Good morning America. All the banks have gone crazy. Make sure you have cash on hand in case the ATM networks decide to play it safe and restrict access to your bank's accounts.
Tough day to be a banker.BTW, does anybody else see some dark irony in the inability of insurance giant AIG to manage it's own risk?
ANYWAY, I really don't know how this mess all got started, but it has to end. At the bottom of the mess is the credit crunch in housing. This is what is killing Bear Sterns and Lehman Brothers and other investment banks. At least that's what we used to call them. I believe they are all just "financial institutions" now, thanks to a law called Gramm-Leach-Bliley or GLB.
That's Gramm as in Phil "Mental Recession" Gramm, the smiling fellow on the left in the picture below. Phil was a senatorial whore for the banking industry back in the day, and so pushed through GLB to repeal the old Glass-Steagall Act, which was passed back in 1933 to prevent another Great Depression caused by the collapse of our banks. I think we can all see what a great idea this was, and we should thank Phil accordingly. He's from Texas, you know, where the death penalty is enthusiastically enforced.
Old Boys NetworkSo, GLB got rid of the separation of banks, investment firms, and insurance companies. Now they could all merge into giant "financial institutions" that, it turns out, are "too big to fail." But fail they do, and tax money is used to prop them up.
Guess who voted for this brilliant idea! Republicans! Really. Check out the vote right here and see it split along party lines. Bill Clinton signed it though. Another nail in his legacy coffin.
Sandy WeillWhat prompted all of this? Businessmen like Sandy Weill, who seems to have been president of most of Wall Street at one time or another, hired Gerald Ford and Robert Rubin and other lobbyists to push congress to dismantle Glass-Steagall. And it worked! Sandy even got an early exemption to pretend that the law didn't exist for 5 years before it was repealed, during which time he merged Traveler's Group with Citibank to form the world's largest financial institution. Wow! Impressive, but bad.
John McCain voted for the repeal. Joe Biden voted against it.
BTW, Glass and Steagall - both Democrats.
Senator Carter Glass
Congressman Henry B. Steagall