by Marti J. Smith
The latest BS I’m hearing is that the failed economy was originally created by Bill Clinton. That’s not what happened.
Clinton wanted to be sure that the middle-class and newbies entering the housing market would get a fair shake. But at the tail-end of his term in office the Republican Congress managed to slip some veto-proof “extras” into a bill, and the result perverted Clinton’s goals and helped spark the series of events that created the mess in which we now find ourselves. I got tired of hearing this rhetoric blaming Clinton’s administration. I’ve been asked by several people I know to explain what happened, so I decided to prepare a real response. Read on…
Two long standing pieces of legislation were “improved” by various pieces of legislation. There were revisions to the Community Reinvestment Act (CRA) during the 1990’s (even more in 2005), The Gramm-Leach-Bliley Act of 1999 which undid much of the Glass-Steagall Act, then the real pièce de résistance was the Commodity Futures Modernization Act of 2000.
When you look at all of this, you can’t help but see a common denominator. In this case, the CD is Phil Gramm.
Check out this article to see how all of the above contributed to where we are today.
For a bit of irony here is what Gramm said on the day of the signing of the GLBA, aka,the Financial Services Modernization Act:
Sen. Phil Gramm, chairman of the Senate Committee on Banking, Housing and Urban Affairs, made the following statement today in a ceremony at the Eisenhower Executive Office Building, where President Clinton signed the Gramm-Leach-Bliley Act into law:
“The world changes, and Congress and the laws have to change with it.
“Abraham Lincoln used to like to use the analogy that old and outmoded laws need to be changed because it made about as much sense to continue to impose them on people as it did to ask a man to wear the same clothes he did when he was a child.
“In the 1930s, at the trough of the Depression, when Glass-Steagall became law, it was believed that government was the answer. It was believed that stability and growth came from government overriding the functioning of free markets.
“We are here today to repeal Glass-Steagall because we have learned that government is not the answer. We have learned that freedom and competition are the answers. We have learned that we promote economic growth and we promote stability by having competition and freedom.
“I am proud to be here because this is an important bill; it is a deregulatory bill. I believe that that is the wave of the future, and I am awfully proud to have been a part of making it a reality.”
The Commodity Futures Modernization Act of 2000 was the piece that blew all of this a part because it allowed for the type of commodity speculation (gambling) that brought everything crashing down. As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in the 262-page measure. Written with the help of financial industry lobbyists and co-sponsored by Senator Richard Lugar (R-Ind), the chairman of the Agriculture Committee, the measure had been considered dead – even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. There was a vote and the bill passed right before Christmas.
How many time do we have to learn that we have to regulate to keep us all honest? The darkest parts of human nature make the temptation to financially benefit at whatever cost too irresistible.
All too often, this becomes a politicized discussion. The Republicans like to blame Clinton for the CRA revisions (“let’s blame the poor people for buying houses they can’t afford”) but conveniently forget to mention that Congress was in the control of their party (January 1995-January 2007) at the time and paved the way for all of this to come to pass. Truth is, both parties can find accountability.
Now, we have to fix things.