Repeal of Glass Steagall, aka Gramm, Leach, Blilely: DU memes versus reality.

[merrily]

Last edited Sat Jul 4, 2015, 07:28 PM - Edit history (1)

Meme: Repeal of Glass Steagall had nothing to do with economic collapse of the United States and several other nations, That was due to deregulation and collateralized mortgage obligations.

Reality: Um, repeal of Glass Steagall WAS the "deregulation" that permitted banks to deal in collateralized mortgage obligations.

http://www.motherjones.com/politics/2008/07/where-credit-due-timeline-mortgage-crisis

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x2127466 (and many, many other sources)

Not only that, but...

During debate in the House of Representatives, Rep. John Dingell (Democrat of Michigan) argued that the bill would result in banks becoming "too big to fail." Dingell further argued that this would necessarily result in a bailout by the Federal Government.[7]

http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act

http://www.dailykos.com/story/2009/04/08/717702/-VIDEO-from-1999-Byron-Dorgan-vs-Gramm-Leach-Bliley-WOW#



Meme: Republicans are to blame for Gramm, Leach, Blilely. Gramm, Leach, Blilely were three Republicans. Duh. And Republicans were in the majority.

Realty: Republicans did indeed have a majority in both Houses of Congress. While Gramm, Leach and Blilely were all Republicans, a number of Democrats voted to repeal Glass Steagall.. Not only did a number of Democrats vote for it, but Bill Clinton signed it. He could have vetoed it. Not only did he fail to veto it, but he and members of his White House, like Summers and Sperling lobbied Democrats in Congress hard to pass it. That lobbying by a Democratic White House was why so many Democrats supported it.


Meme: Clinton had a veto-proof majority.

Reality: Not the first time. Veto proof is, in theory,* two-thirds of each house. The first vote was 343 to 86 in the House (more than veto proof 292) **and 54-44 in the Senate (less than veto-proof 67).

When the two chambers could not agree on a joint version of the bill, the House voted on July 30 by a vote of 241***–132 (R 58–131; D 182–1; Ind. 1–0) to instruct its negotiators to work for a law which ensured that consumers enjoyed medical and financial privacy as well as "robust competition and equal and non-discriminatory access to financial services and economic opportunities in their communities" (i.e., protection against exclusionary redlining).[note 3]

The bill then moved to a joint conference committee to work out the differences between the Senate and House versions. Democrats agreed to support the bill after Republicans agreed to strengthen provisions of the anti-redlining Community Reinvestment Act and address certain privacy concerns; the conference committee then finished its work by the beginning of November.[12][15] On November 4, the final bill resolving the differences was passed by the Senate 90–8,[16][note 4] and by the House 362–57.[17][note 5] The legislation was signed into law by President Bill Clinton on November 12, 1999.[18]

id.

So, after much work, much lobbying by Greenspan, Clinton and the White House (see above) and much compromise between the two houses, the bill did pass the Senate 90 to 8.

Those voting nay were Senator Shelby (R), and Democratic Senators Boxer, Bryan, Dorgan, Feingold, Harkin, Mikulski, Wellstone. Senator Fitzergerald (R) voted present; Senator McCain did not vote (but, when he ran for President in 2007-2008, did appoint Gramm as one of his campaign's financial advisors. Oops.)

http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=106&session=1&vote=00354&TB_iframe=true&width=720&height=540

Not only that, but there was a rush to pass the bill lest a Congress less favorable to repeal be elected.

Besides all the above, a theoretical veto-proof majority does not preclude a veto and President Clinton seemed quite happy to sign the bill.

What did our wise leaders say when that bill was signed? "The world changes, and Congress and the laws have to change with it," said Phil Gramm. "In the 1930s ... it was believed that government was the answer ... We have learned that government is not the answer. We have learned that freedom and competition are the answers."

''This legislation is truly historic,'' said Bill Clinton. ''We have done right by the American people.''

''With this bill,'' said Larry Summers, ''the American financial system takes a major step forward toward the 21st Century -- one that will benefit American consumers, business and the national economy.''

Actually that bill helped crash the economy, costing trillions and leaving millions of people un- or underemployed. They, on the other hand, all got rich.

http://www.huffingtonpost.com/rj-eskow/the-dumbest-bipartisan-mo_b_1374301.html

* Unless and until a Presidential veto in fact occurs, the alleged existence of a veto-proof majority is only theoretical. Overrides of Presidential vetoes have been very rare. Even the threat of a veto often gets action from Congress.

http://www.princeton.edu/~ccameron/The%20Presidential%20Veto%20v3.pdf

http://usgovinfo.about.com/od/thepresidentandcabinet/a/presveto.htm

**House vote was on The Financial Services Act. For those who care, Senator Sanders, then a member of the House, was one of the 86 who voted "no."
http://clerk.house.gov/evs/1999/roll276.xml

***51 less less than veto proof 292, but I don't know how this vote interfaces with the House vote on the Financial Services Act.

ETA: See also http://www.democraticunderground.com/?com=view_post&forum=1277&pid=9158 discussing, among other things, the Commodities Futures Modernization Act. A Senate compromise of the House Bill allowed unregulated mortgage derivatives and credit default swaps. The Clinton White House also lobbied hard for passage of this act.

[randys1]

1. these people dont care about you

It is why I would love to see Bernie or Elizabeth get in because if they ALSO ended up playing the game, at least then we would know

I think I already know.

