Don't You Think It's Time to Reinstate the Laws That Would Have Prevented the Financial Crash?

[Better Believe It]

Don't You Think It's Time to Reinstate the Laws That Would Have Prevented the Financial Crash?
By Nomi Prins
November 14, 2009.
It's been 10 years since Washington repealed the Glass-Steagall Act, the moment we got royally screwed by the banking system -- and we're still paying the price.

This week marks the tenth year anniversary of the repeal of the Glass-Steagall Act of 1933, by the Gramm-Leach-Bliley or Financial Services Modernization Act, marking the moment when we were royally screwed by the banking system. Thank you to all those involved.

It's amazing how downright ebullient, President Bill Clinton was at that signing ceremony on November 12, 1999. an event introduced by then Treasury Secretary (now Obama advisor) Larry Summers, successor to Robert Rubin. Those restricting, anti-competitive Depression era, laws were finally behind us. Awesome.

Fast-forward to now and must of us know how devastatingly expensive that signature was for the American public. Yet, despite our government having deployed or made available over $14.1 trillion worth of federal subsidies to fix Wall Street, the banking landscape is less stable than it was before last year's crisis. And, despite national unemployment approaching double digits, and another record quarter of foreclosures, we stand farther away from the intent of Glass Steagall than ever.

Banks weren't handled with kid gloves then. They were treated like the spoiled, reckless, destructive beings they were. After the stock market crash in 1929, the country sunk into the throes of the Great Depression, characterized by 25% unemployment, bread lines, rampant foreclosures, and general despair. In 1932, the Pecora commission examined the shady banking practices that contributed to the devastation, all of which hinged on one thing - banks had used depositor capital and loans to speculate with. Exactly like the practices going on before and since last fall's financial calamity. The result of that speculation gone wrong tanked the economy. Glass-Steagall logically sought to ensure this wouldn't happen again. It divided up the banking landscape into two parts, commercial banks and investment banks. The federal government would back commercial banks and consumer deposits through establishing the Federal Deposit Insurance Corporation (FDIC). But, it wouldn't be Wall Street's investment bank bookie and bitch.

Over the decades, the financial sector, armed with cunning lobbyists and overpaid lawyers, took many swipes at Glass-Steagall, but none as devastating as the Gramm-Leach-Bliley Act. Since then, the banking sector's powerful ate its weak, amidst a wave of massive consolidation. Nearly half of the nation's biggest bank mergers took place just before or since that Act was passed. All these mega banks can thus churn deposits and loans into debt or capital to fund speculation, risk, and create a roller coaster of an economy that is defined simply on whether those bets, or asset creations, work or not, at any given moment. Heads they win, tails we lose.

Please read the full article at:

http://www.alternet.org/workplace/143942/don%27t_you_think_it%27s_time_to_reinstate_the_laws_that_would_have_prevented_the_financial_crash

[Yo_Mama_Been_Loggin]

1. You betcha

[Skink]

2. Nice picture.

Skink's jealous.

[murielm99]

3. Is that photoshopped?

Are those her real boobs?

[Trajan]

7. Are you really asking that question ?

It is of course a manipulated photograph ...

I wish they wouldn't do that stuff, cause it makes me kinda like her more ...

(Did I just say that ?)

Nah ....

[LakeSamish706]

6. Yeah, she could be my President... Or those two could anyway.. n/t

[Warren DeMontague]

24. Holy shit.

Cognitive dissonance. Don't DO that.

[LakeSamish706]

4. It's long overdue, but in the interm... I think that the US is headed for total colapse....

The bush mis-administration has done this country irreparable harm that will not be resolved in any kind of orderly time frame. Another issue is the way that the US deals with mortgages ... Many other countries (including our neighbors to the north) deal with this in a much better way. Canada does not allow any tax incentives for mortgages. When you own your principal residence, and were to sell it, you do not pay taxes on the final result. The US gives you a write off on your mortgage, but taxes you on the final sale of the property. This just makes the homeowner mortgage the property to the max, and thus, when property values fall, you are screwed big time as a home owner...

[FLAprogressive]

5. Obama's financial flunkies are the same people who orchestrated deregulation!

So it ain't happening.

[MannyGoldstein]

10. +1

All evidence indicates that Obama has drunk that Kool-aid.

