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.

Share
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 $45.99

United States Canada

CATEGORIES

THE CURRENT ISSUE

May 2015

Black Hat, White Hat

= Subscribers only.
Sign in here.
Subscribe here.

Beyond the Broken Window

= Subscribers only.
Sign in here.
Subscribe here.

In Search of a Stolen Fiddle

= Subscribers only.
Sign in here.
Subscribe here.

Displaced in the D.R.

= Subscribers only.
Sign in here.
Subscribe here.

The Quietest Place in the Universe

= Subscribers only.
Sign in here.
Subscribe here.

view Table Content

FEATURED ON HARPERS.ORG

Post
“Don sucked the last of his drink through his straw and licked his lips. 'The coast, to me, is more interesting than the valley.'”
Photograph by the author
Article
Fred Morton, who died this week in Vienna, at the age of 90, was a longtime contributor to Harper's Magazine and a good friend. "Othello's Son," which was listed as a Notable Essay in Best American Essays 2013, appeared in our September 2013 issue.
Photograph © Alex Gotfryd/CORBIS
Article
Beyond the Broken Window·

= Subscribers only.
Sign in here.
Subscribe here.

“By the time Bratton left the department, in 2009, Los Angeles had quietly become the most spied-on city in America.”
Illustration by Taylor Callery
Article
Displaced in the D.R.·

= Subscribers only.
Sign in here.
Subscribe here.

“How is it possible that my birth certificate is invalid if I was born here?”
Photograph by Pierre Michel Jean
Article
The Quietest Place in the Universe·

= Subscribers only.
Sign in here.
Subscribe here.

“Gaitskell and his colleagues are approaching the revelation of a new order, a new universe, in which even light will be known differently, and darkness as well.”
Painting by Sebastiaan Bremer

Number of African countries with vaccination rates higher than that of the United States:

16

Iowa urologists reported that only a minor portion of locker-room teasing arises from “the presence of excess foreskin”; most teasing targets small penises.

A farmer in Surrey, England, was ordered by the Reigate and Banstead Borough Council to tear down his cannon-equipped castle, which he had built secretly and then concealed behind hay bales.

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

HARPER’S FINEST

Subways Are for Sleeping

By

“Shelby is waiting for something. He himself does not know what it is. When it comes he will either go back into the world from which he came, or sink out of sight in the morass of alcoholism or despair that has engulfed other vagrants.”

Subscribe Today