I'd like to hear Clinton's opinion on this. He's an introspective and retrospecitive type of guy. Bill signed it, if he said he made a mistake, then I say go for it.
Rubin, Summers and Greenspan. Even in 1999, during the height of bubble-mania and optimism in this country (I doubt we'll ever see consumer sentiment at those levels again in any of our lifetimes), I knew that the repeal of Glass-Steagall would be a fatal mistake. The one thing that has become abundantly clear over the past 10-15 years is that our entire modus operandi is to only give a rat's ass about the immediate future. Every policy change is always sold as something long term, but it's just a short term cash grab.
On one hand I find it encouraging that so many people here on ET see how the people are being screwed. On the other hand, it's depressing because nobody who can do something about this situation will. They like the system the way it is. Why should they change it to benefit a bunch of losers who can't afford to buy their own jets? So all they'll do is more theatrics, either talking about "government overreach" or "takeover of banking" or how nothing can be done because "we don't have the votes." It's all BS.
I don't know if this created the financial crisis, but take a look at all the major financial institutions: Investment Banks ------------------------ Bear, investment bank, bust Lehman, investment bank, bust Morgan Stanley, investment bank, bust without intervention Merril, investment bank, bust Goldman, investment bank, bust without intervention Commercial Banks ------------------------ Wells Fargo, commercial bank, okay Wachovia, commercial bank, bust Washington Mutual, commercial bank, bust Countless regional banks, commercial banks, bust Universal Banks (thanks to repeal of Glass Steagal) --------------------------------------------------------------- Citigroup, universal bank, bust without intervention Bank of America, universal bank, okay if they didn't try to catch all those falling knives JPMorgan, universal bank, okay Other Relevant Companies ---------------------------------- AIG, insurance company, bust (unregulated by Glass Steagal) Fannie, Freddie, mortgage companies, bust (unregulated by Glass Steagal) GM, auto company, bust (blame unions) MBIA, insurance company, bust (unregulated by Glass Steagal) Moodys, McGrawhill, ratings companies, okay Countrywide, mortgage company, bust I think Ken Griffin described it best. It's not too big to fail, it's too interconnected to fail. Lehman is what precipitated all the volatility and they were one of the smaller investment banks. I think they shoud encourage all the investment banks to team up with commercial banks, and create clearinghouses to lower the notional of all the derivatives, etc out there to allow more orderly unwinds and novations when a firm does go bankrupt. It will also make these banks more competitive on the international landscape.
The investment banks that went bust were able to issue mortgages only because of the repeal of Glass-Steagall. Had that been in place, they would only have been involved in the underwriting and sale of stocks, bonds, etc. The banks, in the meantime, were prohibited from underwriting the sale of stocks, bonds, etc, which would have meant they would have been unable to try to securitize and sell off the mortgages on their books. So, there was more to it than that table shows.
He''ll most certainly have an opinion now, and I would think that he would say it was a mistake. I doubt that at the time he realized the importance of that little add-on slipped into the Omnibus Appropriations Bill by Phil Gramm, with virtually no debate, in the waning days of the Clinton Presidency. It was a "must sign" Bill before the Christmas Holiday. Gramm was also able to get his wife appointed to the Enron Board and Gramm's banking "modernization act" was also very helpful in Emasculating the CFTC where Wendy was active as well -- or should it be "inactive"?! One has to wonder who should get the prize for most damage to the American Economy by a single individual, Gramm or Greenspan?* _______________ * There is such a long list of honorable mention candidates that it's not possible to list them all.