Comments on: The Bet That Blew Up Wall Street

Steve Kroft On Credit Default Swaps And Their Central Role In The Unfolding Economic Crisis

[one4gipper]

krisd999, you are in the majority of Americans that believe there is a disconnect between morality and prosperty. I would adduce that you cannot have one without the other.

I believe that America is about to get a real dose of this Natural Law.

[krisd999-2009]

You see, congress doesn''t have time to read any of these laws they vote on. They are busy, even until a few months ago, investigatig steroid use by baseball players. Issues like abortion, flag burning and gay marriage are much more important to us than wether we have jobs and homes and if our 401ks are being looted.

[mhglenn]

The final answer I want is: just who lobbied to have that language put in? It''s not exactly something a Congress-critter would think-up on their own. And I''d really like something a little more precise than "the industry," thank you very much.

[djlny]

To mhglen, all hyperbole aside, while it may indeed be important to look at a bill''s sponsors, it only provides a snapshot of the power structure of the Congress at that moment in time and provides only a little insight as to the actual support or opposition of the provision amongst the party itself or its'' individual members. In fact, unpopular bills that require co-sponsors of the opposite party are usually jagged little pills to swallow and need co-sponsorship to survive (like our little 700 B bailout gem). The roll call and notes on record indicate the positions of the members and they do not indicate any democratic party opposition to the now disputed provision anywhere in the congressional record. To hang this on the sponsors alone one of whom even voted against the final omnibus is misleading. That the democratic party was opposed to this measure is a laughable proposition and rear-view mirror posturing. This is all an aside, the AIG bailout was substantial but 60 trillion of CDS didn''t bring down Wall Street only its'' unlucky bettors. The guys who sold the swaps to cover, should have known the credit worthiness of swap buyers - otherwise what was the use in dealing unless it was to lower costs and mislead the ultimate guarantors of the securities (FNM FRE?). Hmmmm

[mhglenn]

To dlawrenceny:

Considering the net results we typically receive from them, I sometimes wonder if that wouldn''t be a half-bad idea.

Seriously though, that sentence was indeed badly worded. Hopefully those who did vote for the bill will be called to account by their constituencies, though considering the survival rate of Congressional incumbents I consider that a forlorn hope at best.

No; it is my opinion that it is far more worth my time to publicize those who authored and co-sponsored the bill, as it is very hard for them to deny that they knew what they were doing, or at the very least *should* have known. Perhaps a history exam should be one of the prerequisites for public office?

Finally, in an effort to assuage your feelings, may I point out there are no less than three ''D''s among the bill''s sponsors. So, please stop viewing this as a hatchet-job.

[djlny]

mhglen, "As to the roll call, I have little interest in the rank-and-file, most of whom I sincerely doubt bothered to read the bill before tossing in their vote and stampeding out the door."

Breathtaking! Why bother with congress at all? So we could save a lot of money and eliminate this duplicitous body?

[djlny]

You listed almost 1/2 of the democratic members who voted against it!! Wow. Can you find one democratic Senator who is on record for opposing this based in the disputed legislation (CFMA 2000). It is a matter of Congressional record. You cannot find anything supporting this implication because it isn''t there. So drone on with 1/2 clips and misinform, but do you serve democracy or "your team"?

[mhglenn]

To dlawrenceny:

Doubtless to your astonishment, I normally vote Republican: they usually have a much firmer grasp of reality. However, I do not consider them to have a monopoly when it comes to scruples, nor when it comes to good judgment.

As to the roll call, I have little interest in the rank-and-file, most of whom I sincerely doubt bothered to read the bill before tossing in their vote and stampeding out the door. No; I''m far more interested in those who took the time and effort to *write* the thing, then time its introduction to occur at the last moment of the 2000 legislative session.

Please think about this for a moment, then respond.

[mrsshf]

The implication that the entire Senate voted Aye on the Bill in question demonstrates an incredible ignorance of how bills become law in the US. This bill was rolled into an omnibus spending bill, in this case H.R. 4577 [106th]: Consolidated Appropriations Act, 2001. The vote on the omnibus bill was nearly along party lines in the Senate, with a few crossing the isle on either side (including, amazingly, Phil Gramm, who voted against it). However the Republicans in the Senate, including John McCain, overwhelmingly voted for it, and Democrats, including Feinstein, Dodd, Kerry & Biden voting against. The vote was made, by the way, on June 30, not in the final hours of the session.

Regarding this supposed unanimous vote, the bill had to go into committee to work out the differences between the Senate and House versions of the bill. The bill came out of Committee on December 15th, where it may well have been voted upon "unanimously," since this would be another procedural vote to confirm the agreement of the differences worked out, not a vote on the Bill, itself, since it had already been voted on.

Like the Gramm Leach Bliley Act, I have no idea why in the world Bill Clinton would have signed this bill since neither bill was voted through with a veto-proof majority. But he did, and the bill became law. The rest, as they say, is history.

[djlny]

mhglen, To include only the plan authors in a republican controlled congress is disingenuine and deliberately misleading. A roll call of the vote is the more informative and included in the same artcile you ripped this from. "157 Democrats and 133 Republicans voted for the appropriations bill. 51 Republicans and 9 Democrats opposed." You are a misleading garbage monger. Actually the democratic party supported this popular measure by a larger margin than the republicans did!!!

[mhglenn]

My apologies for the repeat.

[mhglenn]

Very illuminating article, but incomplete: No mention was made as to the *authors* of the Commodity Futures Modernization Act of 2000.

So, please allow me to do a little filling-in. Quoting from Wikipedia:

"(H.R. 5660) was introduced in the House on Dec. 14, 2000 by Rep. Thomas W. Ewing (R-IL) and cosponsored by Rep. Thomas J. Bliley, Jr. (R-VA) Rep. Larry Combest (R-TX) Rep. John J. LaFalce (D-NY) Rep. Jim Leach (R-IA) and never debated in the House.

