Cruz economic adviser Phil Gramm dismissed concerns before 2008 crash

Texas' Phil Gramm called the U.S. a "nation of whiners" about the economy. Texas' Phil Gramm called the U.S. a "nation of whiners" about the economy. Photo: LUKE FRAZZA, AFP/GETTY IMAGES Photo: LUKE FRAZZA, AFP/GETTY IMAGES Image 1 of / 21 Caption Close Cruz economic adviser Phil Gramm dismissed concerns before 2008 crash 1 / 21 Back to Gallery

Ted Cruz's newly-appointed economic adviser brushed off the notion of recession in 2008, two months before the collapse of Lehman Brothers investment bank knocked global markets into the worst slump since 1929.

Former U.S. Sen. Phil Gramm (R-Texas) had advised economic policy for the 2008 presidential campaign of Sen. John McCain, even while taking money from the Union Bank of Switzerland to advocate for the banking industry in matters of the subprime mortgage crisis, NBC reported in 2008.

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While the crisis bubbled to the surface of the American economy in 2008, Gramm co-chaired the McCain campaign. But he stepped down in July, days after rebuking Americans for their concerns with the teetering economy.

"We have sort of become a nation of whiners," he told the Washington Times in a July 2008 interview. "You just hear this constant whining, complaining about a loss of competitiveness."

"You've heard of mental depression; this is mental recession," he said. "We may have a recession; we haven't had one yet."

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And he blamed the media's focus on negative economic indicators for widespread public anticipation of an impending slump.

"Thank God the economy is not as bad as you read in the newspaper every day," Gramm told the Times.

That was less than four months after federal authorities had engineered a takeover of investment bank Bear Stearns, concerned that its impending bankruptcy thanks to irresponsible gambles could drag the nation down with it.

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And it was two months before the failure of Lehman Brothers would almost certainly have toppled the nation's economy, had federal authorities not stepped in with a $700 billion bailout.

Gramm, during his tenure in the Senate, had worked to enable deregulated trading of certain financial instruments on Wall Street, most notably through the Commodity Futures Modernization Act in 2000.

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That legislation is widely credited with fostering massive growth in derivatives markets, which played a big role in filling the bubble that burst in the crisis.