We Were Promised Financial Regulation!
So, Where Is It?
By: John Roth
Issue date: 11/25/09 Section: Editorial
A laissez-faire system of regulation lobbied for by special interest groups handed financial institutions across Wall Street the ability to generate large sums of artificial wealth. The events that followed lead to a financial disaster that warped our country's economic system and demolished many innocent American's "peace of mind." President Obama promised the citizens of our country heightened regulatory policy, so where is it?
Legislation signed by President Bill Clinton in 1999; combined with lenient executive oversight during the Bush Administration's eight year reign unlocked the door to a cataclysmic collapse of the world's economy not seen since the Great Depression.
The Banking Act of 1933 (commonly referred to as the Glass-Steagall Act) barred the consolidation of commercial banks (institutions that accept deposits from and provide loans to individuals like you and me), investment banks (financial institutions that raise capital, buy and sell securities, and facilitate corporate mergers and acquisitions) and insurance companies.
However, a relentless assault by lobbyists and interest groups on long standing and sensible regulatory policies assisted in the passage of legislative deregulation. In its wake surfaced the Financial Services Modernization Act of 1999.
Key features of the Financial Services Modernization Act allowed for the creation of Financial Holding Companies (a holding company controls part or all the interests in another company or companies).
The Act authorizes Financial Holding Companies (FHC) to establish investment companies, merchant banks, insurance underwriting services, insurance company portfolio investments and much more.
Under the Bush administration, oversight was ignored. His hands off policies gave financial institutions added incentive to participate in unethical and destructive practices.
The increasing need to generate monstrous sums of capital fueled the industry's biggest firms. Such practices created a short term boom, allowing many finance barons to become wealthy beyond belief.
Legislation signed by President Bill Clinton in 1999; combined with lenient executive oversight during the Bush Administration's eight year reign unlocked the door to a cataclysmic collapse of the world's economy not seen since the Great Depression.
The Banking Act of 1933 (commonly referred to as the Glass-Steagall Act) barred the consolidation of commercial banks (institutions that accept deposits from and provide loans to individuals like you and me), investment banks (financial institutions that raise capital, buy and sell securities, and facilitate corporate mergers and acquisitions) and insurance companies.
However, a relentless assault by lobbyists and interest groups on long standing and sensible regulatory policies assisted in the passage of legislative deregulation. In its wake surfaced the Financial Services Modernization Act of 1999.
Key features of the Financial Services Modernization Act allowed for the creation of Financial Holding Companies (a holding company controls part or all the interests in another company or companies).
The Act authorizes Financial Holding Companies (FHC) to establish investment companies, merchant banks, insurance underwriting services, insurance company portfolio investments and much more.
Under the Bush administration, oversight was ignored. His hands off policies gave financial institutions added incentive to participate in unethical and destructive practices.
The increasing need to generate monstrous sums of capital fueled the industry's biggest firms. Such practices created a short term boom, allowing many finance barons to become wealthy beyond belief.
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