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A decade after Wall Street killed off the Glass-Steagall Act that separated commercial banks from securities firms, its ghost has returned to haunt the financial industry.
perhaps we should open our minds a little, break away from centuries of central bank propaganda and debate whether free markets are the way to go. what we've had btw is nowhere near the free market!
This is exactly what we need. Restore the regulations which prevented this mess from happening again for 70 years. Is it any coincidence that just a few years after this was repealed we had a repeat of the bubble and bust of the late 1920's?
Again, someone didn't do their research. Actual legal analysis indicates that the GLB Act was redundant and unnecessary in regards to what was already legally allowed, and therefore not at fault:
"...banking law and regulation, as they had evolved to the point in 1999 when GLEBA [GLB Act] was enacted, would have allowed commercial banking organizations to engage as full competitors in the securities and insurance businesses, thereby obviating the need for financial services legislation... the progress of commercial banking organizations’ penetration of the insurance business ...demonstrate how the Comptroller of the Currency’s application of the principle of “functional equivalence” had, by 1999, already positioned commercial banking organizations to be full competitors with insurance providers... commercial banking organizations, even under the Glass-Steagall Act11 regime, could avail themselves of utterly unfettered access to the wholesale securities business."
Again, someone didn't do their research. Actual legal analysis indicates that the GLB Act was redundant and unnecessary in regards to what was already legally allowed, and therefore not at fault:
"...banking law and regulation, as they had evolved to the point in 1999 when GLEBA [GLB Act] was enacted, would have allowed commercial banking organizations to engage as full competitors in the securities and insurance businesses, thereby obviating the need for financial services legislation... the progress of commercial banking organizations’ penetration of the insurance business ...demonstrate how the Comptroller of the Currency’s application of the principle of “functional equivalence” had, by 1999, already positioned commercial banking organizations to be full competitors with insurance providers... commercial banking organizations, even under the Glass-Steagall Act11 regime, could avail themselves of utterly unfettered access to the wholesale securities business."
Yes. Things are going so well without restoring regulation that we should just leave things as they are.
Thank You Phil Gram for Wrecking the Economy
Phil Gramm spearheaded efforts to pass the Gramm-Leach-Bliley Act of 1999, which reduced government regulations in existence since the Great Depression separating banking, insurance and brokerage activities. This legislation encouraged the corporate practices that led to ENRON, the 2008 mortgage crises and the collapse of Fannie Mae, Freddie Mac, Bear Stearns, Merrill Lynch, Lehman Brothers, AIG and who knows when it will end.
Below Boston:: Thank You Phil Gram for Wrecking the Economy (http://www.soapblox.net/belowboston/showDiary.do?diaryId=1810 - broken link)
McCain guru linked to subprime crisis
The general co-chairman of John McCain’s presidential campaign, former Sen. Phil Gramm (R-Texas), led the charge in 1999 to repeal a Depression-era banking regulation law that Democrat Barack Obama claimed on Thursday contributed significantly to today’s economic turmoil.
A decade after Wall Street killed off the Glass-Steagall Act that separated commercial banks from securities firms, its ghost has returned to haunt the financial industry.
On November 12, 1999, President Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act. The Glass-Steagall Act was enacted during the great depression to separate the activities of banks and securities firms. One of the immediate impacts of the repeal will be that certain advisory activities of the banks will be regulated by the Investment Advisers Act of 1940. The Gramm-Leach-Bliley Act directs the SEC to enact rules requiring units of banks that engage in the investment advisory business to register with the SEC.
On November 12, 1999, President Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act. The Glass-Steagall Act was enacted during the great depression to separate the activities of banks and securities firms. One of the immediate impacts of the repeal will be that certain advisory activities of the banks will be regulated by the Investment Advisers Act of 1940. The Gramm-Leach-Bliley Act directs the SEC to enact rules requiring units of banks that engage in the investment advisory business to register with the SEC.
That is one of the reasons that I was never a Clinton fan. Just because someone has a D or an R after their name does not matter. I judge our representatives by their actions not their party association. I was against NAFTA on steroids and The Telecommunications Act. Funny though that there are people that claim Clinton was a Republican in Democrat's clothing. Their is no doubt about Gramm though, he is a Necon to down to his very soul.
Last edited by sickofnyc; 03-21-2009 at 11:03 AM..
That is one of the reasons that I was never a Clinton fan. Just because someone has a D or an R after their name does not matter. I judge our representatives by their actions not their party association. I was against NAFTA on steroids and The Telecommunications Act. Funny though that their are people that claim Clinton was a Republican in Democrat's clothing. Their is no doubt about Gramm though, he is a Necon to down to his very soul.
Just so we know who actually did the deed and I don't mean Monica.
sickofnyc, it's obvious you didn't read or didn't understand what you read in the Law Review article. The GLB Act didn't change anything; it was a redundancy of what wasalready legally allowed by the time the GLB was enacted in 1999.
Again...
"...banking law and regulation, as they had evolved to the point in 1999 when GLEBA [GLB Act] was enacted, would have allowed commercial banking organizations to engage as full competitors in the securities and insurance businesses, thereby obviating the need for financial services legislation... the progress of commercial banking organizations’ penetration of the insurance business ...demonstrate how the Comptroller of the Currency’s application of the principle of “functional equivalence” had, by 1999, already positioned commercial banking organizations to be full competitors with insurance providers...commercial banking organizations, even under the Glass-Steagall Act11 regime, could avail themselves of utterly unfettered access to the wholesale securities business."
Financial deregulation led directly to the current economic meltdown. For the last three decades, government regulators, Congress and the executive branch, on a bipartisan basis, steadily eroded the regulatory system that restrained the financial sector from acting on its own worst tendencies. "Sold Out" details a dozen key steps to financial meltdown, revealing how industry pressure led to these deregulatory moves and their consequences:
In 1999, Congress repealed the Glass-Steagall Act, which had prohibited the merger of commercial banking and investment banking.
Regulatory rules permitted off-balance sheet accounting -- tricks that enabled banks to hide their liabilities.
The Clinton administration blocked the Commodity Futures Trading Commission from regulating financial derivatives -- which became the basis for massive speculation.
Congress in 2000 prohibited regulation of financial derivatives when it passed the Commodity Futures Modernization Act.
The Securities and Exchange Commission in 2004 adopted a voluntary regulation scheme for investment banks that enabled them to incur much higher levels of debt.
Rules adopted by global regulators at the behest of the financial industry would enable commercial banks to determine their own capital reserve requirements, based on their internal "risk-assessment models."
Federal regulators refused to block widespread predatory lending practices earlier in this decade, failing to either issue appropriate regulations or even enforce existing ones.
Federal bank regulators claimed the power to supersede state consumer protection laws that could have diminished predatory lending and other abusive practices.
Federal rules prevent victims of abusive loans from suing firms that bought their loans from the banks that issued the original loan.
Fannie Mae and Freddie Mac expanded beyond their traditional scope of business and entered the subprime market, ultimately costing taxpayers hundreds of billions of dollars.
The abandonment of antitrust and related regulatory principles enabled the creation of too-big-to-fail megabanks, which engaged in much riskier practices than smaller banks.
Beset by conflicts of interest, private credit rating companies incorrectly assessed the quality of mortgage-backed securities; a 2006 law handcuffed the SEC from properly regulating the firms.
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