I think no matter what intentions either would have going in, it would not matter.

[F4lconF16]

6. +1 well said nt

[merrily]

10. What would we know? And what would we do about it?

[rbnyc]

2. there's a lot to say here...

...But right now, what I want to say most is that I miss Wellstone.

[merrily]

11. And Harkin and Dorgan and Feingold. Soon, we'll miss Boxer as well.

On the bright side, Feingold is running again. He was the only Senator of either of the two largest political parties in the United States to vote against the2001 Patriot Act (with Landrieu of all Senators, not voting at all.

http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=107&session=1&vote=00313

He did not vote for the 2006 renewal, either. In that, he was joined by other Democratic Senators plus Jeffords (I VT) http://educate-yourself.org/cn/patriotact20012006senatevote.shtml I wish he were running for President now. Failing that, I sure do hope that he wins his Senate race.

[swilton]

17. Maryland Senator Barbara Mikulski is also leaving

Although Maryland Senator Paul Sarbanes left the Senate a few years ago, it surprises me that he supported this bill.

[daleanime]

3. K&R....

[Gregorian]

4. I had always thought Clinton was unable to veto that. Thanks for clarifying.

And I had always thought that was indicative of whose side he was on. Oh well.

I just hope Americans have grown up since then. It's time to vote in your best interest: a noncorporate candidate is the only way to go.

[merrily]

8. A President always has veto power. Clinton not only did not want to use the veto, he very much

wanted that bill to pass.

Glass Steagall was part of FDR's New Deal. Reading the wiki on the New Deal is interesting. Almost before the metaphorical ink on the New Deal was dry, some people wanted it repealed. That has not changed. The reason that New Democrats call themselves New Democrats is to try to disassociate themselves from the Democrats who came before them, like FDR, Truman and, to an extent, even Carter, who was not exactly a big government liberal.

[Phlem]

5. K&R!

[Enthusiast]

7. It cannot be said enough. Gramm, Leach, Blilely were three Republicans.

And Gramm was the primary asshole responsible. Remember the crash and Gramm's response. McCain's chief economic adviser, lol.

[merrily]

9. Very true, but pointing at Republicans and only Republicans, is all too easy for Democrats and,

IMO, not especially accurate or useful to the 99%. We have been well-trained to do that, but it's not the whole truth. The whole truth is more useful to the 99% than the "bad Republican" default to which we've been conditioned.

Yes, Republicans proposed that bill, but, as we Democratic voters know all too well, proposing a bill is certainly no guaranty of passage. Republicans did not control either the sixty Senators needed for cloture or the Presidential pen.

A Democratic White House (specifically, the first New Democrat White House) lobbied hard to pass that bill and 90 out of 100 Senators voted for it, as did a majority of the House that included many Democrats. Among those in the White House pushing most for it were Summers and Sperling, both hired by the second New Democrat White House, even after the consequences of repeal of Glass Steagall had manifested in several countries, including ours, during 2008.

[Enthusiast]

16. You are right, of course.

I watched a Youtube video of Clinton signing the bill. All those smiling faces. I know what they are.

They also appear to remain in control of the party, mostly. Corruption reins supreme. I don't know what else you can call it.

[RiverLover]

12. Thanks merrily. This is a good one to bookmark when the BS argument is made that it was the

subprime mortgage crisis, and Bill Clinton's repeal of Glass-Steagall had nothing to do with 2008.

I also want to add what motivated Clinton & the rest of the purchased parties to repeal Glass-Steagall. The final push over the edge was done for:

Citigroup

Yep, the same people who wrote the rider killing part of Dodd-Frank & got it inserted into our budget last year, whipped for by Dimon & our president...

The Gramm–Leach–Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999 and commonly pronounced ″glibba″, (Pub.L. 106–102, 113 Stat. 1338, enacted November 12, 1999) is an act of the 106th United States Congress (1999–2001). It repealed part of the Glass–Steagall Act of 1933, removing barriers in the market among banking companies, securities companies and insurance companies that prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and an insurance company. With the bipartisan passage of the Gramm–Leach–Bliley Act, commercial banks, investment banks, securities firms, and insurance companies were allowed to consolidate. Furthermore, it failed to give to the SEC or any other financial regulatory agency the authority to regulate large investment bank holding companies.[1] ”The legislation was signed into law by President Bill Clinton.

A year before the law was passed, Citicorp, a commercial bank holding company, merged with the insurance company Travelers Group in 1998 to form the conglomerate Citigroup, a corporation combining banking, securities and insurance services under a house of brands that included Citibank, Smith Barney, Primerica, and Travelers.

Because this merger was a violation of the Glass–Steagall Act and the Bank Holding Company Act of 1956, the Federal Reserve gave Citigroup a temporary waiver in September 1998.[2] Less than a year later, GLBA was passed to legalize these types of mergers on a permanent basis. The law also repealed Glass–Steagall's conflict of interest prohibitions "against simultaneous service by any officer, director, or employee of a securities firm as an officer, director, or employee of any member bank".[3]

http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act

[merrily]

15. That it had nothing to do with economic collapse in several countries was a new one on me

relatively recently. However, the other two arguments, especially the allegedly veto proof majority one, have come up often enough.

[Martin Eden]

13. K&R ... this is an important thread

Well done!

[merrily]

14. Thank you.