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Hindsight may be 20-20, but foresight is priceless
Nearly 9 years ago, on the eve of passing the Gramm-Leach-Bliley
Act, the now infamous legislation that paved the way for today’s
financial mess, Rep. John Dingell got it right.
From Jim Slattery's Blog for Kansas
“[This bill] fails to recognize that human nature has not changed. It
also fails to recognize something else. The technology that has changed
has made it much easier to take money from the innocent and from the
unsuspecting. It relaxes protection for investors, taxpayers,
depositors, and consumers.
Let us talk about what is wrong with the
legislation…Woe to the American people when they have to pick up the
tag for one of the failures that is going to occur when competition
disappears and prices shoot up and misbehavior or unwise behavior takes
place…
I think we ought to look at what we are
doing here tonight. We are passing a bill which is going to have very
little consideration, written in the dark of night, without any real
awareness on the part of most of what it contains. I
just want to remind my colleagues about what happened the last time the
Committee on Banking brought a bill on the floor which deregulated the
savings and loans. It wound up imposing upon the taxpayers of this
Nation about a $500 billion liability. That is what it cost to clean up
that mess. Now, at the same time, the banks by engaging in questionable
practices wound up in a situation where the Fed and the Treasury
Department had to bail them out also at the taxpayers’ expense. But it did not show. Having said that, what we are creating now is a group of institutions which are too big to fail.
Not only are they going to be big banks,
but they are going to be big everything, because they are going to be
in securities and insurance, in issuance of stocks and bonds and
underwriting, and they are also going to be in banks. And
under this legislation, the whole of the regulatory structure is so
obfuscated and so confused that liability in one area is going to fall
over into liability in the next. Taxpayers are going to be called upon
to cure the failures we are creating tonight, and it is going to cost a
lot of money, and it is coming. Just be prepared for those events.
You are going to find that they are too
big to fail, so the Fed is going to be in and other Federal agencies
are going to be in to bail them out. Just expect that.”
- Rep. John Dingell, 1999
Comments (15)
Just for fun, here are the voting records for the bill as it passed the Senate:
http://www.govtrack.us/congress/vote.xpd?vote=s1999-354&sort=vote
and the House
http://www.govtrack.us/congress/vote.xpd?vote=h1999-570&sort=vote
Some of the Senators that voted FOR the bill include:
Biden
Dodd
Durbin
Kennedy (yes, Ted)
Kerry
Interestingly, one Senator did not vote on this bill. His name? John McCain
In the House, Barney Frank voted against the Bill, and so when you hear your FNC friends hammer him as he should have done something, this is a fun fact to point out.
And let's not forget Bill Clinton who signed the bill into law. In 1999, couldn't he have exercised his veto power more? Of course, he could have... but then he wouldn't have had a nice cozy relationship with Wall St, post-presidency. (You didn't think that Chelsea ended up in one of the most prestigious hedge fund firms on merit alone, did you?)
Why do I point this out?
Because it is an excellent example that the partisan bickering that exists in the Congress and on TPM is pointless. BOTH the GOP and the Dems led us into the mess where we are today.
I hope those elected officials in Congress that voted for the bill, get called to task for it in their upcoming election (though I know they won't). I'm sure we will hear how they didn't know the consequences, but that's malarkey ---
The consequences were very clear to Dingle and he made them known at the time.
October 2, 2008 12:38 PM | Reply | Permalink
McCain did vote for the Senate version that passed on a party line vote. He was probably his usual MIA when the conference report came up.
October 2, 2008 1:44 PM | Reply | Permalink
Your facts on the Gramm-Leach-Bliley vote are inaccurate. Biden voted Nay. McCain voted Yay.
Click here
Your assertian is seriously misleading. I am sick and tired of fighting to shoot zombie lies in the head.
October 3, 2008 11:04 AM | Reply | Permalink
I agree re: both parties being at fault. Thats the rub, isn't it?
I have no illusions regarding the "saintliness" of the Democratic Party-especially over the last 15 or so years. Nevertheless, I'm a social liberal and I believe in regulation, fiscal resp., etc.
Democrats usually trip my trigger and its our job to keep them honest!
October 3, 2008 1:57 AM | Reply | Permalink
Not sure what you are talking about. The link I cite is for the actual Senate vote on the final Senate bill. That's the only thing that counts.
I'm not a fan of McCain, but your knee-jerk reaction is what I'm referring to in my comment.
