Quote:
Originally Posted by Villages Kahuna
A lot of people forget history. I try not to. In this instance, I'm sure Newt Gingrich would like to avoid any discussion of his role in de-regulating the banks, a move which ultimately lead to the financial crisis of 2007-8.
In 1999, Gingrich was the Speaker of the House in the 105th Congress and along with Senate Majority Leader Trent Lott and Senator Phil Gramm of Texas, jammed thru legislation that repealed the Glass-Steagall Act of 1932. Glass-Steagall was the law that separated commercial banks from investment banks, prohibiting commercial banks from becoming involved in trading and the use of exotic financial products using the capital of the banks to leverage into those new and highly risky businesses and products.
Both houses of Congress were heavily lobbied by the banks, who wanted the prohibitions on them becoming involved in those highly profitable but risky businesses lifted. The commercial bankers desperately wanted a piece of the huge bonuses being earned by the Wall Street investment bankers.
The repeal of the laws and regulations that for 70 years had kept the U.S. banking system strong and safe and capable of providing the credit needed for a strong economy was the "beginning of the end" and lead to the almost complete failure of our banking system less than ten years later.
I'm sure Gingrich wouldn't want to be questioned on his role in getting the repeal of Glass-Steagall jammed thru the House. That's a part of his personal history that I'm sure he'd like to forget...and he'd certainly like us to forget!
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Why you credit the repeal of the Glass Stegall act to Newt Gingrich puzzles me. While Newt Gingrich supported its repeal, the primary proponent of repeal was President Clinton. He led the effort to repeal the Glass Stegall on the advice of then Secretary of the Treasury Lawrence Summers and his previous Secretary of the Treasury, Robert Rubin. The vote in congress was bipartisan and overwhelming. 90 to 8 in the United States Senate.
A direct quote representing the administration’s position on the repeal - ”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.”
President Clinton stated on ABC in 2010 that Lawrence Summers and Robert Rubin had given him ‘bad advice.’ He took responsibility for the action and did not try to blame others.