Everyone knows that deregulation allowed Wall Street banks to rob, loot and pillage the nation until they ran out of money and went broke at which point we bailed out the crooks and robbers.
There were two major acts that deregulated the banks and led to this destructive crash that has robbed every single American citizen of their livelihood and retirement and brought the nation into a precarious financial position where only the rich get richer and everyone is spiraling the drain.
Bill Clinton repealing Glass-Steagal with the Gramm-Leach-Bliley Act: http://www.youtube.com/watch?v=WkG4iXiZCQE
Hillary defending the repeal of Glass-Steagal:
Many economists and Wall Street experts blame Gramm-Leach-Bliley Act with the 2008 bank meltdown.
Repeal of Glass-Steagall Caused the Financial Crisis
The repeal of the law separating commercial and investment banking caused the 2008 financial crisis.
By James Rickards | Contributor Aug. 27, 2012, at 1:19 p.m.
Repeal of Glass-Steagall Caused the Financial Crisis
James Rickards is a hedge fund manager in New York City and the author of Currency Wars: The Making of the Next Global Crisis from Portfolio/Penguin.
In fact, the financial crisis might not have happened at all but for the 1999 repeal of the Glass-Steagall law that separated commercial and investment banking for seven decades. If there is any hope of avoiding another meltdown, it’s critical to understand why Glass-Steagall repeal helped to cause the crisis. Without a return to something like Glass-Steagall, another greater catastrophe is just a matter of time.
History is a good place to begin. After the Depression of 1920-21, the United States embarked on a period of economic prosperity known as the Roaring Twenties. It was a time of innovation, especially in consumer goods such as automobiles, radio, and refrigeration. Along with these goods came new forms of consumer credit and bank expansion. National City Bank (forerunner of today’s Citibank) and Chase Bank opened offices to sell securities side-by-side with traditional banking products like deposits and loans.
As the decade progressed, the stock market boomed and eventually reached bubble territory. Along with the bubble came market manipulation in the form of organized pools that would ramp up the price of stocks and dump them on unsuspecting suckers just before the stock collapsed. Banks joined in by offering stocks of holding companies that were leveraged pyramid schemes and other securities backed by dubious assets.
In 1929, the music stopped, the stock market crashed and the Great Depression began. It took eight years from the start of the boom to the bust. Subsequent investigations revealed the extent of the fraud that preceded the crash. In 1933, Congress passed Glass-Steagall in response to the abuses. Banks would be allowed to take deposits and make loans. Brokers would be allowed to underwrite and sell securities. But no firm could do both due to conflicts of interest and risks to insured deposits. From 1933 to 1999, there were very few large bank failures and no financial panics comparable to the Panic of 2008. The law worked exactly as intended.
In 1999, Democrats led by President Bill Clinton and Republicans led by Sen. Phil Gramm joined forces to repeal Glass-Steagall at the behest of the big banks. What happened over the next eight years was an almost exact replay of the Roaring Twenties. Once again, banks originated fraudulent loans and once again they sold them to their customers in the form of securities. The bubble peaked in 2007 and collapsed in 2008. The hard-earned knowledge of 1933 had been lost in the arrogance of 1999.
======================================================================== Even pro-Wall Street bankster propaganda admits and recognizes that Gramm-Leach-Bliley was a contributing factor and partially to blame, and they shift the blame to the Commodity Futures Modernization Act.
From the pro-Wall Street article:
In 1999, Bill Clinton signed the Gramm-Leach-Bliley Act, a bank deregulation bill that swept away a Depression-era law known as Glass-Steagall. The new law had such a chorus of bipartisan support that it passed the Senate 90-8. One of the few who raised a cry against it was Byron Dorgan. “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,” said Dorgan, a populist North Dakota Democratic senator, “and that that which is true in the 1930s is true in 2010.” Today, a few years earlier than he predicted, Dorgan looks prescient. The current financial crisis is frequently called the worst since the Great Depression. And Gramm-Leach-Bliley is often cited as a cause, even by some of its onetime supporters.
As it happens, it’s many of the same people who were behind Gramm-Leach-Bliley. The Clinton administration and Congressional Republicans failed to create a strong framework in place of Glass-Steagall. Democrats pushed for riskier mortgage lending, in an effort to expand home ownership. But surely the bulk of the blame lies with the policy makers and regulators who were on duty while the housing bubble inflated and Wall Street went wild — the Bush administration and Alan Greenspan’s Federal Reserve. Their near-religious belief in the powers of the market led them to conclude that the mere fact that a company was willing to make an investment made that investment O.K.
One of the most influential members of this crowd was none other than Phil Gramm, the Texas Republican and former senator who helped bring down Glass-Steagall. For more than two decades in Congress he argued that the forces of the market had to be freed from government interference. Just a year after the passage of Gramm- Leach-Bliley, he was largely responsible for another bill — the Commodity
Futures Modernization Act — that clearly did contribute to the current crisis. That law unleashed the derivatives market and
paved the way for banks to become more aggressive about investing in mortgages. As recently as this summer, he was still saying that the
biggest problem facing the American economy was excessive regulation. So the bill that bears Gramm’s name may be getting a bad rap, but there is also a bit of justice in the misunderstanding.
But notice what the Gramm-Leach-Bliley Act apologists blame?
The Commodity Futures Modernization Act of 2000.
Guess who signed that?
No matter which side that you take (pro or anti Wall Street) either way: Clinton is the one who made it law.