Who does John McCain turn to when he needs economic advice?  Why Phil Gramm, the guy who called America a nation of "whiners."

And what role does Gramm have in the current banking crisis?  As David Corn reports today, when Gramm was the Republican chairman of the Senate banking committee, he was an anti-regulatory crusader whose actions blazed the trail for the sub-prime meltdown:

[E]ight years ago, Gramm, then a Republican senator chairing the Senate banking committee, slipped a 262-page bill into a gargantuan, must-pass spending measure. Gramm’s legislation, written with the help of financial industry lobbyists, essentially removed newfangled financial products called swaps from any regulation. Credit default swaps are basically insurance policies that cover the losses on investments, and they have been at the heart of the subprime meltdown because they have enabled large financial institutions to turn risky loans into risky securities that could be packaged and sold to other institutions.

As Bloomberg reports this morning, the unregulated market for swaps is at the heart of the Lehman failure.

Gramm was supposedly banished from McCain land, but he attended a meeting in Aspen last month of top McCain advisers  that included Rick Davis, Steve Schmidt and Charlie Black.

Of course, John McCain himself pressured federal regulators to lay off investigating Charles Keating when his wife had money invested in Keating’s Lincoln Savings.  The result was the bankruptcy of Lincoln, which cost the government $3 billion. 

Small wonder McCain thinks the current financial crisis is all "psychological," and the fundamentals of our economy are "great" (YouTube)

Why Obama is not laying blame for the crisis at McCain’s feet is something of a mystery.

Jane Hamsher

Jane Hamsher

Jane is the founder of Firedoglake.com. Her work has also appeared on the Huffington Post, Alternet and The American Prospect. She’s the author of the best selling book Killer Instinct and has produced such films Natural Born Killers and Permanent Midnight. She lives in Washington DC.
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