The letter from Bill Sandry (May 20) blaming the 1999 repeal of the Glass-Steagall Act of 1933 for the financial meltdown that began in 2007 is another in a long series of Republican/tea party attempts to blame Bill Clinton for the mess created by the failed fiscal policies of George II and the Republican-dominated House and Senate of the 1990s and the first half of this decade.
The effort to repeal Glass-Steagall 1933 is a long and complicated affair. It began within a few years of its original passage and picked up steam in the 1980s under Reagan. In the early 1990s George I proposed repealing certain restrictive provisions while Fed Chairman Paul Volcker did not. When Alan Greenspan, a poster boy for “Free Markets,” took over the Fed he strongly favored repeal of Glass-Steagall.
The back-and-forth then becomes extremely complicated with many major players running from Sears to Citigroup and Travelers Insurance involved. When Goldman Sachs president Robert Rubin was selected by Bill Clinton to be Treasury Secretary he, as you can imagine, favored repeal. In the late 1990s, Republicans Phil Gramm of Texas and James Leach of Iowa co-sponsored the bill that ultimately was passed by both Republican-controlled houses and signed by Clinton in 1999, under a threat of overriding his veto if he did not.
Whether or not repeal of Glass-Steagall caused the financial meltdown has, and will continue to be, argued by very learned men and women with no satisfying conclusion. That it contributed to our crisis is not in doubt. But the mortgage problem stemmed more from unregulated private mortgage companies than banks. It was not the poor, inner city borrowers who caused the mortgage market to collapse, it was the middle and upper-income borrowers who piled on low-cost debt, as advocated by Alan Greenspan, taking out expensive second and third mortgages to satisfy their lust for consumer goods, leveraging themselves so much that when housing prices hiccupped, they lost what little equity they still enjoyed and the house of cards came tumbling down.
So, Mr. Sandry, I would suggest you stop the 12-year foolishness of trying to blame Bill Clinton for all of the problems caused by the Republicans between 2001 and 2007 and focus on learning more about what really caused our Great Recession.
Edward F. Murphy