"The companion bill (S.3283) was introduced in the Senate on Dec. 15th, 2000 (The last day before Christmas holiday) by Sen. Richard Lugar (R-IN) and cosponsored by Sen. Peter Fitzgerald (R-IL) Sen. Phil Gramm (R-TX) Sen. Chuck Hagel (R-NE) Sen. Thomas Harkin (D-IA) Sen. Tim Johnson (D-SD) and never debated in the Senate."

Just a little more info that my fellow voters might be more than a little interested in. . . .

[mhglenn]

Very illuminating article, but incomplete: No mention was made as to the *authors* of the Commodity Futures Modernization Act of 2000.

So, please allow me to do a little filling-in. Quoting from Wikipedia:

"(H.R. 5660) was introduced in the House on Dec. 14, 2000 by Rep. Thomas W. Ewing (R-IL) and cosponsored by Rep. Thomas J. Bliley, Jr. (R-VA) Rep. Larry Combest (R-TX) Rep. John J. LaFalce (D-NY) Rep. Jim Leach (R-IA) and never debated in the House.

"The companion bill (S.3283) was introduced in the Senate on Dec. 15th, 2000 (The last day before Christmas holiday) by Sen. Richard Lugar (R-IN) and cosponsored by Sen. Peter Fitzgerald (R-IL) Sen. Phil Gramm (R-TX) Sen. Chuck Hagel (R-NE) Sen. Thomas Harkin (D-IA) Sen. Tim Johnson (D-SD) and never debated in the Senate."

Just a little more info that my fellow voters might be more than a little interested in. . . .

[barrychapnic]

I would like a more definitive identification of who pushed for the de-regulation of these securities 8 years ago. Yes it is clear Phill Gramm was the instrument but who was the author, was this a David Rockefeller move?

[djlny]

The Obamacons would do well to remember that their democratic party is once again vying for control of the largest check writing machine on the planet - one that they have largely run for the last 100 years (don''t forget the last two). Obama didn''t come from Disneyland either, he is a product of the Chicago political machine. Money=power folks. So wake up people, they can only pretend to redistribute wealth for a little while. Soon enough they will have to go back to the business of creating it. Many more American soldiers died on the battlefield during that tenure as well and I am not even including WWI or WWII. Lets not even get started on the civil war - YIKES!. I mean if we can dredge up a republican presidency for the depression, lets have a history lesson. Populism is a double edged sword and there is nothing new under the Sun. Delude yourselves. 3rd party candidates are just a way to split the majority allowing in people like Clinton and Teddy Roosevelt even though the vast majority didn''t support them in their first term ( the only presidents elected with a lower percentage of the population that GWB) So smoke your peace pipe and learn to shoot.

[sbhamrick]

If we truly have no idea how much liability is still out there regarding these credit default swaps, why are we (the taxpayer) still bailing these financial institutions out.

I say, let them all go bankrupt and deny the hedge fund traders the billions they would otherwise reap!

[payasyougo]

"We need a plan; a long term plan to deal with this level of corruption."
----
We are not going to get one with our gullible public, each half blaming the other. As long as the politicians have the voters pointed at each other...

Our founding father put a wonderful plan together for our leadership but they didn''t envision the legalization of corruption called lobbyists.

It would require the taxpayers of America get control back from their government. It''s not going to happen with the current government.

History dictates most civilized nations have a specific pattern to their own demise. This one is easy to see coming.

[otrama]

Decimus,
Your plan is something that I agree with, but I have been seriously concerned that the difficulty of any 3rd party movement has been made even more impossible by Obama''s decision to not take the federal campaign funding.
He has successfully brought "Chicago Street Politics" to the national level with the assistance of many good intentioned supporters. The amount of clout that Democrats now enjoy nationally with that money is overwhelming.
Look at Chicago and you will find only one party.
It then spread to the whole state of Illinois (no Republican holds any statewide office anymore), and now is spreading to the nation via Obama, Rahm Emanuel et. al.
We will be lucky to get back to two viable political parties after this election. We will not in the next 25 years have any movement toward a 3rd party.
Sorry to sound negative.

[decimus4]

We need a plan; a long term plan to deal with this level of corruption. The only way to stop this from happening again and again is from the ground up. We need to elect 3rd party candidates to the State Houses around the country for 2012. That%u2019s when the Congressional districts get redrawn. The Democrats and Republicans have gerrymandered 435 safe seats in Congress. With fellow Democrats and Republicans in the State Houses to protect their districts, the Congress does what they please. For example: the majority of the country was against the bailout and they passed it anyway. Or they de-regulate banking knowing we are going to get fleeced again just like we did in 1907. These Congressman and Senators know they hold safe seats. They no longer work for us. If we can get 3rd party lead State Houses to re-draw district lines to ensure real competition by 2022, we should have the old guard on the Hill replaced by folks that really listen to voters. Then we move to Phase 2 of the plan. With a new accountable Congress you pass four constitutional amendments: Balanced Budget, Term Limits, Corporation Limitations (Can%u2019t be treated as a person) and the Line Item Veto. Then the State Houses that broke the incumbents%u2019 backs with redistricting ratify these four amendments to the Constitution. With God''s help we get our country and government back.

[decimus4]

The Airline Deregulation Act (PL95-504) was passed by Congress and signed by President Carter in October of 1978. It was sponsored by NV Sen. Howard Cannon (D). Texas Rep. Phil Gramm (D) was not sworn in until January 3, 1979. He had nothing to do with the ADA that I can find. He switched to the Republician party in 1983.