On Friday, MSNBC's Rachel Maddow accurately blamed a bill enacted in 1999 for today's financial crisis, but in so doing exclusively pointed accusatory fingers at its Republican sponsors while totally ignoring the overwhelming Democrat support it received in both Chambers of Congress.
Maybe even more egregious, she chose not to address it being signed into law by President Bill Clinton until a guest inconveniently brought it up.
Of course, NewsBusters has been apprising readers about the significance of the Financial Services Modernization Act of 1999 (aka Gramm-Leach-Bliley) for many months, including articles on the subject here and here.
With this in mind, despite Maddow's supposed intellectual prowess, she's not only extremely late to this party, but she also apparently thinks only the sponsors of a bill are responsible for its content and not those that vote for or eventually sign it into law (video part I embedded right, part II below the fold with partial transcript):
RACHEL MADDOW, HOST: The Gramm-Leach-Bliley Act of 1999 was introduced by three Republicans, Gramm, Leach, and Bliley. It repealed the wall that had been put up in the Great Depression, a wall that kept investment banks separate from commercial banks, separate from insurance firms and so on. When that wall got torn down, we ended up with big, hybrid, complicated, uber financial everything companies that we couldn`t have had before. That`s how Citibank ended up eating Travelers Group Insurance to change from Citibank into Citigroup, which just happened to be completely impossible to regulate.
All of a sudden, with these new, uber, giant, complicated, hybrid firms, the Wall Street cops, the regulators, they were essentially still on horseback while the robbers, the guys trying to get away with anything to make a buck, they were in spaceships. So, we had robbers in spaceship and cops on horseback.
Yes, this was introduced by three Republicans. However, what Maddow conveniently ignored is that it passed the Senate by a vote of 90-8 with 38 Democrats saying "Yea"; it passed in the House 362-57 with 153 Democrats saying "Yea".
To be more specific, in the Senate this bill was supported by high-profile Democrats such as Evan Bayh, Joe Biden, Robert Byrd, Tom Daschle, Chris Dodd, John Edwards, Diane Feinstein, Ernest Hollings, John Kerry, Ted Kennedy, Mary Landrieu, Pat Leahy, Carl Levin, Joe Lieberman, Daniel Moynihan, Harry Reid, Paul Sarbanes, and Chuck Schumer.
In the House, the bill was supported by high-profile Democrats such as David Bonior, Sherrod Brown, James Clyburn, Elijah Cummings, Harold Ford, Dick Gephardt, Steny Hoyer, Sheila Jackson-Lee, William Jefferson, John Murtha, Jerry Nadler, Nancy Pelosi, Charles Rangel, Debbie Stabenow, Ellen Tauscher, and Bob Wexler.
With this in mind, why did Maddow only point fingers at the three Republican sponsors? Maybe more importantly, why didn't she mention that it was signed into law by Bill Clinton who could have vetoed it and survived an override attempt if Democrats backed him?
Of course, she actually didn't mention Clinton's involvement. That was only revealed when her guest David Cay Johnston brought it up likely much to Maddow's disappointment.
In the end, I congratulate Maddow for at least informing her viewers about this important piece of legislation, and how critical its passage was in causing the current financial crisis.
However, her exclusively blaming this on three Republicans is a shameful attempt to shelter high-ranking Democrats -- including the current Speaker of the House, the Senate Majority Leader, and the Chairman of the Senate Banking Committee -- from responsibility.
Additionally, it is preposterous to exclusively accuse this bill for Glass Steagall's demise. After all, the Depository Institutions Deregulation and Monetary Control Act of 1980 was actually the first law enacted to remove some of Glass Steagall's regulations. This was sponsored by Democrat Rep. Fernand St. Germain (D-RI.), passed in the House 367-39, passed in the Senate 76-9, and was signed into law by Jimmy Carter.
Two years later, the Garn-St. Germain Depository Institutions Act deregulated savings and loans. It passed in the House by a margin of 272-91, and cleared the Senate with amendments by a simple voice vote.
Add it all up, and for twenty years, Republicans and Democrats in the legislative and executive branches of our government have been steadily unwinding Glass Steagall regulations.
To blame it on only three Republicans is a disgusting farce.
Nice job, Rachel.
RACHEL MADDOW, HOST: There would be no outrage about AIG bonuses if AIG hadn`t need bailing out, right? I mean, sure, people get mad at fat cats with high salaries when everyone else is broke. But if the fact that this company was using our money, the taxpayers money, to pay those bonuses that caused the entire country to grind our teeth down to their nubbins, to rage at these guys. So, there would be no rage about AIG turning taxpayer bailout dollars into executive bonuses if there hadn`t been a bailout. AIG wouldn`t have needed bailing out if it weren`t too big to fail, too integral to all the parts of the financial industry. AIG wouldn`t have become too big to fail if they hadn`t become a big, hybrid, complicated uber financial everything company that made all sorts of arcane financially-engineered moves that got them squirreled into every financially-related business that you can think of.
AIG wouldn`t have become a big, hybrid, complicated, uber financial everything company if there hadn`t been -- and this is key -- deregulation of Wall Street that allowed firms to get like that. And massive deregulation of Wall Street wouldn`t have happened without a rise of a political movement that preached regulation was inherently evil and deregulation was inherently wise and virtuism would make everyone rich and there will be free, well-behaved puppies for every family.
