i thing ive yet to hear mentioned about the mortgage

[BlueWahooChambordDevil]

nightmare is that bill clinton was the one who signed the bill that repealed the glass stegall act

the separation of banks and brokerage firms worked well for 60 plus years

[BlueWahooChambordDevil]

that single handedly allowed banks to be able to buy mortgages and leverage them 1000's of times over creating the nightmare we see today

[imported_Counts]

I had heard something about that before but I would be lieing if I said I compleatly understand it. Not tring to sound stupid but #1 why is it a bad thing and #2 were there any upside that made it seem like a good idea at the time?

[BlueWahooChambordDevil]

its a bad thing because it was created after the crash of 1929 which was due in large part to banks getting involved in other areas of finance (brokerage, ins, etc)

things were fine for almost 70 years after that

once the gates were opened again for banks to merge/buy brokerage firms/ins companies........things got crazy again and here we are today

[neutral88]

It was a typical Democrat short term fix at the time...made CLinton look like a genious when it first went through, because it actually boosted the economy short term, but as the banks got carried away, it went down hill, as expected...

[burton2019]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: neutral88</div><div class="ubbcode-body">It was a typical Democrat short term fix at the time...made CLinton look like a genious when it first went through, because it actually boosted the economy short term, but as the banks got carried away, it went down hill, as expected...</div></div>



just like the "stimulus" package???????

[sup-rbeast]

Over a decade isn't short term...it isn't like the GOP hasn't had 8 years to fix it with a congress that would OK anything the president did.

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: BlueWahooChambor</div><div class="ubbcode-body">that single handedly allowed banks to be able to buy mortgages and leverage them 1000's of times over creating the nightmare we see today </div></div>
The act didn't work too well to start with- the guy that wrote it tried to get it repealed , according to some. The congress that voted it out wasn't led by Brother Bill, either. [img]/LDPforum/ubbthreads/images/%%GRAEMLIN_URL%%/grin.gif[/img]
"Effects of the Act - Creating Barriers
Senator Carter Glass, a former Treasury secretary and the founder of the U.S. Federal Reserve System, was the primary force behind the GSA. Henry Bascom Steagall was a House of Representatives member and chairman of the House Banking and Currency Committee. Steagall agreed to support the act with Glass after an amendment was added permitting bank deposit insurance (this was the first time it was allowed).

As a collective reaction to one of the worst financial crises at the time, the GSA set up a regulatory firewall between commercial and investment bank activities, both of which were curbed and controlled. Banks were given a year to decide on whether they would specialize in commercial or in investment banking. Only 10% of commercial banks' total income could stem from securities; however an exception allowed commercial banks to underwrite government-issued bonds. Financial giants at the time such as JP Morgan and Company, which were seen as part of the problem, were directly targeted and forced to cut their services and, hence, a main source of their income. By creating this barrier, the GSA was aiming to prevent the banks' use of deposits in the case of a failed underwriting job.

The GSA, however, was considered harsh by most in the financial community, and it was reported that even Glass himself moved to repeal the GSA shortly after it was passed, claiming it was an overreaction to the crisis.

Building More Walls
Despite the lax implementation of the GSA by the Federal Reserve Board, which is the regulator of U.S. banks, Congress in 1956 made another decision to regulate the banking sector. In an effort to prevent financial conglomerates from amassing too much power, the new act focused on banks involved in the insurance sector. Congress agreed that bearing the high risks undertaken in underwriting insurance is not good banking practice. Thus, as an extension of the Glass-Steagall Act, the Bank Holding Company Act further separated financial activities by creating a wall between insurance and banking. Even though banks could, and can still can, sell insurance and insurance products, underwriting insurance was forbidden."
http://www.investopedia.com/articles/03/071603.asp

Weakened by the fed dec 96-
In December 1996, with the support of Chairman Alan Greenspan, the Federal Reserve Board issues a precedent-shattering decision permitting bank holding companies to own investment bank affiliates with up to 25 percent of their business in securities underwriting (up from 10 percent).

This expansion of the loophole created by the Fed's 1987 reinterpretation of Section 20 of Glass-Steagall effectively renders Glass-Steagall obsolete. Virtually any bank holding company wanting to engage in securities business would be able to stay under the 25 percent limit on revenue. However, the law remains on the books, and along with the Bank Holding Company Act, does impose other restrictions on banks, such as prohibiting them from owning insurance-underwriting companies.

In August 1997, the Fed eliminates many restrictions imposed on "Section 20 subsidiaries" by the 1987 and 1989 orders. The Board states that the risks of underwriting had proven to be "manageable," and says banks would have the right to acquire securities firms outright.

In 1997, Bankers Trust (now owned by Deutsche Bank) buys the investment bank Alex. Brown & Co., becoming the first U.S. bank to acquire a securities firm.

And George the 1st had the thing repealed and couldn't get it thru...
In 1984 and 1988, the Senate passes bills that would lift major restrictions under Glass-Steagall, but in each case the House blocks passage. In 1991, the Bush administration puts forward a repeal proposal, winning support of both the House and Senate Banking Committees, but the House again defeats the bill in a full vote. And in 1995, the House and Senate Banking Committees approve separate versions of legislation to get rid of Glass-Steagall, but conference negotiations on a compromise fall apart.

Attempts to repeal Glass-Steagall typically pit insurance companies, securities firms, and large and small banks against one another, as factions of these industries engage in turf wars in Congress over their competing interests and over whether the Federal Reserve or the Treasury Department and the Comptroller of the Currency should be the primary banking regulator.

http://www.pbs.org/wgbh/pages/frontl...ll/demise.html