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. [See sidebar.]
“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.
News of Gramm’s involvement as a paid advocate for the banking industry, simultaneous with his unpaid work on McCain’s economic policies, comes as McCain’s campaign continues to reel from the purge of four other lobbyists. Two weeks ago, McCain banned lobbyists from advising him on the same subjects covered by their lobbying work.
As early as October, 2006, RealClearPolitics.com reported that Gramm was advising McCain on economic issues. Politico.com quoted McCain advisors saying that Gramm had input on McCain’s March 26 policy speech about the mortgage crisis. McCain himself has often cited Gramm’s influence as a way to establish his bona fides with economic conservatives.
When Gramm chaired the Senate Banking Committee, he wrote and passed deregulatory legislation in more than one industry, establishing himself as a pre-eminent foe of government regulation. McCain’s March 26 speech recommended further deregulation of the banking industry as his response to the mortgage crisis.
McCain and Gramm have been friends for more than a decade. McCain chaired Gramm’s 1996 presidential run and Gramm says the two men speak every day. McCain reportedly has hinted Gramm might serve as his Treasury secretary.
Last summer, Gramm was widely credited with saving McCain’s presidential campaign.
But even before lobbying emerged as an issue, some of his own advisors told the Washington Post last month that they questioned how Gramm’s legislative record might affect McCain’s campaign.
After Gramm passed a law easing regulation of energy-commodity trading, California experienced a sharp run-up in energy costs. The energy-trading company Enron was blamed and soon collapsed.
In 1999, Gramm successfully undid the Depression-era Glass-Steagall Act, removing the decades-old wall between commercial banking, which was heavily regulated, and investment banking, which was not. The Gramm-Leach-Bliley Act did not extend significant new regulation to investment banking.
McCain spokesman Brian Rogers said that Gramm is "not benefitting from John McCain's plan." He also said that McCain preferred to focus on homeowners "truly in need" and opposed bailouts for affected banks, an aspect of the crisis that was not addressed in "Countdown"'s report.
Some economists fault Gramm’s deregulatory successes, as well as lax enforcement of remaining oversight powers, not just for the subprime mortgage crisis, but for its spread to other sectors of finance. Even Treasury Secretary Henry Paulson has expressed interest in toughening regulations.
Jared Bernstein of the Economic Policy Institute told the Washington Post, “McCain is counting on people having very short memories and not connecting some pretty obvious dots here.”
The final UBS form listing Gramm’s work as a lobbyist says he was lobbying the Senate in the second half of 2007 regarding the Helping Families Save Their Homes in Bankruptcy Act. The bill would have let bankruptcy judges rewrite mortgage terms for Americans facing foreclosure so they could repay their loans and keep their homes.
The banking industry opposed this measure. The bill failed.