Financial Sector Deregulation Gone Wild Part III
Excellent work my DOJ Naybob...
the banking industry had been lobbying with large amounts of cash, for the repeal of the 1933 Glass-Steagall Act since the 1980s. 12 attempts in 25 years prior to GLBA.
We went on record in Financiaal Sector Deregulation Gone Wild Part I and Part II
With the conveniently forgotten fact that the largest damage done to Glass-Steagall was not GLBA under Clinton in 1999 but in December, 1982 when the Garn St Germain Depository Institutions Act of 1982 is enacted under Reagan.
This Reagan Administration initiative gives expanded powers to federally chartered S&Ls which had previously been limited primarily to the home-loan market and enables them to diversify their activities with the view of increasing profits.
Major provisions include: elimination of deposit interest rate ceilings; elimination of the previous statutory limit on loan to value ratio; and expansion of the asset powers of federal S&Ls by permitting up to 40% of assets in commercial mortgages, up to 30% of assets in consumer loans, up to 10% of assets in commercial loans, and up to 10% of assets in commercial leases.
As usual, after the Republicans cleared all obstacles... the result was an orgy of speculation, profiteering and outright plundering of assets culminating in collapse and at the time, the biggest financial bailout in US history, costing the federal government more than $600 billion.
This would be known as the S&L crisis which led to a recession in the early 90's and resulted in a little known Arkansa governor defeating Shrub Sr. in 1992. The Garn St. Germain deregulation practically eliminated the distinction between commercial and savings banks.
Deregulation caused a rapid growth of savings banks and S&L's that now made all types of non homeowner related loans. Now that S&L's could tap into the huge profit centers of commercial real estate investments and credit card issuing many entrepreneurs looked to the loosely regulated S&L's as a profit making center.
Over time, Federal judges and regulators chipped away at the Glass-Steagall Act and other restrictions on cross-ownership of banks, insurance companies and securities firms enabling, for instance, Citibank to merge with Travelers to form Citigroup, the world's largest financial services company.
More Nattering to come in our next post.
the banking industry had been lobbying with large amounts of cash, for the repeal of the 1933 Glass-Steagall Act since the 1980s. 12 attempts in 25 years prior to GLBA.
We went on record in Financiaal Sector Deregulation Gone Wild Part I and Part II
With the conveniently forgotten fact that the largest damage done to Glass-Steagall was not GLBA under Clinton in 1999 but in December, 1982 when the Garn St Germain Depository Institutions Act of 1982 is enacted under Reagan.
This Reagan Administration initiative gives expanded powers to federally chartered S&Ls which had previously been limited primarily to the home-loan market and enables them to diversify their activities with the view of increasing profits.
Major provisions include: elimination of deposit interest rate ceilings; elimination of the previous statutory limit on loan to value ratio; and expansion of the asset powers of federal S&Ls by permitting up to 40% of assets in commercial mortgages, up to 30% of assets in consumer loans, up to 10% of assets in commercial loans, and up to 10% of assets in commercial leases.
As usual, after the Republicans cleared all obstacles... the result was an orgy of speculation, profiteering and outright plundering of assets culminating in collapse and at the time, the biggest financial bailout in US history, costing the federal government more than $600 billion.
This would be known as the S&L crisis which led to a recession in the early 90's and resulted in a little known Arkansa governor defeating Shrub Sr. in 1992. The Garn St. Germain deregulation practically eliminated the distinction between commercial and savings banks.
Deregulation caused a rapid growth of savings banks and S&L's that now made all types of non homeowner related loans. Now that S&L's could tap into the huge profit centers of commercial real estate investments and credit card issuing many entrepreneurs looked to the loosely regulated S&L's as a profit making center.
Over time, Federal judges and regulators chipped away at the Glass-Steagall Act and other restrictions on cross-ownership of banks, insurance companies and securities firms enabling, for instance, Citibank to merge with Travelers to form Citigroup, the world's largest financial services company.
More Nattering to come in our next post.
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