Was Wall Street's Banking Crisis Predictable?

by Dollars and Sense

This is from former D&S collective member Bob Feldman:

If you check out back issues of D&S and books like The Trouble With Capitalism: An Enquiry Into The Causes of Global Economic Failure by Henry Shutt, Origins of the Crash by Roger Lowenstein and American Theocracy by Kevin Phillips, you can see that Wall Street's banking crisis and crash of 2008 was a predictable one.

Of course Clinton Administration Treasury Secretary, Robert Rubin (who's apparently been advising the 2008 Democratic Party presidential candidate on how to solve the current crisis), played a big role in pushing for more U.S. banking industry deregulation in the 1990s. As Roger Lowenstein observed in his 2004 book, Origins of the Crash:

"In the spring of 1998, when...the Commodity Futures Trading Commission proposed a study...to revisit the question of whether to regulate derivatives, Greenspan, along with Rubin, quashed the idea...

"The Greenspan-Rubin duo pushed deregulation on numerous fronts. Glass-Steagall, the Depression-era law that separated banking, insurance, and underwriting was erased at the particular urging of Rubin...After burying Glass-Steagall, Rubin left the government to become a senior official at Citicorp--a financial superconglomerate made possible only by Glass-Steagall's repeal..."

Coincidentally, under the recent bipartisan corporate welfare bailout plan that both the Republican and the Democratic presidential candidates endorsed, $25 billion of U.S. Treasury tax dollars is to be invested in Citicorp stock. And, coincidentally, the fourth-largest source of 2008 campaign contributions ($499,598) for even the Democratic Obama presidential campaign came from executives of Rubin's failing Citicorp firm.

Labels: Bob Feldman, financial crisis, Henry Shutt, Kevin Phillips, Robert Rubin, Roger Lowenstein

 

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10/29/2008 10:34:00 AM