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This current financial meltdown is just a repeat of some of the causes of the crash of 1929 that led to the Great Depression.
One of the main reasons for the crash was that banks were involved in trading securities (stocks) as well as keeping people's hard-earned savings. Once the market crashed,
In 1933, Sen. Carter Glass and Rep. Henry Steagall got Congress and FDR to pass the Glass-Steagall Act, which separated investment institutions from commercial (savings and loan, mortgage) banks.
The Act worked great until 1998, when Travelers Insurance wanted to merge with Citibank. After Citi and its allies spent $200 million in lobbying Congress and raising
Guess who co-sponsored the repeal--Phil Gramm, John McCain's former campaign economic advisor.
And the Treasury Secretary who heavily influenced President Clinton to sign the repeal was Robert Rubin, who later got a job with Citicorp.
Because of the investment-commercial bank mergers, these newly directed institutions began, among other crazy things, aggressively pushing subprime mortgages because these high-yielding instruments became "investments" instead of old-fashioned, stable, traditional mortgages.
This, in turn, affected people's hard-earned savings in these investment banks because of all the mortgage defaults.
You'll never hear any presidential candidate say they want to re-enact the Glass-Steagall Act because
Until the Glass-Steagall Act is reinstated, this mess will continue to cost taxpayers billions, with no end in sight.
Gary Olsen
Fredericksburg
