Happy 10th Anniversary Repeal of Glass-Steagall!

Ten years ago today, President Clinton signed, Gramm-Leach-Biley, better known as repeal of Glass-Steagall. Another gift from the Clinton era that keeps on giving. Glass-Steagall had been one of the most important New Deal banking reforms. For over six decades, it helped keep financial stability by separating commercial and investment banking. It was simple and effective.

But the Go-Go 90s was the era of "financial innovation" and the monster of financial innovation was Citi. Sandy Weill was at the top of his game and working with Treasury Secretary Rubin, Fed Chair Alan Greenspan, Larry Summers, and no doubt Tim Geithner was there somewhere. They were all so innovative that they ran right over the established law that was Glass Steagall.

In part, Gramm-Leach-Biley was passed to make the monstrosity Citi had become legal. If you were paying attention last year as the govenment was handing out the bailouts, the most painful groan occurred from those understanding the history when Citi wallowed up to the government trough. Goldman may be the vampire squid, but Citi is the pig of pigs.

All Clinton's so-called regulators had been in cahoots trashing the rules they were supposed to be enforcing. In an NYT interview a few months back, Mr. Clinton denies the repeal of Glass-Steagall had much to with our financial meltdown saying, "You could say that the signing of that legislation sped up what was happening anyway..." You still got it Bubba! That's what you say when your regulators were greatly responsible for "what was happening anyway."

The repeal of Glass-Steagall won by an impressive margin in the House of 362 - 57, including 155 Democrats. But in that august institution of the Senate, which we're told protects us from the whims of the rabble, the repeal passed 90 - 8. Most amusing was the Titan of the Senate, Mr. Gramm, who at the signing stated,

Abraham Lincoln used to like to use the analogy that old and outmoded laws need to be changed because it made about as much sense to continue to impose them on people as it did to ask a man to wear the same clothes he did when he was a child.

Well, you don't need to win any history contests to be in the Senate. The quote is actually bastardization of two thoughts from the third president of the United States, Thomas Jefferson. Mr Jefferson wrote:

"We might as well require a man to wear still the coat which fitted him when a boy as civilized society to remain ever under the regimen of their barbarous ancestors."

"I know also that the laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed and enlightened as new discoveries are made, new truths disclosed, and manners and opinions change with the change of circumstances, institutions must advance and keep pace with the times."

Important thoughts, considering ten years later we can't even come close to simply reviving Glass-Steagall.