Please Identify the Bush-Era Deregulation responsible for the financial meltdown
In a comment to my post,On Rush, the Media, Arianna & the Myth of Deregulation, I wished that every time a liberal pundit or leading Democrat claimed that Bush-era deregulation was responsible for the financial meltdown, someone would ask them
to specify the particular programs Republicans deregulated in the past eight years. They repeat the mantra of Republican deregulation over and over again, as if the repetition guarantees its veracity, yet it has little basis in reality.
Instead of specifying such deregulation, one of critics asked rhetorically, “If not rampant greed, brought about in large part by de-regulation during the Bush years, then what exactly was the cause of the massive economic meltdown in this country?“
We have addressed the causes here, here and here, just to link a three of our posts on the matter. Even Obama-supporting columnist Sebastian Mallaby wrote, during last fall’s campaign that “claim that the financial crisis reflects Bush-McCain deregulation is not only nonsense. It is the sort of nonsense that could matter.“
Kevin (our critic), by contrast, has joined a chorus of left-wing voices attributing the meltdown to alleged Bush-era deregulation. I have, in a number of posts, frequently linking those better equipped to explain economic matters than I, addressed why, I believe, we experienced the recent meltdown.
I’m far from the only blogger (not to mention pundits and economists as well) to offer a conservative/libertarian view of the meltdown. We have pointed to laws which facilitated the crisis and thwarted legislation which might have forestalled it.
So, in that spirit, I’m asking Kevin and others who buy into the “deregulation theory” of the meltdown to identify the specific legislation Bush signed deregulating the financial industry and the specific policies he and his Administration enacted.
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Oh, this should be interesting! I am biting my tongue.
Comment by Sonicfrog — March 5, 2009 @ 2:17 pm - March 5, 2009
Dan, I don’t buy into the Democrat Party/Obama Admin line that Bush’s deregulation efforts are to blame for the economic meltdown.
But I did have to sit in a meeting with Barney Frank recently and he was exampling (?) Sarbox as his proof on that point… which caused something like 19-21-22 new “big” rules from SEC and, of course, the disasterous PCAOB. Sarbox has been instrumental in driving some capital out of the country… but it hasn’t led to the current econ-crisis… that’s the subprime mkt failing just like the HighTech/dot com bubble burst before this crisis (late 1990s) and that crisis was preceeded by the real estate/S&L collapse in the early 1990’s.
Not agreeing with ol’ Barney Frank or anything… but he seems to be connected to the mainline feed tube of the Democrats. And yeah, I washed my hands after shaking his. Wow, is he getting huge in person! He’s like a walking heart attack.
I seem to recall that just before SlickWilly left with all the WH furniture not nailed down and a few too many official gifts from visiting dignitaries, he signed a bunch of far more broadly dereg’ging bills that reversed the Glass-Steagal act. I think those were wider in impact than Sarbox.
But you know why the Dems are trying to tie the dereg thing to Bush and the economic collapse? It’s to provide the rationale for their own sweeping engagement in new regulatory action yet to be defined.
Comment by Michigan-Matt — March 5, 2009 @ 2:26 pm - March 5, 2009
MM, your last comment? SPOT ON!!!!!!
The Obama administration, when it comes to economic solutions, is a rudderless ship! And the Captain helming it has about as much experience on a ship as the average whale watcher off the coast of California.
Comment by Sonicfrog — March 5, 2009 @ 2:40 pm - March 5, 2009
I expect Kevvie to fully take on Dan’s challenge as much as I expect Count Chocula to take on El Rushbo.
In other words, when hell freezes over.
Liberals are cowards.
Regards,
Peter H.
Comment by Peter Hughes — March 5, 2009 @ 3:17 pm - March 5, 2009
The minute The Won forced a trillion dollar spending bill down our throats without allowing anyone to read it, including himself, he bought this economy lock stock and barrel. He hung it around his neck and now he cannot escape the blame. This in not the Bush recession, this is the Obama disaster. Fasten your seatbelts, its gonna be a bumpy four years.
Comment by John in Dublin, Ca — March 5, 2009 @ 7:50 pm - March 5, 2009
Here’s proof Republicans wanted to add regulations to reign in Fannie and Freddie.
http://thevirtuousrepublic.com/?p=1454
Blocked by the Democrats. It would be worth a few millions to run an ad buy of this for the American patriots. To see where the root cause was and who aided and abbeted the calamity. The Democrats.
Comment by Gene in Pennsylvania — March 5, 2009 @ 10:31 pm - March 5, 2009
Any moment now…..
Comment by ThatGayConservative — March 5, 2009 @ 11:15 pm - March 5, 2009
Check out Phill Gramm and the Commodity Futures Modernization Act in 2000 or the Gramm-Leach-Bliley Act in 1999. You’re very quick to blame Fannie/Freddie on things, but it was really these pieces of legislation that were the initial basis of mortgage mess. In 1933, congress passed legislation to separate consumer banks from investment banks. That legislation (Glass Steagall Act) seemed to work fairly well, until all those mergers started happening in the time since the legislation passed. (My favorite was the ability they had to chop up the risky mortgages they had and then sell them off as securities – priceless).
Oddly enough, when Gramm became a lobbyist for UBS, which reaped millions initially, but then fell apart. With the CMA Act, his wife (as a Board member of Enron) borught in somewhere between $900K and $1.8M before the Enron debacle.
