Bill Clinton, Glass-Steagall and the Current Financial and Mortgage Crisis

thestrangedeathofliberalamerica ^ | May 22nd, 2008 | thestrangedeathofliberalamerica

[dennisw]

The banking and financial industry complained about the Banking Act of 1933 even as Congress debated it. As the Act worked its way through Congress, banks vigorously opposed it, causing some doubts about whether it would pass, especially with the provisions Carter Glass advocated that prevented banks from entering into the stock market.

[shield]

Two felons just keep on giving........

[Calpernia]

ping

[ex-Texan]

Phil Gramm, Bill Clinton, CitiGroup, Sandy Weill and the list goes on and on and on:

Phil Gramm is also currently co-chair of John McCain’s Presidential campaign and one of his chief economic advisors. * * * Just a year after the passage of the bill repealing Glass-Steagall, Citigroup had become the number one subprime lender in the country. Its vehicle for this was the newly formed CitiFinancial.

The repeal of Glass-Steagall was an important contributor to the bubble.

Well, it added to the frenzy. It added to the investment banking fervor. It added to the amount of money that was staked on this. * * *

Former SEC Chair Arthur Levitt is another who worried about the repeal of Glass-Seagall:

The merger of investment bank and commercial bank interests has created conflicts of interest that clearly hurt the public investor. Only extraordinary activity by both the banking and security regulators can begin to address [the] issue. * * *

These Wall Street bankers became filled with greed. The richer they got, the greedier they became. Eventually pure greed became overweening lust for power. Now one of their own is sitting in the cat bird's seat dictating who gets bailed out and who suffers.

Who suffers ___________________ ? American taxpayers get the shaft. All to save a bunch of WS crooks. 'Nuff said.

[muawiyah]

Will try to read this all the way through ~ I promise ~ but it looks just like the last Glass-Steagall expose I read ~ couple of years ago, or was that decades.

As I see it the fundamental problem is that all of our systems are designed to deal well with inflation, increased value, and profits.

They are not designed to deal with deflation, lost value, and losses.

The purpose of Glass-Steagall was simply to separate and differentiate financial and investment activities of corporate entities so that deflation,lost value, and losses were identifiable earlier and maybe somebody in the company could do something about such problems.

Apparently greater minds than my own see more noble, and complex, purposes implicit in Glass-Steagall. If they are correct why did substantial revision of the rules and standards in that law under the Clinton Regime result in an apparent inability for anyone to recognize DEFLATION?

Don't people realize that the cost of housing has dropped enough to eliminate the "low-cost housing" programs and worries? Even Twentysomethings, with jobs, can afford nice houses. This is like the 1950s! Our dollars actually buy more real estate.

Sure this causes investors in mortgages problems ~ like when folks walk away from those which are not supported by the current value of the home. That house is still there. Nothing changed. It can be sold, but for less. The advantage to the buyer in getting a lower price will shortly be translated into investment opportunity by that same buyer (out of his saved income) thereby off-setting perfectly the loss incurred by the investor who foolishly invested in the purchase of what became a bad mortgage.

There might be a few years lag time, but the process will work out.

Before that Trillion Dollar "loan" is fully lent, the buyers' advantage will have fully penetrated, and corrected, the market imbalances.

[plenipotentiary]

Missing so far is the mechanism. Hedge Funds funded in the end by Bank Deposits, drove indexed Commodity Markets higher. The Banks were now allowed to buy into indexed Commodity Markets, and they did, because the Hedge Funds drove them ever higher, so huge profits were made by the Banks and the Hedge Funds.

When the Hedge Funds withdraw, or start betting on a downturn in Commodities, because for example, the Saudis just keep pumping more Oil, and when the liquidity goes out of the Markets, and the Banks and Hedge Funds have to sell, then the Markets go over a cliff, and at a stroke the Banks Shareholder Capital is wiped out.

The losers here have been the Bank Shareholders who were betrayed by the Bank Executives who acted in their own interests, and not the Shareholders interests.

Obviously the Bank Laws will be reformed. But I’d like to see the Bank Executives Criminalised for their actions.

[M. Espinola]

Goldmine Sachs and front man Paulson want Congress to ram this $trillion-plus Banking Industry (taxpayer) funded cash give-a-way through by the end of this week! The 'government bailout' is currently proposed virtually without meaningful oversight. Get ready for Phase II -- Crash Countdown.

NEW YORK, April 20, (2007) (Reuters) - U.S. Treasury Secretary Henry Paulson said on Friday the housing market correction appears to be at or near its bottom and that troubles in the subprime mortgage market will not likely spread throughout the economy.

"We've clearly had a big correction in the housing market. Retail housing was growing for some time at a level that was not sustainable," Paulson said in a speech to The Committee of 100, a business group in New York promoting better Chinese relations.

"I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained," he added.

Link

This 'bailout' is the modern day financial version of the Reichstag fire.

[WOBBLY BOB]

Kashkari to be tapped to head bailout

http://news.yahoo.com/s/ap/20081006/ap_on_bi_ge/meltdown_kashkari

An official says the administration has decided to pick a key Treasury Department official to be the interim head of its $700 billion rescue effort for financial institutions.

http://www.treas.gov/organization/bios/kashkari-e.html
“Prior to joining the Treasury Department, Mr. Kashkari was a Vice President at Goldman, Sachs & Co. in San Francisco, where he led Goldman’s IT Security Investment Banking practice, advising public and private companies on mergers and acquisitions and financial transactions.”

[M. Espinola]

Thanks for those links.

Goldman Sachs is at the center of this financial storm.

The Partnership: The Making of Goldman Sachs

Goldman Sachs will profit from financial crisis

Goldman-Sachs executive selling 5.9 acres on Nantucket for $55 million

[ex-Texan]

Nice little beach cottage. Who said 'crime does not pay?' High level misconduct pays very well when the White House, Congress, U.S. Treasury, Federal Reserve and Fibbies are acting in concert. Good to have friends in key positions, to grease the wheels of injustice.

We Witnessed the 'Worst Week Ever' for Stocks

I took a much needed break from from Wall Street on Friday.

[TigerLikesRooster]

Repealing Glass-Steagall amounts to treason. All perpetrators of this act will be remembered in financial history.

[M. Espinola]

Let's keep an eye on how Asian trading does Sunday evening (Monday day trading).

Oy, I can't take this! Not even a coffee break!

[liberalamerican2]

As the author of the above article I should warn you that it is governed by the following license:

“This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.”

In other words, you are in violation of the above license. It is also in violation of your own fair use rules. Courts have ruled that fair use does not include using an entire article under one’s own name.

In other words, I do not expect to see this posting in the future.