The Clinton Years: Banking Deregulation, Undoing The New Deal & Screwing Minorities

[KittyWampus]

Taking an unvarnished look at the Clinton years that Hillary supporters unquestioningly seem to think were so great.
Question for Clinton and her supporters- does she and do YOU support Clinton's repeal of the Glass Steagall Act?

Clinton, Republicans agree to deregulation of US financial system (November 1999)

An agreement between the Clinton administration and congressional Republicans, reached during all-night negotiations which concluded in the early hours of October 22, sets the stage for passage of the most sweeping banking deregulation bill in American history, lifting virtually all restraints on the operation of the giant monopolies which dominate the financial system.

The proposed Financial Services Modernization Act of 1999 would do away with restrictions on the integration of banking, insurance and stock trading imposed by the Glass-Steagall Act of 1933, one of the central pillars of Roosevelt's New Deal. Under the old law, banks, brokerages and insurance companies were effectively barred from entering each others' industries, and investment banking and commercial banking were separated.

snip
Differing versions of financial services deregulation passed the House and Senate earlier this year, and the conference committee was called to work out a consensus bill and avert a White House veto. The principal bone of contention in the last few days before the agreement had nothing to do with the central thrust of the bill, on which there was near-unanimous bipartisan support.

The sticking point was the effort by Gramm to gut the Community Reinvestment Act, a 1977 anti-redlining law which requires that banks make a certain proportion of their loans in minority and poor neighborhoods. Gramm blocked passage of a similar deregulation bill last year over demands to cripple the CRA, and bank lobbyists were in a panic, during the week before the deal was made, that the dispute would once again prevent any bill from being adopted.

snip

The latter provision was particularly offensive to black and other minority business and community groups, who have used the CRA provisions as a lever by threatening to challenge mergers and other bank operations which require government approval. In most such cases, the banks have offered loans to businessmen or outright grants to community groups in return for dropping their legal actions. These petty-bourgeois elements have been able to posture as defenders of the black or Hispanic community, while pocketing what are essentially payoffs from finance capital and concealing from the public the details of this relationship.

The banks and other financial institutions did not themselves oppose continuation of the CRA, which they have treated as nothing more than a cost of doing a highly profitable business in minority areas. Loans tied to the CRA average a 20 percent rate of return. Financial industry lobbyists complained that they were being caught in a crossfire between the Republicans and Democrats which was unrelated to the main purpose of the bill.

The Clinton White House threatened to veto the bill if CRA provisions were substantially weakened, in response to heavy pressure from the Congressional Black Caucus and the Reverend Jesse Jackson, whose Operation PUSH has made extensive use of CRA in its campaigns to pressure corporations and banks for more opportunities for black businessmen. But eventually the White House caved in to Gramm, accepting his amendments so long as the program remained formally in place.

The White House similarly retreated on pledges that consumer privacy would be protected in the legislation. Consumer groups pointed to the potential for abuse of financial information once giant conglomerates were created which would handle loans, investments and insurance at the same time. For example: a bank could refuse to give a 30-year mortgage to a customer whose medical records, filed with the bank's insurance subsidiary, revealed a fatal disease.

The final draft of the bill contains a consumer privacy protection clause, but it is extremely weak, applying only to the transfer of information outside of a financial conglomerate, not within it. Thus Citigroup will be able to pass on financial information about its bank depositors to Travelers Insurance, but not to an outside company like Prudential. Even that limitation would be breached if there was a contractual relationship with the outside company, as in the case of a telemarketer which did work for Citigroup and was given private information about Citigroup depositors to aid in its telephone solicitations.

snip
The Wall Street Journal celebrated the agreement to end such restrictions with an editorial declaring that the banks had been unfairly scapegoated for the Great Depression. The headline of one Journal article detailing the impact of the proposed law declared, "Finally, 1929 Begins to Fade."

..................................................


http://www.wsws.org/articles/1999/nov1999/bank-n01.shtml
See also: http://www.opensecrets.org/news/banks/

[displacedtexan]

1. Newt Gingrich. n/t

[KittyWampus]

7. Clinton Gives Signing Pen To Head Of Citigroup, Billionaire Sanford Weill

Bill Clinton and the Wall of Me

Billionaire Sanford I. Weill, ....... has as a major trophy is the pen Bill Clinton used to sign the repeal of the Glass-Steagall Act, a move which allowed Weill to create Citigroup. Fittingly, Citigroup is a major contributor to guess which current Democratic Presidential candidate?

A Frontline report on the repeal of Glass-Steagall shows how those with money end up with pens from the President of the United States on their walls.

