Barack Obama constantly talks about how George Bush’s “gutting” of Wall Street regulations (with john McCain’s help) is what is responsible for the current financial mess. I dare him (or anyone else) to name one such gutted regulation that would have helped prevent the current problem in the slightest. Just one!!! Why doesn’t he? Because such phantom regulations don’t exist, and have never existed.
This article should be passed out to every man, woman, and child listening to an Obama speech. In fact, I wish Obama would read it himself.
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.
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.
None of the investment banks that got into financial trouble, specifically Bear Stearns, Merrill Lynch, Lehman Brothers Holdings Inc., Morgan Stanley and Goldman Sachs Group Inc., were affiliated with commercial banks, and none were affected in any way by the repeal of Glass-Steagall.
It is correct to say that there has been significant deregulation in the U.S. over the last 30 years, most of it under Republican auspices. But this deregulation–in long-distance telephone rates, air fares, securities-brokerage commissions, and trucking, to name just a few sectors of the economy where it occurred–has produced substantial competition and innovation, driving down consumer costs and producing vast improvements and efficiencies in our economy.
The Internet, for example, wouldn’t have been economically possible without the deregulation of data-transfer rates. Amazon.com Inc., one of the most popular Internet vendors, wouldn’t have been viable without trucking deregulation.
Read the whole thing. Again and again and again and again, each and every time someone wants the government to regulate us out of an economic mess.
