2007 Mortgage and 2008 Financial & Economic Crises
See also: Gramm-Leach-Bliley_Act#ControversySome economists state that the 1999 legislation spearheaded by Gramm and signed into law by President Clinton – the Gramm-Leach-Bliley Act — was significantly to blame for the 2007 subprime mortgage crisis and 2008 global economic crisis. The Act is most widely known for repealing portions of the Glass–Steagall Act, which had regulated the financial services industry. The Act passed the House and Senate by an overwhelming majority on November 4, 1999.
Gramm responded in March 2008 to criticism of the act by stating that he saw "no evidence whatsoever" that the sub-prime mortgage crisis was caused in any way "by allowing banks and securities companies and insurance companies to compete against each other."
Gramm's support was later critical in the passage of the Commodity Futures Modernization Act of 2000, which kept derivatives transactions, including those involving credit default swaps, free of government regulation.
In its 2008 coverage of the financial crisis, The Washington Post named Gramm one of seven "Key Players In the Battle Over Regulating Derivatives", for having "ushed through several major bills to deregulate the banking and investment industries, including the 1999 Gramm-Leach-Bliley act that brought down the walls separating the commercial banking, investment and insurance industries".
2008 Nobel Laureate in Economics Paul Krugman, a supporter of Barack Obama and former President Bill Clinton, described Gramm during the 2008 presidential race as "the high priest of deregulation," and has listed him as the number two person responsible for the economic crisis of 2008 behind only Alan Greenspan. On October 14, 2008, CNN ranked Gramm number seven in its list of the 10 individuals most responsible for the current economic crisis.
In January 2009 Guardian City editor Julia Finch identified Gramm as one of twenty-five people who were at the heart of the financial meltdown. Time included Gramm in its list of the top 25 people to blame for the economic crisis.
Read more about this topic: Phil Gramm
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