Wednesday, March 25, 2009

Glass Steagal

h/t This Modern World

Lawrence Summers (Director of the White House's National Economic Council for President Barack Obama)

Congratulations Lawrence Summers! Your hard fought repeal of the Glass Steagal act will turn ten years old this fall.

Here's a line to the NY Times Story CONGRESS PASSES WIDE-RANGING BILL EASING BANK LAWS, referenced on This Modern World.

Here are some choice quotes from the article.

''Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century,'' Treasury Secretary Lawrence H. Summers said. ''This historic legislation will better enable American companies to compete in the new economy.''

The decision to repeal the Glass-Steagall Act of 1933 provoked dire warnings from a handful of dissenters that the deregulation of Wall Street would someday wreak havoc on the nation's financial system. The original idea behind Glass-Steagall was that separation between bankers and brokers would reduce the potential conflicts of interest that were thought to have contributed to the speculative stock frenzy before the Depression.

''The world changes, and we have to change with it,'' said Senator Phil Gramm of Texas, who wrote the law that will bear his name along with the two other main Republican sponsors, Representative Jim Leach of Iowa and Representative Thomas J. Bliley Jr. of Virginia. ''We have a new century coming, and we have an opportunity to dominate that century the same way we dominated this century. Glass-Steagall, in the midst of the Great Depression, came at a time when the thinking was that the government was the answer. In this era of economic prosperity, we have decided that freedom is the answer.''

''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.''

''The concerns that we will have a meltdown like 1929 are dramatically overblown,'' said Senator Bob Kerrey, Democrat of Nebraska.

But other lawmakers criticized the provisions of the legislation aimed at discouraging community groups from pressing banks to make more loans to the disadvantaged. Representative Maxine Waters, Democrat of California, said during the House debate that the legislation was ''mean-spirited in the way it had tried to undermine the Community Reinvestment Act.'' And Representative Barney Frank, Democrat of Massachusetts, said it was ironic that while the legislation was deregulating financial services, it had begun a new system of onerous regulation on community advocates.


At 5:01 PM, Blogger an average patriot said...

I guess he's proud of that huh? You know, Barney Frank really pisses me off. He is as responsible for this mess as all the rest of the hypocrites!

At 10:30 PM, Blogger Weaseldog said...

I'd be happy to eat corn and bend over so Barney can enjoy a pre-digested meal...

But I have a feeling that such sarcasm and heartfelt feelings would be lost on him.

I think your dream of Obama is over. It won't be long before any rational man can't help but agree.

I voted for him, but only for his eloquence. I figured out that he was shill, as a senator.

At 4:03 AM, Anonymous edgar kuato alpo said...

Hello Weaseldog,

kuato kuato man, I want to be, er, never mind.

Any way the (political) wind blows. These career bureaucrats can change their stripes on command. Reform? Sure! More regulation? Less regulation? Rinse? Recycle? Sit up and bark like a dog? No-one has any conviction, except the few blagos of the world who are fed to the wolves for public consumption. Seriously, there's not one true patriot left with even a shred of power.

At 12:02 PM, Blogger an average patriot said...

I am trying to think otherwise but I believe you are right and we have been wrong about nothing as to how bad this is going to get.

At 1:29 PM, Blogger Weaseldog said...

If it's any consolation, I really want to be wrong. I just can't find a reason to believe it, when the evidence is so overwhelmingly negative.

I worry that that again, I may underestimate how bad things can get, and how quickly they can turn for the worse.


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