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Flashback: Clinton Repeals Glass-Steagall

As Esquire magazine used to ask — why is this man smiling?

From the front page of the November 13, 1999 edition of the New York Times:

[NYT caption:] Depression-Era Rules Undone Alan Greenspan, left, the Federal Reserve Chairman, and Congressional leaders applauded President Clinton yesterday after he signed the Financial Services Modernization Act, which allows merging of banks, securities firms and insurers. It repeals parts of the 1933 Glass-Steagall Act. Page C3.

As the caption notes, the Reuters article itself was buried in the back pages:

Depression-Era Rules Undone

Clinton Signs Legislation Overhauling Banking Laws

WASHINGTON, Nov. 12 (Reuters) – President Clinton signed into law today a sweeping overhaul of Depression-era banking laws. The measure lifts barriers in the industry and allows banks, securities firms and insurance companies to merge and sell each other’s products.

“This legislation is truly historic,” President Clinton told a packed audience of lawmakers and top financial regulators. “We have done right by the American people.”

The bill repeals parts of the 1933 Glass-Steagall Act and the 1956 Bank Holding Company Act to level the domestic playing field for United States financial companies and allow them to compete better in the evolving global financial marketplace.

Analysts and industry leaders say the measure will probably fuel a wave of mergers as companies compete to build financial supermarkets offering all the services customers need under one roof.

Financial stocks were winners on Wall Street today, with J.P. Morgan & Company, Citigroup, American Express and Merrill Lynch all posting big gains. That helped the Dow Jones industrial average end up 174.02 points, at 10,769.32.

The Senate approved the final bill by 90 to 8 on Nov. 4 and the House followed suit by a vote of 362 to 57. Congress had previously made almost a dozen unsuccessful attempts over the last 25 years to revise the statutes, which had increasingly come to be viewed as anachronisms.

“The world changes, and Congress and the laws have to change with it,” said Senator Phil Gramm of Texas, chairman of the Banking Committee and one of the bill’s prime sponsors.

Supporters of the legislation say it will also benefit consumers, providing them with greater choice and convenience and spurring competition that will lead to lower prices.

“With this bill,” Treasury Secretary Lawrence H. Summers said, “the American financial system takes a major step forward toward the 21st Century — one that will benefit American consumers, business and the national economy.” Opponents said it would have the opposite effect, creating behemoths that will raise fees, violate customers’ privacy by sharing and selling their personal data, and put the stability of the financial system at risk.

The privacy issue was a key focus in the long and often heated negotiations that produced a compromise bill, and President Clinton made clear he still wanted to see more done to safeguard consumers’ personal financial information.

President Clinton said the Treasury and White House would put together a legislative proposal to take to Congress next year that would extend the privacy provisions of the legislation.

This is just one of the several things that Mr. Clinton did which led to the current financial mess we enjoy today.

And mind you, the Democrats are now trying to tie this act around the necks of the Republicans.

Never mind that the Senate approved the final bill by 90 to 8. Or the House did the same by a vote of 362 to 57. Or that Bill Clinton crowed:

“This legislation is truly historic. We have done right by the American people.”

Some how, some way a Republican must be found to take the blame.

This article was posted by Steve on Tuesday, September 23rd, 2008. Comments are currently closed.

4 Responses to “Flashback: Clinton Repeals Glass-Steagall”

  1. RightWinger says:

    I saw the Glass-Steagall Act mentioned a few days ago on some lefty blog. The blogger was trying to say that as much as everybody wanted to skin Bush for this, that this was all Phil Gramm’s fault and McCain was to blame because he voted for it.

    Now I see on Politico they are ripping Phil Gramm and McCain for supporting this. Naturally there is not one mention any place of Bill Clinton’s overwhelming support and the overwhemling support in it’s passage by Both sides as Steve pointed out here.

    If this was such a POS, the vote would have been down party lines and in the end, Clinton would have vetoed it under pressure from his party. Just another red herring to throw everybody off of Dodd and Frank and Obama and all the rest of them who are responsible.

    What is really steaming me right now is that the RNC, McCain and everybody needs to get out and scream this from the roof tops and I am not hearing it. The RNC better be filling up the Sunday shows to dismiss this nonsense.

  2. Arctain says:

    RW –

    The problem is, it was a bi-partisan effort to repeal parts of Glass-Steagall. McCain did support it – just as Clinton did sign it. It was wrong – but both sides bear the blame (I’m agreeing with you, here…)

    But, as we know; like three-year olds, Democrats never take responsibility for their actions – they always blame someone else. I doubt that Republicans are going to act in kind and respond by whining “…but they did it, too!” It’s hard for the the free-market conservatives to claim on one hand that the repeal was a good idea in light of the current financial mess, and on the other hand support the current administration’s plan for Wall Street socialism – but that’s exactly the position that we are in. Liberal Democrats, on the other hand, are on very comfortable ground with socialism. It comes as no surprise that they want more – more pork, deeper control over the markets, caps on salaries, etc… The truly disheartening thing is that fiscal conservatives cannot make a coherent argument to stop this madness.

  3. Anonymoose says:

    I remember 1999; the over-hyped Millennium celebrations no one cared about, The Matrix was hot and everybody wanted to invest in the coming bazillions on the Internet. Yes, Clinton’s hand was in it deep-n-dirty, like they all were.

    But the people ultimately to blame (points finger) are all the bankers and executives who somehow thought sub-prime mortgages would be a great idea. You start giving $450,000 loans to people with bad credit so they can buy their McMansions and what do you expect will happen? All I can think is a either A. A few bigwigs wanted to cash in and get out before it all fell apart, or B. Someone seriously thought there’d be some great economic good times to carry it all through.

    I’m going back to counting my nickels and dimes now………

  4. Greg Poland says:

    It was Laurence Summers and Robert Rubin (both appointed by Clinton) along with the Republican controlled House and Senate that repealed the Glass-Steagall act. Summers, Rubin and Allen Greenspan helped to suppress a report on the possible dangers of derivatives by Brooksley Born, then the Chair of the Commodity Futures Trading Commission. What I don’t understand is why these same people are advising President Obama (except Born) and why there is no talk of re-instating the Glass-Steigall act.

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