If you want an example of how this deregulation thing worked, you can totally use this at the high school dance or a bar or whatever to try to impress someone. Somebody starts complaining about the bailout, complaining about AIG, you tell them -- actually, the real villain is Gramm-Leach Bliley. Just say it with total confidence. Watch. You will get dates.
Here`s how to explain it. The Gramm-Leach-Bliley Act of 1999 was introduced by three Republicans, Gramm, Leach, and Bliley. It repealed the wall that had been put up in the Great Depression, a wall that kept investment banks separate from commercial banks, separate from insurance firms and so on. When that wall got torn down, we ended up with big, hybrid, complicated, uber financial everything companies that we couldn`t have had before. That`s how Citibank ended up eating Travelers Group Insurance to change from Citibank into Citigroup, which just happened to be completely impossible to regulate.
All of a sudden, with these new, uber, giant, complicated, hybrid firms, the Wall Street cops, the regulators, they were essentially still on horseback while the robbers, the guys trying to get away with anything to make a buck, they were in spaceships. So, we had robbers in spaceship and cops on horseback.
All right. So, if talking about Gramm-Leach-Bliley doesn`t get you a date or at least admiring glances from your peers, drop one of this on then -- the Commodity Futures Modernization Act of 2000. That one said that certain things that financial companies do to spread their risk around, to keep their balance sheets looking good even when they`re make hugely risky deals, these are things like credit default swaps and collateralized debt obligations. You`ve heard these terms, right?
This legislation decided that those things, those risk-hiding things would be completely exempt from regulation -- completely exempt. They would not be regulated. So, from a cops and robbers perspective, that`s like saying, OK, now it`s legal to wear a ski mask and carry a gun inside a bank, oh, and driving a getaway car is legal now, too. How would you like to be a cop in that town?
Deregulation laws like Gramm-Leach-Bliley and the Commodity Futures Modernization Act, these were pushed as great ideas to get the horrible burden of government regulation off of Wall Street. The horrible burden of regulation was lifted off of Wall Street, and then Wall Street proceeded to self-destruct. Now it`s time to start over, and maybe this time, avoid the same mistakes?
Joining us now is Pulitzer Prize-winning reporter, David Cay Johnston. He`s the author of "Free Lunch: How the Wealthiest Americans Enriched Themselves at Government Expense and Stick You with the Bill."
Mr. Johnston, thanks for joining us tonight. Nice to see you.
DAVID CAY JOHNSTON, PULITZER PRIZE WINNING REPORTER: Thank you, Rachel.
MADDOW: Everyone on Capitol Hill is trying to blame each other for the AIG bonuses. Do you think it`s possible that this instead could be a teaching moment about why we own AIG in the first place? What went wrong? Do you think it`s time to start teaching about regulation and deregulation?
JOHNSTON: Well, I certainly hope so because, otherwise, this will continue to happen. People will take unwarranted risks. You know, the reason we have regulation is not for people who behave it`s for when people misbehave. And if you believe what the banking community said, then let`s follow it to its logical conclusion.
Why don`t we save a lot of money as taxpayers by getting rid of traffic lights and stop signs and the speed limits because we`re all responsible drivers, we don`t need to be regulated and traffic will flow smoothly, right?
MADDOW: What could possibly go wrong? Yes.
Well, do you think that the people who argued for deregulation of Wall Street in the first place feel at all chastened by what has happened since? Have you seen any signs of penance? Any sign that they are changing their minds?
JOHNSTON: No. And I would be somewhat surprised if they did, because this was done with a lot of ideological fervor. But I don`t think that`s the important part, Rachel. I think the important part is that the American public recognize that this was a terrible policy mistake. It`s costing us dearly and we should correct that mistake by going back to what has worked for decades and decades -- which is sound, reasonable restraint when people are dealing with the money you and I put into -- from our paychecks into the bank or into the insurance company or anywhere else.
MADDOW: Is there a problem, though, that so many people who are considered to be experts in this field are people who have Wall Street experience, and so, we don`t have -- essentially an adversarial enough relationship between the proverbial cops and the proverbial robbers in this field?
JOHNSTON: Well, certainly, you need people who have expertise. But it is, I think, a little troubling that the Obama administration has gone back to people who were supporters of these ideas or at least allowed them to happen. Remember, it was President Clinton who signed both of the bills which...
MADDOW: That`s right.
JOHNSTON: ...I loved your description of it, I thought that was brilliant. They are the ones who are running the shop. The rules that we need are not terribly complicated to impose, separate retail banking, investment banking and insurance. Don`t allow people to borrow with excessive levels of risk, the same thing as not allowing people to buy houses with no money down or borrowing more than the price of the house.
MADDOW: Who are going to be the roadblocks to re-regulation or towards, I guess, reinstating the old regulations or whatever they are going to call this in order to make it politically sellable -- who do you think is going be the opposition in Congress?
JOHNSTON: Well, whoever Wall Street is financing. I think that Representative Cantor from Virginia has shown himself to be one of the champions of whatever Wall Street wants, lower tax rates, no regulation. Those people who would rely on for their campaign contributions on those people who make money when the regulators are not around, or -- as you put it -- the cops are only on horseback.
MADDOW: David Cay Johnston, Pulitzer Prize-winning reporter -- thank you for your time tonight. You have a way of making this stuff understandable. Nice to see you.
JOHNSTON: Thank you, Rachel.
