AND NOW THE REST OF THE STORY ....
Our present problem is rooted in bank de-regulation ... see THIS RECENT bailout ... and recent bank failures ...
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The
Gramm-Leach-Bliley Act, also known as the
Gramm-Leach-Bliley Financial Services Modernization Act,
Pub.L. 106-102, 113
Stat. 1338, enacted
1999-
11-12, is an
Act of the
United States Congress which repealed part of the
Glass-Steagall Act, opening up competition among
banks,
securities companies and
insurance companies. The
Glass-Steagall Act prohibited a bank from offering
investment,
commercial banking, and
insurance services.
The
Gramm-Leach-Bliley Act (
GLBA) allowed commercial and investment banks to consolidate. For example,
Citibank merged with
Travelers Group, an insurance company, and in 1998 formed the conglomerate
Citigroup, a corporation combining banking and insurance underwriting services. Other major mergers in the financial sector had already taken place such as the
Smith-Barney, Shearson,
Primerica and
Travelers Insurance Corporation combination in the mid-1990s. This combination, announced in 1993 and finalized in 1994, would have violated the
Glass-Steagall Act and the
Bank Holding Company Act by combining insurance and securities companies, if not for a temporary waiver process
[1]. The law was passed to legalize these mergers on a permanent basis. Historically, the combined industry has been known as the
financial services industry.
Congressional history of the Act
The bills were introduced in the Senate by
Phil Gramm (R-TX) and in the House of Representatives by
James Leach (R-IA) and Thomas Bliley (R-VA).
The bills were passed by a 54-44 vote largely along party lines with Republican support in the Senate[1] and by a 343-86 vote in the House of Representatives[2]. Nov 4, 1999: After passing both the Senate and House the bill was moved to a conference committee to work out the differences between the Senate and House versions. Democrats agreed to support the bill only after Republicans agreed to strengthen provisions of the
Community Reinvestment Act and address certain privacy concerns.
[3]
The final bipartisan bill resolving the differences was passed in the Senate and was signed into law by President
Bill Clinton on November 12, 1999.
[4]
The banking industry had been seeking the repeal of Glass-Steagall since at least the 1980s. In 1987 the Congressional Research Service prepared a report which explored the case for preserving Glass-Steagall and the case against preserving the act.
[5]
Critics
Economist Robert Kuttner (among others) has criticized the repeal of the Glass-Steagall Act as contributing to the 2007 subprime mortgage financial crisis.[8] Economists Robert Ekelund and Mark Thornton have made similar criticisms, arguing that while "in a world regulated by a gold standard, 100% reserve banking, and no FDIC deposit insurance" the Financial Services Modernization Act would have made "perfect sense" as a legitimate act of deregulation, under the present fiat monetary system it "amounts to corporate welfare for financial institutions and a moral hazard that will make taxpayers pay dearly". [9]
Source: Wiki
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Guess who voted for it? Yep .... You guessed it.
THAT'S WHY CRAKJAK.
Don't forget we "bailed out" ... Freddie Mac and Fannie Mae already ....
Old news.
Housing and Economic Recovery Act of 2008
The
Housing and Economic Recovery Act of 2008 included six separate major acts designed to restore confidence in the domestic mortgage industry.
[136] The Act included:
- Providing insurance for $300 billion in mortgages estimated to assist 400,000 homeowners.
- Establishing a new regulator to ensure the safe and sound operation of the GSE's (Fannie Mae and Freddie Mac) and Federal Home Loan banks.
- Raises the dollar limit of the mortgages the government sponsored enterprises (GSE)'s can purchase.
- Provides loans for the refinancing of mortgages to owner-occupants at risk of foreclosure. The original lender or investor reduces the amount of the original mortgage (typically taking a significant loss) and the homeowner shares any future appreciation with the Federal Housing Administration. The new loans must be 30-year fixed loans.
- Enhancements to mortgage disclosures.
- Community assistance to help local governments buy and renovate foreclosed properties.