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On November 8, 1999, a few months before the NASDAQ index peaked at 5132.52, The American Banker ran several short items in its “Washington People” column. The lead piece reported that House Banking Committee Chairman Jim Leach had hosted a party to commemorate passage of a key “financial reform bill.” This was a reference to the Gramm-Leach-Bliley Act–the one that allowed for the financial deregulation that helped produce the current meltdown.
In attendance at the party were a group of Leach’s “closest collaborators on the bill, including Federal Reserve Board Chairman Alan Greenspan [and] Treasury Secretary Lawrence H. Summers,” said the item. “They joined staff members, lobbyists, and reporters in drinking champagne and devouring a large cake, which bore an epitaph for the Depression-era separation of commercial and investment banking that the bill undoes. It read: Glass-Steagall, R.I.P., 1933-1999.”
A second item in “Washington People” reported on the appointment of the new chief of a panel that helped members of congress understand financial matters and policy. Maurice R. “Hank” Greenberg was named chairman of the Congressional Economic Leadership Institute last week,” it read. “The institute educates lawmakers and their staff members on economic issues including taxes, trade, and financial services.”
Greenberg, of course, was the chairman and chief executive officer of American International Group (AIG)–the company that taxpayers just bailed out to the tune of $85 billion. It would be great to know what advice Greenberg offered during his tenure at the Institute.
Also, check out Howard Kurtz’s column today in the Washington Post. “The shaky house of financial cards that has come tumbling down was erected largely in public view: overextended investment banks, risky practices by Fannie Mae and Freddie Mac, exotic mortgage instruments that became part of a shadow banking system,” he writes. “But while these were conveyed in incremental stories–and a few whistle-blowing columns–the business press never conveyed a real sense of alarm until institutions began to collapse.”
But mainstream newspapers didn’t do a great job either, especially editorial pages. From Denver to Durham, the vast majority of local papers were at least guardedly in favor of the Gramm-Leach-Bliley Act, and some offered exuberant support. Here’s the Chicago Tribune on October 26, 1999:
Like many frail old things, Glass-Steagall by century’s end had lost much of its power to prevent relentless change… A law fashioned in the depth of the 20th century’s greatest economic depression is a poor vehicle on which to build a reliable, innovative and trustworthy financial system for a 21st century world where the click of a mouse whisks billions in “cash” across continents.
More from Ken Silverstein:
Perspective — October 23, 2013, 8:00 am
How pro-oil Louisiana politicians have shaped American environmental policy
Postcard — October 16, 2013, 8:00 am
A trip to one of the properties at issue in Louisiana’s oil-pollution lawsuits
Fleming awoke in the dark and his room felt loose, sloshing so badly he gripped the bed. From his window there was nothing but a hallway, and if he craned his neck, a blown lightbulb swung into view. The room pitched up and down and for a moment he thought he might be sick. The word “hallway” must have a nautical name. Why didn’t they supply a glossary for this cruise? Probably they had, in the welcome packet he’d failed to read. A glossary. A history of the boat, which would be referred to as a ship. Sunny biographies of the captain and crew, who had always dreamed of this life. Lobotomized histories of the islands they’d visit. Who else had sailed this way. Famous suckwads from the past, slicing through this very water on wooden longships.
A welcome packet, the literary genre most likely to succeed in the new millennium. Why not read about a community you don’t belong to, that doesn’t actually exist, a captain and crew who are, in reality, if that isn’t too much of a downer on your vacation, as indifferent to one another as any set of co-employees at an office or bank? Read doctored personal statements from underpaid crew members — because ocean life pays better than money! — who hate their lives but have been forced to buy into the mythology of working on a boat, separated now from loved ones and friends, growing lonelier by the second, even while they wait on you and follow your every order.
Number of people stopped and frisked by the NYPD in 2011 for “furtive movements”:
The faces of Lego people were growing angrier.
Four people were arrested for using a remote-controlled hexacopter to fly two pounds of tobacco to prisoners inside the yard at Calhoun State Prison in Georgia.
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Our congratulations to Alice Munro, winner of the 2013 Nobel Prize for Literature