Sigh.

[FLAprogressive]

20. we continue to hear the "they know the system!!!" garbage

Obama's financial flunkies are not working for us.

[peace frog]

14. +2

:: Deep sigh ::

[phasma ex machina]

52. 42DDD plus. nt

[peace frog]

54. Why Ms Prejean, is that you?????

Whatchoo doin' in DU, aside from strutting your stuff. :evilgrin:

[SammyWinstonJack]

56. +2

[donheld]

8. The sooner the better

[BrklynLiberal]

9. Yes! It should have been one fo the first things done in this administration

[Blue_Tires]

18. agreed...along with some stronger environmental controls...

[western mass]

11. The Democrats were instrumental in abolishing the reforms

What makes you think they're going to bring them back now?

One thing and one thing only is going to bring back financial regulation: Campaign finance reform. Until then, this bought and paid for Congress is going to do squat.

[NoUsername]

17. You are exactly right.

If they actually wanted to bring back Glass-Steagall, they could have easily put that in as part of the Wall Street bailout bill. It's been one year and we've heard precisely squat about regulating Wall Street, mainly because they have no intention whatsoever of doing so because their corporate backers wouldn't like it. It might possibly have the adverse affect of limiting their profits and that's something that just can't be tolerated.

Public financing of all political campaigns is the only way the people of this country will ever have a say. Plus that would bring with it the added bonus of doing away with the extremely annoying year-plus lavish campaigns. (Not to mention the constant bombardment of incessant ads that accompany such campaigns. I'm not sure which is worse.) Give anyone running for office an allowance of, say, $500,000 (and I'm being really generous here) to run for the Senate and let them learn to live within a budget like the rest of us 99.9 percenters have to. Of course, the main benefit of public financing is that it would open the door to "third-party" candidates and let them actually be able to compete on a level paying field. Given that last bit, I think we can all rest assured that public financing of elections will never happen. Not in this country anyway. After all, we can't have those pesky "third-party" candidates actually threatening the status quo now, can we?

NOTE: By "third-party," I actually mean second party because at present, there is only one party -- the corporate party. And I don't expect that to change anytime soon. Certainly not in my lifetime.

[theFrankFactor]

42. This is THE Most Important Issue!

Dems are a sham, an act.

Blue Dogs and Nancy and Harry assure beating down real reform. It really is a n outrage that has never been easier to see.

[heppcatt]

12. Yes its past time to do so, But..........

It will not happen. No real regulation will happen. Both Democrats and Republicans voted to pass the repeal of Glass Steagall.
They also voted to pass the Commodities Futures Modernization act.
To top it off a Democrat signed those bills into law.

http://www.youtube.com/watch?v=w2nZbo8SKbg

This video is very insightful.

[Angry Dragon]

13. Yes and more.............

[MannyGoldstein]

15. Ever See The Big Dawg With A Bigger Smile Than This?

Here's the photo of Bill signing the repeal of Glass-Steagall:



Ever see him radiating such deep-seated joy? He knew exactly what it meant: his financial future was secure. He was going to be a very, very wealthy man.

He handed the signing pen to the CEO of CitiGroup.

God, I hope the entire Middle Class enjoyed a cigarette after that screwing.

[chill_wind]

16. UGH.

ALL of them. Look at them giggling.

[Better Believe It]

29. Notice all of the rich white men just overcome with joy?

[phasma ex machina]

53. Franklin Delano Raines' bonuses alone would enable every poor person in my small town

to trade in their trailer for a nice new home.

[amandabeech]

19. I don't see Brooksley Borne in that crowd. n/t

[MannyGoldstein]

26. Her Loss

She's probably not now a very, very wealthy woman.

[HughBeaumont]

46. Oh, and look who else is cheerleading like a 2-dollah whore: Alan Greenscam.

Another piglet bastard of unbridled corporatism who rah-rah'd the borrow-n-waste Bewshconomy while workers were getting screwed out of pay, jobs, personal wealth and savings.

[Hamlette]

21. what caused the crash of 2008?

Having lived through the S&L crisis and the crash of the Industrial Loan banks, and being married to the former state banking commissioner, I'm not sure the person who wrote this article knows any more about what happened than do those on the right who say it was because banks had to give mortgages to the poor (nee minorities).

