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POWER PIONEER

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     A staunch defender of laissez-faire economics, Gramm's challenge as CFTC chair was keeping the agency from over-regulating.

     "The natural instinct for a government agency," Gramm says, "is to regulate more, to amass more power and expand its jurisdiction. I fought against that. I fought to be more efficient, to do more with less.

     "I would also appeal to their interests. I would tell them that as regulators we need regulatees. If we over-regulate, we kill off business and the market goes overseas. If the market goes overseas, we have nothing left to regulate, and U.S. consumers would be at an enormous disadvantage."

     Gramm took control of the CFTC just after the 1987 stock market crash, and her free-market theories slammed up against the views of the agency's bureaucrats. They wanted to assert more control over the markets. Regulatory aggression, Gramm felt, would undermine the innovation and flexibility that markets require to adapt and prosper.

     "There are a lot of people who respond to problems by saying we have to regulate, we have to pass more laws," Gramm says. "And a lot of people were making crazy claims that the commodities futures market caused the crash. The evidence didn't support this. So I jumped right into the policy debate. I testified before Congress 15 times within my first six months at the CFTC. My role was to keep people from overreacting and killing off the markets with unnecessary laws."

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     To instill free-market attitudes, Gramm engineered a course for agency workers that explained how regulations stifle innovations, experimentation and creativity. She invited top commodities brokers to speak and laissez-faire economists to present seminars. Eventually, she convinced agency workers to back free-market innovation and loosen the reins on commodity brokers.

     Economic progress, Gramm believes, requires that markets have the space to flex, twist, bulge and yawn. Strap a market into a regulatory straitjacket and it shrivels into something like the Cuban or North Korean financial systems.

     "Then you would have a case where Washington was grabbing too much power and telling you how to run your business and to run your life," she says.

     Gramm's passion for economics and free markets may have evolved from her family history. Both her maternal and paternal grandparents emigrated from Corea to Hawaii in the early 20th Century. They worked the sugar cane fields, saved their earnings and built comfortable but simple lives.

     Her father too labored in the sugar industry and saved enough money to attend a mainland college. He graduated with an engineering degree and returned to Hawaii to design processing equipment for the same sugar company that had hired his father to toil in the fields. Eventually he became the firm's vice president, becoming the first Asian to hold a management position in the Hawaiian sugar industry. PAGE 3

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Wendy Lee Gramm, husband Phil Gramm -- a U.S. Senator from Texas who was a leading contender for the 1996 Republican Presidential nomination -- and sons Marshall and Jeff.


"A lot of people were making crazy claims that the commodities futures market caused the crash."




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