Former President Bill Clinton speaks in the Queens borough of New York City in 2005. Photo by Shutterstock
Newly released documents from the Bill Clinton presidential library show two separate attempts by advisors, in 1995 and 1997, to hurry the president into supporting a repeal of Wall Street regulation. Clinton responded to the pressure with the Financial Services Modernization Act in 1999. The legislation, which tore down the Depression-era Glass-Steagall banking rules, has been blamed with helping to bring about the near-collapse of the banking industry in 2008 and creating the subsequent economic trouble that has cost taxpayers billions.
The memos show that Treasury Secretary Robert Rubin, his deputy Bo Cutter and senior advisors, including John Podesta, gave Clinton three days to decide whether to back a repeal of Glass-Steagall. Little discussion of the risks of deregulation appear in the notes. Rubin, who is credited with spearheading the changes, benefited handsomely from the new rules when he joined the board of Citigroup the same year the rules were initiated. The bank had merged with Travelers Group two years prior. Clinton’s law retroactively legalized the move. Rubin briefly became the corporation’s chairman in 2007.
Podesta is now a special advisor to President Barack Obama. Critics have blamed the closeness of Obama’s team to the deregulation policies of the late 1990s for the current administration’s reluctance to regulate Wall Street more aggressively after the crash.
The Guardian reports:
Throughout the documents, which are among 7,000 pages released by the Clinton library on Friday, there is little discussion of internal opposition to repealing Glass-Steagall, although some memos inadvertently touch on the risks that ultimately proved so expensive to the US taxpayer.
Read the documents here.
—Posted by Donald Kaufman.
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