Ugh!
Clinton instructs Obama on finance and Phil Gramm.
A running cliché of the political left and the press corps these days is that our current financial problems all flow from Congress's 1999 decision to repeal the Glass-Steagall Act of 1933 that separated commercial and investment banking. Barack Obama has been selling this line every day. Bill Clinton signed that "deregulation" bill into law, and he knows better.
In BusinessWeek.com, Maria Bartiromo reports that she asked the former President last week whether he regretted signing that legislation. Mr. Clinton's reply: "No, because it wasn't a complete deregulation at all. We still have heavy regulations and insurance on bank deposits, requirements on banks for capital and for disclosure. I thought at the time that it might lead to more stable investments and a reduced pressure on Wall Street to produce quarterly profits that were always bigger than the previous quarter.
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Mr. Clinton: "Not on this bill I don't think he did. You know,
Phil Gramm and I disagreed on a lot of things, but he can't possibly be wrong about everything. On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I'd be glad to look at the evidence.
"But I can't blame (the Republicans). This wasn't something they forced me into. I really believed that given the level of oversight of banks and their ability to have more patient capital, if you made it possible for (commercial banks) to go into the investment banking business as Continental European investment banks could always do, that it might give us a more stable source of long-term investment."
We agree that Mr. Clinton isn't wrong about everything. The Gramm-Leach-Bliley Act passed the Senate on a 90-8 vote, including 38 Democrats and such notable Obama supporters as Chuck Schumer, John Kerry, Chris Dodd, John Edwards, Dick Durbin, Tom Daschle -- oh, and Joe Biden. Mr. Schumer was especially fulsome in his endorsement.
(emphasis added)
Two of Mr. Obama’s chief advisers for his speech served under President Clinton: Joseph E. Stiglitz was chairman of the president’s Council of Economic Advisers, and Robert B. Reich was secretary of labor.
Mr. Obama said the housing slump was a result of another of the bubbles that have distorted the economy in the past decade. Few doubted, he noted, that the nation needed to reform the 1930s-era law — the Glass-Steagall Act — that had erected a wall between commercial and investment banks. But, as Mr. Obama’s aides noted, the banking and insurance industries spent more than $300 million on a successful effort to repeal that act in 1999.
The resulting changes, Mr. Obama said, granted far greater freedom to investment houses without modernizing the regulatory regime and demanding transparency. The same pattern played out in regulation of home mortgages to bad effect, he said.
linkWhat utter distortion, they're using the Conference Report vote, which McCain missed, instead of the actual vote on the bill:
On Passage of the Bill (S.900 as amended) It's easy to understand how a Conference Report is agreed to by the full Senate. The Republicans had 54 votes. The bill passes anyway. Bill Clinton wasn't going to veto it. With that hand, the Republicans could have easily negotiated a deal to allow the CRA and other provisions (forms of protection) in exchange for votes. Otherwise those protections would not have been in place. Bush further weakened the CRA provisions in 2005.
Obama vs. McCain on Gramm-Leach-Bliley"The Glass-Steagall wall was devised to prevent a repeat of the 1920s' scams" Economists: Gramm To Blame For The Current CrisisJohn McCain's Gramm Gamble