Understanding The End Of Glass-Steagall Act by Elaine Meinel Supkis

[Joanne98]

September 27, 2008

Elaine Meinel Supkis


I spent 8 hours with no breaks, observing the US House as it tried to deal with the complete collapse of the entire US banking system. While debating the $700 Billion Bank Bail Out Bill, I was astounded at the lack of knowledge, the shallow discussions, the stone-walling, the wailing of Gollum Sachs complaining about not sleeping, but no discussion as to how Congress enabled and assisted in this collapse. So here is a comprehensive article about just ONE aspect of this historic banking disaster: the death of the Glass-Steagall Act and how it enabled the banking lending bubble.


Time to examine the bill from Congress that helped to recreate the toxic trusts of the Roaring Twenties:

The bills were introduced in the Senate by Phil Gramm (R-TX) and in the House of Representatives by James Leach (R-IA) and Thomas Bliley (R-VA). The bills were passed by a 54-44 vote largely along party lines with Republican support in the Senate and by a 343-86 vote in the House of Representatives. Nov 4, 1999: After passing both the Senate and House the bill was moved to a conference committee to work out the differences between the Senate and House versions. Democrats agreed to support the bill only after Republicans agreed to strengthen provisions of the Community Reinvestment Act and address certain privacy concerns.

The final bipartisan bill resolving the differences was passed in the Senate and was signed into law by President Bill Clinton on November 12, 1999.

The banking industry had been seeking the repeal of Glass-Steagall since at least the 1980s. In 1987 the Congressional Research Service prepared a report which explored the case for preserving Glass-Steagall and the case against preserving the act.

Many of the largest banks, brokerages, and insurance companies desired the Act at the time. The justification was that individuals usually put more money into investments when the economy is doing well, but they put most of their money into savings accounts when the economy turns bad. With the new Act, they would be able to do both 'savings' and 'investment' at the same financial institution, which would be able to do well in both good and bad economic times.



The Gramm-Leach bill was a 100% GOP affair. Many commentators on the right would like to make this affair Bill Clinton's responsibility. The bipartisan nature of the vote for this bill definitely puts a lot of responsibility on both parties. But the initiative for the impetus behind this and the bankruptcy bill lies within the GOP. A number of Democrats desired this, too. But nearly the entire GOP desperately wanted these bills.


For example, in the Senate, only one Democrat voted for the bill. All Republicans but 2 voted for it. Only one of the two didn't vote at all, the other voted 'Present.' 79% of the House voted because of the addition of provisions that would encourage these new-fangled financial institutions to lend to inner city neighborhoods. The House alterations to this terrible bill gave the GOP a veto-proof majority.

Continued>>>
http://elainemeinelsupkis.typepad.com/money_matters/2008/09/elaine-meinel-8.html

[WillYourVoteBCounted]

1. Did a republican President SIGN the bill?

:shrug:

[Joanne98]

3. No. Clinton caved. Just like he did on welfare reform.

[RufusTFirefly]

5. Interesting since only 1 Democrat in the Senate voted for repeal

Fritz Hollings of South Carolina.

[RC]

6. This bill was veto proof. It did not matter whether he signed it or not.

[WillYourVoteBCounted]

10. Gramm-Leach-Bliley Act passed 54-44 vote in the senate

Congressional history of the Act

The bills were introduced in the Senate by Phil Gramm (R-TX) and in the House of Representatives by James Leach (R-IA) and Thomas Bliley (R-VA). The bills were passed by a 54-44 vote largely along party lines with Republican support in the Senate<1> and by a 343-86 vote in the House of Representatives<2>. Nov 4, 1999: After passing both the Senate and House the bill was moved to a conference committee to work out the differences between the Senate and House versions. Democrats agreed to support the bill only after Republicans agreed to strengthen provisions of the Community Reinvestment Act and address certain privacy concerns. <3>

The final bipartisan bill resolving the differences was passed in the Senate and was signed into law by President Bill Clinton on November 12, 1999. <4>

The banking industry had been seeking the repeal of Glass-Steagall since at least the 1980s. In 1987 the Congressional Research Service prepared a report which explored the case for preserving Glass-Steagall and the case against preserving the act.<5>

http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act

[BrklynLiberal]

2. Off to the greatest...

[Warren Stupidity]

4. And as far as I can tell NOBODY IS TALKING ABOUT PUTTING IT BACK

Although I will give Obama credit for demanding quite clearly re-regulation and an end to the era of deregulation last night. He did not get specific (nor was it the appropriate place to do so.)

Both parties drank deeply from the neoliberal kool-aide. I do not trust any of them to do what has to be done here until the pitchfork mob is at their doors.

The quandry is that the only opposition in Washington from either party is coming from the Republican Guards in the House - the dead enders of the free market fundamentalists who are insisting not (of course) on re-regulation, but on, as always more deregulation and more tax cuts, plus the insurnace sleight of hand that will cost taxpayers at least as much as the straight bailout with no possibility of any recovery of that cost.

[autorank]

9. Of course they don't. the Money Party wouldn't approve. n/t

[Wilber_Stool]

7. I've known for a long time that

I wasn't the sharpest knife in the drawer but reading this article really drives it home.

[Lochloosa]

8. K/R