Posted on 02/17/2010 6:01:01 PM PST by Libloather
Bill Clinton Is Responsible For Our Current Mess
posted February 17, 2010
Just as I have been saying all along, this current economic mess in which we find ourselves lies at the feet of Bill Clinton. While I have known this for some time from evidence found through various sources, the fact was driven home last night on a television special. Was it on Fox News? Far from it. It was on the PBS show, "Frontline." Long story short is that the deregulation of the financial industry under Clinton and his Treasury Secretary, Robert Rubin, along with their complete refusal to even acknowledge the possibility of a financial meltdown through the unregulated over the counter derivatives markets caused this entire situation.
Despite a major lawsuit by Proctor & Gamble over a derivatives investment scandal in 1994, Clinton and Rubin looked the other way with full knowledge of the fact that the scandal was the tip of the iceberg. In 1998, the new chairperson of the Commodity Futures Trading Commission (CFTC), Brooksley Born, brought to the attention of Congress as well as Rubin and Clinton the growing investment by banks in the unregulated over the counter derivatives markets. Rubin and Clinton resoundingly rejected Born's proposal for regulating derivatives despite yet another derivatives scandal of billions of dollars at Long Term Capital Management (LTCM.)
When Clinton repealed the Glass-Steagall Act, which then allowed investment banks to merge with commercial banks, the final piece of the puzzle was in place as normally conservative investing banks could then invest heavily in over the counter derivatives markets, much of which was in the form of speculative credit derivatives closely tied to real estate. Much of that real estate had been financed with sub-prime financing with borrowers who could barely buy a doughnut, let alone a house. Thank Barney Frank, D-MA, for this trend.
Once so many bad borrowers had their rates adjusted, the house of cards started to come tumbling down. The default rate started to grow rapidly while many derivatives sold to banks and large institutional investors were based on credit derivatives, basically betting that people and companies would not default on their mortgages. There was little or nothing that George W. Bush could have done as the pieces were already in place for this catastrophe.
Perhaps the severity could have been mitigated somewhat, but the bullet had left the gun long before and there was no bringing it back. How does one "undo" the unregulated, highly speculative investment of hundreds of trillions of dollars by the largest banks and investment banks in the world? The fact is that had Clinton and Rubin simply looked at what was going on and listened to those trying to prevent this disaster, we would be in a far better situation.
You may ask what happened to those in the Treasury who sat by while this happened. Robert Rubin only recently left Citibank after pocketing an estimated $40,000,000 during his time there. Tim Geither, the #3 man at the Treasury while this was going on, is now our illustrious, tax-evading Treasury Secretary. The #2 man under Rubin, Larry Summers, is now serving as the Chief Economic Advisor to Barack Obama. The prisoners are definitely running the jail. Oh, did I mention that Clinton was also given the precise location of Osama bin Laden while military personnel were waiting to launch missiles into that location? He could not be bothered during his fund-raising event as written about by his Nation Security Advisor, Sandy Berger. He failed to do anything to prevent the biggest disasters of the last 80 years. Is there any other way to see it?
Joel Walker
“The congressional vote on Gramm-Leach-Bliley in November 1999 was not close. The bill passed handily with bipartisan support in both the House of Representatives and Senate, 450-64 between the two chambers. President Bill Clinton supported the legislation and readily signed it. “
http://www.opensecrets.org/news/2008/09/money-and-votes-aligned-in-con.html
It pretty much looks like a bipartisan cluster-funk to me, that not enough people tried to see what the unintended consequences might be.
Smokingfrog, who starts to get a headache trying to figure out who's trying to screw us the most.
In the context of today’s economic realities, you’ve got to be willing to look at the patterns over time.
Republicans in congress can often be blamed for cronyism, and for corruption driven by greed.
But none of them cut their teeth with hard core Marxist subversives. All prominent Democrats have these associations.
So if we’re faced with cleaning house, do we sweep the floor and dust off the shelves or do we start by cutting off the stream of raw sewage seeping in from the basement?
Bipartisan for sure but I would lay blame more on Republicans because Congress is supposed to be will of the people and Republicans overwhelmingly voted it through Congress while Democrats voted against it ———>>>>
The bill that ultimately repealed the Act was introduced in the Senate by Phil Gramm (Republican of Texas) and in the House of Representatives by Jim Leach (R-Iowa) in 1999. The bills were passed by a Republican majority, basically following party lines by a 54–44 vote in the Senate[12] and by a bi-partisan 343–86 vote in the House of Representatives.[13] After passing both the Senate and House the bill was moved to a conference committee to work out the differences between the Senate and House versions. The final bill resolving the differences was passed in the Senate 90–8 (one not voting) and in the House: 362–57 (15 not voting). The legislation was signed into law by President Bill Clinton on November 12, 1999.[14]
I vote Republican 95% of time.
You hit the nail on the head! Clinton’s repeal allowed Banks to invade markets they had no understanding of, the result was derivatives insured by under capitalized agencies, all overlooked by regulators, in the name of profit!
