Most people, remotely familiar with our financial markets, know that a large portion of our current problems was the result of deregulation of the insurance and banking industry. Almost without exception George Bush gets the blame for deregulating the financial markets. But, this accusation is absurd, because deregulation took place during the Clinton years. It was passed just in time for Robert Rubin to cash in big time at Citi-Corp.
In case you doubt this, read the transcript of an interview of Bill Clinton by Jay Tapper in 2010:
http://crooksandliars.com/susie-madrak/president-clinton-i-was-wrong-listen
You will notice that the title of this website is “crooks and liars.” The transcript was published here because Bill Clinton was lying about his own involvement. But, what Clinton admits is devastating enough.
Well, I think on the derivatives – before the Glass-Steagall Act was repealed, it had been breached. There was already a total merger practically of commercial and investment banking, and really the main thing that the Glass-Steagall Act did was to give us some power to regulate it
Clinton is admitting that the financial crisis was brought about by deregulating the derivatives market. What he was lying about is his own role in this. He is also lying about his interest in regulating banks and insurance. Clinton is now claiming he was “tricked into doing this because Robert Rubin and Larry Summers gave him bad advice.
Clinton even admits that this was the primary cause of our financial problems over the next eight years:
Now, on derivatives, yeah I think they were wrong and I think I was wrong to take it because the argument on derivatives was that these things are expensive and sophisticated and only a handful of investors will buy them and they don’t need any extra protection, and any extra transparency. The money they’re putting up guarantees them transparency. And the flaw in that argument was that first of all sometimes people with a lot of money make stupid decisions and make it without transparency.
And secondly, the most important flaw was even if less than 1 percent of the total investment community is involved in derivative exchanges, so much money was involved that if they went bad, they could affect a 100 percent of the investments, and indeed a 100 percent of the citizens in countries, not investors, and I was wrong about that. I’ve said that all along. Now, I think if I had tried to regulate them because the Republicans were the majority in the Congress, they would have stopped it. But I wish I should have been caught trying. I mean, that was a mistake I made.
Charles Ferguson explained the extent of the lie by Clinton in the following article:
http://www.huffingtonpost.com/charles-ferguson/hillary-clinton-documentary_b_4014792.html
Ferguson was the man hired to write the screen play for a puff Hillary documentary on CNN. He quickly discovered that he could not tell the truth and puff Hillary at the same time. The following paragraph about Bill Clinton is very revealing:
Mr. Clinton sorrowfully lamented his inability to stop the Commodity Futures Modernization Act, which banned all regulation of private (OTC) derivatives trading, and thereby greatly worsened the crisis. Mr. Clinton said that he and Larry Summers had argued with Alan Greenspan, but couldn’t budge him, and then Congress passed the law by a veto-proof supermajority, tying his hands. Well, actually, the reason that the law passed by that overwhelming margin was because of the Clinton Administration’s strong advocacy, including Congressional testimony by Larry Summers and harsh public and private attacks on advocates of regulation by Summers and Robert Rubin.
In the interview with Jay Tapper, Clinton blamed Robert Rubin and Larry Summers. The same Robert Rubin he called the best Treasury Secretary in history.
Currently, Clinton, Rubin and Summers all claim they were secretly opposed to the strategy they were collectively jamming down people’s throats in the later 1990s.
This is far from a dead subject. We still aren’t regulating this. The following article in the Insurance Journal explains how Dodd-Frank is trying to use the Volcker rule to repair some of the damage:
http://www.insurancejournal.com/news/national/2013/12/09/313372.htm
The following paragraph explains the situation quite well:
The view that deregulation of the financial industry in the 1990s was a prime cause of the 2008 crisis resonates with both Democrats and Republicans, and many of their proposed remedies have drawn support in both parties
If both political parties have figured this out, why does the liberal left, Barack Obama and the main stream media continue to get away with blaming all our financial problems on George Bush? The answer is unfortunately obvious. Republicans had a majority in the House and the Senate in 1999, so they share much of the blame. Clinton could not have repealed Glass-Steagall without Republican support. It was easier for people in both parties to just blame Bush. This was a bi-partisan mistake.
It is the ultimate tragedy that Barack Obama gained and retained power primarily by blaming all our financial problems on George W. Bush. Bush didn’t de-regulate the financial markets, Clinton did that. It was Bush who tried to regulate Fannie Mae and Freddie Mac. He was blocked by Christopher Dodd and Barney Frank, the co-authors of Dodd-Frank. Talk about hiring the fox to protect the chickens.
We cannot possibly fix the problem until we are ready to tell the truth about the problem. One important truth is that Republicans currently in the House and/or the Senate who were there in 1999 are part of the problem. This is the true face of the Republican establishment.
TDM