It’s too bad you didn’t present an argument, or perhaps we could’ve had a conversation. I find it interesting that I am the troll for stirring debate, but you are presumably not when all you have contributed to this conversation is name-calling. I think if you remove your helmet and shoulder pads, and re-read my previous comments, you’ll see that I really wasn’t advocating the repeal, but was merely looking for some answers; some of the responses I received were helpful, some were not.

Perhaps I need to make my thinking even more transparent: I think the reasoning behind the Glass Steagall regulation made sense. I have seen some pundits say that its repeal did not contribute to the current crisis. I have also seen some pundits say that its repeal did contribute to the current crisis. Neither type offers much reasoning behind such assertions (that I’ve seen). Since I saw that BR was implicating it in this post, I was hoping that he could elaborate. Is his reasoning that the repeal allowed more banks to purchase MBSs, increasing marginal demand for them, elavating the housing bubble and spreading more risk to commercial banks? And now these MBSs are eroding the capital of commercial banks, leading to mistrust, impeding lending, and worsening the crisis beyond what it would’ve been if GS stayed in place? If so, that sounds pretty reasonable to me, and I’m not sure why he wouldn’t state it (or perhaps he has somewhere and I just haven’t seen it). I was just trying to pull out a more complete story than what I had been hearing.

When I discuss these matters with my friends and colleagues, I need reasoning and facts that go beyond: when A was in place, B didn’t happen; when A was removed, B happened; therefore, the removal of A caused B. Especially when there were so many potential factors in play. That sort of reasoning is what the man in NYC uses while snapping his fingers to keep the tigers away.

I’ll just leave it at this: I would personally like to see a post dedicated to the role of the repeal of Glass Steagall in the current crisis. I think BR is capable of shedding some light on the issue and presenting very clear arguments (like the ones he presented here for the housing boom/bust) that could provide direction to what specific regulation may be needed moving forward.

You know, Rubin and Friedman just don’t get it. ONE MORE TIME and ALL TOGETHER! NO TRUST = NO FUTURE for your business. The business was to give us the “business” good and hard. This is the reality that all the wordsmithing by the most convoluted spin masters and PR geniuses won’t change. They think the people are rubes. They got so full of vanity and hubris that they thought they could parade their greed and corruption in our face like it was a virtue. They didn’t realize that the position of trust they occupied had been earned by a lot of hard work and integrity after the Great Depression. So the trust is gone now. Live with it, assholes.
So here’s our message to the powers that be:
WE DON’T WANT BAILOUTS!
WE WANT JAILINS!!!

You just didn’t like it.

Deal with yourself – you’re wrong.. and cutely inane rhetorical tricks don’t help.

In his own explanation of the cause of the crisis, BR does not mention the Glass Steagall repeal. Saying that with GS in place there was no crisis, and without it there is a crisis is not a compelling story, especially given that he has already implicated other causes. I’m not a defender of the Glass Steagall repeal, but I don’t think it’s too much to ask BR to defend his assertion with some actual logic. I’d be happy to spread the word that the repeal of Glass Steagall is a root cause of the crisis if I were presented with some compelling evidence and reasoning. I just want to know how BR thinks it specifically fits into the puzzle.

Thanks to those who have resp0nded so far.

http://query.nytimes.com/gst/fullpage.html?res=9A03E6DF143DF930A25752C1A96F958260

The New York Times, November 13, 1999:

President Clinton signed into law today a sweeping overhaul of Depression-era banking laws. The measure lifts barriers in the industry and allows banks, securities firms and insurance companies to merge and to sell each other’s products.

”This legislation is truly historic,” President Clinton told a packed audience of lawmakers and top financial regulators. ”We have done right by the American people.”

The bill repeals parts of the 1933 Glass-Steagall Act and the 1956 Bank Holding Company Act…

”The world changes, and Congress and the laws have to change with it,” said Senator Phil Gramm…

”With this bill,” Treasury Secretary Lawrence H. Summers said, ”the American financial system takes a major step forward toward the 21st Century — one that will benefit American consumers, business and the national economy.”

=======================================================================

http://www.thenation.com/archive/detail/14239331

The Nation Magazine / Nov 15, 1999:

For their money, the finance industry bought not only the end of the Glass-Steagall Act but also the partial repeal of the Bank Holding Company Act. These landmark pieces of legislation, recognizing the inherent dangers of too great a concentration of financial power, barred common ownership of banks, insurance companies, and securities firms… the misnamed Financial Services Modernization Act will usher in another round of record breaking mergers… PAVING THE WAY FOR FUTURE TAXPAYER BAILOUTS OF TOO-BIG-TO-FAIL FINANCIAL CORPORATIONS.

Good Call, here it is, in full:

Its_Science Says:

November 29th, 2008 at 1:15 pm
BR, you blame Rubin and Greenspan for the repeal of Glass Steagall. Can you explain why you believe this has contributed to the current crisis? I don’t know that I’ve seen anyone make a clear connection for that. To be fair, I think those who claimed that its repeal has helped were too early in declaring victory. But I’d like to see someone clearly lay out an argument for why the repeal directly led to this financial crisis.

~~~

BR: No sir. The duty is on you to disprove it.

Res Ipsa Loquitor: For the better part of 3/4s of a century, the original Glass Steagall laws kept the brokerage business and the banking business separate. That seemed to work out fine. We avoided a meltdown the entire time.

Then some idealogues — and a $100 million in lobbying money — managed to get Glass Steagall repealed. Banks and brokers get together, shortly thereafter, they leverage up and . . . well, you know the rest.

You think it had NOTHING TO DO WITH THIS MESS? You prove it. You have the burden, not I . . .

Good going BR..

peep like ‘Its_Science’ prove there’s, still, a too broad Market for pre-Masticated tidbits, and, other, associated Pablum..maybe one day he’ll figure out why he has Teeth, physical, meta-, and otherwise..

The fantasy wealth he and his ilk created during his stewardship at C with the MBS/CDS Ponzi scheme made it possible for him to walk out the door with hundreds of millions. I hope he is eternally dogged with civil lawsuits or what ever for the pile of steaming shit he helped create.

Rubin and any one else that attemps to brainwash us that they didn’t see this comming (Dimon) are just opposite ends of the same turd.

If it wasn’t for the fraud of underlying value in these so called investment insterments those fucks could not aquire the obscene amount of money they have.

The should be arrested for fraud and if found guilty, shot.

What they have done is the equivilent of a financial 9/11!

BR a virtual high five to you on your response to the G/S post above!