Then there was a (sorry, still foggy this ealry) company — Equity Funding, Capital funding — can someone give me the right name. Then there was the insider trading story that turned Michael Milken from a ‘financial genius’ to someone who seems to be authentically reforming himself by his work on prostate cancer — as we hear every year. There’s Enron, and there were at least a couple more that I’ll add when the caffeine hits. And now the mortgage crisis.

    I hope Obama — either during the campaign or after he is elected, begins to make the case for re-regulation and the benefit of having the government work as a ‘countervailing force’ to unchecked capitalism.

  • With McCain, conflicts of interest abound. This is all the more reason why Cindy McCain has to release her full tax returns.

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