Happy birthday Gramm-Leach-Bliley! You're 10 years old today! And now, a celebration the way only MSNBC's Dylan Ratigan can throw it, with poignant commentary.
The premise is this: back in the day, the Glass-Steagall act prevented banks from doing risky things with people's money by establishing a barrier between investment banks, "main st" or personal banks, and insurance companies. Any money that you put into one of those institutions could not be gambled in other money markets so consumers could be sure that there money was safe.
This was so from 1933 to 1999. It was a measure passed after the crash of the Great Depression caused by banks speculating with consumer money in investment markets.
Sounds pretty air-tight right? This measure would keep people from dabbling in fragile derivative markets using people's pensions or mortgages, which meant that people could not lose their home because a bank's investment accounts tanked.
So what happened? On Nov. 2nd, 1999 Congress passed Gramm-Leach-Bliley. An act that undid that regulatory protection remove the barrier that prevented banks from participating in all three markets at the same time. This gave banks, especially those with more capital in their vaults like Citigroup and Goldman Sachs, the opportunity to make boatloads of money by speculating with people's money and pensions!
Now how did this come to pass? How did Congress let such an egregious measure pass the gavel and out into the financial world? Because lobbyists from Citigroup (yes, the one's that owe us hundreds of billions of dollars in bailout money) coerced congress into passing this deregulatory measure. The deal was made in the backrooms of the White House and Congress and now, we're paying for it.
So grab a hat everybody! Let's celebrate the only way we can! By wading through job applications into a crippled job market where credit is harder to come by than ever before.
Deregulation and "too big to fail" got you down? Feel free to leave comments at the front desk.