Thus began the Financial Crisis

I recommend the first 8 pages.

Never have I had a bulls-eye appear so readily, nor have I been so misinformed. I’m beginning to wrap my head around the origins of the financial crisis, after I found out something pretty enlightening. Check this out:

Today Bill Clinton is synonymous with deregulation. He signed the Financial Services Modernization Act into law, which effectively repealed the Glass-Steagall Act, a law that prevented commercial banks from merging with investment banks. 

The truth of the matter is Bill Clinton was hamstrung when he signed the Act. Earlier in his presidency he rebuffed an attempt to repeal the Glass-Steagall Act, and he was always against deregulation. 

However, on April 6, 1998, Citicorp took the Glass-Steagall Act into its own hands. Citicorps announced its merger with Traveler’s Insurance to become Citigroup, the largest financial conglomerate in the world. It was empowered to sell securities, take deposits, make loans, underwrite stocks, sell insurance, and operate an enormous variety of financial activities, directly violating the Glass-Steagall Act. 

Citicorp knew that it was in violation of the Act when it merged with Traveler’s Insurance, yet it merged anyway because of a loophole. The new Citigroup was allowed a five-year window for the law to change or be repealed.

It was after this merger where the most powerful banking lobbies in the country bombarded politicians with millions of dollars’ worth of contributions. They seduced Congress and won. 

In November 1999, the necessary bills were passed 54-44 in the Senate and 343-86 in the House. In the ensuing days the final bipartisan bill moved through the Senate, 90-8 and the House, 362-57. Those margins made it veto proof. 

Even if President Clinton wanted to stop the legislation, we would have gotten overrun by Congress. I still think he should have vetoed the damn thing anyway to exonerate himself, yet we’d be in trouble either way.

I highly recommend reading “A Colossal Failure of Common Sense: The Inside Story of the Collapse of the Lehman Brothers.” I haven’t read much of it yet, but it’s elucidated a festeloon’s worth already. 

Also, I’m new to this game, but I can’t help the feeling that a collapse round two is coming our way. I hope that I’m wrong, but we when I look at the recent bankruptcy of MF Global and its criminal ledger level, and note the impending collapse of Italy and Greece, I see blustery weather coming straight towards us.  

I personally believe we don’t have the kind of political system anymore that could fix an economic downturn. I say this because I understand that money buys policy in this nation. Money will probably continue to do so until the Supreme Court’s decision for permitting unlimited campaign contributions is reversed. 

Just a question, do any of you loyal blog readers know anything about purchasing gold? Not investing in it, but actually buying the real thing.

P.S. I know this is an environmental blog, and I will get back to that soon. This just blew my hair back and I felt like sharing. Kind sentiment for kind people.