As we try to understand the carnage we have recently experienced in the stock market and look at the housing bubble and related lending crisis, we need to remember that this was not created by either political party alone, but rather a lot of people who in retrospect didn't really want to listen.
BusinessWeek published a very good article this week discussing how in 2003 Attorney Generals from North Carolina and Iowa met with John D. Hawke, Jr., the then head of the Comptroller of the Currency (he was appointed by the Clinton administration in 1998 and returned to private legal practice with Arnold & Porter in 2004) to voice their strong concerns about lending practices in their states. Click here for the link.
My favorite quote regarding our out-of-control lending system was made by Peter Wallison of The American Enterprise Institute in 1999 in regards to Fannie Mae easing of credit requirements on loans it purchases. He said ''From the perspective of many people, including me, this is another thrift industry growing up around us, if they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'' Click here for the link.
BusinessWeek published a very good article this week discussing how in 2003 Attorney Generals from North Carolina and Iowa met with John D. Hawke, Jr., the then head of the Comptroller of the Currency (he was appointed by the Clinton administration in 1998 and returned to private legal practice with Arnold & Porter in 2004) to voice their strong concerns about lending practices in their states. Click here for the link.
My favorite quote regarding our out-of-control lending system was made by Peter Wallison of The American Enterprise Institute in 1999 in regards to Fannie Mae easing of credit requirements on loans it purchases. He said ''From the perspective of many people, including me, this is another thrift industry growing up around us, if they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'' Click here for the link.
Following this action, in November 1999 President Clinton signed the Financial Services Modernization Act of 1999, which overhauled U.S. Banking regulation (picture above). This legislation repealed certain parts of the 1933 Glass-Steagal Act and the 1956 Bank Holding Company Act, paving the the way for many of the abuses that contributed to the economic situation we find ourselves in today.
This legislation was passed with substantial support from both parties, passing the House in a vote of 362 - 57 and the Senate 90-8. So I think both Democrats and Republicans through this legislation were contributors to our current mess. I like when each tries to blame the other.
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