Tuesday, March 24, 2009

It's Not Just the Republicans

An article some are loving for its supposed bluntness, really isn't all that blunt. Here is its description of 90's era deregulation, aka - "The Big Takeover"
In 1999, Gramm co-sponsored a bill that repealed key aspects of the Glass-Steagall Act, smoothing the way for the creation of financial megafirms like Citigroup. The move did away with the built-in protections afforded by smaller banks. In the old days, a local banker knew the people whose loans were on his balance sheet: He wasn't going to give a million-dollar mortgage to a homeless meth addict, since he would have to keep that loan on his books. But a giant merged bank might write that loan and then sell it off to some fool in China, and who cared?

The very next year, Gramm compounded the problem by writing a sweeping new law called the Commodity Futures Modernization Act that made it impossible to regulate credit swaps as either gambling or securities.

There's a little problem. Clinton signed the Glass-Steagall Act, and its final version was passed 90-8 and 362-57 in the two chambers of Congress. It was supported and shaped by Rob Rubin, (Secretary of Treasury 1995-1999) and Larry Summers (Secretary of the Treasury 1999-2001). Larry Summers is still around as one of Obama's chief economic advisors.

By not mentioning both parties role in deregulation, this article distorts history in a very factual way. Deregulation was not just thought up by a bunch of goulish Republicans. There were plenty of goulish Democrats on board, as well.

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