Mind and Destiny

“I make no pretension to patriotism. So long as my voice can be heard ... I will hold up America to the lightning scorn of moral indignation. In doing this, I shall feel myself discharging the duty of a true patriot; for he is a lover of his country who rebukes and does not excuse its sins. It is righteousness that exalteth a nation while sin is a reproach to any people.”- Frederick Douglass

Location: Delhi, N.Y., United States

The author and his webmaster, summer of 1965.

Thursday, May 04, 2017

Preventing Future Collapse

As a result of that Great Depression, President Franklin D. Roosevelt and Congress put in place the Glass-Steagall Act to prevent future collapse.  However, in 1999, the Gramm-Leach-Bliley Act was passed and essentially gutted Glass-Steagall.  It was advertised as historic legislation, which would enable American companies to compete in the new economy.  Nearly every member of the Senate voted to allow large financial holding companies to merge with banks and insurance companies.  The eight members of the Senate, who opposed the Gramm-Leach-Bliley Act couldn’t understand how their colleagues could have forgotten the painful lessons learned during the Hoover administration.

Not unlike the culture of the 1920’s, the predominate culture in Congress had again become: “Wall Street knows best.” Consequently, huge financial holding companies, were allowed to bring significant risk to banks, as they began to gamble with investors money. 

In its coverage of Gramm-Leach-Bliley Act passing in 1999, the “New York Times,” quoted former Republican Senator Phil Gramm of Texas as writing: “We have a new century coming, we have an opportunity to dominate that century the same way we dominated this century.

However, when Congress repealed the original Glass-Steagall Act in 1999, Senator Byron Dorgan argued: “The fusing together of the idea of banking, which requires not just safety and soundness to be successful but the perception of safety and soundness.  To merge it with inherently, risky, speculative activity is in my judgment unwise.  We are with this piece of legislation moving towards greater risk.  We are almost certainly moving towards substantial new concentration and mergers of the financial services industry.  That is almost certainly not in the interest of consumers.  I think we will in 10 years time look back and say we should not have done that.”


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