It did get bipartisan House support, but a disturbingly large number of Representatives are demagogues and/or idiots. It is the chamber where people like Cynthia McKinney and Ron Paul can not only be elected, but RE-elected. Not that I am trying to point fingers here; there is plenty to go around if I were, and one of my biggest complaints against Clinton is that his New/No Left policies shilled for Big Business to an extent that would have shamed nearly all Republicans. It is a measure of how true that is that Ross Perots fierce opposition to NAFTA and the WTO would have been much better for both labor AND small businesses, because his Giant Sucking Sound has proven appallingly prescient. If you are saying Clinton was too much of a pro-Big Business Republican, I strongly, if sadly, agree.


The CRAs rather limited "damage" was "done" in 1998 in the sense its minor extent, if any, had ended. Debt of a few hundred billion dollars rose above $1 trillion, then leveled remained steady for two solid years. Then Gramm-Leach-Bliley repealed Glass-Steagall and allowed lenders, investors and insurers to resume the incestuous consolidation that contributed so much to the Great Depression.

Suddenly, that $1 trillion debt rose to $6 trillion in just 5 years. A big reason was Fannie and Freddie chasing high interest loan profits as investors, not just aiding home ownership by handing out loans (bad or otherwise) as public lenders. Another was the largest banks chasing CDO profits as insurers by INTENTIONALLY issuing mortgages EXPECTING default, because that is the only way to profit from selling someone else a collateralized mortgage obligation. Remember the article I posted a while back about a loan officer who was all but told right out to issue as many risky loans as possible and repackage them as CMOs, and to ignore the mass indications of future default accompanying so many?

Ultimately, CDOs are just a form of insurance; loan defaults are the ONLY way sellers make a profit, and the major banks up to their ears in them engaged in nothing more than elaborate large scale insurance fraud. Rather foolishly, too, since they were all selling them to each other, so when the house of cards collapsed all any of them had was a mountain of debt, for which the public picked up the tab. The most brazen part is that none of those banks executives or investors see anything ironic, insulting or ungrateful in running to Uncle Sam for a trillion dollar bailout to stay in business, then complaining that government takes too much of their money for the 47% of lazy dishonest Americans living on welfare.

None of that would have been possible if laws against lenders acting as insurers or investors, insurers acting as investors or lenders and investors acting as lenders or insurers had remained in place. Glass-Steagall was created during the Depression specifically in response to those three businesses doing exactly what they did during the subprime mortgage disaster, because it had exactly the same effect 80 years ago. It is no surprise removing bars to that kind of greedy, irresponsible and destructive behavior immediately revived it with the same results as it inflicted previously.

Unfortunately, the folks who always preach personal accountability would much rather blame it on federal loans to minority homebuyers than admit the truth and their own responsibility. Every time this comes up I ask for stats showing minority borrowers defaulted more than others during the subprime mortgage fiasco, since they MUST have if expanded minority lending caused the disaster. I have been asking for those stats for, what, five years now? Still waiting....

The last time we went down this road it was a big factor in the Depression, and not because Harding and Coolidge pushed so many banks to issue mortgages to blacks, hispanics and single mothers. In response, Congress passed Glass-Steagall in the early '30s and put an end to this crap for the next 70 years. The moment Big Business got its way and removed Glass-Steagall we went right back where we were 80 years previously. Lesson (finally) learned?

I keep tellin' ya, the Reagan Revolutions unrelenting systematic effort to repeal the New Deal, successful as it has been, just has not worked out as advertised. In 1980 SS and Medicare were solvent with large surpluses, federal debt was just below $1 trillion and the dollar was worth about three times what it is now. Far from making us rich and prosperous, upper class tax cuts and deregulation have all but bankrupted the nation; the only consolation is that most federal debt is the SS trust fund and Treasury Securities owned by private banks and our employee pension funds.

That makes our problems simple to solve: Restore regulation that prevented things like the subprime mortgage and S&L disasters, and resume taxing people who expect Uncle Sam to pay its debts to them but deny it taxes with which to do so. Maybe instead of raising millionaire and corporate taxes we should just start canceling their Treasury Securities until they get the point.