I don't bother with McClatchy anymore. I had hopes for them, but lately no. I did happen to catch this title, though"
Wall Street crisis is culmination of 28 years of deregulation
http://www.mcclatchydc.com/227/story/52559.htmlSuch troubles were supposed to have been prevented, or at least mitigated, by regulatory systems that the nation began to put in place after the banking system collapsed at the start of the Great Depression.
Many banks at the time were badly wounded by their personal and financial ties to securities trading. The 1933 Glass-Steagall Act, and later the 1956 Bank Holding Company Act, mandated the separation of banks, insurance companies and securities firms.
Those and many other federal laws stabilized the banking and securities markets, but by the 1970s, a stumbling U.S. economy led to a change in America's political-economic values. Ronald Reagan led a movement that came to power in 1980 proclaiming faith in free markets and mistrust of government. That conservative philosophy has dominated America for the past 28 years.
Even after taxpayers had to rescue deregulated savings and loans, or S&Ls, with a $200 billion bailout in the late 1980s, the push to loosen regulation paused only briefly.
In 1999, President Clinton signed the Financial Services Modernization Act, which tore down Glass-Steagall's reforms by removing the walls separating banks, securities firms and insurers.
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But looking a little further into the act that supposedly tore down the Glass-Steagall Act:
http://en.wikipedia.org/wiki/Glass-Steagall_ActThe Glass-Steagall Act of 1933 established the Federal Deposit Insurance Corporation (FDIC) in the United States and included banking reforms, some of which were designed to control speculation.
Some provisions such as Regulation Q that allowed the Federal Reserve to regulate interest rates in savings accounts were repealed by the Depository Institutions Deregulation and Monetary Control Act of 1980. Other provisions which prohibit a bank holding company from owning other financial companies were repealed in 1999 by the Gramm-Leach-Bliley Act.
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Did you catch that? The Gramm-Leach-Bliley Act, as in Phil Gramm?
Why, none other than:
http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act
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The bills comprising the act were introduced in the Senate by Phil Gramm (R-TX) and in the House of Representatives by James Leach (R-IA). The bills were passed along party lines with Republican support in the Senate<1> and with bipartisan support in the House of Representatives<2>. It was signed into law by President Bill Clinton.
The banking industry had been seeking the repeal of Glass-Steagall since at least the 1980s. In 1987 the Congressional Research Service prepared a report which explored the case for preserving Glass-Steagall and the case against preserving the act.<3>
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Senator Phil Gramm led the Senate Banking Committee which sponsored the Act; he later joined UBS Warburg, at the time the investment banking arm of the largest Swiss bank.
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My point is, let's give credit where credit is due. Yes, Clinton signed the bill, but who put the bill through Congress? None other than McShame's right hand economy expert whiner-buster extraordinaire, Phil "Enron Loophole" Gramm.
We have been Enroned.