Were I McCain, I would use this comment to ask questions of Biden, et al.
Pelosi made a mistake by trying to play partisan in her talk for 2 reasons. First, it foolishly gives the GOP an excuse to vote against -- which they used as you saw. Second, it opens up the notion that the Dems are blameless, which, as you can see, is clearly not the case.
You can only go partisan when you have all the votes lined up... and Pelosi was a poor vote tracker, as I discuss extensively in a comment here:
http://tpmcafe.talkingpointsmemo.com/talk/2008/10/in-favor-of-bipartisanship.php#comment-3147346
October 2, 2008 1:55 PM | Reply | Permalink
I was speaking of the "Senate Vote On Passage: S. 900 [106th]: Gramm-Leach-Bliley Act
http://www.govtrack.us/congress/vote.xpd?vote=s1999-105
McCain voted aye, Biden voted no. After it went through conference, it passed with huge support on both sides.
What, prey tell, is my "knee jerk" reaction? A citation from John Dingle with NO mention of his party affiliation and no dissing of one side over another? Please, clearthinker, I'd like to know what you're talking about.
If you are referring to my statement re McCain being MIA on the final vote, you have to concede that McCain has one of the worst attendance records in the Senate. During the 109th congress, when he wasn't running for pres, he missed 58 out of 645 votes - 5th worst attendance record.
October 2, 2008 3:37 PM | Reply | Permalink
Nice bait and switch. When it suits you, you bring up the Senate Vote (like here) but when you need to show strong support in the Senate prompting Clinton not to veto (like in your next comment), you bring up the conference passage.
I'll grant you McCain's vote. That's hardly my central point.
Bottom line:
Why did all those Dem Senators switch for passage?
Why didn't the GOP Senators switch to block?
The passage vote could still have been blocked. It wasn't.
October 2, 2008 4:27 PM | Reply | Permalink
Also, clearthinker, the final passage had 90 ayes in the Senate and 362 ayes in the house. And you say Clinton could have vetoed this?
Clearthinker?
October 2, 2008 3:41 PM | Reply | Permalink
Yes, of course. You have a lame duck President whose veto is very powerful. Did you not recall earlier this year when it was clear that Bush would wield his veto to block things in his last year?
Of course, the Constitution guarantees the single executive can veto and then see if Congress can override. But overriding is very difficult -- because deals have to be remade.
Finally, Congress doesn't work in isolation of the President. We often hear how LBJ got the Great Society through Congress. Well, LBJ was the President when it happened! So what does this mean? It means the President consults with Congressional leaders to ensure passage. Bill Clinton could have been part of shaping the bill -- and then veto or not. Either way, he is culpable, too.
And of course, his involvement makes sense. It is clear in retrospect that Hillary was planning her Senate run in 2000, and do I have to remind you what part of NY funded a lot of her campaign? The same Wall Street that Clinton just helped deregulate?
Do you see how he personally benefited by not exercising the veto?
I stand by my initial point: both parties were culpable in getting us into the current mess. It's bipartisanship at its finest level. And that many of the politicians who are now crying loud, helped get us there. The GOP folks are obvious, but the Dems also have their villains here.
Check out:
http://www.chomsky.info/articles/20080919.htm
October 2, 2008 4:20 PM | Reply | Permalink
But earlier in the thread you said partisan bickering was pointless.
Hmmmmmm.
October 2, 2008 4:52 PM | Reply | Permalink
LOL!
October 2, 2008 4:59 PM | Reply | Permalink
I never questioned your original point, clearthinker, nor did I attempt to deflect anybody's culpability. You seem to be reading into my comments that which isn't there. It seems the knee-jerk is your, my friend.
October 2, 2008 5:54 PM | Reply | Permalink
I stand corrected.
October 2, 2008 8:00 PM | Reply | Permalink
If anyone wants to another example of foresight in 1999:
http://query.nytimes.com/gst/fullpage.html?res=9c0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=all
If this link is too long, get there by googling Fannie Mae Lending + New York Times + 1999
A passage from the above that now tolls like a bell in warning:
"In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's"
"From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry."
October 2, 2008 2:52 PM | Reply | Permalink
Four (or five) more shoes yet to drop:
(CDS maturities.)
Hedge Fund redemptions.
Credit card defaults.
Liquidity trap caused by Fed T-bill hoarding.
EU Banks
Have a great day!!
October 2, 2008 3:02 PM | Reply | Permalink
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