Former financial regulator Bill Black mocks Republican claims of ‘bigotry’ against ‘the success of CEOs’.
JAISAL NOOR, PRODUCER, TRNN: Welcome to the Real News Network. I’m Jaisal Noor in Baltimore. And welcome to this latest edition of the Black Financial Fraud Report. Now joining us from Bloomington, Minnesota is Bill Black. He’s a former bank regulator and author of The Best Way to Rob a Bank is to Own One. As always, Bill, thanks for joining us. BILL BLACK, ASSOCIATE PROF. OF ECONOMICS AND LAW, UMKC: Thanks for having me. NOOR: So Bill, tell us what you have for us this week. BLACK: Okay. So we have the gift that keeps on giving. This is Phil Gramm, former Republican senator from the state of Texas, former chairman of Senate Banking Committee. The lead person in Congress on the repeal of Glass-Steagall through the Gramm-Leach-Bliley Act of 1999 with the active support of President Clinton and such, who the Republicans chose to make their lead featured witness in an attack on financial regulation just a few days ago in which Phil Gramm said that the only still-legitimate form of bigotry in the United States as treated by the media was to attack the successful. PHIL GRAMM: It goes way beyond paperwork. What all this is about is political demagoguery. It’s the one form of bigotry that is still allowed in America, and that’s bigotry against the successful. BLACK: And in particular he was outraged on attacks on his friend, the guy stepping down from running AT&T who he said was only going to get something like $68 million. And he considered people like this CEO to be the most exploited people in America, because they added so much value. NOOR: It sounds like it. Yeah, it sounds like pure exploitation. BLACK: Yeah. It’s the first word that came to mind when I heard that he got roughly $150 million. I don’t think that could serve him, at his age, through more than about 100,000 times his lifespan that remains. NOOR: So Bill, talk about more of his comments. We understand that this was an effort to repeal the Dodd-Frank Act. BLACK: Yeah. It’s part of a general assault. It’s interesting given the Republican primaries as well, that they’re making it so absolutely frontal that they want to A, destroy Dodd-Frank and free up bankers, the exploited class in America. But this is not just the Dodd-Frank repeal. The House is also passing bills that effectively would destroy pretty much all regulation, not just financial regulation. And so it’s an incredibly broad assault on the entire concept, really, that there should be regulation. That instead that we should go to almost complete laissez-faire system and let bankers and CEOs do pretty much whatever they please without even the pretense of regulation, which is of course what we have now. NOOR: So we know that with President Obama in the White House for the time being, these proposals have very little chance of advancing and becoming into law. But talk about what would happen if a Republican such as frontrunner Donald Trump would take over when President Obama’s term expires. BLACK: Oh, well I think enough of us would probably leave the country that that would be the real problem for the United States. But you don’t need a Trump. And that’s really the point. This is getting, these votes that I’m talking about to destroy Dodd-Frank and to pretty much destroy financial regulation are getting 95 percent support or more among rank and file Republicans in the House and the Senate. So if they had the White House, these things would already be law. And of course on the margins they are chipping away at Dodd-Frank. President Obama agreed to a quote-unquote compromise that already delayed significant important sections of Dodd-Frank, and the Republicans are making it clear that they’re going to use every vote possible on things like the debt ceiling, on things like the transportation bill to demand further weakening of regulation, particularly financial regulation in the United States. So this isn’t just an issue if the Republicans get control of all three branches of government. It’s a very live issue now. NOOR: And Bill, I didn’t want to pass up the opportunity to discuss former senator Gramm’s history and involvement in repealing things like Glass-Steagal and the Commodity Futures Modernization Act. Give us a little more about his history, and more about–so just to contextualize the fact that it’s this particular person giving this testimony in front of Congress. BLACK: So Phil Gramm is an economist. He was an academic. Very conservative. Came to Washington eager to roll back financial regulation. This is well before Dodd-Frank, of course. Ended up being chairman of Senate Banking. Was incredibly active, as you said, in both of these so-called modernization acts that President Clinton was also heavily supportive of. One got rid of Glass-Steagall, violating the rule that if it ain’t broke, don’t fix it. So Glass-Steagall had worked brilliantly for nearly 50 years before the regulators, particularly Alan Greenspan, turned it into swiss cheese by regulatory exceptions, but that wasn’t good enough for Gramm and Clinton. They decided to virtually eliminate the act. The second one was of course the destroy Brooksley Born law. That’s Commodities Future Modernization Act, which is an oxymoron, that was designed to essentially make it impossible to regulate broad classes of financial derivatives. And that too ended in disaster. But it isn’t just Phil Gramm. It’s also his wife Wendy Gramm. Also an economist, also extremely conservative, who ended up as chair of the Commodities Future Trading Commission after Brooksley Born. And so in addition to that act that I talked about, Wendy Gramm in her role as chair of the CFTC as Brooksley Born’s actually sort of second successor, passed a special rule that was of enormous benefit to Enron’s fraudulent leaders in producing the California energy crisis. So this further eliminated jurisdiction over another class of trading derivatives that Ken Lay and Skilling used to create the California energy crisis. And of course, Wendy Gramm at that point was on the board of directors of Enron. And Phil Gramm was taken care of very nicely by a very large bank after his, he retired from the government as well. So these are, this family, the Gramm family, are principal architects. If you want to blame members of the legislature if would be Phil Gramm. If you’re going to blame members of the regulatory ranks, it would be Alan Greenspan, of course, first, but Wendy Gramm second. And then of course you can add President Clinton to that list, because he was not forced into either of these things. He was a strong proponent of gutting all financial regulation. NOOR: Well Bill, thanks so much for that report. And of course it makes total sense why former senator Gramm would be giving this testimony in front of Congress. BLACK: It is deliberate symbolism on the part of the Republican party. This–we are the architects of this, and you put us back in power and we plan to go to the max. NOOR: Well, thanks so much for joining us, Bill. BLACK: Thank you. NOOR: Thank you for joining us at the Real News Network.
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