10-Year Anniversary of the Bill That Led to the Current Economic Crisis

The legislation sounded innocuous enough: The Financial Modernization Act. But proponents, who included almost the entire U.S. Senate and the Clinton administration, were euphoric over the passage of the bill in November 1999 that revoked the Depression-era Glass-Steagall Act, and consequently helped lay the quicksand foundation that sunk the nation into the Great Recession less than 10 years later.

 
The Glass-Steagall Act, officially known as the Banking Act of 1933, separated commercial banks, those that held the deposits of everyday citizens, from investment banks that engaged in risky profit-making strategies. This separation protected depositors’ savings from the possible excesses of the investment banks, and it worked well for 65 years.
 
The Financial Modernization Act, or Gramm-Leach-Bliley as it came to be known, lifted the federal restrictions on banks using depositors’ money as capital for corporate investments and mergers and as collateral for risky loans. Supporters of Gramm-Leach-Bliley promised great things would come of deregulating banks. Then-Treasury Secretary Lawrence Summers said, “This historic legislation will better enable American companies to compete in the new economy,” and declared it would “benefit American consumers, business, and the national economy for many years to come.” Summers, who was painfully wrong in his assessment, is now the director of President Barack Obama’s National Economic Council.
 
Summers celebrated the repeal of Glass-Steagall with the likes of Congressman Jim Leach (R-IA) and Federal Reserve Chairman Alan Greenspan, along with lobbyists, staffers and reporters by drinking champagne and eating a cake decorated with the words: “Glass-Steagall, R.I.P., 1933-1999.” In July 2009, President Obama appointed Leach to be Chairman of the National Endowment for the Humanities.
 
But not everyone on Capitol Hill was happy with the repeal of Glass-Steagall. Senator Byron Dorgan (D-ND) said, “I want to sound a warning call today about this legislation,” which he added was “a financial swamp” and nothing short of “fundamentally terrible.” The late Sen. Paul Wellstone (D-MN) put it this way: “Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk. It was designed to prevent a handful of powerful financial conglomerates from holding the rest of the economy hostage. Glass-Steagall was one of the few stabilizers designed to keep that from ever happening again, and until recently, it was very successful.”
 
A few other senators agreed with Dorgan and Wellstone, including Barbara Boxer (D-CA), Richard Shelby (R-AL), and Russ Feingold (D-WI). But opponents had no chance of preventing the act from passing because the momentum for “modernizing” the financial system was too great. The bill passed the Senate 90-8 and the House 362-57. President Clinton signed the bill on November 12, 1999. Less than nine years later, the risky and speculative practices that the repeal of Glass-Steagall unleashed led to the near-collapse of the U.S. economy and the bailing out of banks by U.S. taxpayers.
-Noel Brinkerhoff, David Wallechinsky
 
Deregulation Was So Much More Fun! By Kevin Connor, (LittleSis)
A Decade Without Glass-Steagall: Heckofa Job, Larry (by Tim Dickinson, Rolling Stone)

Latest News

The $20 Bill: Andrew Jackson or Harriet Tubman?

With all the talk of taking down statues and changing the names of buildings, isn’t it time that we talk about the presence of Andrew Jackson on the $20 bill? Jackson was actually a slave trader who made his fortune buying and selling African-Americans. What he did to Native Americans was even worse. He forced an estimated 46,000 Native Americans off their ancestral lands and turned over the land to white people. Thousands of Cherokee died on the Trail of Tears, walking to what is now Oklahoma.   read more

Donald Trump Revealed to be a Democratic Mole

Release of a secretly recorded conversation between President Donald Trump and Joe Biden revealed the shocking news that Trump is actually a mole who has infiltrated the Republican Party and is working to get Biden elected president. "My big strategy is to hold rallies in battleground states, tell my supporters not to wear masks and instead to link arms. So many of them will end up dying before the election, it’ll be great.”   read more

President Trump Apologizes for Coronavirus Deaths

In a series of tweets, Trump said, “I’m sorry I didn’t act sooner and I’m sorry that I’ve pushed to open up the country before the pandemic is under control. As you know, I’ve added my name to the stimulus checks that Americans have received. Now I’ve asked to add my name to the death certificates of all Americans who die of the coronavirus from now on.”   read more

Hundreds of Thousands Wait in Line for Anti-Stupid Leader Vaccine

All over the United States, hospitals were swamped with people wanting the new Anti-Stupid Leader Vaccine, which eliminates all images of Donald Trump, replacing them with photos of forests and streams, and replaces all his words with the sound of birds singing or babies giggling. Massive street parties were reported in Hungary and Belarus, while citizens of Great Britain and France anxiously waited to see if the vaccine worked against leaders who are merely ridiculous.   read more

Suicide Cult Urges Increased Coronavirus Deaths

Members of the Trumpianity religion are urging their co-religionists to end anti-coronavirus restrictions and expose themselves to the Covid-19 virus in order to martyr themselves with the goal of increasing their leader’s power. A protest organizer, Sharpie Bellicose, went a step further. “I’m glad to die to help Trumpianity. But before I die, I intend to infect at least three Democrats. That way my martyrdom will be really useful.”   read more
see more...