MORTGAGE CRISIS SHOWDOWN ON TUESDAY

Tuesday the Senate will vote on legislation passed by the House to ameliorate the mortgage crisis. The bill passed with overwhelming bipartisan support in the House and there is a veto-proof majority. Bush has vowed to use his puppets in the Senate, McConnell and McCain, to filibuster the legislation, which would forestall foreclosures for millions of families, and kill it there. Democratic Senate Majority Leader Harry Reid believes he can overcome the McCain/McConnell Obstructionist Express on Tuesday because there are enough frightened Republicans who know that a vote to filibuster the popular bill would help ensure their defeats in November.

There is no doubt that reflexive rubber stamps Susan Collins (R-ME), Norm Coleman (R-MN), John Sununu (R-NH), Gordon Smith (R-OR), perhaps even lily-livered reactionaries Elizabeth Dole (R-NC) and Ted Stevens (R-AK), currently down in the polls and losing to progressive Democrat Mark Begich, are afraid to support their reactionary party. Reid feels that the pressure from their constituents-- while having no effect on arrogant and crazed red state extremists like James Inhofe (R-OK), Pat Roberts (R-KS), John Cornyn (R-TX), Lindsey Graham (R-SC), the two nutcases from Wyoming, the two nutcases from Mississippi, Lamar Alexander (R-TN), Jeff Sessions (R-AL), Saxby Chambliss (R-GA) and, of course, Miss McConnell (R-KY)-- will force enough Republicans to cross the aisle and vote with the Democrats to overcome the filibuster and present Bush with veto-proof majorities in both Houses of Congress. Governors from both parties have endorsed the bill and have told Republicaan senators that it is urgent.

Today's Washington Post reports that there is a cascading effect of problems up and down the banking foodchain thanks to a few bigtime, unregulated, sleazy operators in the subprime market world: the speculators the Bush Regime has taken such good care of.

Late payments on home-equity loans are at a record high, according to fresh data from the Federal Deposit Insurance Corp. The delinquency rates on loans for cars, small businesses and construction are spiking to levels not seen in a decade or more.

Unlike last year, when soaring mortgage defaults sparked a crisis of confidence in the financial system, the root of these problems is the downturn in the broader economy. Simply put, consumers and businesses are strapped for cash with job losses growing and retail sales falling, economists said.

...The institutions most at risk in this new phase of the credit crisis are regional and local banks, many of which stayed away from subprime mortgages. These firms are key drivers of economic activity in communities across the country. Without them, consumers would lose a source of personal loans. Small businesses would struggle to stay afloat. Construction companies often can't finance local projects without these banks.

In the backdrop of this were hundreds of arrests of Wall Street and mortgage broker criminals who manipulated the mortgage market for short term profits, causing it to implode. Two ex-Bear Stearns executives, Ralph Cioffi and Matthew Tannin, were dragged out of their offices by the FBI in handcuffs and indicted on securities fraud charges in connection with the $1.4 billion collapse of two hedge funds. They were charged with deceiving investors-- something made more prevelant in the last half dozen years due to dysfunctional, ideological Bush Regime policies geared towards wrecking the federal regulatory agencies.

So far "Operation Malicious Mortgage" has led to arrests of more than 400 crooked real estate mortgage operators most of whom were charged with lending fraud and foreclosure and bankruptcy scams. Bush Regime policies-- and every single one of them was rubber stamped by John McCain without a peep or a question (some originating with McCain's chief economic advisor, lobbyist/ex-Senator Phil Gramm-- has managed to wipe out trillions of dollars in home equity, basically driving property values down to early 1990s levels). That is one of the keystones of the Bush Economic Miracle that John McCain seeks tp perpetuate. There has even been talk about making Gramm Secretary of the Treasury.

Perp walks (but not Bush yet):




UPDATE: HOUSTON CHRONICLE LOOKS AT PHIL GRAMM'S ROLE IN THE CURRENT ECONOMIC MELTDOWN

There's plenty of blame to go around for the disaster Americans are going through in terms of housing and energy and ultimately... well, the buck stops with Bush. But McCain has backed every single piece of the Bush policy agenda in both areas and McCain's chief economic advisor, Phil Gramm is one of the original architects of the underlying policies that attempted to do away with regulation and oversight. McCain who has admitted that he doesn't know anything about economics-- and implies that he doesn't care to find out-- told the Houston Chronicle that "Gramm is the smartest economist and political strategist he knows." Now a lobbyist for a shady Swiss investment firm, Gramm is the Co-chairman of McCain's ill-starred campaign.

Gramm's coterie of critics say his actions as a Texas senator contributed to today's mortgage meltdown and energy price speculation that has driven up oil prices.

"Gramm's particular area is opening up financial markets to untrammeled dominance by speculative forces," said James K. Galbraith, a University of Texas economist who is advising Democratic candidate Barack Obama. "He's the sorcerer's apprentice of financial instability and disaster."

Democrats also say that Gramm's post-Senate lobbying activities conflict with McCain's promise to steer clear of lobbyists in his presidential campaign. And left-leaning critics point at Gramm for turning McCain, a longtime fiscal conservative who voted against President Bush's tax cuts, into a supply-sider who wants to make those tax cuts permanent.

..."With advisers like this, it's no wonder John McCain doesn't understand the economy," said DNC spokesman Damien LaVera. "John McCain's decision to outsource his economic agenda to people like Phil Gramm is one more reason he is the wrong choice for America's future."

...As chairman of the Senate Banking Committee, Gramm was instrumental in pushing major banking deregulation in 1999 that critics say has contributed to the current mortgage crisis.

The bank deregulation law, known as the Gramm-Leach-Bliley Act, was the most important update in banking laws since the New Deal. Its most important feature: breaking down walls between commercial banks, investment banks and insurance companies.

Gramm's critics say the deregulation of commercial banks contained in the law made it easier for banks to push risky subprime mortgages on lower-income customers.
"His fingerprints are all over a lot of pretty serious economic fallout from deregulation he championed and continues to do so," said Obama adviser Jared Bernstein, an economist with the liberal-leaning Economic Policy Institute.

...Gramm used his prominent position in the Senate to promote less federal oversight of the energy industry. Democrats single out a provision pushed by Gramm in 2000 that exempted energy trading on electronic platforms from federal regulation.

The provision was dubbed "the Enron loophole" because it was backed by the Houston-based energy trader Enron, on whose board Gramm's wife Wendy sat at the time. Democrats give Gramm full credit for the proposal; Gramm says that he used language that was "essentially the same" as a provision approved months earlier by the House.

California officials blamed the provision for precipitating the electricity crisis in California in late 2000 and 2001. More recently, Democrats say that energy traders have used it to drive up energy prices. Sen. Carl Levin, D-Mich., likens the action to taking "the cop off the beat."

Gramm denies everything and says his lobbying on behalf of "death bonds" was a kind of public service. Even McCain's campaign refuses to defend these shenanigans.