Digby remember Glass Steagel

[hfojvt]

"Ten years ago today, they repealed Glass Steagel. It was a landmark, bipartisan bill. Here's what the NY Times said about it at the time:"

(snip)

''I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010,'' said Senator Byron L. Dorgan, Democrat of North Dakota. ''I wasn't around during the 1930's or the debate over Glass-Steagall. But I was here in the early 1980's when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness.''

(snip)

"Tucked away in the legislation is a provision that some experts today warned could cost insurance policyholders as much as $50 billion. The provision would allow mutual insurance companies to move to other states to avoid payments they would otherwise owe policyholders as they reorganize their corporate structure. Many states, including New York and New Jersey, do not allow such relocations without the consent of the insurer's domicile state. But the legislation before Congress would pre-empt the states."

http://digbysblog.blogspot.com/2009/11/remember-remember-fifth-of-november-by.html

I was lead to Digby by the Daily Howler

http://www.dailyhowler.com/

He also makes the point about media coverage of this issue back then

"By most accounts, repeal of Glass-Steagall was a major event. We thought we’d join Digby in remembering! In our case, we thought you might want to recall what Establishment Pundits were discussing in the week when repeal occurred.

Simply put, they were discussing Naomi Wolf—and earth tones, and alpha males. And, of course, oral sex. And the way Al Gore had hired a woman to teach him to be a man:

On Sunday, October 31, 1999, Time released a news report which said that Wolf had been advising Candidate Gore and the Gore campaign. On a rational basis, it’s hard to imagine why this utterly underwhelming news should have provoked a discussion at all. But within the broken-souled world of Establishment Washington, this underwhelming report produced an astonishing “Month of Wolf”—one of the smuttiest, phoniest, dumbest discussions the modern, corporate-owned pundit corps has ever let loose on the world.

Those votes in the House and the Senate took place on Thursday, November 4. By that date, Establishment Pundits were in Day 4 of their smut-laden takedown of Wolf—and, of course, of Candidate Gore, the real target of their witch trial. On November 5, newspapers reported Glass-Steagall’s repeal (see Digby). But so what? In the Washington Post, Ann Gerhart was explaining something much more significant. She was explaining why a book reviewer had spotted beauty products in Wolf’s bathroom back at the start of the decade:"

[redqueen]

1. That act should have been vetoed. (nt)

ETA I mean Gramm Leach Billey, of course... not Glass Steagall.

[hfojvt]

6. unfortunately after Clinton pushed for it

it passed by a veto-proof margin. Although Republicans and Leach lead the charge, enough Democrats climbed on board to make us culpable too.

[mod mom]

2. Some background on the Repeal of Glass Steagall:

How the Gramm-Leach-Bliley Act became law -
On Oct. 21, with the House-Senate conference committee deadlocked after marathon negotiations, the main sticking point is partisan bickering over the bill's effect on the Community Reinvestment Act, which sets rules for lending to poor communities. Sandy Weill calls President Clinton in the evening to try to break the deadlock after Senator Phil Gramm, chairman of the Banking Committee, warned Citigroup lobbyist Roger Levy that Weill has to get White House moving on the bill or he would shut down the House-Senate conference. Serious negotiations resume, and a deal is announced at 2:45 a.m. on Oct. 22. President Bill Clinton signed this bill into law on November 12, 1999.

Bill Clinton -
So we know that the topic of that late night phone call between Bill Clinton and Sandy Weill, the man whose career began in the subprime mortgage business, was the Community Reinvestment Act. We know that Phil Gramm, who was the one most strongly pushing for gutting CRA (Leach actually supported it) threatened to torpedo the legislation if the White House did not reach an agreement.

So why did Clinton go along? His writings are silent on the subject. He seemingly held the trump card with the threat to veto any legislation that did not meet his approval. And why is it Sandy Weill who makes the phone call to Clinton? At this point not enough evidence is available to finally connect the dots, but whatever it is, it cannot possibly benefit Bill Clinton. The reason for the silence may be that for the Clintons the repeal of Glass-Steagall may prove far more embarrassing in the long run than Monica Lewinsky.

