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February 01, 2010

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Neo
BURGESS: Glass-Steagall has come up this morning. If I recall, Glass- Steagall was repealed -- that bill was signed by Bill Clinton...

GEITHNER: You're right about that.

BURGESS: ... not George Bush.

GEITHNER: You're absolutely...

BURGESS: And I frankly don't understand. If that's such a good protection, this president's been in office for 10 months. Where's the signed legislation reinstating Glass-Steagall? What...

GEITHNER: Actually, I would not support reinstating Glass-Steagall. And I don't actually believe that the end of Glass-Steagall played a significant role in the cause of this crisis.

http://www.powerlineblog.com/archives/2009/11/024990.php

Jack is Back!

Oh, good. Friedman wants us to be more like China and Krugman wants us to be more like Canada and the UK. When in actuality we are on our way to be more like Sweden except with 300 million people dependent on the government to tell us when to go wee-wee.

Jim Miller

Correction: When WaMu crashed, it was no longer a small regional bank, if this Wikipedia article is correct (and it probably is, in general). The NYT article they link to says that WaMu was the nation's largest savings and loan when it failed.

(I followed WaMu's remarkable expansion first with awe and then fear, because I couldn't see what they were doing to deserve that growth.)

Ian McCracken

Important to get the historical facts straight...Krugman is correct...Reagan signed The Depository Institutions Deregulation & Monetary Control Act and Garn–St.Germain Depository Institutions Act. These were significant banking reforms.

The Financial Services Modernization Act of 1999 may have been as significant but it is also important to note that this act was authored by Republicans and their congressional majorities would have easily overode any veto by Clinton.

The fact that Clinton signed it probably has more to do with campaign contributions than anything else.

How about getting rid of money in politics?. There should be some legislative response to the recent Supreme Court decision (again the conservative majority making the decision)

Cecil Turner

How 'bout getting politics out of the mortgage business? Am I the only one who thinks the mortgage meltdown and government exposure (thanks to Fannie Mae and Freddie Mac) provided the catalyst that made this conflagration spectacular?

clarice

You're not the only one, Cecil, if that provides any comfort at all.

narciso

Ian, old chap, Obama got 750 million dollars mostly from the murderer's row of banks like
Goldman, Morgan, CitiCorp et al, that created
this mess, try again

clarice

Ian there is no way to "keep money out of politics"..The effort to do so only muzzles citizens and empowers crooks who have the means and talent to end run any constitutional limits CONGRESS CAN ENVISION.

Rob Crawford

How about getting rid of money in politics?

How about getting the politics out of money?

Neuter the government, and no one will feel the need to buy a Congresscritter.

clarice

The NYT should hire me for balance--I want the US to be more like the Midwest US (esp the Midwest in the late 1950's before Congress got so involved in the states' business--like education and housing.

Sue

The fact that Clinton signed it probably has more to do with campaign contributions than anything else

Is there anything a democrat is responsible for? Just pick one. You can go back a few years if it helps you.

Carol Herman

Most of the time Reagan went along with the ponies in DC. In the one place he didn't was Iran/Contra. When congress tried to make a Federal Case out of this, the People rose up. And, protected Reagan's fanny.

For Bill Clinton the same "save" appears over the issue of Monica.

As to what's going on now? The veil's been ripped off. First, because of sales problems the word "liberal" morphed into "progressive." It's been made naked.

This is our one best advantage.

Pofarmer

and their congressional majorities would have easily overode any veto by Clinton.

It takes a 2/3 majority in both Houses to override a presidential veto. The Republicans were never anywhere near that. Nice try though, now, go learn some history.

Charlie (Colorado)

I think the US should be more like Canada. We should serve gravy and cheese curds with french fries.

Ignatz

--Important to get the historical facts straight...Krugman is correct...Reagan signed The Depository Institutions Deregulation & Monetary Control Act and Garn–St.Germain Depository Institutions Act. These were significant banking reforms.--

Important to get the facts straight indeed. The Depository Institutions Deregulation & Monetary Control Act was signed into law by Carter in March 1980.

The other one was signed by Reagan in 1982 but had widesprwead bipartisan support including Shumer and Hoyer and it might be noted Dems had control of the house.

More importantly the S&L crisis demonstrated how to roll up a mess like the one of 08-09. Too bad no one seemed to learn any lessons from it.

in_awe

Funny, Dems love to give Clinton credit for balancing the budget, reining in the runaway welfare system, etc. - which were shoved down his throat by a Republican Congress. But in the Dems revisionist history - Clinton was the glorious leader who led us fiscal sanity...

