JOHNSON, NIXON, FORD, CARTER, REAGAN, BUSH NO. 1, CLINTON, BUSH NO.2, OBAMA
CLINTON, REPUBLICANS AGREE TO DEREGULATION OF US FINANCIAL SYSTEM
Martin McLaughlin
1 November 1999
World Socialist Web Site
http://www.wsws.org/
Published by the International Committee of the Fourth International (ICFI)
http://www.wsws.org/articles/1999/nov1999/bank-n01.shtml
An agreement between the Clinton administration and congressional Republicans, reached during all-night negotiations which concluded in the early hours of October 22, sets the stage for passage of the most sweeping banking deregulation bill in American history,
lifting virtually all restraints on the operation of the giant monopolies which dominate the financial system.
[Et si on avait écouté à l'époque les lamentations (harmonieuses pourtant) des banques canadiennes demandant plus de flexibilité: la permission de se racheter entre-elles pour faire un monopole et l'abandon des limites dans la participation étrangère soit la possibilité d'avoir un associé étranger ( banque étrangère), un associé majoritaire ou la possibilité d'être acheté (de se vendre) pour faire des banques plus grosses donc, selon elle, plus concurrentielle, en fait, un monopole mondial (comme on a vu faire pour les Bourses) on aurait été dans le béton mou jusqu'au cou lors de la catastrophe financière de 2008. Ou avant. Ou après. J'oubliais, ceci aurait pour avantage d'améliorer les services à la population. Hum! Rheuuu! Déjà, qu'on leur avait permis de faire du courtage et vendre des assurances, cartes de crédit, pourquoi pas des préarrangements funéraires? Et si le gouvernement Harper se vante de la bonne santé financière des banques canadiennes et de leur bonne gestion, c'est bien malgré elles qu'une telle chose est arrivée. Parce que lorsqu'elles étaient en faillite, parce que le même gouvernement a dépensé des centaines de milliards pour racheter les papiers pourris (valeur zéro) dans lequel elles avaient spéculés a leur valeur d'avant la chute dans l'idée expliquée publiquement et avec une belle et sincère naïveté de les garder 30 ans et de les remettre en vente ensuite pour récupérer leur valeur (zéro). Ce qu'on a fait aussi pour General Motors et autres mammouths industriels et financiers. Ce qui a sauvé à ce moment le capitalisme et les capitalistes. On a cessé d'expliquer ensuite. Espérant que les spectateurs (non capitalistes) du désastre oublieraient; ce qu'ils ont fait. Depuis ce temps, on ne cesse de chanter les vertus des mêmes banques et du capitalisme. Une sorte de mantra. Ou de thème d'hypnose collective. Et de la bonne gestion du parti conservateur canadien. Qui sait jeter par la fenêtre l'% des contribuables. Qui, comme rien ne se perd ni se crée, se retrouve dans les poches des industries d'armements US.]
The proposed Financial Services Modernization Act of 1999 would do away with restrictions on the integration of banking, insurance and stock trading imposed by the Glass-Steagall Act of 1933, one of the central pillars of Roosevelt's New Deal.
The certain result of repeal of Glass-Steagall will be a wave of mergers surpassing even the colossal combinations of the past several years.
Kenneth Guenther, executive vice president of Independent Community Bankers of America, an association of small rural banks which opposed the bill, warned,
One such merger was already carried out well before the passage of the legislation, the $72 billion deal which brought together Citibank, the biggest New York bank, and Travelers Group Inc., the huge insurance and financial services conglomerate, which owns Salomon Smith Barney, a major brokerage.
CAMPAIGN OF INFLUENCE-BUYING
They had good reason, to be sure. The banking, insurance and brokerage industry lobbyists have combined their forces over the last five years to mount the best-financed campaign of influence-buying ever seen in Washington.
The chairman of the Senate Banking Committee, Texas Republican Phil Gramm, himself collected more than $1.5 million in cash from the three industries during the last five years: $496,610 from the insurance industry, $760,404 from the securities industry and $407,956 from banks.
During the final hours of negotiations between the House-Senate conference committee and White House and Treasury officials, dozens of well-heeled lobbyists crowded the corridors outside the room where the final deal-making was going on.
While Democratic and Republican congressmen and industry lobbyists claimed that deregulation would spark competition and improve services to consumers,
Differing versions of financial services deregulation passed the House and Senate earlier this year, and the conference committee was called to work out a consensus bill and avert a White House veto. The principal bone of contention in the last few days before the agreement had nothing to do with the central thrust of the bill, on which there was near-unanimous bipartisan support.
The sticking point was the effort by Gramm to gut the Community Reinvestment Act, a 1977 anti-redlining law which requires that banks make a certain proportion of their loans in minority and poor neighborhoods.
Gramm and other extreme-right Republicans saw the opportunity to damage their political opponents among minority businessmen and community groups, who generally support the Democratic Party. Gramm succeeded in inserting two provisions to weaken the CRA, one reducing the frequency of examinations for CRA compliance to once every five years for smaller banks, the other compelling public disclosure of loans made under the program.
The latter provision was particularly offensive to black and other minority business and community groups, who have used the CRA provisions as a lever by threatening to challenge mergers and other bank operations which require government approval.
The banks and other financial institutions did not themselves oppose continuation of the CRA, which they have treated as nothing more than a cost of doing a highly profitable business in minority areas.
The Clinton White House threatened to veto the bill if CRA provisions were substantially weakened, in response to heavy pressure from the Congressional Black Caucus and the Reverend Jesse Jackson, whose Operation PUSH has made extensive use of CRA in its campaigns to pressure corporations and banks for more opportunities for black businessmen.
The White House similarly retreated on pledges that consumer privacy would be protected in the legislation.
The final draft of the bill contains a consumer privacy protection clause, but it is extremely weak, applying only to the transfer of information outside of a financial conglomerate, not within it.
THREAT TO FINANCIAL STABILITY
The proposed deregulation will increase the degree of monopolization in finance and worsen the position of consumers in relation to creditors.
The Glass-Steagall Act of 1933, which the deregulation bill would repeal, was not adopted to protect consumers, although one of its most celebrated provisions was the establishment of the Federal Deposit Insurance Corporation, which guarantees bank deposits of up to $100,000.
As a recent history of that era notes:
The separation of banking and the stock exchange was ordered in response to revelations of the gross corruption and manipulation of the market by giant banking houses,
Over the past 20 years the restrictions imposed by Glass-Steagall have been gradually relaxed under pressure from the banks, which sought more profitable outlets for their capital, especially in the booming stock market, and which complained that foreign competitors suffered no such limitations to their financial operations.
The Wall Street Journal celebrated the agreement to end such restrictions with an editorial declaring that the banks had been unfairly scapegoated for the Great Depression.
This comment underscores the greatest irony in the banking deregulation bill. Legislation first adopted to save American capitalism from the consequences of the 1929 Wall Street Crash is being abolished just at the point where the conditions are emerging for an even greater speculative financial collapse. The enormous volatility in the stock exchange in recent months has been accompanied by repeated warnings that stocks are grossly overvalued, with some computer and Internet stocks selling at prices 100 times earnings or even greater.
And there is a much more recent experience than 1929 to serve as a cautionary tale.
*
Photo.
*
Photo. http://amateurdebeauxchars.forumactif.com/t1371-cadillac-1928
Amateurs de Beaux Chars
Pour tous les mordus de voitures anciennes
Cadillac V8 Town Sedan 1928 ayant appartenue à Al Capone