Quote:
Originally Posted by Villages Kahuna
The way I add up the numbers, we can't afford any tax decreases. In fact, we probably need a tax increase. In addition, we need some major league spending reductions--cuts that would effect every single American every single day. Even then, our grandchildren will likely be paying off the debt we ran up during our generation. And I'm sure they'll be saying, "What were they thinking?"
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After 2 hours of viewing C-SPAN and listening to Sen. Bryon Dorgan (among others), I'm beginning to understand how we got into this economic mess, how we may get out of it, and MOST IMPORTANTLY how to make sure it doesn't happen again (or it will!).
I suggest to all to read the Gramm-Leach-Bliley Financial Services Modernization Act, Pub.L. 106-102, (GLBA for short) enacted the end of 1999. This act (can be found at
http://thomas.loc.gov/cgi-bin/bdquery/z?d106:SN00900:|) basically stripped away the protections to the public placed on the banks and other financial institutions in 1933 by the Glass-Steagall Act which, among other things, created the FDIC, demanded that bank officers and employees could not work for other financial institutions (such as stock brokerages), and basically kept banks at arms-length from other types of financial insitutions to protect their solvency.
As was explained by Sen. Dorgan, The GLBA set the framework for the mega-financial institutions (which are now going broke) to exist, and gave them legal license to get into the same mess which was part of why the 1929 crash occurred. There was "good" money to be made prior to the 1929 crash with free-wheeling financial houses, and we didn't learn from history (or were too ready for a quick buck)
Sen. Dorgan is in no hurry to YEA any bailout without full recognition by Congress and the Administration as to why we are in this mess, and guarantees that the GLBA be tossed so that we return to the protections of the Glass-Steagall Act. If we don't kill the GLBA as an integral part of any bailout, we can bet the farm this mess will happen again, and soon.
It made sense to me, and I don't claim to have any banking experience. But it does match to basic troubleshooting: 1) confirm the problem; 2) isolate the cause; 3) fix the cause; 4) test the solution; 5) implement. There is no solution that does not include root cause identification and matching fix of the root cause.
What's even more interesting is reading the legislative history of the GLBA, who voted for/against it initially, when it passed, and the final for/against vote list in the House and Senate. I wonder what the campaign contributions, sweetheart loan deals, etc. came into play between the time the bill was submitted until it was passed, and who collected what from which institutions over the years? That will be fun research when I get back to DC.