But they demur when it comes to things like the repeal of Glass-Steagall; liberal all insist it was not Clinton's fault - he was forced to do it by the mean ol' Republicans. Clinton as victim.

tea anyone

How about getting the politics out of money?

Neuter the government, and no one will feel the need to buy a Congresscritter.

Here, here Rob C., say it again louder, Congress can not be bought if it has NOTHING to sell.

narciso

Example of what I was talking about, in the LUN

Neo
As a political barometer, the Davos World Economic Forum usually offers up some revealing indicators of the global mood, and this year is no exception. I heard of a phrase being bandied about here by non-Americans — about the United States — that I can honestly say I’ve never heard before: “political instability.”
“Political instability” was a phrase normally reserved for countries like Russia or Iran or Honduras. But now, an American businessman here remarked to me, “people ask me about ‘political instability’ in the U.S. We’ve become unpredictable to the world.”
So much for restoring Americas' image
in_awe

Oh, on the matter of the Garn-St Germain Act, there were some provisions that extended some real power to homeowners. Recall that mortgage rates under Carter soared from 8.85% in 1976 to 16.85% by 1981 (my first home loan was at 14.75% fixed for thirty years and I was an "A" credit).

Prior to Garn-St Germain loans were written with a due on sale clause that prevented a home buyer from taking over an existing mortgage since that would require the buyer to apply and pay for a new loan at what might be the higher current rate. The lenders won through more fee income and potentially a higher rate.

While Garn-St Germain didn't prohibit the due on sale clause, it did provide an out for buyers who wanted to assume a contractually unassumable mortgage. So, as a buyer I could now effectively assume a loan from the pre-Carter era when rates were less than half, and the banks couldn't stop me.

Patrick R. Sullivan

Glass-Steagall was repealed by technology. It was only effective in an ink and paper world where it might take days to move funds from one account to another.

By the late 90s that was moot. A mouse click instantaneously moved funds from non-interesting accounts to ones that did pay. All the 1999 legislation did was put it out of its misery.

Jack is Back!

in_awe,

I bought a house in 1980 with a VA loan. The interest rate was 18% but didn't have to put anything down. 2 years later I sold the house to another vet who had been given a VA loan at 13.5%. Those were the good old days of watching Reaganomics blow up the Carter era of misery - high mortgage rates, inflation and high unemployment. It was truly transformative unlike this sequel we are living through. When we get rid of this guy and his enablers, apologists, propagandists and policy mavens it will feel the same way as 1-21-81. Freedom.

sbw

in the Dems revisionist history - Clinton was the glorious leader who led us fiscal sanity.

Why is it that people assume it it the government that directs the economy? Clinton had the sheer good fortune to be in office at a time of incredible productivity gains from the introduction of the networked personal computer.

Dave (in MA)

Getting rid of money in politics would be a lot like getting rid of money in prostitution. No, what was I thinking? I mean it would be exactly like it.

Charlie, one of these days I'll get around to trying poutine.

Ignatz

-Why is it that people assume it it the government that directs the economy? Clinton had the sheer good fortune to be in office at a time of incredible productivity gains from the introduction of the networked personal computer.--

sbw,
I recall George Gilder presciently observing in the early nineties that like the crowing rooster taking credit for the sunrise Clinton/Gore would take credit for the incipient technology revolution and its attendant economics benefits.

Dave (in MA)

Taken from a report issued by the Republican members of the Budget Committee.

I hope MM doesn't mind the hotlink.

Gabriel Sutherland

FYI: Timothy Geithner was previously the Under Secretary of the United States Treasury for International Affairs. He held this position under Rubin and then under Summers from 1998-2001.

Geithner was an opponent of regulating derivative contracts.

Danube of Thought

"How about getting rid of money in politics?"

How? Why? And would doing so prohibit the New York Times from selling a newspaper in which it endorsed a political candidate?

chip

Canada's banking system only appears boring because we have yet to experience our housing crash. Vancouver, for example, was recently listed as the Western world's most expensive housing market with house prices 9.3 times the median income.

Why have we held off the crash? Look to the federal government which opened the spigot on the amount of mortgages it would insure. In the last couple of years the amount fully backed by the government jumped from $250 billion to $650 billion.

Give us another year.

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