Circulating on Wall Street:
SUBJECT: REQUEST FOR URGENT BUSINESS RELATIONSHIP
DEAR AMERICAN:
I NEED TO ASK YOU TO SUPPORT AN URGENT SECRET BUSINESS RELATIONSHIP WITH A TRANSFER OF FUNDS OF GREAT MAGNITUDE.
I AM MINISTRY OF THE TREASURY OF THE REPUBLIC OF AMERICA. MY COUNTRY HAS HAD CRISIS THAT HAS CAUSED THE NEED FOR LARGE TRANSFER OF FUNDS OF 800 BILLION DOLLARS US. IF YOU WOULD ASSIST ME IN THIS TRANSFER, IT WOULD BE MOST PROFITABLE TO YOU.
I AM WORKING WITH MR. PHIL GRAM, LOBBYIST FOR UBS, WHO WILL BE MY REPLACEMENT AS MINISTRY OF THE TREASURY IN JANUARY. AS A SENATOR, YOU MAY KNOW HIM AS THE LEADER OF THE AMERICAN BANKING DEREGULATION MOVEMENT IN THE 1990S. THIS TRANSACTIN IS 100% SAFE.
THIS IS A MATTER OF GREAT URGENCY. WE NEED A BLANK CHECK. WE NEED THE FUNDS AS QUICKLY AS POSSIBLE. WE CANNOT DIRECTLY TRANSFER THESE FUNDS IN THE NAMES OF OUR CLOSE FRIENDS BECAUSE WE ARE CONSTANTLY UNDER SURVEILLANCE. MY FAMILY LAWYER ADVISED ME THAT I SHOULD LOOK FOR A RELIABLE AND TRUSTWORTHY PERSON WHO WILL ACT AS A NEXT OF KIN SO THE FUNDS CAN BE TRANSFERRED.
PLEASE REPLY WITH ALL OF YOUR BANK ACCOUNT, IRA AND COLLEGE FUND ACCOUNT NUMBERS AND THOSE OF YOUR CHILDREN AND GRANDCHILDREN TO WALLSTREETBAILOUT@TREASURY.GOV
YOURS FAITHFULLY MINISTER OF TREASURY PAULSON
(Hat tip: Manny Klausner)
The reasoning goes that because the CFMA deregulated credit default swaps, then that of course opened the door to subprime lending. But of course anyone with a rudimentary knowledge of economics would realize that that was not the problem. Being able to securitize the risk of default and market it is just like stock options and oil futures, it is a way to spread risk, not create it. The problem of course was nobody was accurately pricing the risks of credit defaults. In a housing bubble that still would have happened even if all the risks were left bundled with the original debt instruments.
Credit default swaps did not create risk, they didn't magnify it, all they did was spread it around.
The sheer economic ignorance driving this, the most intrusive government intervention in the market since FDR, is truly stunning. FDR and the New Deal was dead wrong, but at least they had dead wrong prominent economists advising them. This whole gagglefark is the sort of "from the gut" thinking that you'd expect from Stephen Colbert. And regardless of how exactly we divvy up partisan blame for how we got here (a rather pointless exercise in and of itself), John McCain and the GOP and Barack Obama and the Dems are both dead wrong on where we go from here.
I was just reading a bit about the Panic of 1907, which this latest round bears a lot of resemblance to. Three big events pulled the nation through that crisis and one of them was when John D. Rockefeller pledged half his fortune to maintain the credit of the United States. I guess if he were alive today, at least one American would email WALLSTREETBAILOUT@TREASURY.GOV.
I forget, was Phil Gramm the emperor of the United States when that bill was enacted, or was it passed by both houses of Congress and signed by President Clinton?
http://volokh.com/posts/1222146031.shtml#444539
The Angry Bear post you linked to is datelined Tuesday, September 23, 2008, 9:17 AM.
Christopher Hayes' posting at The Nation's Capitolism blog is datelined Monday, September 22, 2008, 3:59pm. And note his update: He didn't originate it, but received it in email.
It turns out McCain's campaign manager Rick Davis has lied about being on Freddie Mac's payroll up until the bailout.
Look, this is BIPARTISAN rot. Both parties suck up to Wall Street. I have no problem admitting Democratic relationships with Fannie Mae/Freddie Mac and others are sleazy. But Phil Gramm's a sleazeball as well.
The problem is we are in an election campaign and everything therefore has to be all the other party's fault.
"It turns out McCain's campaign manager Rick Davis has lied about being on Freddie Mac's payroll up until the bailout."
Based on an anonymously sourced account in the error-riddled Grey Dowager? Please provide more credible information.
"But Phil Gramm's a sleazeball as well."
Actually no. It is entirely possible that Gramm suffers from an overly optimistic view of either human nature or the capacity of markets to function in an environment where regulations are so seriously warped by that nature.
Dodd, Bush, Rangel, et. al. likely suffered from a similar excess of confidence in the power of regulations to achieve social change and secure opportunity for their constituents.
Raines, Johnson, Gorelick, et. al. on the other hand did take advantage of their position to enrich themselves, as did hundreds of thousands on main street who took advantage of the bubbling market and the implicit fed guarantee of mortgages to flip their real-estate investments for short-term tax-free capital gains. Likewise Wall Street debt packagers.
Tragedy of the commons 101.
How do you explain the party-line Dem vote against stopping it in 2005?
HIS FIRM was paid by FM. Its a different thing. Not quite like the $100K+ in direct donations received by Obama.
As for Phil Gramm, I am old enough to remember when he actually campaigned for the Republican Party presidential nomination on the single argument that he could raise more money from special interests than anyone and therefore was the best guy to run against the Democrats. Seriously.
So no, it's not that he's some principled conservative who has an optimistic view about markets.
http://www.campaignmoney.org/pressroom/2008/09/24
/davis-freddie-mac
Again, the rot is bipartisan.
Link
FYI...per my e-mail, the original was written and posted by spencer at Angry Bear.
I'm still only seeing two anonymous sources. I'll need more than the echoes of that around your chamber. And you still haven't answered my question regarding Dem obstruction of Fannie Mae reform. I'm also curious why the R majority couldn't get it out of committee.
Bush of course was pimping no-down-payment mortgages at the time.
I still don't think Gramm was corrupt (nor was Frank, Rangel, Bush, et. al.), they just let their various and at times coinciding ideological goals get in the way of their sense. They generated special interest money because the interests were interested in what they were already doing, not the other way around. Dodd is mostly in this category, but got a little on the side from Countrywide.