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"The House of Representatives on Thursday passed sweeping legislation to strip and replace much of the financial regulations passed under President Obama after the 2008 financial crisis."
http://thehill.com/policy/finance/337004-house-passes-sweeping-bill-to-strip-post-recession-banking-rules
What no one wants to admit is that the lust for financial deregulation can be laid flat in the lap of Bill Clinton and his wife, "The Travelin' Trollop o' Hanover Street".
In 1999 Clinton signed the Gramm-Leach-Blilley Act which repealed most of Glass-Steagall, the 1932 Act which separated investment banking from commercial banking and prevented a re-occurrence of the banks failures of the depression.
Gramm-Leach-Blilley led directly to the 2008 financial crisis.
Here's Nobel Prize winning Economist Joseph Stiglitz on the connection:
The deregulation philosophy would pay unwelcome dividends for years to come. In November 1999, Congress repealed the Glass-Steagall Act—the culmination of a $300 million lobbying effort by the banking and financial-services industries, and spearheaded in Congress by Senator Phil Gramm. Glass-Steagall had long separated commercial banks (which lend money) and investment banks (which organize the sale of bonds and equities); it had been enacted in the aftermath of the Great Depression and was meant to curb the excesses of that era, including grave conflicts of interest. For instance, without separation, if a company whose shares had been issued by an investment bank, with its strong endorsement, got into trouble, wouldn’t its commercial arm, if it had one, feel pressure to lend it money, perhaps unwisely? An ensuing spiral of bad judgment is not hard to foresee. I had opposed repeal of Glass-Steagall. The proponents said, in effect, Trust us: we will create Chinese walls to make sure that the problems of the past do not recur. As an economist, I certainly possessed a healthy degree of trust, trust in the power of economic incentives to bend human behavior toward self-interest—toward short-term self-interest, at any rate, rather than Tocqueville’s “self interest rightly understood.”
http://www.vanityfair.com/news/2009/01/stiglitz200901-2
And now the Republicans want to do it again.
What could go wrong?
http://thehill.com/policy/finance/337004-house-passes-sweeping-bill-to-strip-post-recession-banking-rules
What no one wants to admit is that the lust for financial deregulation can be laid flat in the lap of Bill Clinton and his wife, "The Travelin' Trollop o' Hanover Street".
In 1999 Clinton signed the Gramm-Leach-Blilley Act which repealed most of Glass-Steagall, the 1932 Act which separated investment banking from commercial banking and prevented a re-occurrence of the banks failures of the depression.
Gramm-Leach-Blilley led directly to the 2008 financial crisis.
Here's Nobel Prize winning Economist Joseph Stiglitz on the connection:
The deregulation philosophy would pay unwelcome dividends for years to come. In November 1999, Congress repealed the Glass-Steagall Act—the culmination of a $300 million lobbying effort by the banking and financial-services industries, and spearheaded in Congress by Senator Phil Gramm. Glass-Steagall had long separated commercial banks (which lend money) and investment banks (which organize the sale of bonds and equities); it had been enacted in the aftermath of the Great Depression and was meant to curb the excesses of that era, including grave conflicts of interest. For instance, without separation, if a company whose shares had been issued by an investment bank, with its strong endorsement, got into trouble, wouldn’t its commercial arm, if it had one, feel pressure to lend it money, perhaps unwisely? An ensuing spiral of bad judgment is not hard to foresee. I had opposed repeal of Glass-Steagall. The proponents said, in effect, Trust us: we will create Chinese walls to make sure that the problems of the past do not recur. As an economist, I certainly possessed a healthy degree of trust, trust in the power of economic incentives to bend human behavior toward self-interest—toward short-term self-interest, at any rate, rather than Tocqueville’s “self interest rightly understood.”
http://www.vanityfair.com/news/2009/01/stiglitz200901-2
And now the Republicans want to do it again.
What could go wrong?
