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Such leverage was entirely unfortunate, because years of lobbying efforts became true (patience please, as I do snag some long swaths from the wayback machine):
The NYT, Oct. 23rd, 1999, reporting that an agreement was nigh:
Agreement Reached on Overhaul of U.S. Financial System
The Clinton Administration and top Republican lawmakers reached an agreement early Friday to overhaul the financial system, repealing Depression-era laws that have restricted the banking, securities and insurance industries from expanding into one another's businesses.The deal was announced about 2 A.M. after a compromise was reached over the measure's effect on lending rules for the disadvantaged, the source of months of partisan bickering between the White House and Senator Phil Gramm, the Texas Republican who heads the banking committee.
[...]
For instance, the nation's largest financial services company, Citigroup, would have been forced to sell some of its insurance operations as part of the $72 billion merger last year between Citibank and Travelers Group without either the legislation or a waiver from regulators. [emphasis mine (these above and all emphases below too) - the merger was "technically" illegal - read ILLEGAL - at the time, and this was a retro-patch to make it legal. Sound familiar?]
[...]
Treasury Secretary Lawrence H. Summers said in an interview, "At the end of the 20th century, we will at last be replacing an archaic set of restrictions with a legislative foundation for a 21st-century financial system." The measure, he added, "would provide significant benefits to the national economy."
[...]The idea behind Glass-Steagall, named for the two lawmakers who wrote it, was that confidence in America's financial house could best be restored if bankers and brokers stayed in separate rooms. Such a separation, it was thought, achieved two purposes.
First, it would reduce the potential conflicts of interest between investment banking and commercial banking that were thought to have contributed to the speculative frenzy in the stock markets. Under the 1933 Banking Act, commercial banks could receive no more than 10 percent of their income from the securities markets, a limit so restrictive that most simply abandoned business on Wall Street.
Second, it would provide a safe harbor for the money of ordinary Americans by enabling them to put their money in accounts that were protected by deposit insurance and insulated from more speculative investments like stocks. (The 1933 act also established the Federal Deposit Insurance Corporation, which now insures bank deposits up to $100,000.)
Over time, Federal judges and regulators chipped away at the Glass-Steagall Act and other restrictions on cross-ownership of banks, insurance companies and securities firms, enabling, for instance, Citibank to merge with Travelers last year to form Citigroup, the world's largest financial services company. But large hurdles remained that have discouraged the expansion by banks into new businesses.
[...]
The breakthrough in Friday's legislation came in a backroom meeting at the Capitol soon after midnight, when a group of moderate Senate Democrats -- led by Christopher Dodd of Connecticut and Charles E. Schumer of New York -- forced a compromise between Gramm and the White House over the legislation's effect on the Community Reinvestment Act, a 1977 anti-discrimination law intended to encourage lending to minorities and others historically denied access to credit.
Dodd, whose state is home to the nation's largest insurance companies, and Schumer, with strong ties to Wall Street, have long sought legislation to repeal the Glass-Steagall Act. Both men said in interviews Friday that they moved to strike a compromise after it became apparent that the legislation might be killed, as it was last year by Gramm, over the debate about the Community Reinvestment Act.
Gramm had maintained that he did not want anything in the bill that would expand the application of the Community Reinvestment Act because it was, he said, unnecessarily burdensome to banks. He had sought a provision that would exempt thousands of smaller banks from the law. He also wanted a provision that would expose what he has described as the "extortion" committed by community groups against banks by requiring the groups to disclose any special financial deals the groups extract from the banks.
But the White House found that provision unacceptable and had its own ideas about community lending. It wanted the legislation to prevent any bank with an unsatisfactory record of making loans to the disadvantaged from expanding into new areas, like insurance or securities.
The White House had insisted that the President would veto any legislation that would scale back minority-lending requirements. Four days of intense negotiations between Summers, Gene Sperling, the President's top economic policy adviser, and Gramm, while moving the two sides closer, failed to resolve the differences.
Such was the state of play Thursday evening when Gramm decided to force the issue by having the House-Senate conference committee vote on his proposed compromise, which the White House had already rejected for failing to block banks with bad lending records from expanding to new businesses.
When Gramm's measure was defeated by one vote, it quickly became clear that there would be no law unless Gramm could get some Democrats to break from the White House.
But Administration officials had spent all day making sure that the Democrats remained solidly against the measure until their concerns about the Community Reinvestment Act could be worked out.
After receiving calls from executives of some of the nation's leading financial companies, Dodd and Schumer began trying to work out a compromise. An agreement was quickly reached on the issue of banks and expanded powers -- no institution would be allowed to move into any new lines of business without a satisfactory lending record.
The lawmakers bogged down on Gramm's insistence that all community organizations disclose to the regulators what benefits they get from banks. Some Democrats expressed the fear that Gramm's proposal would require the Boy Scouts to file reports with the regulators.
Ultimately, the following provisions were drawn up and both the White House and Gramm said they could accept them:
-Banks will not be able to move into new lines of business unless they have satisfactory lending records.
-Community groups will have to make disclosures to regulators about certain kinds of financial deals with banks that they have pressed to make loans under the Community Reinvestment Act.
-Wholesale financial institutions, a new kind of business that takes large, uninsured bank deposits, cannot be affiliated with commercial banks.
-Small banks with satisfactory or excellent track records of lending to the underserved would be reviewed less frequently under the Community Reinvestment Act. As a practical matter smaller banks are reviewed about every three years. The deal struck today allows all rural banks and banks with less than $250 million in assets to undergo examination once every five years if their last exam resulted in an "outstanding" grade and every four years if they last scored "satisfactory."
