OK, we'll say it if no one else will: Thank heaven for Gramm-Leach-Bliley. If you've been listening to the fulminations from Congress and the campaign trail, you know that we're talking about the 1999 law that dismantled the Depression-era barriers between commercial and investment banking. Democrats largely supported it at the time, and one of their own, Bill Clinton, signed it. Now they frame it as a Republican bill that helped send the nation on the path to perdition." But according to IBD it made this week's rescues possible: "By taking down an outmoded firewall, the law is helping the financial industry cope with a once-in-a-lifetime crisis. Far from being the cause, this instance of deregulation, or whatever you call it, is part of the cure.
But wait, there is more:
Did the Gramm-Leach-Bliley Act cause the housing bubble?
No. That is one common myth among the progressive left. Because it involves financial deregulation and the unpopular Phil Gramm, the Act is vilified and assumed to be part of a broader chain of evil events. Here are some of the articles which promulgate the myth that the Act caused or helped cause the housing bubble. One version of the claim originates with Robert Kuttner, but if you read his article (and the others) you'll see there's not much to the charge. Kuttner doesn't do more than paint the Act as part of the general trend of allowing financial conflicts of interest.
Most of all, the Act enabled financial diversification and thus it paved the way for a number of mergers. Citigroup became what it is today, for instance, because of the Act. Add Shearson and Primerica to the list. So far in the crisis times the diversification has done considerably more good than harm. Most importantly, GLB made it possible for JP Morgan to buy Bear Stearns and for Bank of America to buy Merrill Lynch. It's why Wachovia can consider a bid for Morgan Stanley. Wince all you want, but the reality is that we all owe a big thanks to Phil Gramm and others for pushing this legislation. Brad DeLong recognizes this and hail to him. Megan McArdle also exonerates the repeal of Glass-Steagall.
Read the whole thing, and check out this from the comments to the article:
The majority of left-wing blogs are absolutely loving the financial crisis. It's the rapture of the marxists
So, once again, the Left is attempting to have it both ways. They did love the law, now they hate it and are trying to lay it all on our feet. What about the Fannie and Freddie trough Jamie Gorelick, Franklin Raines, Jim Johnson and other Dems fed from for years? What about the Clinton boning up of the Carter era Housing Act that basically told lenders to loan to those who couldn't pay back and helped usher in all of this? No, nothing to see here....
