Deregulation "played virtually no role" in the housing collapse and credit crisis that now threaten economies across the globe, according to former Sen. Phil Gramm.
"Some people look at subprime lending and see evil," Gramm told the New York Times. "I look at subprime lending and I see the American dream in action.”
“My mother lived it as a result of a finance company making a mortgage loan that a bank would not make," Gramm says.
During his time in the U.S. Senate, Gramm consistently voted to block legislation that would have curtailed deceptive or predatory lending.
He also pushed through a provision that ensured that the collateralized debt obligations (CDOs) made up of subprime mortgages would be virtually unregulated.
“There is this idea afloat that if you had more regulation you would have fewer mistakes,” Gramm says.
“I don’t see any evidence in our history or anybody else’s to substantiate it.”
Increasingly, economic observers agree more regulation is needed.
Yet some worry the pendulum is swinging too far in that direction.
"There is an inclination, when you get into problems like this to go to an extreme, to over-regulate,” Commerce Secretary Carlos Gutierrez told CNN.
“I think we have to be careful, we have to find a balance and we can't over regulate so that five years from now we're trying to claw our way back because we overdid it," Gutierrez says.
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