Sandy Weill calls President Clinton in the evening to try to break the deadlock after Senator Phil Gramm, chairman of the Banking Committee, warned Citigroup lobbyist Roger Levy that Weill has to get White House moving on the bill or he would shut down the House-Senate conference. Serious negotiations resume, and a deal is announced at 2:45 a.m. on Oct. 22. Whether Weill made any difference in precipitating a deal is unclear.

Just days after the administration (including the Treasury Department) agrees to support the repeal, Treasury Secretary Robert Rubin, the former co-chairman of a major Wall Street investment bank, Goldman Sachs, raises eyebrows by accepting a top job at Citigroup as Weill's chief lieutenant. The previous year, Weill had called Secretary Rubin to give him advance notice of the upcoming merger announcement. When Weill told Rubin he had some important news, the secretary reportedly quipped, "You're buying the government?"

When Bill Clinton gave that pen to Sanford Weill, it symbolized the ending of the twentieth century Democratic Party that had created the New Deal. Although the 1999 law did not repeal all of the banking Act of 1933, retaining the FDIC, it did once again allow banks to enter the securities business, becoming what some term "whole banks."

The repeal of one of the most important pieces of legislation in this nation's history came about as a result of another Clinton "triangulation," the wobbling attempt to find the middle of the road that has somehow managed to pass for a philosophy with many Democrats for over two decades. As former Clinton former campaign Richard Morris once described it, you move a little to the left, a little to the right. I'd love to hear Clinton give that explanation to a foreclosed home owner today.

With the stroke of a pen, Bill Clinton ended an era that stretched back to William Jennings Bryan and Woodrow Wilson and reached fruition with FDR and Harry Truman. As he signed his name, in the whorls and dots of his pen strokes William Jefferson Clinton was also symbolically signing the death warrant of Liberal America and its core belief in the level playing field that had guided the Democratic Party. But it was the gift of the pen to Sanford Weill and its assuming an honored place on the Wall of Me that rubbed salt in the wound.
In his famous First Inaugural Roosevelt asserted:


Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.
Clinton not only repealed the act Roosevelt had put in place to curb those practices, but presented one of the pens used to sign it to one of those "money changers."
http://www.myleftwing.com/showDiary.do?diaryId=19889

[onenote]

2. The Clinton Years: Justices Ginsburg and Breyer

Hey,I'm voting for Obama on Tuesday; but if HRC gets the nomination I'll be supporting her as vigorously as I would've supported Obama.

You, on the other hand, should feel free to support the candidate that George W. Bush endorses if that is what you prefer.

[bigtree]

3. so sez the World Socialist Website

[Whisp]

6. of course a supporter for World Capitalists like the Clintons would think

socialism and equal justice is a nasty disease to be rid of.

[KittyWampus]

8. spoken like a true cult member. There are nothing but FACTS in what I posted. No opinions

[Armstead]

32. The WSW is a very good source of information -- even for non-socialists

Whether or not one agrees with them, the World Socialist is an excellent source of information and analysis. They cut through the crap and shine a light on the issues and behaviors that is ignored by the mainstream media.

[DJ13]

4. Oh please

The Hillary supporters dont have time for thinking, Chelsea was called a whore by a guy on TV.

Wheres your priorities?!
:crazy:

[LSparkle]

5. NAFTA and FCC dereg are more sore points with me

BIG mistakes.

[KittyWampus]

11. I will be posting Telecommunications Deregulations. However, this lead to subprime mortgage mess

it's very relevant.

[IndianaGreen]

12. Clinton put Michael Powell as FCC Chair

Bill always had a soft heart for rightwingers.

[RUMMYisFROSTED]

16. Definately an ouchie.

[KittyWampus]

22. He also kept Greenspan in the game.

[RUMMYisFROSTED]

24. Ruh-oh.

[KittyWampus]

25. lol! actually, I think Welfare Reform should be a good topic here as well.

[KittyWampus]

27. just posted on Obama's Tech Plans. Hillary is so vague.

[KittyWampus]

28. kick

[ShortnFiery]

9. No more "Clinton" or "Bush" surnames in *our* White House! eom.

[IndianaGreen]

10. 1996 Telecom Act, DOMA, DADT, School of Americas, Plan Colombia

NAFTA, and on and on.

[NashVegas]

19. I Hated All That

The industry I work in was savaged thanks to DMCA and Telecoms Act.

Unfortunately, the only candidate still in the game who agrees with us that shit needs to be undone is Ron Paul.

