Tags: deregulation

Clinton: Deregulation Not to Blame for Crisis

Wednesday, 01 Oct 2008 11:33 AM

Former President Bill Clinton says deregulation of financial institutions is not to blame for the mortgage market mess.

Clinton was asked in an interview if he regretted signing legislation in 1999 that repealed the Glass-Steagall Act of 1933, which had separated commercial and investment banking.

"No, because it wasn't a complete deregulation at all. We still have heavy regulations and insurance on bank deposits, requirements on banks for capital and for disclosure," Clinton said emphatically in the Business Week interview.

The Gramm-Leach-Bliley Act passed the Senate on a 90-8 vote, among them 38 Democrats, some of them quite vocal supporters of the deregulation bill, including Sens. Chuck Schumer, John Kerry, Chris Dodd, John Edwards, Dick Durbin, Tom Daschle, and Joe Biden.

"Schumer was especially fulsome in his endorsement," observes The Wall Street Journal.

Now, according to The Journal, these facts will likely come as news to many, including the national press corps and presidential candidate Barack Obama, who are promoting the idea that deregulation is to blame for the mortgage market meltdown.

In the interview, Clinton provides extensive insight into his thinking then about financial deregulation.

"I thought at the time that it might lead to more stable investments and a reduced pressure on Wall Street to produce quarterly profits that were always bigger than the previous quarter,” said Clinton.

“I have really thought about this a lot. I don't see that signing that bill had anything to do with the current crisis. Indeed, one of the things that has helped stabilize the current situation as much as it has is the purchase of Merrill Lynch by Bank of America, which was much smoother than it would have been if I hadn't signed that bill."

One of the writers of that landmark legislation was McCain adviser and former senator Phil Gramm, a man Obama described last week as "the architect in the United States Senate of the deregulatory steps that helped cause this mess."

Clinton was asked if he believed Gramm had sold him "a bill of goods” on deregulation.

"Not on this bill, I don't think he did. You know, Phil Gramm and I disagreed on a lot of things, but he can't possibly be wrong about everything,” Clinton said.

“On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I'd be glad to look at the evidence. I can't blame (the Republicans). This wasn't something they forced me into.”

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Former President Bill Clinton says deregulation of financial institutions is not to blame for the mortgage market mess.Clinton was asked in an interview if he regretted signing legislation in 1999 that repealed the Glass-Steagall Act of 1933, which had separated commercial...
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Wednesday, 01 Oct 2008 11:33 AM
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