The banks which lost so much money in the financial derivatives business were also totally unregulated. In the case of the banks, the 107th Congress specifically exempted financial derivatives from regulation by any federal agency. That legislation, enacted in January, 2000 followed the repeal of the Glass-Steagall Act which was enacted in 1933 following the Great Depression to prohibit commercial banks from entering the securities and insurance businesses.

The repeal of Glass-Steagall was accomplished by the Gramm-Leach-Bliley Financial Services Modernization Act, enacted November 12, 1999, only days after the election of President George W.Bush. Between 1995 and 2000, Senator Phil Gramm (R-Texas) was the chairman of the U.S. Senate Committee on Banking. During that time he spearheaded efforts to pass banking deregulation laws. The act which he sponsored in 1999 repealed the Glass-Steagall Act which had prohibited banks from entering investment and insurance businesses.
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One thing missing from this is the fact that in order for this Gramm-Leach-Blily act to pass and be signed by President Clinton was the insistance of the Clinton administration that an amendment to the bill be added saying that the bank MUST HAVE A SATISFACTORY RATING WITH ITS CRA EXAM.

This was added to the bill because President Clinton said something to the affect that he would veto anything THAT WOULD SCALE BACK MINORITY LENDING.

Wonder how it would have worked WITHOUT that ammendment !!!