Archive for March 26, 2009

Leave it to Rachel Maddow to finally have a discussion regarding the Gramm-Leach-Bliley Act (GLBA) aka the Gramm-Leach-Bliley Financial Services Modernization Act. Mainstream media is too focused on finger-pointing and punditry to discuss the details. Oh and if the Gramm sounds familiar to you, the “Gramm” is Phil Gramm, former Texas senator, John McCain’s campaign advisor during the 2008 presidential campaign and yes, the same man who called us American’s feeling the effects of the recession “whiners” (ah hem). In short Gramm’s legislation, the GLBA, allowed for commercial banks to branch out and get into the investment banking business. GLBA also enabled the financial behemoths we now know as Citigroup, Bank of American, Wells Fargo and JP MorganChase, to name a few. But apparently as Rachel points out in the video some senators saw problems down the road but the GOP choose to ignore.

To be fair, it wasn’t just the GLBA that caused this massive meltdown but the legislation certainly was a recipe for disaster. Add in some greed, some deregulated aspects of the banking industry that was  previously regulated, throw in some credit default swaps and some OTC’s, fast forward to the present day and “voila”, meltdown central. Well, its really not that simple but like you I’m looking for answers. Here are a couple of issues of interest, consider GLBA’s legislative history for starters, the legislation passed along party lines:

The banking industry had been seeking the repeal of the 1933 Glass-Steagall Act (which estabvlished the FDIC) since the 1980s, if not earlier. In 1987 the Congressional Research Service prepared a report which explored the case for preserving Glass-Steagall and the case against preserving the act.

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Here is an interesting prespective on the stimulus package that has merit.

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