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.

Sunday, June 11, 2017

More Dangerous

The Glass-Steagall Act had erected a wall between regulated Main Street banks and unregulated investment banks.  Without that wall, the stage was set for firms to merge until they were “too big to fail.”  Regulators began allowing firms to hide risky investments off their books which meant they didn’t have to keep enough money on hand to cover possible losses.  Those practices were permitted by the Financial Accounting Standards Board in rules pushed for by bank executives.

In 1999, Republican Senator Phil Gramm was chairman of the Senate Banking Committee.  He slipped the “Commodity Futures Modernization Act,” through Congress, which set derivatives free from virtually any regulation just as members of Congress were headed for vacation.

Billionaire Warren Buffett noticed, that the “Gramm amendment” enabled the creation of a shadow banking system, which allowed the creation of financial “weapons of mass destruction.”  The Gramm amendment directly contributed to the 2008 mortgage foreclosure crisis, that resulted in the worst economic crisis since the Great Depression.

In 2004, George W. Bush’s Securities and Exchange Commission scrapped a 20 year old rule that made banks keep a certain amount of cash on hand to cover investment losses.  The new rule was pushed by Henry Paulson, who eventually, became Bush’s treasury secretary.  In 2008, the $700 billion, Troubled Assets Relief Program (TARP) was passed.

Don’t forget that Wall Street deregulation resulted in millions of people's life savings being wiped out, and 800,000 jobs lost every month by the time President Bush left office. 

In 2015, 18 Senate Republicans joined 21 Senate Democrats and Independent Bernie Sanders voted against the 1.1 trillion budget bill, because it was design to again make taxpayers responsible for bailing out banks for risky derivative trades. 

The Financial Choice Act is a more dangerous weapon of economic destruction. 


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