While there were several reasons for the crash, a major one was the bursting of the housing bubble. (Remember Krugman warning us that this would happen? That the housing bubble would burst which would bring down the banks? Same thing happened with the S&Ls in the 80s, for the same reason.)

So how does Congress do anything about that? Pass a law that you can't "flip that house?" Set the values of all houses and prohibit you from selling for more than that?

Shit happens. Especially in a changing economy. Sure some financial institutions made some horrible investments but there was unbelievable competitive pressure in a world wide economy with too much money floating around. And the financial institutions made possible by Glass Steagall had a better record in this crash than other banks.

For who cares, I'm told Dodd's bill is the right way to go.

[Better Believe It]

30. One word. Derivatives was the primary cause.

What does your former state banking commissioner have to say about derivatives?

[Hamlette]

36. he believes it was a cause among many but not the primary cause

Not sure what the snark was about.

More importantly, he's concerned about why these institutions invested in derivatives in the first place and what to do about that. They are just a symptom. You can write a law that will stop this one but they will just find another instrument that is just as risky if you don't cure the problem.

[optimator]

22. Dodd's current bill

does not reinstate Glass-Steagall.

[Warren DeMontague]

23. Hell, I've talked to MAJOR financial poo-bahs; hardly liberals by any stretch- who say the first

thing we need to do is reinstate Glass-Steagall.

Absolutely.

[no_hypocrisy]

25. How soon?

[cornermouse]

27. If they're too big to fail, they're too big to allow to continue to exist.

Time to break them down till they're small enough to fail. Let them live in fear and anxiety for a while.

[kentuck]

28. Because over 90% of the House and Senate voted for it...

and no one likes to admit they were wrong on such a grand scale.

[tomp]

31. quiet, obama is playing chess. nt

[SammyWinstonJack]

58. HA!

:evilgrin:

[bvar22]

32. No.

The time to reinstate Glass-Steagall was BEFORE handing out the MONEY.

There is NO leverage to force regulation on Wall Street AFTER they got the money.
But Obama and The "Democrats" already know this.

Wall Street Banking will be regulated right after the War Criminals from the Bush Administration are put on trial.

Chump Change.



NOW we have Your Children’s Money too !!!
And there is not a fucking thing you can do about it!
Now THIS is “Bi-Partisanship” !
Better get used to it!!
Hahahahahahahahaha!

[jtrockville]

33. I tend to agree. The horses have already left the barn.

What's the point of closing the door?

[FLAprogressive]

34. +1

[Raineyb]

47. I have to agree.

My reason for not liking the bailout in the first place was that they were giving all this money away and put no meaningful conditions behind it. Reinstating Glass-Steagall would have been a step in the right directions. But now that our government has already given away all this money to the banks and they feel they are so healthy that they can give out tens of billions of dollars in bonuses without any shame there's no way in hell that we're going to be able to get any new regulation onto these rat bastards.

[slipslidingaway]

35. knr nt

[chill_wind]

37. K & R.

[Quantess]

38. Absolutely!

[anonymous171]

39. Yep. We used to treat bankers right back then.

They are truly the scum of the Earth.

[pleah]

40. Long past time. n/t

[winyanstaz]

41. K & R for a great idea...

but don't hold your breath America. The New World Order is not done distroying our economy and our nation yet.

[laughingliberal]

43. Yeppers! Good luck with that, though

Congress' corporate owners aren't going to allow us to go too far in protecting ourselves from them.

[placton]

44. Under Obama? ROFLMAO n/t

[lib2DaBone]

45. Long ...Long ...Long ...Overdue....In addition to the repeal of NAFTA.

NAFTA gave us the SHAFTA.

[Maraya1969]

48. YES

[earcandle]

49. yes, please....

[bjobotts]

50. It's an army of lobbyists controlled by the money party who are writing our laws

[bjobotts]

51. It's the lobbyists and their contractors that must be eliminated not the gov.

[Echo In Light]

55. Error: you can only recommend threads which were started in the past 24 hours

[Le Taz Hot]

57. What? And shut off the corporate spigot?

Surely you jest. What POSSIBLE motive would they have for killing the golden calf?