Financial Sector Deregulation Gone Wild II
Before the S&L crisis, in 1980 the US had 4,600 thrifts, by 1988 mergers and bankruptcies left 3000. By the mid 1990's less than 2000 survived.
Like Father, Like Son...In less then 7 years after the initiation of the Reagan Garn St. Germain major banking deregulation... In February of 1989, Shrub Sr. unveiled the S&L bailout plan. The S&L crisis cost about $600 Billion dollars in "bailouts." This was $1500 dollars from every man woman and child in the US. Does this sound vaguely familiar? It should, as Shrub Jr, recently unveiled a $700 billion financial sector bailout.
Shrub Sr. attempts to further advance the banking deregulation effort... In the spring of 1987, overriding the opposition of Chairman Paul Volcker the Federal Reserve Board votes 3-2 in favor of easing regulations under Glass-Steagall Act. Thomas Theobald, then vice chairman of Citicorp, argues that three "outside checks" on corporate misbehavior had emerged since 1933: "a very effective" SEC; knowledgeable investors, and "very sophisticated" rating agencies. Oi!
The ever prescient Volcker is unconvinced, and expresses his fear... that lenders will recklessly lower loan standards in pursuit of lucrative securities offerings and market bad loans to the public.
In January 1989, the Fed Board approves an application by J.P. Morgan, Chase Manhattan, Bankers Trust, and Citicorp to expand the Glass-Steagall loophole. In 1990, J.P. Morgan becomes the first bank to receive permission from the Federal Reserve to underwrite securities. In 1991, the Bush administration puts forward a repeal proposal, winning support of both the House and Senate Banking Committees, but the House again defeats the bill in a full vote.
Under Clinton, the Republican majority Congress and their banking masters advance deregulation further...
In December 1996, with the support of Chairman Alan Greenspan...the Federal Reserve Board issues a precedent-shattering decision permitting bank holding companies to own investment bank affiliates with up to 25% of their business in securities underwriting. In August 1997, the Fed eliminates many restrictions imposed on "Section 20 subsidiaries" by the 1987 and 1989 orders. The Board states... that the risks of underwriting had proven to be "manageable," and says banks would have the right to acquire securities firms outright.
In 1997, Bankers Trust (now owned by Deutsche Bank) buys the investment bank Alex. Brown & Co., becoming the first U.S. bank to acquire a securities firm. On April 6, 1998, CEO's Weill and Reed announce a $70 billion stock swap merging Travelers (which owned the investment house Salomon Smith Barney) and Citicorp to create Citigroup Inc., the world's largest financial services company, in what was the biggest corporate merger in history.
The transaction would have to work around regulations in the Glass-Steagall and Bank Holding Company acts governing the industry, which were implemented precisely to prevent this type of company: a combination of insurance underwriting, securities underwriting, and commecial banking.
The repetition of the S&L crisis in the much larger banking and securities markets was precipitated by the 1999 Gramm-Leach-Bliley Act which repealed part of the Great Depression-era bank regulations or Glass-Steagall Act of 1933..
After 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts.
Supporters hail the change as the long-overdue demise of a Depression-era relic. This deregulation broke down barriers between banks, securities firms, mortgage lenders and insurance companies. The GLBA allowed commercial and investment banks to consolidate.
The bill was a Republican drafted bill passed by a Republican majority congress and signed into law by President Clinton. Had the Democrat Clinton refused, Congress would have overridden the vetoe.
Economists Robert Ekelund and Mark Thornton criticized the Act as contributing to the 2007 subprime mortgage financial crisis, arguing that while "in a world regulated by a gold standard, 100% reserve banking, and no FDIC deposit insurance" the Financial Services Modernization Act would have made "perfect sense" as a legitimate act of deregulation, under the present fiat monetary system GLBA "amounts to corporate welfare for financial institutions and a moral hazard that will make taxpayers pay dearly".
The banking, insurance and brokerage industry lobbyists spent 25 years and $300 million on the effort to garner support from our whores on the hill: $58 million in campaign contributions to Democratic and Republican candidates; $87 million in "soft money" contributions and $163 million on lobbying of elected officials.
The chairman of the Senate Banking Committee, Texas Republican Phil Gramm, whose name adorns the GLPA bill was a key architect of the banking and lending deregulation. Sen. Gramm himself collected more than $1.5 million in cash from the three industries
$496,610 from the insurance industry, $760,404 from the securities industry and $407,956 from banks... and is now a central McCain economic adviser.
In conclusion... We despise and view both Republicans and Democrats as one in the same. Rich elitists who control everything... and smoke cigars and laugh behind closed doors as they take advantage of all us poor folk. Through media propaganda, they use devisiveness to separate and conquer the masses, religion, race, color, creed, gender, sexual preference and especially political dogma are used.
With unbiased fact checking we have proven empirically, it is two Republican Presidents, a senator and Congress that take the cake with regard to having done the most damage in support of financial sector deregulation... and not without the support of the Democrats. These two bills have led directly to two major financial crises. The greenback/grant deed dope pushers of late are spawns of 25 years and $300 million in financial sector lobbying for deregulation.
In addition, 6 years of a Republican Congress and 8 years with an incumbent idiot in the executive branch have allowed the financial and corporate sector to run wild. Culminating in the largest systemic financial collapse in history.
As we have Nattered before: Deregulation and globalization are euphemisms for unfettered corporate rape and pillage.
Over the last 40 years, since 1968: 12 years of democratic presidency: 28 years of republican. Let the TRUE history be known... allowing the ascendency of the house of finance has been the publics greatest folly of the 20th & 21st century and if left unchecked, will ultimately lead to the demise of American democracy and freedom itself.