-snip
http://www.theminorityreportblog.com/story/pilgrim/2008/09/19/the_players_in_paving_the_way_to_the_wall_st_meltdown


A chronology tracing the life of the Glass-Steagall Act, from its passage in 1933 to its death throes in the 1990s, and how Citigroup's Sandy Weill dealt the coup de grâce.


On April 6, 1998, Weill and Reed announce a $70 billion stock swap merging Travelers (which owned the investment house Salomon Smith Barney) and Citicorp (the parent of Citibank), to create Citigroup Inc., the world's largest financial services company, in what was the biggest corporate merger in history.

The transaction would have to work around regulations in the Glass-Steagall and Bank Holding Company acts governing the industry, which were implemented precisely to prevent this type of company: a combination of insurance underwriting, securities underwriting, and commecial banking. The merger effectively gives regulators and lawmakers three options: end these restrictions, scuttle the deal, or force the merged company to cut back on its consumer offerings by divesting any business that fails to comply with the law.

-snip

Citicorp and Travelers quietly lobby banking regulators and government officials for their support. In late March and early April, Weill makes three heads-up calls to Washington: to Fed Chairman Greenspan, Treasury Secretary Robert Rubin, and President Clinton. On April 5, the day before the announcement, Weill and Reed make a ceremonial call on Clinton to brief him on the upcoming announcement.

-snip

Weill and Reed have to act quickly for both business and political reasons. Fears that the necessary regulatory changes would not happen in time had caused the share prices of both companies to fall. The House Republican leadership indicates that it wants to enact the measure in the current session of Congress. While the Clinton administration generally supported Glass-Steagall "modernization," but there are concerns that mid-term elections in the fall could bring in Democrats less sympathetic to changing the laws.

-snip

http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html

:mad:

[Festivito]

7. That does not include the veto proof majority, THE REASON.

IIRC, Clinton faced a veto proof bill he could either sign and get some provisions or face it being enacted without him and without any of his own good inclusion, plus he would be able to monitor the situation longer as developments from the bill continued.

To me that explains why Clinton acted as he did.

I'm seeing another NPR hit job.

[Hissyspit]

3. Written by Republicans. Signed by a Democrat acting like a Republican.

[Orwellian_Ghost]

4. Remember those heady days?

New York Times, 13 November 1999, Page A1:



This item appeared in the paper as a stand alone photograph. Caption information is provided below.

Photo: Alan Greenspan, left, the Federal Reserve chairman, and Congressional leaders applauded President Clinton yesterday after he signed the Financial Services Modernization Act, which allows merging of banks, securities firms and insurers. It repeals parts of the 1933 Glass-Steagall Act. Page C3. (Justin Lane for The New York Times)

http://www.nytimes.com/1999/11/13/business/depression-era-rules-undone.html

Depression-Era Rules Undone

Clinton Signs Legislation Overhauling Banking Laws

WASHINGTON, Nov. 12 (Reuters) – President Clinton signed into law today a sweeping overhaul of Depression-era banking laws. The measure lifts barriers in the industry and allows banks, securities firms and insurance companies to merge and sell each other’s products.

“This legislation is truly historic,” President Clinton told a packed audience of lawmakers and top financial regulators. “We have done right by the American people.”

The bill repeals parts of the 1933 Glass-Steagall Act and the 1956 Bank Holding Company Act to level the domestic playing field for United States financial companies and allow them to compete better in the evolving global financial marketplace.

Analysts and industry leaders say the measure will probably fuel a wave of mergers as companies compete to build financial supermarkets offering all the services customers need under one roof.

Financial stocks were winners on Wall Street today, with J.P. Morgan & Company, Citigroup, American Express and Merrill Lynch all posting big gains. That helped the Dow Jones industrial average end up 174.02 points, at 10,769.32.

...

http://sweetness-light.com/archive/clintons-financial-services-modernization-act

[hfojvt]

5. actually I don't remember them

I was in Wisconsin, working two jobs for about 70 hours a week and all I got was CBS news on the radio.

Whoops, I don't even remember my own history, because by 1999 I was in Iowa working as a temp, so I did have TV in the break room and also copies of the Globe Gazette and Register to read.

I do remember being sick of hearing about how great the economy was when I still could not find a job that wasn't a temp job.