The blue ticker says “Deal or No Deal,” but it’s been preempted for a CNBC special on our nation’s latest financial crisis. Electronic voyeurs fix emotionless on employees leaving Manhattan towers with their office belongings. Reality TV. As 158 year old Lehman Brothers stands on the cliff of bankruptcy, insurance giant American International Group struggles to find capital and restore investor confidence, and Merrill Lynch desperately seeks a buyer for itself, tomorrow may go down as an infamous “Black Monday” on Wall Street. Lehman and Merrill Lynch gone in a weekend… Before tonight, that was unthinkable.
I have no idea how these financial black holes will impact the day to day of American businesses, but as they suck available capital and again shock the confidence of American consumers, it cannot be good.
So how did we get here? Well, some blame can be um, leveraged on John McCain’s primary financial advisor, Phil Gramm, he of the “nation of whiners” comment who sponsored the deregulation responsible for much of the speculation that depression-era legislation was designed to limit. The Glass-Steagall Act was passed in 1933 to address the rubble of a large portion of the American commercial banking system that collapsed from over-speculation.
The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 repealed Glass-Steagall and in the opinion of some economists, contributed to the risk driven subprime mortgage crisis which has now snowballed into a full-fledged financial system crisis. The Gramm law has been described as “corporate welfare for financial institutions and a moral hazard that will make taxpayers pay dearly.”
Oh, here’s how the voting went on Gramm-Leach-Bliley:
- 53 Republican Senators including John McCain – AYE
- 44 Democrats no Republicans – NAY
Are these the guys we want running our country?