[Bread and Circus]

13. Thanks, I wish this whole board about issues, records, and candidate history...

there's way to much out and out spinning her.

GDP is about 2 shades of grey away from the Bill O'Reilly show half the time.

[KittyWampus]

14. there's a reason Hillary supporters spam this board with Rezco and Cult crap.

[EFerrari]

15. DADT. Now she's the champion of the gay community?

Madness.

[IndianaGreen]

20. The Clintons will say or do anything to get elected.

Remember Bill as the friend of the common man? That man (and woman) is now out of a good paying job because the factory closed down and the jobs went to Mexico. Thank you Bill and Hillary for NAFTA.

[Dogmudgeon]

17. The poor were bamboozled by prosperity!

How could they tell they were being robbed blind by the KKKlint00ns? They were distracted by making so much money that Bitlery was able to sneak in and give them even MORE money. The cad!

--p!

[KittyWampus]

21. How undoing Glass-Stesgall contributed to subprime mortgage & hedge fund mess:

What Hath Clinton Wrought?

What can be said in Clinton's favor is that in 1999 few people anticipated the out-of-control growth of the hedge fund industry and the subprime mortgage market. The New York Times described the new financial world created by the repeal of Glass-Steagall in a June 2007 profile of Goldman Sachs:

While Wall Street still mints money advising companies on mergers and taking them public, real money - staggering money - is made trading and investing capital through a global array of mind-bending products and strategies unimaginable a decade ago.

Curiously, Goldman Sachs head Lloyd Blankfein paints the perfect big picture of what has happened:

We've come full circle, because this is exactly what the Rothschilds or J. P. Morgan, the banker were doing in their heyday. What caused an aberration was the Glass Steagall Act.
Blankfein's analysis testifies to the full impact of Bill Clinton's actions, for like many members of the Counterrevolution he sees the New Deal as an aberration and longs for a return to the days J. P. Morgan and other tycoons gave the Gilded Age its nickname. His "aberration" was eliminated not because of the actions of some radical Republican, but because of Bill Clinton. No wonder Goldman Sachs is also a prime contributor to you-know-who.

As is often the case, the story of the repeal of Glass-Steagall and the growth of the subprime mortgage market that is now crumbling around us like a financial house of cards can be best be told by a graph:



If you think of this graph as the level playing field, notice how flat it was before Bill Clinton repealed Glass-Steagall, then notice how steep it has become. Those subprime loans amount to nothing more than an organized ripoff of millions of innocent Americans, with the steepness of the graph illustrating the how far the playing field has tilted.

The result is that all of a sudden people are thinking Glass-Steagall wasn't such a bad idea after all. Robert Kuttner testified before Barney Frank's Committee on Banking and Financial Services in October, evoking the dreaded specter of the Great Depression:

Since repeal of Glass Steagall in 1999, after more than a decade of de facto inroads, super-banks have been able to re-enact the same kinds of structural conflicts of interest that were endemic in the 1920s - lending to speculators, packaging and securitizing credits and then selling them off, wholesale or retail, and extracting fees at every step along the way. And, much of this paper is even more opaque to bank examiners than its counterparts were in the 1920s. Much of it isn't paper at all, and the whole process is supercharged by computers and automated formulas.

Then there is Dow Jones MarketWatch's Kostigen:

I'm not saying that Glass-Steagall would have made a difference to the evolution of the collateralized debt obligations. But it might have helped identify and isolated the damage.
As Congress continues to investigate the mortgage crisis, more people are wondering whether the repeal of Glass-Steagall was a mistake.

The Future of Your Mortgage

In testimony before Congress on November 8, Federal Reserve Chair Ben Bernanke painted a grim picture of the current crisis and even grimmer picture of the future:


On average from now until the end of next year, nearly 450,000 subprime mortgages per quarter are scheduled to undergo their first interest rate reset.
According to a December 2006 study by the Center for Responsible Lending, a nonpartisan research and policy organization:
More than 2 million people with subprime loans are facing foreclosure this year and nearly 20 percent of subprime mortgages issued between 2005 and 2006 are projected to fail.
But numbers and testimony and even history mean little to those who suddenly find themselves up against the wall. In every city and town across this country "For Sale" signs are popping up on lawns. Behind each of those signs lies a personal story, a family tragedy, which like the tragedies of the Great Depression, tells of innocent Americans felled by an affliction they never saw coming. Walk any street in this country today--even in affluent neighborhoods--and each time you see one of those signs the hairs on the back of your own neck stand up, because those signs instill the same fear people felt when they walked into a bank in 1932 and found their money gone.
Two million people have found themselves one step away from figuratively being tossed out onto the street, the way millions were in the 1930s. Meanwhile, there are young people starting new lives for whom home ownership is rapidly receding, middle-aged people who finally had scraped together enough for a down payment only to find they can't get a mortgage and older people for whom their home was their retirement and now find its value dropping like George Bush's poll numbers. Finally there are even millions more for whom the collateral damage from the crises promises to cast its shadow over their American Dream.

