Repeal of Glass Steagall, aka Gramm, Leach, Blilely: DU memes versus reality. [View all]

Last edited Sat Jul 4, 2015, 07:28 PM - Edit history (1)

Meme: Repeal of Glass Steagall had nothing to do with economic collapse of the United States and several other nations, That was due to deregulation and collateralized mortgage obligations.

Reality: Um, repeal of Glass Steagall WAS the "deregulation" that permitted banks to deal in collateralized mortgage obligations.

http://www.motherjones.com/politics/2008/07/where-credit-due-timeline-mortgage-crisis

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x2127466 (and many, many other sources)

Not only that, but...

During debate in the House of Representatives, Rep. John Dingell (Democrat of Michigan) argued that the bill would result in banks becoming "too big to fail." Dingell further argued that this would necessarily result in a bailout by the Federal Government.[7]

http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act

http://www.dailykos.com/story/2009/04/08/717702/-VIDEO-from-1999-Byron-Dorgan-vs-Gramm-Leach-Bliley-WOW#



Meme: Republicans are to blame for Gramm, Leach, Blilely. Gramm, Leach, Blilely were three Republicans. Duh. And Republicans were in the majority.

Realty: Republicans did indeed have a majority in both Houses of Congress. While Gramm, Leach and Blilely were all Republicans, a number of Democrats voted to repeal Glass Steagall.. Not only did a number of Democrats vote for it, but Bill Clinton signed it. He could have vetoed it. Not only did he fail to veto it, but he and members of his White House, like Summers and Sperling lobbied Democrats in Congress hard to pass it. That lobbying by a Democratic White House was why so many Democrats supported it.


Meme: Clinton had a veto-proof majority.

Reality: Not the first time. Veto proof is, in theory,* two-thirds of each house. The first vote was 343 to 86 in the House (more than veto proof 292) **and 54-44 in the Senate (less than veto-proof 67).

When the two chambers could not agree on a joint version of the bill, the House voted on July 30 by a vote of 241***–132 (R 58–131; D 182–1; Ind. 1–0) to instruct its negotiators to work for a law which ensured that consumers enjoyed medical and financial privacy as well as "robust competition and equal and non-discriminatory access to financial services and economic opportunities in their communities" (i.e., protection against exclusionary redlining).[note 3]

The bill then moved to a joint conference committee to work out the differences between the Senate and House versions. Democrats agreed to support the bill after Republicans agreed to strengthen provisions of the anti-redlining Community Reinvestment Act and address certain privacy concerns; the conference committee then finished its work by the beginning of November.[12][15] On November 4, the final bill resolving the differences was passed by the Senate 90–8,[16][note 4] and by the House 362–57.[17][note 5] The legislation was signed into law by President Bill Clinton on November 12, 1999.[18]

id.

So, after much work, much lobbying by Greenspan, Clinton and the White House (see above) and much compromise between the two houses, the bill did pass the Senate 90 to 8.

Those voting nay were Senator Shelby (R), and Democratic Senators Boxer, Bryan, Dorgan, Feingold, Harkin, Mikulski, Wellstone. Senator Fitzergerald (R) voted present; Senator McCain did not vote (but, when he ran for President in 2007-2008, did appoint Gramm as one of his campaign's financial advisors. Oops.)

http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=106&session=1&vote=00354&TB_iframe=true&width=720&height=540

Not only that, but there was a rush to pass the bill lest a Congress less favorable to repeal be elected.

Besides all the above, a theoretical veto-proof majority does not preclude a veto and President Clinton seemed quite happy to sign the bill.

What did our wise leaders say when that bill was signed? "The world changes, and Congress and the laws have to change with it," said Phil Gramm. "In the 1930s ... it was believed that government was the answer ... We have learned that government is not the answer. We have learned that freedom and competition are the answers."

''This legislation is truly historic,'' said Bill Clinton. ''We have done right by the American people.''

''With this bill,'' said Larry Summers, ''the American financial system takes a major step forward toward the 21st Century -- one that will benefit American consumers, business and the national economy.''

Actually that bill helped crash the economy, costing trillions and leaving millions of people un- or underemployed. They, on the other hand, all got rich.

http://www.huffingtonpost.com/rj-eskow/the-dumbest-bipartisan-mo_b_1374301.html

* Unless and until a Presidential veto in fact occurs, the alleged existence of a veto-proof majority is only theoretical. Overrides of Presidential vetoes have been very rare. Even the threat of a veto often gets action from Congress.

http://www.princeton.edu/~ccameron/The%20Presidential%20Veto%20v3.pdf

http://usgovinfo.about.com/od/thepresidentandcabinet/a/presveto.htm

**House vote was on The Financial Services Act. For those who care, Senator Sanders, then a member of the House, was one of the 86 who voted "no."
http://clerk.house.gov/evs/1999/roll276.xml

***51 less less than veto proof 292, but I don't know how this vote interfaces with the House vote on the Financial Services Act.

ETA: See also http://www.democraticunderground.com/?com=view_post&forum=1277&pid=9158 discussing, among other things, the Commodities Futures Modernization Act. A Senate compromise of the House Bill allowed unregulated mortgage derivatives and credit default swaps. The Clinton White House also lobbied hard for passage of this act.