This article is a pretty interesting recap of the history leading up to the mess we’re in. The entire article spreads the blame around from Reagan through Bush.
Let me know your thoughts.
In 2000, a well-orchestrated financial services industry persuaded Congress to allow a huge, unregulated market in derivatives, which are traded privately. Their estimated market value on October 13, 2008 was $531 trillion. And losses from derivatives, in association with Mortgage-Backed Securities, are what helped bankrupt giant Lehman Bros in September. Losses on derivatives also led to the government bailout of another giant, the insurer, AIG, in recent weeks, a bailout that is not yet finished.
Why did Congress take a hands-off approach? Note this paragraph from a front-page story titled: How Congress set the stage for a meltdown.
The bill barring most regulation of derivative trading was inserted into an 11,000-page budget measure (in Congress) that became law as the nation was focused on the disputed 2000 presidential election (Bush vs. Gore). The inserted bill was sponsored by Republican Senators Phil Gramm of Texas and Richard Lugar of Indiana, with support from Democrats, the Clinton administration, and then-Federal Reserve chairman Alan Greenspan. Few opposed it. – USA Today Oct. 13, 2008.
The below excerpt came from Mother Jones News – it’s factually correct- http://www.motherjones.com/news/feature/2008/07/foreclosure-phil.html
"Who’s to blame for the biggest financial catastrophe of our time? There are plenty of culprits, but one candidate for lead perp is former Sen. Phil Gramm. Eight years ago, as part of a decades-long anti-regulatory crusade, Gramm pulled a sly legislative maneuver that greased the way to the multibillion-dollar subprime meltdown. "
"And in 1999, Gramm pushed through a historic banking deregulation bill that decimated Depression-era firewalls between commercial banks, investment banks, insurance companies, and securities firms—setting off a wave of merger mania.
But Gramm’s most cunning coup on behalf of his friends in the financial services industry—friends who gave him millions over his 24-year congressional career—came on December 15, 2000. It was an especially tense time in Washington. Only two days earlier, the Supreme Court had issued its decision on Bush v. Gore. President Bill Clinton and the Republican-controlled Congress were locked in a budget showdown. It was the perfect moment for a wily senator to game the system. As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered dead—even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. "Nobody in either chamber had any knowledge of what was going on or what was in it," says a congressional aide familiar with the bill’s history."