I am opposed to all forms of control. I am for an absolute laissez-faire, free, unregulated economy. Let me put it briefly - I am for the separation of state and economics ~ Ayn Rand (2/2/1905 to 3/6/1982) a Russian-American novelist, philosopher, playwright, and screenwriter. She is known for her two best-selling novels and for developing a philosophical system she called Objectivism.
Ayn Rand became a stabilizing force in my life. It hadn't taken long for us to have a meeting of the minds - mostly my mind meeting hers ~ Alan Greenspan (DOB 3/6/1926) an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006, quoted from his autobiography, "The Age of Turbulence"
Everyone knows that the recent financial meltdown, which began in 2008, came about as the result of another housing bubble. But what caused this bubble? And whom can we blame? Did McCain lose the election simply due to the fact that the Republicans were in charge at the time? That, plus the fact that he looked incredibly foolish when he suspended his campaign to rush back to Washington to fix the mess, stopping first to be interviewed by Wolf Blitzer in his "Situation Room", and snubbing David Letterman in the process?
Fortunately the American public correctly assigned blame for the financial crisis to John McCain, the Republican Party and deregulation. In the days immediately following McCain suspending his campaign, visiting Wolf's situation room, and apologizing to David Letterman because he "screwed up", McCain was asked (in a "CBS Today" interview) if he regretted championing deregulation in 1999. McCain replied, "I think the deregulation was probably helpful to the growth of our economy" (a definite "no").
And this occurred only shortly after McCain was forced to fire his financial advisor, Phil Gramm, who called the recession "mental", and declared that "America is a nation of whiners". Unsurprisingly, McCain lost the election.
The deregulation McCain championed in 1999, along with his financial advisor Phil Gramm, was the Financial Services Modernization Act of 1999 (also known as the Gramm-Leach-Bliley Act). It repealed part of the Glass-Steagall Act of 1933, which "prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and/or an insurance company". In other words, retail banks and investment banks were required to remain separate entities, so as to discourage speculation (which can also be described as gambling).
Freed from these prohibitions, investment banks purchased retail banks, bundled their customer's mortgages and resold them as "mortgage backed securities". But because the banksters made their money upfront they didn't really care if the mortgage holders defaulted. Certainly there was a strong incentive from them not to care, as their profit margin would be negatively impacted if they did. Naturally this led to a bubble (and bubbles eventually burst). But for the time being there was loads of cash to be made.
Gramm, Leach, and Bliley were Republicans. Conservative economic philosophy calls for deregulation. Ayn Rand believed in it, and so did her acolyte Alan Greenspan, who began his tenure with the Federal Reserve in 1987 when he was appointed its chairman by President Ronald Reagan. Reagan, the President who declared, "Government is not the solution to our problem, government is the problem" (sounds anti-regulation to me).
It is the Democratic Party that is supposed to champion protection of the consumer through strict regulation, yet they got snookered by the Ayn Rand laissez-faire fairy tale! Greenspan kept his Fed chair position for the next 18 years, whether the President was a Republican or a Democrat. According to the Frontline special, The Warning, "by the time Bill Clinton took the White House, the anti-government rhetoric had become so fashionable that even some Democrats embraced it".
In addition to not firing Greenspan as he should have, Clinton brought on board ex-Goldman Sachs employee Robert Rubin to head up the Treasury department. Greenspan and Rubin, along with advisors Lawrence Summers and Timothy Geithner formed a "pro-business anti-regulation support group". The 2/15/1999 edition of Time Magazine dubbed Greenspan, Rubin and Summers, "The Committee to Save the World". I think a more apt honorific would have been "The three horsemen of the coming financial apocalypse".
And so, President Clinton, following the Randian advice of his free market advisors, signed a bill sponsored by three Republicans and championed by a future Republican Presidential contender. That was after Gramm-Leach-Bliley passed the Senate with 53 Republican "yeas", one Democratic "yea", and 44 Democratic "nays" (there was also one "present" and one "absent", but those were Repubicans).
Update 9/26/2014: The vote I reference above was NOT the final vote. After conferencing with the House the bill came up for a vote again and this time it passed with 38 Democratic "yea" votes and only 7 Democratic "nay votes... unfortunately. Also, I've known about this post being wrong for quite some time and did nothing about it.
That is something that I ALWAYS try to avoid (wrong information being presented here). But this was back during my early days of blogging. I think that currently I am doing a much better job in making sure no erroneous information slips through. I apologize for taking so long to correct this post.
Correctly voting "nay" on this terrible piece of legislation in the Senate were Democrats Barbara Boxer (CA 1993-present), Richard Bryan (NV 1989-2001), Byron Dorgan (ND 1992-2011), Russell Feingold (WI 1993-2011), Tom Harkin (IA 1985-present), Barbara Mikulski (MD 1987-present), Paul Wellstone (MN), and Republican Richard Shelby (AL 1987-present).
|Final Vote Tallies on S. 900, 106th Congress: Gramm-Leach-Bliley Act (On the Conference Report) 11/4/1999. (Yea/Nay/Not Voting or Present)...|
Senate Vote #354: Republicans (52/1/2), Democrats (38/7/0).
House Vote #570: Republicans (207/5/11), Democrats (154/51/4).