The International Monetary Fund recently drew the following lessons from various financial crisis:

It is difficult to tell at the time whether a financial crisis will have broader economic consequences


Regulators often cannot keep up with the pace of financial innovation that may trigger a crisis.

Both have characterized what happened after the repeal of Glass-Steagall. It is too bad Bill Clinton did not have their wisdom when he made his decision, but then when you make decisions by triangulating, how much weight do you give such studies?
http://www.myleftwing.com/showDiary.do?diaryId=19889

[Dogmudgeon]

29. Bill Clinton's law? Not quite. Try PHIL GRAMM.

The http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act">Gramm-Leach-Bliley Financial Services Modernization Act.

Phil Gramm's bill.

Yet MyLeftWing only mentions Gramm ONCE. And never mentions the name of the bill AT ALL.

It's like writing a history of the 60s and mentioning The Beatles only once.

http://thomas.loc.gov/cgi-bin/bdquery/z?d106:SN00900:|
(You may need to correct the URL to use Thomas' register.)

This was a Republican initiative. Clinton signed it when it had passed by a veto-proof majority -- then bragged about how it was HIS bill.

The Republicans went apeshit. Ballistic. Nuclear. They howled. Cursed him. Cursed Hillary, and Chelsea, and Socks the Cat. It was on TV.

So in a way, yes, it was "his bill". Think about how the Obama supporters boil over when Hillary "steals" one of his lines to tweak him. Multiply that by a thousand, and that's what you had. It was on TV.

Most of those bills you like to tie around Clinton's neck are like that -- especially the Welfare bill that everyone brings up. Newt's face was CRIMSON when he was interviewed over that one. You forget how Bill kicked the GOP in the balls, repeatedly. Instead, you believe bourgeois Trotskyite-wannabes who tell you that Clinton was "the best Republican president we've had". And you believe it because it makes you feel clever.

Put that in next to "not a nickel's worth of difference".

So instead of looking into this, you took an angry, gullible blogger's word for it, and she took Robert Kuttner's word for it (though he only gets ONE mention).

Original Source Research by MyLeftWing: NONE.

It's another smear-Clinton screed from -- this one the left instead of the right.

--p!

[NashVegas]

18. Convince Me Obama Will Undo This

Can you?

[blm]

23. I can try, Crisco. He advocates for open government. I was skeptical of him for

a very long time, and was reluctant to be swayed. But he has started speaking my language more and more, and when he said at the last debate that he would push for cameras on all legislative negotiations so any lawmaker carrying water for a special interest or lobbyist would be on full view - they'd have to OWN their role in the negotiations - well, that mattered to me, and I thought it was the most significant statement of the entire debate. (so of course the media ignored it)

I have to believe that his view of transparency will stay with him. He has surrounded himself with strong, solution-oriented, progressive advisors on national security issues, too, like Gary Hart, Richard Clarke, John Kerry and Gen. Anthony Zinni.

I don't trust easily (as you know). I am 95% trusting Obama at this point.

[Bread and Circus]

31. his fighting for transparency is a pattern in both in IL and in the US Senate.

it's one of my favorites aspects of his candidacy as well. we won't be able to change things until we change the system. Clinton offers nothing to change the system from what I can tell, mainly because it "works" for her.

[Xolodno]

26. Well....

It took several decades to end many of the New Deal legislation. It will take just that to put it back....short of a full blown economic depression (no..not a recession...a depression).

Greenspan wasn't kidding that Clinton was the first real Republican President we've had in awhile. I'm sure George H.W. Bush would have loved to repeal that legislation, but didn't have the support to do it in Congress. Probably get flamed for this comment..but the what hell....Reagan who lived through the depression, I speculate would have vetoed any such mass legislation undoing the New Deal. Actually, Reagan wouldn't even get nominated in today's hijacked GOP.

It's ironic, that Reagan rebuilt the GOP....only to have it yanked away by ultra-conservatives and Christian fundamentalist who now defecate on anyone who promotes Reagan ideals (McCain for example)...but at the same time call themselves "Reagan supporters". I think he would have changed his party affiliation BACK TO Democrat in todays GOP.

[KittyWampus]

30. kick