Familiar? The playahs are really the same from yesterday to today. Not really a surprise. But the nugget I get out of that is revenge of the Banksters today regarding sticking them with CRA provisions: "Hey, if We, The Banksters Of The United States (TBOTUS) are going down, so are those godamned brown and poor people that you made us have in our godamn cake. Otherwise our plan WOULD HAVE BEEN PERFECT!"
Behind the Banking Bill, Years of Intense Lobbying
[...] banking deregulation has been vigorously lobbied and debated for 20 years by three of the nation's wealthiest industries: banking, insurance and securities.In 1997 and 1998 alone, these three industries gave $58 million to Federal political candidates, according to compilations by the Center for Responsive Politics, a nonpartisan research group. They donated $87 million in so-called soft money to the political parties, and they reported spending $163 million in additional lobbying expenses.
Some other issues generate larger donations and expenses over limited periods of time. Health care lobbyists on both sides of the managed-care debate, for example, reported $230 million in lobbying expenses in 1997 and 1998. But that issue has been lobbied for a relatively short time. Over two decades of lobbying, the insurance and financial services industries have certainly spent more.
"A tremendous amount of money has been spent just because it has gone on for such a long, long time," said Wright Andrews, a longtime Washington lobbyist who over the years has represented companies on both sides of the debate.
Of course, not every dollar donated by every bank and insurance office was dedicated to this subject. But Gary Hughes, a senior vice president with the American Council of Life Insurance, noted: "The lion's share of our resources have been devoted to this. We viewed this is as critical to the long-term viability of our industry."
Yingling of the bankers association said: "The way we saw it, if we didn't get this legislation we were going to disappear. This was our top issue for a long, long time. The resources devoted to it were huge, and we fought it tooth and nail."
[...]
Schumer was on the House Banking Committee and is now on the Senate Banking Committee. He has long been regarded as the securities industry's strongest ally in Congress. Of course, most brokerage and financial services companies are based in New York City, parts of which Schumer represented in the House. He received more money from the securities industry in 1997 and 1998 than anyone else now in the Senate, almost certainly because he was running for the Senate.
Senator Christopher Dodd, the Connecticut Democrat, is regarded as one of the strongest allies of the insurance industry. Hartford is the nation's insurance capital. Between 1993 and 1998, Dodd received $325,124 from insurance companies -- not a great deal less than the Republican chairman of the Banking Committee, Senator Phil Gramm of Texas, the man who determined whether banking bills came up for a vote.
The insurance industry gave Gramm $496,610. He also received $760,404 from the securities industry and $407,956 from the banking industry.
[...]
Oddly, though, the lists show that Jim Leach, the Iowa Republican who is chairman of the House Banking Committee and has the power to bring bills up for votes or bury them, received meager amounts from the three industries in 1997 and 1998: $8,570 from the bankers, $10,483 from the securities industry and just $3,000 from the insurance companies.
A member of his staff explained: " Leach doesn't take money from PAC's; he never has." Much of the industry money has been donated to members of Congress through political action committees.
More on Leach momentarily.
----------------------------
Let's look at and memorialize who actually voted against Gramm-Leach-Bliley.
| NAYs ---8 | ||
| Boxer (D-CA) Bryan (D-NV) Dorgan (D-ND) | Feingold (D-WI) Harkin (D-IA) Mikulski (D-MD) | Shelby (R-AL) Wellstone (D-MN) |
| Present - 1 | ||
| Fitzgerald (R-IL) | ||
| Not Voting - 1 | ||
| McCain (R-AZ) | ||
House: (Dems in Italics)
| Baldwin Barrett (WI) Barton Brady (PA) Campbell Capuano Clay Condit Conyers Costello Coyne Davis (IL) DeFazio DeLauro Dingell Dixon Edwards Evans Fattah | Filner Frank (MA) Gejdenson Gutierrez Hastings (FL) Hefley Hinchey Inslee Jackson (IL) Kaptur Kildee Kucinich Lee Lewis (GA) Lipinski Luther Markey McDermott McKinney | Meek (FL) Mica Miller, George Obey Phelps Rivers Rodriguez Roybal-Allard Rush Sanders Sanford Schakowsky Serrano Taylor (MS) Thurman Tierney Waters Waxman Woolsey |
| Bereuter Dickey Kanjorski Larson Martinez | McInnis Mollohan Ney Norwood Paul | Radanovich Scarborough Shuster Stark Taylor (NC) |
These are the "relatively" good guys on today's economic issues.
Certainly, I must withdraw my previous strong support for Dodd. I applauded his FISA floor speeches, which I still do, but civil liberties and ordinary citizen economic liberties are indeed LINKED in my view. A strong citizen, all the way around, both civilly and economically are really the American way. You can't have one without the other Chris Dodd, and you split the baby. Don't get shy when EFCA comes up or you are really doomed. Ask Arlen Specter about that.
Anyhow, amongst the Senators, at least Feingold has both issues right. I still mourn Wellstone.
Bliley has been replaced in the House, beginning in the 2002 class, by Eric Cantor. Bliley works at Steptoe & Johnson, and has made most of his 2008 lobbying money, well, look here for yourself. Kudos on the autism, Tom, but it's a shame that it's the least amount of money, where the others are generally reprehensible.
Leach - is a little weirder character. I can't figure out the total angle, as he didn't take PAC money, and strangely broke rank with Republicans and endorsed Obama, and even spoke at the Convention (YouTube). He is, however, a Lecturer and John L. Weinberg/Goldman Sachs Visiting Professor at Princeton.
Goldman Sachs - the world revolves around YOU!
TAGS: Gramm-Leach-Bliley, Economic Crisis, Goldman Sachs, Prates, Jerks and Thieves
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