The stock market (Dow Jones Industrial Average) dropped 788 points yesterday, one of the blackest days on Wall Street since the Great Depression.
Me personally? We lost thousands. On paper. And it could have a devastating impact on our family's financial wellbeing if something doesn't happen quick to shore up this crisis.
So how did this happen? How did we get to this critical place in history?
I know very little about Wall Street and high finance but but based on what I've been reading in the newspaper and hearing from financial experts on TV, deregulation by congress is largely responsible. And of course, greed is the other major culprit: greed in corporate entities, banking houses, lending institutions, stock brokerage firms, and the insurance industry, to name a few of the players.
So what is this deregulation? I'm trying to piece it together legislatively so that I can have a reasonably informed opinion. I thought I might pass along what I've learned, in case anyone else has been feeling the need for a primer.
In a nutshell, this is what I've come up with based on a newspaper article in the business section of my local paper:
After the Great Depression, lawmakers passed consumer protection laws. One of these laws was the Glass Steagall Act of 1933, signed by President FDR.
Glass-Steagall is best known for the creation of the FDIC. But it also prohibited the mixing of investment, commercial banking and insurance services. These kind of high flying dealings are, apparently, what helped create the stock market crash of 1929.
Fast forward to 1999. Enter Phil Gramm, who at the time was the senior Senator from Texas. This is the same Phil Gramm who, until a few weeks ago, was the McCain campaign's chief economic adviser. He was fired after he claimed the recession was "mental" and that we Americans have become a "nation of whiners." The same Phil Gramm who has a Phd in Economics and told us this often enough to prove how much smarter he was than his lawyerly friends in the Senate. This is the same Phil Gramm who early into the Clinton's presidency and on one of the Sunday morning political shows predicted that Clinton's economic plan would tank our economy within 18 months or he would come back on the show and eat his hat. It didn't. And he didn't.
Phil Gramm crafted the Gramm Leech Bliley Act in 1999. Gramm-Leech (aptly named ... Gramm, for all of his railings against "big government" lived off the government his ENTIRE life, including his birth at a military hospital, his education at a state supported university, his career in the Senate, and teaching at another state supported school, Texas A&M University) repealed the consumer protections put into place by the Glass Steagall Act.
Again, these protections were enacted to prevent banking institutions and insurance industries from playing fast and loose with loans and securities and hedge funds and all manner of financial trickery (of which I know virtually nothing) designed to make millions for the financial brokers.
My search turned up a roll call vote on the Gramm-Leech in the Senate in May of 1999 on Govtrack.us , a website that helps "the public research and track the activities in the U.S. Congress." Govtrack states that this bill passed in the Senate May 6, 1999 by roll call vote. The totals were 54 Ayes, 44 Nays, 2 Present/Not Voting.
When I looked at the individual votes, I saw that nearly all the YES votes in favor of deregulating were made by Republicans. Nearly all of the NO votes were logged by Democrats. If you want to see how the Senators from your state voted, click HERE.
Plenty of congressional leaders are crying, "this is not a time to blame." (McCain said this before he he blamed Obama).
Not the time to blame? Maybe not for them because they've got business to do. Main streets to save.
But for me this is a call to arms to throw out members of congress who supported this legislation. To hold them accountable. Fortunately, that damn Phil Gramm is no longer my Senator. He's just a washed up political hack.
But many of the AYE voters are still in the Senate. Look for yours. Look for those who are running for reelection in November.
And then look on the presidential ballot. Because one of those Senators who voted YES is running for President.
Can you guess which one?