In 1933, Congress passed the Glass-Steagall Act, part of four provisions of the Banking Act of 1933. Bankers would be allowed to take deposits and make loans; brokers would be allowed to underwrite and sell securities. But no firm could do both because of conflicts of interest and risks to insured deposits.
In 1999, Democrats led by President Bill Clinton and Republicans led by Sen. Phil Gramm joined forces to repeal Glass-Steagall at the behest of the big banks. We were told that the banks had abandoned the irresponsible financial practices of the 1920s; that less regulation of the banking industry would bring prosperity for all. What happened in the years following repeal was almost an exact replay of the Roaring ’20s, ending basically the same way.
In the present political campaign, the Republicans are uniformly telling us that we have too many regulations, too many restrictions on business. We are told by the Club for Growth Action that the stimulus failed; that we would be better off if we had done nothing. We already know what happens when we do nothing. We tried that in 1929, and the Great Depression followed.
How come only some of us are hurting? How come big corporate profits are at an all-time high while people are out of work? Why are Wall Street banks thriving while folks are losing their homes?
Unregulated, laissez faire capitalism is boom or bust. The economy goes into recession every five years with a depression every 20. This is real class warfare: no unemployment insurance, no Social Security, no jobs programs to put people back to work. These are the same programs now under heavy attack from those banking interests that drink at the public trough.
Billions of dollars are being spent on advertising to convince Americans that government oversight is an evil. The present problem is not too much regulation but too little. The government has to get involved. We’ve lived this nightmare, and are now bombarded with messages that we will all be better off if we live it again, while the rich get richer and the middle class vanishes.
When you hear the words job-killing regulations, beware.