"Former President Bill Clinton: I think that the only thing that our administration did or didn't do that we should have done is to try to set in motion some more formal regulation of the derivatives market. They're wrong in saying that the elimination of the Glass-Steagall division between banks and investment banks contributed to this. Investment banks were already…banks were already doing investment business and investment companies were already in the banking business. The bill I signed actually at least puts some standards there. And if you look at the evidence of the banks that have gotten in trouble, the ones that were most directly involved in there … in a diversified portfolio tended to do better.
Some of the conservatives said that I was responsible because I enforced the Community Reinvestment Act, and they said that's what made all these subprime mortgages be issued. That's also false. The community banks, the people that loan their money in the community instead of buying these esoteric securities, they're doing quite well. " CNN.com
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Everybody's favorite charming rogue uncle, or, in my case, charming rogue nephew. We pretty much all like this guy, having gotten over the chagrin of his more or less public bad boy behavior. What came after made his philandering look trivial. What the hell, if his wife could say at her swearing-in as Secretary of State that he had contributed immensely to the enrichment of her experience… Interesting.
What he says here makes a good deal of sense. The whole derivatives/hedge fund/naked shorting scam should have been reined in and he must bear part of the blame for that.
On the other hand, it is true that the local and community oriented banks who have been content to abide in the retail banking markets have done very well.
They should be proud of their membership in the club of merely local pomposity. They have done us all a service and that should be worth a comfortable round of golf at the country club any day. pl
“They’re wrong in saying that the elimination of the Glass-Steagall division between banks and investment banks contributed to this. Investment banks were already…banks were already doing investment business and investment companies were already in the banking business”.
IOW….’the banks were already breaking the law. You certainly did not expect me to enforce the law against them, did you? I mean who could stand in the way of the progress of these giants? So I passed a law that said ‘here, at least you are not breaking the law anymore”. And for that we are to be thankful to him and the fellow Pols that went along with this? Your right, ya gotta love the guy.
From a foreign perspective: Bill Clinton was your ADHD president, a basically good kid with endless energy who got corrupted along the way. He has a political genius. He just isnt able to shake it loose from his connections. He is still plugged into the game, getting his fix (to channel H.S.Thompson).
Up here in Norway, our former conservative prime minister Kåre Willoch has suddenly become a defender of the palestinian people, to such an extent that he got hit by the Hasbara campaign. But he is a perfect gentleman every Norwegian loves in his old age, so it backfired. Thats a model for Clinton, who after all smoked wed on the Red Square, or however it went …;-)
When God made Bubba, he broke the mold.
It’s sad though that while he had the potential to be one of the best presidents, he squandered it in many ways, not only through his philandering, although in fairness it should be said that the republicans had him in their sights from day one.
And, yes, he is correct on the community banks. I have no idea why our toothless media fail to question pundits and pols when they bring up that strawman.
A historical note: Bubba’s approval rating reached its all time high–above 70%–on the day the House voted to impeach. I think it was that “mandate” that saved the day from political evil.
No, they weren’t breaking the law as much as finding ways to make the existing regulations irrelevant…
… and the key question is one of proactivity* – listening to ‘conservative’ experts who identified the weaknesses in the existing but evolving systems versus ‘liberals’ who believed that any loophole or innovation was meant to be exploited to the hilt.
The two examples that come to my mind instantaneous are the excessive use and relatively arbitrary manipulation of stock options and the technical manipulation of market dynamics through the application of sophisticated real-time techniques to find low-risk (if not risk-less) positions that were not at all available to ordinary investors…
First some investment banks were able to essentially take deposits (though without FDIC insurance) because they had the liquidity from these techniques to allow their investors to access their accounts for short term, daily needs as well as positioning their funds for longer term gains.
Then the regulated banks were driven to place riskier investments to remain competitive, both because their stockholders wanted them to perform like the investment broker/banks and also because their depositors demanded returns that were commensurate with the environment that ‘expected’ a positive return after inflation.
The bottom line, of course, is that Bill Clinton is right on the mark to accept responsibility for not having anticipated the downside of financial innovation and further deregulation (or the failure to regulate)…
… and that’s not the same as saying that he failed to enforce the law.
* The biggest irony in this was the complete reversal of roles… and perhaps that was (and is) the clearest indication that something was (and is) amiss…
Sorry… but I think the first part of the conjecture that I offered is confusing, so here’s a better attempt (I hope):
No, they weren’t breaking the law as much as finding ways to make the existing regulations irrelevant…
… and the key question is one of the failure of proactivity* – NOT listening to ‘conservative’ experts who identified the weaknesses in the existing but evolving systems versus EMBRACING ‘liberals’ who believed that any loophole or innovation was meant to be exploited to the hilt.
It’s good to see that Bill Clinton is finally acknowledging his role. But it’s sad to see that he’s still gilding the lily on that role.
It’s totally disningenuous for him to claim that Glass-Steagall needed to be undone because banks were already doing investment banking–illegally. Sure, why not justify legalizing pot smoking because people are already smoking pot? (Unthinkable!–the usual double standard.)
And what about the Commodities Futures Modernization Act, which
opened the Enron loophole? Does Clinton have any regrets about that?
Banking bubbles have happened before:http://en.wikipedia.org/wiki/John_Law_(economist)
Remember Enron, W’s buddy Kenny-Boy Lay and a couple of corrupt directors at Arthur Andersen?
Conservatives got the ‘free market’ that they wanted. It collapsed, in the same what that has happened in the past.
The FED was actually encouraging Glass-Stegal violations. Recently reading a story of Ole Hickory (Andrew Jackson) and his battle against the Second Bank of the United States refreshes my memory of how largely unaccountable central banks many still totally private (an the US FED more private and foreign than many in the know “Know”)means that little likely hood of the main street economy long destroyed by roll-up corpos like Wal-Mart and Home Depot surviving without deep deep scars this time around. I basically argue that neither Clinton or the Bushes had a clue about economics. Add to that the Reagan Presidency and future historians will be calling it the “30 years Befuddlement.” WAPO recently started an article with the phrase “Economists agree—” boy is that one great joke.
I don’t know enough to be able to say that what banks were already doing back in Clinton’s day was illegal or not, but saying that since the banks were doing it anyway it was best to let them keep on doing it doesn’t fly. People are always stealing from each other and committing fraud. Should we let them do that? Of course not.
Clinton neatly sidestepped the issue of whether it’s a good idea for a society that its banks are able to make risky investments with our money. That’s the important point.
P.S. Since I wasn’t a member of his family, Clinton’s dalliances seemed trivial even at the time. No need for comparison, although I seem to remember saying at the time that it was better than getting us involved in a useless war or allowing widespread corruption.
at the start of his mandate Bill was really loved all around the world..but as the time passed he got more and more corrupted and had some really major mistakes…unworthy of the most powerfull president in the world…