Bill Clinton defends Phil Gramm
On this past Sunday’s Meet the Press, Bill Clinton was praising John McCain, while going out of his way not to say anything really laudatory regarding Obama.
In this interview in Business Week, Clinton goes further by defending the repeal of Glass-Steagall by stating: "No, because it wasn’t a complete deregulation at all."
Not helpful, Bill.
Now the Wall Street Journal Editorial Board has taken that ball and run with it.
The most choice statements in that editorial, 2 in succession:
"The least regulated of our financial institutions — hedge funds — have posed the least systemic risks in the current panic. The big investment banks that got into the most trouble could have made the same mortgage investments before 1999 as they did afterwards."
This perpetuates the lie, that McCain is advancing, that this is a credit crisis, not an asset crisis. The reason banks won’t lend to each other is because they don’t know is the value of the assets they are holding as collateral.
My limited understanding regarding Mortgage Backed Securities and Collateral Debt Obligations is that those instruments would not have passed muster with the regulatory agencies who provide the oversight. (of course said agency would actually have to want to provide oversight, but that’s a whole other story inherent to the Bush Administration)
Furthermore, one of the reasons AIG had to be bailed out is because they provided insurance on said derivatives. [Any economists out there, feel free to correct me]
As an aside, of note in the Business Week article is that Robert Rubin is an advisor to the Obama campaign. If anyone was wondering why Obama was supporting any kind of bail out package (along with his association with Chicago School economists) that aids Wall Street, look no further than there.