Prophetic Article in the 1999 NY Times- ‘CONGRESS PASSES WIDE-RANGING BILL EASING BANK LAWS’

By Erik Larson

An article was published in the November 5, 1999 New York Times regarding the passage of “Gramm-Leach-Bliley” Act; it overturned the Glass-Steagal Act and opened the door for banks and securities companies to engage in the massive orgy of speculation and greed that led to the current economic meltdown. Clinton signed it into law, and most Republicans and Democrats in Congress, and the politically-controlled SEC, OTS, OCC, FBI, Fed Reserve and Treasury, did nothing to stop the criminal corporate profiteers from raping the American consumer and blowing up the economy. Even now, Obama’s administration is aiding and abetting profiteering from the current crisis, by the very same people who profited from rigged markets that led to the crisis. 

The quotes without links in my post here are from this article: 

CONGRESS PASSES WIDE-RANGING BILL EASING BANK LAWS

The Times: “The decision to repeal the Glass-Steagall Act of 1933 provoked dire warnings from a handful of dissenters that the deregulation of Wall Street would someday wreak havoc on the nation’s financial system. The original idea behind Glass-Steagall was that separation between bankers and brokers would reduce the potential conflicts of interest that were thought to have contributed to the speculative stock frenzy before the Depression.” 

Clinton’s Treasury Secretary Larry Summers, now Obama’s Chief Economic Advisor, was a champion of the plan; ”Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century,” Treasury Secretary Lawrence H. Summers said. ”This historic legislation will better enable American companies to compete in the new economy.” 

The Times: “But consumer groups and civil rights advocates criticized the legislation for being a sop to the nation’s biggest financial institutions. They say that it fails to protect the privacy interests of consumers and community lending standards for the disadvantaged and that it will create more problems than it solves.” 

“The opponents of the measure gloomily predicted that by unshackling banks and enabling them to move more freely into new kinds of financial activities, the new law could lead to an economic crisis down the road when the marketplace is no longer growing briskly.” 

Sen. Paul Wellstone, D-MN, who had voted against the Authorization for Use of Force (Iraq), died in a mysterious plane crash shortly before he would have likely been reelected; his replacement, Walter Mondale, lost to Republican Norm Coleman, giving the Republicans control of the Senate. About Gramm-Leach-Bliley Wellstone said, ”Scores of banks failed in the Great Depression as a result of unsound banking practices, and their failure only deepened the crisis,” Mr. Wellstone said. ”Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk. It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place.” 

The Times: “Supporters of the legislation rejected those arguments. They responded that historians and economists have concluded that the Glass-Steagall Act was not the correct response to the banking crisis because it was the failure of the Federal Reserve in carrying out monetary policy, not speculation in the stock market, that caused the collapse of 11,000 banks. If anything, the supporters said, the new law will give financial companies the ability to diversify and therefore reduce their risks. The new law, they said, will also give regulators new tools to supervise shaky institutions.” 

Congress and the regulators failed to do anything to prevent this current economic meltdown, which was foreseen by a number of people and organizations. Some people at the regulatory agencies tried to do their job, but were blocked and overruled by political appointees and the concerns of industry lobbyists; the Bush Administration was warned in 2005 and 2006 that current practices would lead to a crisis. The Federal Reserve, supposedly a regulatory agency, but essentially a government-protected and unaccountable cartel of privately-owned banks, has a history of taking actions that primarily benefit the corrupt owners of these privately-held Federal Reserve Banks– they attempt to ensure stability and economic growth, but always position themselves to profit massively whether the market is going up or down, something that is not entirely under their control, and often gets out of control due to their selfishness and greed. 

Former Senator Bob Kerrey, D-NB, a Vietnam War criminal who replaced Max Cleland on the 9/11 Commission and participated in its fraud of an investigation, told CNN’s Paula Zahn in an interview just after the 2004 election, “We took an Oath not to talk about it during the campaign”. In 1999, he had this to say about the pending Gramm-Leach-Bliley bill; “”The concerns that we will have a meltdown like 1929 are dramatically overblown,” said Senator Bob Kerrey, Democrat of Nebraska.” 

 Schumer a “Democrat” who consistently accepts obscene amounts of campaign contributions from the financial industry, said, ”If we don’t pass this bill, we could find London or Frankfurt or years down the road Shanghai becoming the financial capital of the world,” said Senator Charles E. Schumer, Democrat of New York. ”There are many reasons for this bill, but first and foremost is to ensure that U.S. financial firms remain competitive.”” Notice that protecting the Constitution, the public and citizens and consumers is not “first and foremost” in Schumer’s mind- and if he thought that these things are achieved by ensuring that “U.S. financial firms remain competitive”, well he and all the other Republocrats who thought so sure were wrong, weren’t they? Or not- since lenders around the world have all been dragged down by the meltdown?

“One Republican Senator, Richard C. Shelby of Alabama, voted against the legislation. He was joined by seven Democrats: Barbara Boxer of California, Richard H. Bryan of Nevada, Russell D. Feingold of Wisconsin, Tom Harkin of Iowa, Barbara A. Mikulski of Maryland, Mr. Dorgan and Mr. Wellstone.” 

“In the House, 155 Democrats and 207 Republicans voted for the measure, while 51 Democrats, 5 Republicans and 1 independent opposed it. Fifteen members did not vote.” 

Related report from WallStreetWatch.org, which lists Gramm-Leach-Bliley as the first of 12 factors leading to the current economic crisis- “Sold Out: How Wall Street and Washington Betrayed America” 

Can anyone tell me why imposing a small tax on money (not wealth or capital) would be a bad idea?  This was tried in 1933 in Worgl, Austria, a town which had 1/3 unemployment due to the Great Depression. As no one wanted to pay the tax, the ‘stamp scrip’ stimulated spending, hiring and long-term, sustainable investment. It increased the circulation of money by a factor of 14 and halted inflation. The result was full employment, and numerous fully-funded public works projects. Nearly 200 neighboring towns were interested in the idea, some had started to implement it, but when the central bank got word of it, they shut it down and the town went back to 1/3 unemployment. When Hitler invaded not long after, he was welcomed as a savior.

This one simple idea, of taxing money being hoarded, was just one of the economic principles outlined in Austrian economist Silvio Gesell’s Natural Economic Order.

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