As politicians begin pointing fingers over our financial crisis perhaps we electorates should keep the facts in order.
Deregulation was a bipartisan effort when the Glass-Steagall Act was repealed in 1999 by the Gramm-Leach-Bliley Act. Legislation for the Gramm-Leach-Bliley Act was introduced in the Senate by Phil Gramm (R-TX) and in the House of Representatives by James Leach (R-IA). Efforts to get it through Congress were driven by Clinton and his Treasury Sec. Robert Rubin. The vote in the Senate and the House fell along party lines. McCain (R.AZ) voted Yes. On November 12, 1999 President Clinton signed the Act into law. Within days after the Treasury Department signed in support for the repeal of Glass-Steagall. Rubin, a former co-chairman of Goldman Sachs, accepted a top position at Citigroup as Vice Chairman. Gramm is a current economic advisor to McCain. Rubin is a current economic advisor to Obama.
http://www.govtrack.us/congress/vote.xpd?vote=s1999-105; http://clerk.house.gov/evs/1999/roll276.xmlBanking Deregulation, our representative Democracy at work:
One key feature of The Gramm-Leach-Bliley Act is it permitted commercial and investment banks to consolidate, which was prohibited under the Glass-Steagall Act.
In 1997 Travelers insurance company acquired Salomon Brothers investment bank. Travelers already owned Smith Barney brokerage firm which following the merge became Salomon Smith Barney. Sandy Weill, head of Travelers in February 1998 approached Citicorp’s John Reed for a merge and on April 6, 1998, announced a $70 billion stock swap merging Travelers with Citibank. This merge formed what we know today as Citigroup. However for the merge to succeed, which was the combining of banking and insurance underwriting services, it would first be necessary to change or repeal the Glass-Steagall Act.
To resolve this issue immediately following the merger announcement, Weill launched a lobbying and public relations campaign to repeal Glass-Steagall and passage of a new financial services legislation known as of the Financial Services Modernization Act of 1999 whose official name was the Gramm-Leach-Bliley Act.
During the1998 mid-term election as the final push for the new legislation heated up, lobbyists raised the issue of financial modernization with a fresh round of political fund-raising. The finance, insurance, and real estate industries built a bonfire of more than $200 million on lobbying and more than $150 million in political donations. Naturally campaign contributions were targeted to members of Congressional banking committees and other committees with direct jurisdiction over financial services legislation.
Finally after a dozen different attempts over the years Congress rewarded financial companies for more than 25 years and $300 million worth of lobbying efforts by passing the legislation which effectively repealed Glass-Steagall.
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