Today marks a decade since the repeal of Glass-Steagall Act, the Depression-era safeguard that prohibited the commingling of commercial and investment banks. The deregulation gave rise to all-in-one financial behemoths like Citi, ushered in the too-big-to-fail era, and nearly toppled the global financial system.
The hubris expressed during the signing ceremony at the Old Executive Office Building ten years ago today will make you throw up in your mouth a little.
Take it away, President Clinton:
I think you should all be exceedingly proud of yourselves… today what we are doing is modernizing the financial services industry, tearing down these antiquated laws and granting banks significant new authority. This will save consumers billions of dollars a year through enhanced competition.
Hit it Phil Gramm:
In the 1930s, at the trough of the Depression, when Glass-Steagall became law, it was believed that government was the answer. It was believed that stability and growth came from government overriding the functioning of free markets. We are here today to repeal Glass-Steagall because we have learned that government is not the answer. We have learned that freedom and competition are the answers. We have learned that we promote economic growth, and we promote stability, by having competition and freedom. I am proud to be here because this is an important bill. It is a deregulatory bill. I believe that that is the wave of the future. And I am awfully proud to have been part of making it a reality. (Applause.)
It’s easy to lampoon the vile likes of the former Texas senator, who continues to profiteer from his deregulation as a Vice Chairman of UBS. But what’s more galling is how many of the key players in this debacle are still shaping policy today.
Start at the top with then Treasury secretary, now Obama economics czar Larry Summers, who boldly declared that the deregulation would “benefit American consumers, business, and the national economy for many years to come.”
Other men and women who also got shout outs that day include:
Gary Gensler, then a treasury undersecretary, today the head of the Commodity Futures Trading Commission.
Gene Sperling, then head of Clinton’s National Economics Council, now a senior counselor to Treasury Secretary Tim Geithner.
Linda Robertson, another assistant Treasury secretary, (she’d briefly become an Enron lobbyist) who is now a senior adviser to the Federal Reserve trying to sell congress on Obama’s proposal to give the Fed massive new powers.
Heckofa job guys. Heckofa job.