Thank you Congress, thank you Senate. If only they had left well enough alone. The Glass-Steagall Act was repealed in 1999 in the name of competition and an outstanding display of bipartisanship. You'll note that candidate McCain stated he wasn't voting, and Fitzgerald of Illinois voted present. Seven of the eight "Nays" were Democrats, including that reliable Maryland liberal Mikulski, but what did they know? Maybe they were smart enough to realize it was a bad deal, and Fitzgerald and McCain were riding the fence unable to commit in either direction.
However you want to play that vote, this bill gave birth to the debacle we now face as a nation. Apparently we learned nothing from the S&L bailout of 20 years or so ago. I seriously recommend that you read the causes per the US League of Savings Institutions. Deja vu anyone?
Senator McCain has addressed this issue, including pounding Obama for being too cozy with the leadership in Freddie Mac and Fannie Mae, but he ignores his own complicity. Straight from his website post of Friday's speech:
We've heard a lot of words from Senator Obama over the course of this campaign. But maybe just this once he could spare us the lectures, and admit to his own poor judgment in contributing to these problems. The crisis on Wall Street started in the Washington culture of lobbying and influence peddling, and he was square in the middle of it.
And where were you Senator when the bill that made this possible was passed on your watch? Why didn't you vote "Nay" at the very beginning? Were you covering all the possibilities with your weasely "not voting" vote?
First, to deal with the immediate crisis, I will lead in the creation of the Mortgage and Financial Institutions trust -- the MFI.
That's nice, but it is a band-aid, not a fix for the underlying root cause.
Second, I will propose and sign into law reforms to prevent financial firms from concealing their bad practices.
What? Not interested in just rolling back the law and repealing the repeal? Or would that be unacceptable to the Wall Street gamblers you now despise? Who is going to enforce these new reforms?
Third, we need regulatory clarity. The lack of transparency in our financial markets went unnoticed by the regulatory agencies scattered throughout Washington charged with protecting the common good. We've got the SEC, the FDIC, the CFTC, the SIPC, the OCC, the Fed. At best, this confusing assortment of regulators and institutions was egregiously lax in carrying out their responsibilities. At worst, they engaged in the old Washington game of guarding their bureaucratic turf, instead of safeguarding the public interest and protecting investors.
Them's fighting words buddy. This needs real, objective proof. And might I dare to remind the Republican nominee that if we are dealing with political hacks (put in place by Dubya) setting the policy, priorities, and objectives, then they were following the lead set at 1600 Pennsylvania. The alphabet soup exists due to (dare I say it?) a legislative body that passes more laws then they can shake a stick at, and then turns to the Executive branch to enforce same laws. Seldom do they consider revamping the scope of an agency, although the development of the Department of Homeland Security is the poster child for what happens when they are inclined to do so. The professional bureaucrats grumbled and no doubt tried hard to sway minds, but when the political hacks lay down the law as they believe it to be the professionals shut up, and I am enough of an insider to know that is a fact.
Fourth, we must ensure that consumers and investors are protected.
How about if we start by reexamining the logic of an economy whose wealth is based on paper instruments instead of real, tangible, productivity?
Fifth, in cases where failing companies seek taxpayer bailouts, the Treasury Department will follow consistent policies in deciding whether to guarantee loans. It must have well developed remedies for a financial crisis. With billions of dollars in public money at stake, it will not do to keep making it up as we go along.
You saying the fat lady has yet to warble?
And finally, because it is so laughable on its face:
And we will simplify the tax code so people can understand it and do their tax returns themselves.
That one gets dusted off every year. Reagan tried it and look where we are. Lawyers write the code, and everyone with an ox to gore makes sure they get some protection in language a lawyer would love and only lawyers can interpret.
Reading Obama's speech, it's clear he recognizes the roots of the problem in the repeal of Glass-Steagall, and he raises the specter of the S&L bailout. I am not convinced that everything he proposes will work, and his call for regulatory reform is not that far from McCain's, but at least he didn't insult my intelligence with a call to simplify the tax code.