Sources: Seeking Alpha: Deregulation Gone Wild
A complete history of GLBA here.
Final vote on the GLBA bill here.
Like Father, Like Son...In less then 7 years after the initiation of the Reagan Garn St. Germain major banking deregulation... In February of 1989, Shrub Sr. unveiled the S&L bailout plan. The S&L crisis cost about $600 Billion dollars in "bailouts." This was $1500 dollars from every man woman and child in the US. Does this sound vaguely familiar? It should, as Shrub Jr, recently unveiled a $700 billion financial sector bailout.
Shrub Sr. attempts to further advance the banking deregulation effort... In the spring of 1987, overriding the opposition of Chairman Paul Volcker the Federal Reserve Board votes 3-2 in favor of easing regulations under Glass-Steagall Act. Thomas Theobald, then vice chairman of Citicorp, argues that three "outside checks" on corporate misbehavior had emerged since 1933: "a very effective" SEC; knowledgeable investors, and "very sophisticated" rating agencies. Oi!
The ever prescient Volcker is unconvinced, and expresses his fear... that lenders will recklessly lower loan standards in pursuit of lucrative securities offerings and market bad loans to the public.
In January 1989, the Fed Board approves an application by J.P. Morgan, Chase Manhattan, Bankers Trust, and Citicorp to expand the Glass-Steagall loophole. In 1990, J.P. Morgan becomes the first bank to receive permission from the Federal Reserve to underwrite securities. In 1991, the Bush administration puts forward a repeal proposal, winning support of both the House and Senate Banking Committees, but the House again defeats the bill in a full vote.
Under Clinton, the Republican majority Congress and their banking masters advance deregulation further...
In December 1996, with the support of Chairman Alan Greenspan...the Federal Reserve Board issues a precedent-shattering decision permitting bank holding companies to own investment bank affiliates with up to 25% of their business in securities underwriting. In August 1997, the Fed eliminates many restrictions imposed on "Section 20 subsidiaries" by the 1987 and 1989 orders. The Board states... that the risks of underwriting had proven to be "manageable," and says banks would have the right to acquire securities firms outright.
In 1997, Bankers Trust (now owned by Deutsche Bank) buys the investment bank Alex. Brown & Co., becoming the first U.S. bank to acquire a securities firm. On April 6, 1998, CEO's Weill and Reed announce a $70 billion stock swap merging Travelers (which owned the investment house Salomon Smith Barney) and Citicorp to create Citigroup Inc., the world's largest financial services company, in what was the biggest corporate merger in history.
The transaction would have to work around regulations in the Glass-Steagall and Bank Holding Company acts governing the industry, which were implemented precisely to prevent this type of company: a combination of insurance underwriting, securities underwriting, and commecial banking.
The repetition of the S&L crisis in the much larger banking and securities markets was precipitated by the 1999 Gramm-Leach-Bliley Act which repealed part of the Great Depression-era bank regulations or Glass-Steagall Act of 1933..
After 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts.
Supporters hail the change as the long-overdue demise of a Depression-era relic. This deregulation broke down barriers between banks, securities firms, mortgage lenders and insurance companies. The GLBA allowed commercial and investment banks to consolidate.
The bill was a Republican drafted bill passed by a Republican majority congress and signed into law by President Clinton. Had the Democrat Clinton refused, Congress would have overridden the vetoe.
Economists Robert Ekelund and Mark Thornton criticized the Act as contributing to the 2007 subprime mortgage financial crisis, arguing that while "in a world regulated by a gold standard, 100% reserve banking, and no FDIC deposit insurance" the Financial Services Modernization Act would have made "perfect sense" as a legitimate act of deregulation, under the present fiat monetary system GLBA "amounts to corporate welfare for financial institutions and a moral hazard that will make taxpayers pay dearly".
The banking, insurance and brokerage industry lobbyists spent 25 years and $300 million on the effort to garner support from our whores on the hill: $58 million in campaign contributions to Democratic and Republican candidates; $87 million in "soft money" contributions and $163 million on lobbying of elected officials.
The chairman of the Senate Banking Committee, Texas Republican Phil Gramm, whose name adorns the GLPA bill was a key architect of the banking and lending deregulation. Sen. Gramm himself collected more than $1.5 million in cash from the three industries
$496,610 from the insurance industry, $760,404 from the securities industry and $407,956 from banks... and is now a central McCain economic adviser.
In conclusion... We despise and view both Republicans and Democrats as one in the same. Rich elitists who control everything... and smoke cigars and laugh behind closed doors as they take advantage of all us poor folk. Through media propaganda, they use devisiveness to separate and conquer the masses, religion, race, color, creed, gender, sexual preference and especially political dogma are used.
With unbiased fact checking we have proven empirically, it is two Republican Presidents, a senator and Congress that take the cake with regard to having done the most damage in support of financial sector deregulation... and not without the support of the Democrats. These two bills have led directly to two major financial crises. The greenback/grant deed dope pushers of late are spawns of 25 years and $300 million in financial sector lobbying for deregulation.
In addition, 6 years of a Republican Congress and 8 years with an incumbent idiot in the executive branch have allowed the financial and corporate sector to run wild. Culminating in the largest systemic financial collapse in history.
As we have Nattered before: Deregulation and globalization are euphemisms for unfettered corporate rape and pillage.
Over the last 40 years, since 1968: 12 years of democratic presidency: 28 years of republican. Let the TRUE history be known... allowing the ascendency of the house of finance has been the publics greatest folly of the 20th & 21st century and if left unchecked, will ultimately lead to the demise of American democracy and freedom itself.
Sources: Seeking Alpha: Deregulation Gone Wild
A complete history of GLBA here.
Final vote on the GLBA bill here.
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