Republicans, you will be happy to know that the guy who is the sober alternative to Donald Trump is being advised on economic policy by the guy who helped lay the groundwork for most recent total collapse of the global economy.
Ted Cruz this week decided that one of his senior economic advisers will be former Texas Senator Phil Gramm—90s kids remember Phil Gramm! Looks like an old mouse and hates Bill Clinton? Yep, that’s the guy. He also has a long track record of opposing government regulation of Wall Street: “The distinguishing feature of Gramm’s career in public service is hostility to regulation in almost every form.”
Cruz is aligning himself here with a man whose actions were one of the direct causes of the 2008 financial crisis. Gramm played a key role in repealing the Glass-Steagall Act, thereby allowing huge banks to start gambling with everyone’s money, which threw the global financial system into chaos when the bets went bad in 2008. Thank you for that Phil! As if that’s not enough, Gramm also ensured that the government did not regulate derivatives, the wildly abused financial instruments that made the crisis so, so much worse. Thank you for that also, Phil! Barry Ritholtz explains:
The damage caused by rolling back Glass-Steagall pales compared with what resulted from the Commodity Futures Modernization Act of 2000. Gramm was a co-sponsor of the legislation, which exempted many derivatives and swaps from regulation. Not only was the law problematic, but it veered into potential conflict-of-interest territory.
At the time the legislation was under consideration, Gramm’s wife, Wendy, was on the board of Enron, which as we now know was one of the greatest accounting fiascos in history... At Wendy Gramm’s urging, then-Senator Gramm inserted what became known as the Enron loophole into the Commodity Futures Modernization Act. This allowed Enron to avoid most regulation in its energy-trading business. Enron, coincidentally, was a major campaign contributor to the senator.
So, Ted Cruz has selected as an economic adviser a man who was a direct cause of the global financial crisis and helped to blow up Enron, as well as being thoroughly corrupt.
That’s what America is all about.