Washington Babylon — October 6, 2008, 8:37 am

Department of Irony: Congress, lobbyists, and reporters toast “financial reform”

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.

Single Page

More from Ken Silverstein:

From the November 2013 issue

Dirty South

The foul legacy of Louisiana oil

Perspective October 23, 2013, 8:00 am

On Brining and Dining

How pro-oil Louisiana politicians have shaped American environmental policy

Postcard October 16, 2013, 8:00 am

The Most Cajun Place on Earth

A trip to one of the properties at issue in Louisiana’s oil-pollution lawsuits 

Get access to 164 years of
Harper’s for only $39.99

United States Canada



September 2014

Israel and Palestine

= Subscribers only.
Sign in here.
Subscribe here.

Washington Is Burning

= Subscribers only.
Sign in here.
Subscribe here.

On Free Will

= Subscribers only.
Sign in here.
Subscribe here.

They Were Awake

= Subscribers only.
Sign in here.
Subscribe here.

view Table Content


Arab artists take up — and look past — regional politics
“When everyday life regularly throws up images of terror and drama and the technological sublime, how can a photographer compete?”
“Qalandia 2087, 2009,” by Wafa Hourani
“There was torture by the previous regime and by the current Iraqi regime,” Dr. Amin said. “Torture by our Kurdish government, torture by Syrians, torture by the U.S.”
Visiting His Own Grave © Anadolu Agency/Getty Images
The Tale of the Tape·

= Subscribers only.
Sign in here.
Subscribe here.

“Heroin isn’t the weakness Art Pepper submits to; it’s the passion he revels in.”
Photograph (detail) © Laurie Pepper
The Soft-Kill Solution·

= Subscribers only.
Sign in here.
Subscribe here.

"Policymakers, recognizing the growing influence of civil disobedience and riots on the direction of the nation, had already begun turning to science for a response."
Illustration by Richard Mia
New Books
New Books·

= Subscribers only.
Sign in here.
Subscribe here.

“Almond insists that watching football does more than feed an appetite for violence. It’s a kind of modern-day human sacrifice, and it makes us more likely to go to war.”
Photograph by Harold Edgerton

Chance that a movie script copyrighted in the U.S. before 1925 was written by a woman:

1 in 2

Engineers funded by the United States military were working on electrical brain implants that will enable the creation of remote-controlled sharks.

Malaysian police were seeking fifteen people who appeared in an online video of the Malaysia-International Nude Sports Games 2014 Extravaganza, and Spanish police fined six Swiss tourists conducting an orgy in the back of a moving van for not wearing their seatbelts.

Subscribe to the Weekly Review newsletter. Don’t worry, we won’t sell your email address!


In Praise of Idleness


I hope that after reading the following pages the leaders of the Y. M. C. A. will start a campaign to induce good young men to do nothing. If so, I shall not have lived in vain.

Subscribe Today