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Ronal Reagan called her his favorite economist, and Wendy Lee Gramm seemed to deserve the praise. Both while she was an academic economist and after reagan appointed her to various regulatory positions in his administration , she excelled in articulating antiregulatory rhetoric that marked hyer as a true believer in what would later be labeled the "Reagan Revolution". Reagan himself had risen in politics after eight years of tutelage as a spokesman for the General Electric Company, from 1954 to 1962. It was a time of conversion, as he described it, from being a "hemophiliac liberal" Hollywood actor to a cold-blooded Big Business conservative. Carryng the company´s banner, Reagan came to absorb the message that goverment regulation developed during the New Deal had become a chokehold on economic growth. Although as governor of California and laterin the white House Reagan would preside over massive goverment budgets and even expand them, he found in gramm an ideological "small goverment" soul mate. The Mercatus Center, an antiregulation think tank based at George Mason University from which Gramm has proselytized mightily, proudly boasts in her website biografy that the wall Street Journal "Called her "The Margaret Tatcher of financial Regulation" However, unlike the former British prime minister, neither Gramm nor President Reagan was able to bring about much change in the balance between goverment and the private sector. While his administration did funnel hundreds of billions of dollars in new Cold War military spending to corporate contractors- hugely expanding the national debt in the process- Reagan was no able to deliver to Wall Street a parallel windfall. For Wall street, the holy grail was not cash handouts but a deconstruction of the complex public-private partnership ushered in by Frankling Roosevelt's New Deal to restrain capitalism's most self-destructive patterns.For these so- called FIRE firms-Finance, Insurance, and Real State-this half-century-old regulatory system, modest as it was, was an iritant that limited their ability to gamble and leverage their dominant positions. While the companies just wanted to be free of restraint to profit at will, reagan and Gramm werw true believers, arguing thaht the regulatory status quo was outmoded and onerous-even socialist-hobbling business growth. The top target in their sigths was the New Deal-enacted Glass Steagall Act of 1933, signed into law by "President Roosevelt", which regulayted the financial services industry. Key to its efectiveness was the seemingly simple wall it erected between the commercial banks entrusted with depositor's funds-and insured by the goverment's Federal Deposit Insurance Corporation (FDIC), the agency unregulated Wall Street investment banks like Goldman Sachs. In 1982, Reagan signed the Garn- St. Germain Depository Instituions Act. easing rergulation of savings and loans and in the eyes of criticis such as Paul Krugman, paving the way for the S&L collapse in the 1980s as well as the subprime housing crisis decades later.Nevertheless, Reagan made clear even then that this was not the biggest target on his list: Unfortunately, this legislation does not deal with the important question of delivery of the other services, including securities activities by banks and other depository institutions. But I'm advised that many in the Congress want to put this question at the top of the banking deregulatory agendes next year, and I would strongly endorse such an initiative and hopethat at the same time, the Congress will consider other proposals for more comprehenssive deregulation which the administration advanced during the 97th Congress. Reagan's timeline, however, was overly optimistic; economic problems, particulary the savings and loan meltdown and the spiraling national debt, made politicians of both parties cautions. Yet, in one of the grand twists of American politics, the proposals he sought wouls eventually be signed into law more than a decade later by a Democratic president with a reputation of being a liberal child of the 1960's. In fact, at the end of Reagan's presidency, Congress passed legislation that toughened rather than weakened financial industry rgulation. As time magazine reported on August 17, 1987: Ronald Reagan's dream of carrying out a sweeping deregulationof the US economy has stirred a powerful backlash on Capitol Hill. Never has that been more apparent than last week, when COngress passed its first comprehensive piece of banking legislation since 1982. The White House had hoped the bill would remove many of the govermental shackles that inhibit competition between banks, securities firms and other institutions in the burgeoning field of financial services. In fact, it does just the opposite. Reagan signed the bill, the Competitive Equiality Bancking Act of 1987, only after criticizing it for not only failing to tear down the Glass-Steagall walls but, worse, temporarily extending "the 1933 Glass-Steagall Act restrictions on securities activities to state-chartered, non-member banks for the first time". He made it clear he was signing the bill despite his quite vociferous objections because it contained provisions for funding for local banks in trouble. It was at once a statement of the enormous importance he attached to decimating Glass-Steagall and an admissionn that he would come to the end of his last term without a accomplishing that goal. So legislatively his adminsitration was a bust when is came to reversing the New Deal. Yet rhetorically it was an enormous success in propagandizing a view that so-called big goverment was the cause of America's late-twentieth- century crisis of economic confidence. He managed to popularize and make palatable the heretofore fringe belief that goverment regulation of the financial sector, rather than saving capitalism from itself, was an irrational hindrance to individual profit and even a threat to our national power. Speaking at the signing of the 1987 bill, Reagan noted, "These new anti- consumer and anti-cpmpetitive provisions couls hold back a vital service industry at a time when competition in the international capital markets increasingly challenges United States financial isntitutions, and they should be repealed". Whit great political irony, this speech would be repeated almost word for word a dozen years later, when Democrat Bill Clinton reversed a half century of his party's core economic principles to argue for the repeal of Glass- Steagall. Clinton's public rationale for this watershed shift was that if regulation of WallStreet were not "modernized"-political code for weakened or eliminated-the United States would lose out to foreign competition in capital makets. Much of the groundwork for Clinton's break was laid by the diligent Republican Wendy Lee Gramm and her husband, Senator Phil Gramm, also a Texas Republican. The high priestess and priest of financial deregulation met at a conference in New York where Wendy Lee, a PhD student in economics, was interviewing with Phil Gramm for a position at Texas A&M University, where he was a senior professor. Wendy Gramm would later tell interviewers that as Professor Gramm was helping her on with her coat at the intervie's conclusion, he expressed interest in dating her if she came to Texas. She later told the New York Times her action to him was "Oh, yuck", but Gramm persisted, and six weeks after she arrived on campues, they wed. His bold self-confidence might have helped carry the duo as apostles of an unabashedly Big Business creed then increasingly gaining currency in academic economic circles and within both political parties. Back in 1976, in fact, Jimmy Carter, now know mostly for his post presidency activism on behalf of Thirs World democracy, Middle East peace, and ending poverty in America, was a strong advocate of business deregulation. As Georgia's governor, Carter had been a fiscal conservative who, in the tradition of conserative Southern Democrats, shunned Northern liberalism. Phil Gramm .

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