Never did I think there’d come a day when I’d agree with Bill Clinton this often, and yet, here I go again. As I was saying yesterday, Bill Clinton has been perhaps the strongest voice against the Obama-created meme that deregulation and the free market are at fault for a crisis actually caused by government interference. And, here he goes again… Bill may be attending rallies now, but he’s not toeing Obama’s line on the banking crisis and what caused it. On the Gramm-Leach-Bliley bill, which passed the senate 90-8, with the prominent support of Obama backers such as Sen. Chuck Schumer (D-N.Y.) and, err Joe Biden (D-imwitted):
In BusinessWeek.com, Maria Bartiromo reports that she asked the former President last week whether he regretted signing that legislation. Mr. Clinton’s reply: “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. 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. “But 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 legislation was then-Senator Phil Gramm, who is now advising John McCain, and who Mr. Obama described last week as “the architect in the United States Senate of the deregulatory steps that helped cause this mess.” Ms. Bartiromo asked Mr. Clinton if he felt Mr. Gramm had sold him “a bill of goods”? Mr. Clinton: “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. 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. “But I can’t blame [the Republicans]. This wasn’t something they forced me into. I really believed that given the level of oversight of banks and their ability to have more patient capital, if you made it possible for [commercial banks] to go into the investment banking business as Continental European investment banks could always do, that it might give us a more stable source of long-term investment.”
Peter Wallison provides four reasons Barack is wrong on this, in case he and Bill never get together over ice cream sodas to talk about it:
1. There has been a great deal of deregulation in our economy over the last 30 years, but none of it has been in the financial sector or has had anything to do with the current crisis. Almost all financial legislation, such as the Federal Deposit Insurance Corp. Improvement Act of 1991, adopted after the savings and loan collapse in the late 1980s, significantly tightened the regulation of banks. 2. The repeal of portions of the Glass-Steagall Act in 1999–often cited by people who know nothing about that law–has no relevance whatsoever to the financial crisis, with one major exception: it permitted banks to be affiliated with firms that underwrite securities, and thus allowed Bank of America Corp. to acquire Merrill Lynch & Co. and JPMorgan Chase & Co. to buy Bear Stearns Cos. Both transactions saved the government the costs of a rescue and spared the market substantial additional turmoil. 3. Republicans have favored financial regulation where it was necessary, as in the case of Fannie Mae and Freddie Mac, while the Democrats have opposed it. In 2005, the Senate Banking Committee, then under Republican control, adopted a tough regulatory bill for Fannie and Freddie over the unanimous opposition of committee Democrats. The opposition of the Democrats when the bill reached the full Senate made its enactment impossible. Barack Obama did nothing; John McCain endorsed the bill in a speech on the Senate floor. 4. The subprime and other junk mortgages that Fannie and Freddie bought–and the market in these mortgages that their buying spawned–are the underlying cause of the financial crisis. These are the mortgages that the Treasury Department is asking for congressional authority to buy. If the Democrats had allowed the Fannie and Freddie reform legislation to become law in 2005, the entire financial crisis might have been avoided.
Now, if McCain could include some of these points in his stump speeches, we’d be getting somewhere. Better yet, have Sarah Palin serve them up tomorrow night. If her RNC speech was any indication, she’s a delightful, entertaining attack dog, and I’d love to see her stick Biden on this. After all, the Left has suddenly decided, after weeks of calling her the dimmest woman on Earth, that she is the greatest debater ever, so I’m confident she could pull that off. Update: A screenshot of Huffington Post today, where just yesterday they were listing the “Top 10 reasons Palin will cancel the debate.”
If she performs decently, we’ll soon be hearing, ala Obama’s performance in the first debate, how all Joe Biden had to do was remain upright to reassure voters, and how that pretty much constitutes a win.
