The stars moon and sun must be aligned because I actually agree with Bill Clinton on something (via WSJ );
A running cliché of the political left and the press corps these days is that our current financial problems all flow from Congress’s 1999 decision to repeal the Glass-Steagall Act of 1933 that separated commercial and investment banking. Barack Obama has been selling this line every day. Bill Clinton signed that “deregulation” bill into law, and he knows better.
President Clinton provides the schooling;
“But I can’t blame [the Republicans]. This wasn’t something they forced me into. I really believed that given the level of oversight of banks and their ability to have more patient capital, if you made it possible for [commercial banks] to go into the investment banking business as Continental European investment banks could always do, that it might give us a more stable source of long-term investment.”
More below the fold.
Barack Obama has been fond of beating up on Phil Graham in part due to fostering Republican hate (very bipartisan, by the way) but mostly since Mr. Graham is an advisor to John McCain. Obama has tried to make Graham the whipping boy for all of his stump speeches which, without evidence, try to blame deregulation as a starting point for this crisis.
However Mr. Clinton further absolves Graham and robs this “deregulation” argument of any credibility;
You know, Phil Gramm and I disagreed on a lot of things, but he can’t possibly be wrong about everything. On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I’d be glad to look at the evidence.
Just as an additional reminder, the act in question, Graham-Leach Bliley (GLB), passed the Senate on a 90-8 vote with notable Obama confederate Joe Biden in tow.
To put a contemporary view on GLB, it allowed;
Bank of America and Merrill Lynch to merge
Permitted J.P Morgan to exist in its current very strong state
Recently permitted Goldman Sachs and Morgan Stanley to become Bank Holding Companies
I believe Obama owes Phil Graham an apology. As an aside, I am donating a gift card for his book store of choice. He may want to read up on both economics, the history of regulation and financial services.