Oh it was. Just like the Bankruptcy Reform Bill. But whenever the crux is related to “de-regulation”, I think that is more GOP. It’s one of their bugaboos. So it’s maybe 51-49 against the GOP. A pox on both parties. This is a place for common ground by the grass roots people of both parties. Whatever, the GOP don’t need to go around acting all smug and innocent and trying to pin it on the Dems and vice versa.
parsy, who notes Karl Denninger had a real good post about this when he had to spank Ann Coulter the other day
“The finance, insurance and real estate sector contributed more than $86 million to members of Congress between 1997 and the key vote on Gramm-Leach-Bliley in November 1999. As the graph below shows, on average, those lawmakers voting “yea” received about $180,000 in campaign contributions from individuals and PACs in the financial sector during that period. Those who voted “nay” received about $90,000 each, or half of what supporters got.
There was little difference in the money collected by Republicans who supported the bill and those who opposed it; the 255 GOP supporters collected an average of $179,175, while the opponents in their ranks-and there were only five of them-collected $171,890. On the Democratic side, however, there was a wide gulf, as the graph indicates. The 195 Democrats who supported the Financial Services Modernization Act had received an average of $179,920 in the two years and 10 months leading up to its passage, while the 59 Democrats who opposed it received just $83,475.
Many of the Democrats who voted for Gramm-Leach-Bliley are still in Congress, as are many of the Republicans. Republican presidential nominee John McCain was recorded as absent for the 1999 vote. Democratic nominee Barack Obama was not serving in the Senate then, but his running mate, Joe Biden, supported the bill. McCain’s running mate, Sarah Palin, was mayor of Wasilla, Alaska, at the time.
For Gramm-Leach-Bliley’s Democratic supporters, at least, the contributions from that time suggest they were cozier with the financial sector than the bill’s opponents and, thus, more inclined to vote for a piece of legislation that — at least until Wall Street’s recent collapse — greatly benefited their contributors.”
http://www.opensecrets.org/news/2008/09/money-and-votes-aligned-in-con.html
Happy for you.
Hope you got my point about where that horrible smell is coming from.
Here is a real good site for all the major players (of both parties) and sequence of events. The footnotes and internal links are great, too.
http://www.crashopedia.com/index.php/Main_Page
parsy
It was a joint bipartisan effort for sure. Here’s a good list of the 25 people who were most responsible. FWIW, I used to like Phil Gramm.
http://www.guardian.co.uk/business/2009/jan/26/road-ruin-recession-individuals-economy
parsy
As initially influenced by Cloward and Piven.
I don’t believe he was thinking eventual overthrow of the Constitution.
Maybe we should pretend Cloward and Piven never existed?
I was being sarcastic, everything has to beBush’s fault
Hopefully not, but Glass-Steagal was passed for good reason. Politicians seem to have great difficulty assessing (or even considering) potential adverse consequences.
Oh, I don’t think so. Gramm is no saint by any means, but as a matter of fact:
“Gramm blocked passage of a similar deregulation bill last year (1997) over demands to cripple the CRA, and bank lobbyists were in a panic, during the week before the deal was made, that the dispute would once again prevent any bill from being adopted.”
http://www.wsws.org/articles/1999/nov1999/bank-n01.shtml
As a matter of fact, he almost blocked it again, because he knew what the CRA was doing. And it was Clinton that demanded the CRA be left in the bill or he would Veto it. Gramm did get two of his components in the final bill that weakened the CRA somewhat. But of course we know now that the democrats with their puppet Franklin Raines, et al never complied with the public disclosure portion and in fact cooked their books and Dodds, Fwanks, Waters, et al all covered up for them.
The democrats tried to make political capital out of it by saying that Gramm was trying to cripple the CRA so as to discredit the democrats. Gramm knew what the derivatives were doing already and had been since the CRA was passed in 1977.
It was Bill Clinton that went back to Congress and begged for de-regulation because he had let CitiFinancial and Travelers Insurance merge which was flat out against the law and he was about to be called on the carpet for it.
Nothing I read there absolved Gramm. Far from it, he should have been very aware of the potential danger:
“And there is a much more recent experience than 1929 to serve as a cautionary tale. A financial deregulation bill was passed in the early 1980s under the Reagan administration, lifting many restrictions on the activities of savings and loan associations, which had previously been limited primarily to the home-loan market. The result was an orgy of speculation, profiteering and outright plundering of assets, culminating in collapse and the biggest financial bailout in US history, costing the federal government more than $500 billion. The repetition of such events in the much larger banking and securities markets would be beyond the scope of any federal bailout.”
May I add. It is really a crying out loud shame when the durn Socialist Party of America has a better grasp on economics that the GOP or the Democrats. You know, I mean right is right and here a bunch of near-commies predict what is going to happen while rocket scientists like Phil Gramm smugly march us off the plank. . .
parsy, who is ROTFLMAO
Then I guess you need to read some more, don’t cha?
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