Congress Passes Wide-Ranging Bill Easing Bank Laws

[FourScore]

Congress Passes Wide-Ranging Bill Easing Bank Laws
by DrSteveB
Wed Mar 25, 2009 at 11:07:35 AM PDT

This is a fun read from the NY Times in November 1999 Congress Passes Wide-Ranging Bill Easing Bank Laws

It's about the repeal of the Glass-Steagall Act which

opens the door for a new era on Wall Street in which commercial banks, securities houses and insurers will find it easier and cheaper to enter one another's businesses.

and which had huge bipartisan support:

was approved in the Senate by a vote of 90 to 8 and in the House tonight by 362 to 57.

Gee such an overwhelming consensus... I wonder how did that all work out?

Larry Summers who of course in now back in charge, said at the time:

''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.''

Because of course...

Administration officials and many Republicans and Democrats said the measure would save consumers billions of dollars and was necessary to keep up with trends in both domestic and international banking. Some institutions, like Citigroup, already have banking, insurance and securities arms but could have been forced to divest their insurance underwriting under existing law. Many foreign banks already enjoy the ability to enter the securities and insurance industries.

I mean who could have predicted...?

...Well actually:

The opponents of the measure gloomily predicted that by unshackling banks and enabling them to move more freely into new kinds of financial activities, the new law could lead to an economic crisis down the road when the marketplace is no longer growing briskly.

''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.''

Senator Paul Wellstone, Democrat of Minnesota, said that Congress had ''seemed determined to unlearn the lessons from our past mistakes.''

''Scores of banks failed in the Great Depression as a result of unsound banking practices, and their failure only deepened the crisis,'' Mr. Wellstone said. ''Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk. It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place.''



The White House has estimated the legislation could save consumers as much as $18 billion a year as new financial conglomerates gain economies of scale and cut costs.

Other experts have disputed those estimates as overly optimistic, and said that the bulk of any profits seen from the deregulation of financial services would be returned not to customers but to shareholders.

Just a reminder that liberal/progressive economic populists are never listened to, have no power... and are usually right... and have been since this all started going bad in mid-1970s.

I miss Paul Wellstone. I wonder when Minnesota might get another strong progressive Senator. Hmmm...

fyi...

One Republican Senator, Richard C. Shelby of Alabama, voted against the legislation. He was joined by seven Democrats: Barbara Boxer of California, Richard H. Bryan of Nevada, Russell D. Feingold of Wisconsin, Tom Harkin of Iowa, Barbara A. Mikulski of Maryland, Mr. Dorgan and Mr. Wellstone.

In the House, 155 Democrats and 207 Republicans voted for the measure, while 51 Democrats, 5 Republicans and 1 independent opposed it. Fifteen members did not vote...

http://www.dailykos.com/story/2009/3/25/712914/-Congress-Passes-Wide-Ranging-Bill-Easing-Bank-Laws

[bluestateguy]

1. Ever notice how the "bipartisan" legislation is always the worst?

Bipartisan bills (that come to mind):

The USA Patriot Act
repeal of Glass-Steagall
The Reagan Tax Cuts in 1981
Iraq War Resolution
Homeland Security Act
No Child Left Behind
Garn-St. Germain Act (deregulate the S&L's)
The Bankruptcy bill in 2005

[truedelphi]

4. Yours is a very good point. Thank you for listing so many

Of the bipartisian bills that have derailed America.

[slipslidingaway]

2. This worked out well...

"The White House has estimated the legislation could save consumers as much as $18 billion a year as new financial conglomerates gain economies of scale and cut costs."

:sarcasm:

[alstephenson]

3. Thanks for posting!

Deja vu all over again.