So….you blame the Democrats repeatedly on Fannie/Freddie, but where were our Republican champions on Gramm’s legislation?
Comment by Kevin — March 6, 2009 @ 12:42 am - March 6, 2009
LOL…and now, kevin, you’re going to learn the problem with your Obama Party massas thinking for you — they feed you contradictory talking points.
MARIA BARTIROMO
Mr. President, in 1999 you signed a bill essentially rolling back Glass-Steagall and deregulating banking. In light of what has gone on, do you regret that decision?
FORMER PRESIDENT BILL CLINTON
No, because it wasn’t a complete deregulation at all. We still have heavy regulations and insurance on bank deposits, requirements on banks for capital and for disclosure. I thought at the time that it might lead to more stable investments and a reduced pressure on Wall Street to produce quarterly profits that were always bigger than the previous quarter. But I have really thought about this a lot. I don’t see that signing that bill had anything to do with the current crisis. Indeed, one of the things that has helped stabilize the current situation as much as it has is the purchase of Merrill Lynch (MER) by Bank of America (BAC), which was much smoother than it would have been if I hadn’t signed that bill.
MARIA BARTIROMO
Phil Gramm, who was then the head of the Senate Banking Committee and until recently a close economic adviser of Senator McCain, was a fierce proponent of banking deregulation. Did he sell you a bill of goods?
FORMER PRESIDENT BILL CLINTON
Not on this bill I don’t think he did. You know, Phil Gramm and I disagreed on a lot of things, but he can’t possibly be wrong about everything. On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I’d be glad to look at the evidence. But I can’t blame [the Republicans]. This wasn’t something they forced me into. I really believed that given the level of oversight of banks and their ability to have more patient capital, if you made it possible for [commercial banks] to go into the investment banking business as Continental European investment banks could always do, that it might give us a more stable source of long-term investment.
Comment by North Dallas Thirty — March 6, 2009 @ 2:37 am - March 6, 2009
(My favorite was the ability they had to chop up the risky mortgages they had and then sell them off as securities – priceless).
And another example of how Kevin is unaware of anything outside Obama Party talking points.
Q: What are Fannie Mae and Freddie Mac and what do they do?
A: Originally chartered by Congress, both were converted into private companies with shares traded on Wall Street. Neither company directly loans money to prospective home buyers. Instead, they buy mortgages from banks and other lenders on the secondary market, thus freeing up more funds to home lenders. They resell bundled loans as mortgage-backed securities.
Comment by North Dallas Thirty — March 6, 2009 @ 2:46 am - March 6, 2009
Ok, so Kevin’s ‘it’s Bush’s fault’ has now become, look at what the President signed in 1999 and 2000.
Except that wasn’t President Bush, and the Karl Rove Time machine was busy at that time making all the Democrats lay groundwork for our liberation of Iraq in the future.
You’re right. This -is- fun.
Comment by The Livewire — March 6, 2009 @ 7:18 am - March 6, 2009
Hey SonicFrog, thanks.
Comment by Michigan-Matt — March 6, 2009 @ 7:27 am - March 6, 2009
The financial institutions should have been better regulated. However, for the banks to now blame lack of regulatory enforcement is like a man having an accident under the influence driving 95 mph blaming his wreck on the lack of Highway Patrolmen to stop him.
The banks did this to themselves. And everyone in the middle of the companies knew it was a bad idea. Just the idiots at the top didn’t want to hear it so long as the money was rolling in.
Comment by Houndentenor — March 6, 2009 @ 11:10 am - March 6, 2009
Kevin, once again, did you read the post? You have identified legislation passed during Clinton’s term. I had asked you to identify Bush-era regulations.
Yes, Bush was elected in 2000, but Clinton was President that year he signed the Commodity Futures Modernization Act. Phil Gramm, while a Republican from Texas, like the former President, is not George W. Bush.
Comment by GayPatriotWest — March 6, 2009 @ 11:50 am - March 6, 2009
LOL. Poor, poor liberals. Their publik skool education don’t allow for free thought. Just spouted talking points.
Comment by GayPatriot — March 6, 2009 @ 1:30 pm - March 6, 2009
[...] As she reminds us yet again of the Democrats blaming “deregulation” I decided to check my post where I asked readers who bought that “‘deregulation theory’ of the meltdown to identify the specific legislation [then-Preside...“ [...]
Pingback by GayPatriot » Democrats Proposing “Wrong Cure” for Financial Mess — March 26, 2009 @ 7:45 am - March 26, 2009
The main deregulation was passed under Clinton, with a Republican house and Democratic Senate IIRC, led by the terrible Phil Gramm who had switched between the parties, but who really worked for the financial industry, and later left Congress to be a lobbyist for one of them (his wife was on the board of Enron).
However, the Republicans under Bush were ideologically in full support, and did not reverse it; and the deregulaton problem began with Reagan and his radical right ideological administration, who simply did not believe in regulation basically, and which led to the Savings and Loan industry crash.
They were beginning the rollback of New Deal financial regulation that had ended the regular crashes for fifty years – passed by a super-majority Democratic Congress under FDR.
Hopefully, the conservatives here can take some responsibility for those who implement bad ideology under the banner, just as they can ask Democrats to take responsibility for their sellouts.
Comment by Craig234 — August 28, 2009 @ 3:13 am - August 28, 2009