I had heard someone blaming our favorite national scapegoat, George Bush,for the nation’s mortgage meltdown.
That piqued my curiosity so I did a little digging to see if that was actually true. What I found, and what we’re witnessing, is actually part of the Bill Clinton legacy. Probably not the one he has been hoping for, though. In 1999 President Bill Clinton rescinded the Glass-Steagall Act. This act had protected our monetary system since the Great Depression. At the suggestion of Fed Chairman Alan Greenspan and U.S. Treasury Secretary Robert Rubin, it was repealed and signed into law by Bill Clinton. The Glass-Steagall act would of kept us from this current calamity but with one swipe of the pen, the wall keeping home loans from being traded as securities was gone. Once that wall was gone, lenders didn’t care if a person could make the payment on a home loan because it would be sold soon to another company (China), as an investment, and be the next company’s problem.
Treasury Seceretary Rubin
“The banking industry is fundamentally different from what it was two decades ago, let alone in 1933.” He said the industry has been transformed into a global business of facilitating capital formation through diverse new products, services and markets. “U.S. banks generally engage in a broader range of securities activities abroad than is permitted domestically,” said the Treasury secretary. “Even domestically, the separation of investment banking and commercial banking envisioned by Glass-Steagall has eroded significantly.”
Looking forward to your comments.
Source: napavalley register