MIKILLINI: Thanks for the history of the Glass-Steagal Act. I only skimmed it so far, but I did find something I take exception to:
Neither party, except maybe the Republicans under Reagan, have been "‘in thrall’ to market fundamentalism", if by that you mean free market ideas. Bush Sr. and W. Bush didn't do much to limit government spending. Clinton expanded the CRA and urged the market to find "creative financing" techniques, as well as pushed the GSE's to make more subprime loans. W. Bush signed a protectionist steel tariff bill and expanded medicare coverage to pay for prescription drugs. Not since Reagan have we had any real serious deregulation, except the Glass-Steagal act.
And Glass-Steagal isn't where I would begin to deregulate the economy. From what little I understand, it was made necessary by all sorts of other regulations, such as the Federal Reserve, Smoot-Hawley, the abandonment of the gold standard, high taxes, governemtn issuing bonds to cover deficit spending, and so on, all causing inflation. This all led to unwarranted speculation, which Glass-Steagal may or may not have helped control.
[qimg]http://www.usnews.com/dbimages/master/4362/GR_PR_080410_21Big2.jpg[/qimg]
From the above graph, it doesn't look to me like anyone was "‘in thrall’ to market fundamentalism".
Neoliberal Democrats voted for the repeal, virtually matching the Republicans. Vote tallies indicate just how much they agreed to repeal the Act:
38 of 45 Senate Democrats voted for the repeal (which passed 90-8).
DEMOCRATS FOR (38): Akaka, Baucus, Bayh, Biden, Bingaman, Breaux, Byrd, Cleland, Conrad, Daschle, Dodd, Durbin, Edwards, Feinstein, Graham (Fla.), Hollings, Inouye, Johnson, Kennedy, Kerrey (Neb.), Kerry (Mass.), Kohl, Landrieu, Lautenberg, Leahy, Levin, Lieberman, Lincoln, Moynihan, Murray, Reed (R.L), Reid (Nev.), Robb, Rockefeller, Sarbanes, Schumer, Torricelli and Wyden.
REPUBLICANS FOR (52): Abraham, Allard, Ashcroft, Bennett, Brownback, Bond, Bunning, Burns, Campbell, Chafee, Cochran, Collins, Coverdell, Craig, Crapo, DeWine, Domenici, Enzi, Frist, Gorton, Gramm (Tex.), Grams (Minn.), Grassley, Gregg, Hegel, Hatch, Helms, Hutchinson (Ark.), Hutchison (Tex.), Inhofe, Jeffords, Kyl, Lott, Lugar, Mack, McConnell, Murkowski, Nickles, Roberts, Roth, Santorum, Sessions, Smith (N.H.), Smith (Ore.), Snowe, Specter, Stevens, Thomas, Thompson, Thurmond, Voinovich and Warner.
REPUBLICANS AGAINST(1): Shelby.
DEMOCRATS AGAINST(7): Boxer, Bryan, Dorgan, Feingold, Harkin, Mikulski and Wellstone.
NOT VOTING: 2 REPUBLICANS (2): Fitzgerald (voted present) and McCain.
The House Democrats were no less enthusiastic in their endorsement, the repeal passed there by a margin of 343-86, with the Democrats favoring the measure by a two-to-one margin, 138-69. Current House speaker Nancy Pelosi managed not to register a vote on this one.
Once Glass-Steagall was rendered ineffective, many variations of greed, mixed with conflicting, reactionary regulation, became the catalyst which drove directly into the leveraged sub-prime mortgage market.
ETA: Perhaps a look at those who benefited from all these ill-advised loans need to be spotlighted. One good example is Henry Paulson, the former Goldman Sachs CEO and current Secretary Of The Treasury:
Paulson was compensated to the tune of $30 million in 2004 and took home $37 million in 2005. In his career at Goldman Sachs, it's estimated he built up a personal net worth of over $700 million.
After Paulson’s ascension to the treasury, his colleagues at Goldman Sachs carried on the bonanza. At the end of 2006, Paulson’s successor Lloyd Blankfein was handed over a $53.4 million year-end bonus, while 11 other Goldman Sachs executives raked in $150 million in year-end bonuses combined. That year, the top investment firms Goldman Sacks, Morgan Stanley, Merrill Lynch, Lehman Brothers, and Bear Stearns handed out $36 billion in bonuses. At the end of 2007, the executives of the same firms, excepting Merrill, were handed another $30 billion.
So what would be the motivation for pushing bad loans? Big paydays for executives. They made their money whether those loans defaulted or not.
