So much for Wall Street cleaning up its act

Published on

The San Francisco Chronicle

So happy to hear that Phil Gramm is gonna land on his feet.

The Texas senator, after 24 years on Capital, er, Capitol Hill, will have to get new business cards made up this winter. Address: Wall Street. Company: UBS Warburg. Title: Vice Chairman.

Gramm will bring his vast knowledge of investment banking to the firm. The man holds a doctorate in economics from the University of Georgia, awarded during the Harding administration, I believe.

And, of course, he must have picked up a few creative finance tricks over the years from his wife, Wendy, who served as a director of Enron Corp.

And, certainly, the Rolodex he amassed during his time on the Senate Banking Committee didn’t hurt his candidacy, either.

And, incidentally, Gramm co-authored the legendary Gramm-Leach-Bliley Act, of 1999. The bill changed banking merger laws (dating back to the Depression) and paved the way for UBS to buy PaineWebber for $12 billion back in 2000.

Glad to see Wall Street is serious about cleaning up its act.

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To be fair, things aren’t much better in Sacramento. Consumer advocates have their Birkenstocks in a bunch over Gramm’s new job.

As you may know, California, through the Public Utilities Commission, has hired UBS Warburg to arrange financing for PG&E‘s bankruptcy plan. UBS plans to float $1.75 billion in new stock to help the utility back onto its feet.

The catch? PG&E ratepayers pick up UBS’ banking fees and commissions, which could run upward of $170 million.

Now, that’s ugly enough. Things turned downright fugly when folks heard Gramm was joining UBS.

Back in the heyday of the energy crisis, you may recall, the Texas Republican was not shy in voicing his opinion on California’s knuckleheaded management of electrical deregulation.

California is suffering “the consequences of their own feckless policies” and “environmental extremism,” while the state’s leaders “blame power companies, deregulation and everyone but themselves” for the energy crisis.

Of course, we now know that Enron was gaming California’s energy market the whole time, along with myriad others. We also know that Enron‘s business ethics ranked somewhere between Martha Stewart and Caligula on the moral-o-meter. And we know that Gramm’s wife was a director at Enron.

I suppose if anyone knows how to work PG&E over, it would be Phil Gramm. Others aren’t getting the joke.

“Sen. Phil Gramm excused Enron for punishing California and mocked state officials, but the CPUC has agreed to pay his company millions to tell us how to solve the problems Enron and lawmakers like Gramm created,” said consumer crusader Doug Heller, a senior advocate for the nonprofit Foundation for Taxpayer and Consumer Rights.

“The CPUC should seek advice from people who want California to get out from under the shadow of Enron and deregulation, instead of turning to the ghost of Enron for the solution,” sez Heller.

The FTCR sent Gov. Gray Davis a letter last week, demanding he take UBS Warburg, and its new vice chairman, off of California’s payrolls.

Here’s hoping they stuffed a campaign contribution in the envelope.

Consumer Watchdog
Consumer Watchdog
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