http://www.bloombergview.com/articles/2015-11-15/why-democrats-fixate-on-glass-steagall http://www.bloombergview.com/articl...glass-steagall-is-debate-democrats-don-t-need During the Saturday night Democratic debate the Glass-Steagall banking legislation (actually two acts) that put form to the Federal Reserve, FDIC and FOMC. The short version of the debate is that a return to that legislation would have prevented the last financial meltdown. I don't pretend to be knowledgeable enough to discuss the arguments set forth one way or the other. Nevertheless, I thought these two background pieces with a sufficient historical perspective are interesting and sufficiently worthy to recommend to board members.
It's funny (or not) that it was actually repealed under Clinton. And legislation going back to 1977 that called for relaxed lending standards for some applicants was what started the whole unwinding that hit us hard 7-8 years ago when the real estate bubble popped. Some people like to think that Bush caused it and Obama saved the world, when the whole thing began decades before Bush got into office, and most of the heavy lifting done by Paulson, Bernanke, and others to "save the world" was done before Obama ever came into office. Bottom line, the recession would have happened whether Bush or Kerry was in office, and the recovery would have started in early '09 whether Obama or McCain was in office. Of course I believe that Dodd-Frank, the ACA, and numerous other excess regulations and taxes have slowed the recovery. That's the problem with a federal govt run amok - they create a problem, then go overboard in "fixing" it. I think it's a good idea to give depositors a certain level of insurance, and I also think that institutions who invest the money of unsophisticated investors should have common sense limits on things like being highly leveraged - particularly on investment activities that carry a unlimited downside risk such as short positions. But the government goes way overboard.
Another good idea in general with this was to have some sort of general separation between the low-risk deposit activities and the higher risk securities and investment banking activities.
Interesting, JR. Thanks. But you should know that big government's philosophy is "we're here to help you." Heh. As I get older, really ticks me off... guess I have more time to pay attention to the nonsense. I worry about the future for my child and grandchild.
