Forgetting the Past

While there is much coverage on what has been said about the financial crisis we are in the how necessary the steps were for Congress to take by the Secretary of the Treasury, the head of the Federal Reserve, members of Congress and the press, no one seems to have commented or remembered that just a few years ago we had legislation called the Glass/Steagall Act which separated the commercial banks from the investment banks as a result of the Crash in 1929. I testified twice before the House Banking Committee on this subject begging the Congress not to overturn Glass/Setagall, noting that it would lead to larger and larger institutions which one day might become "too big to fail", that abuses that came out of the Crash would once again prevail. While the form this time is different: derivatives, securitization, swaps and a corruption of the rating system, the results are the same. At the time I asked how many in the Congress had read the Pecora hearings leading up the passage of Glass/Steagall. Silence! It is as Santayana said, those who do not remember history are doomed to repeat it. And now the pitch of Paulson before Congress was not to turn back and look at history but to demean it as being "outmoded" and not "modern", whatever that means. There is, unfortunately, an arrogance in the resistance to look backward for answers, thinking that innovation is somehow superior to proven themes. The fear is of course that in our anxiety to "do something" we will once again travel rapidly down an unproven road to further complications. For example, by underwriting money market funds, are we not jeopardizing the ability of community banks to compete for the deposits necessary to survive because they will not be able to pay as high a rate for these deposits? This is but one ramification of moving without thought. I am sure there are many other nuances not yet explored by this rush to "save the system" that may very well be the cure that kills the patient.

As a responsible voice in the search for answers to this financial crises, it is incumbent upon all of us who contribute to the dissemination of ideas to explore what has gone before us and extend those choices above the exigencies of the moment so that the lessons of history and not the tourniquet of desperation will prevail.

Wayne Rogers, Fox News Contributor

Comments

[jmpurser]

What has "gone before us" is 30 years of Reaganomics, 10.6 trillion in debt, a growing population of people living below the poverty line, and the general crumbling of America brought on by the "success" of the republican party.

Congratulations Wayne, your side won.

[Maschine]

its too late, the meltdown has begun. Only prison terms and massive fines will equate to a revolution. Which is normal times years ago, would be taking place right now.

[Maschine]

this rescue package happened way to quickly. I assume they moved to protect the very system that is failing.

As in going to war in iraq, this calamity needed time and thought.

Personally a 2 to 5 year colling off period should have been implemented. Yes, shutting the markets down for a period of time would have been sensible. Tinkering with short selling rules and massive bailouts will not work. The corruption and failure is too deep for anyone to have any confidence. Shut the store down, the floors need to be mopped.

[Unrepentantliberal]

Wayne, you didn't mention the man mainly responsible for the repeal of Glass-Stegall.......... the one, the only, Phil Gramm! The man who advises John Sidney McCain III on a subject he knows very little about, the economy.

It serves no useful purpose to say "I was against it," if you don't point out who was for it and their relationship to current events. "Those who forget the past etc, etc............

[Rule Of Law]

Or the fact that President Clinton signed it into law and gave the pen he used to the CEO of--drum roll please--Goldman-Sachs, a name from the darkest chapter (so far) of our Economic History, the Great Depression. Goldman-Sachs; Architects then, as now, of our biggest financial debacles! And who should Paulson (ex-GS CEO himself) hire but another of these demons to administer Our money in the Mother of all bailouts.

[Chavez08]

I'd think the last thing you Capitalists would want is for Americans to remember history. If they did, they'd never have let Reagan push repackaged, neoclassic economics on them and we wouldn't live in a darwinist world where only the most dishonest, most cunning and apathetic take all and the good, hard-working honest people get slavery, poverty, disease and are disappeared from the media radar like the post-globalization Indian farmers.

Americans would know the simple history of FDR saving Capitalism from itself and saving us from robber-baron fascism and how he created a fair economic system that gave Americans dignity.

No, Mr. Rogers (no pun intended), you and your big Wallstreet buddied better hope that Americans stay ignorant.

BTW, - thought you were great on MASH!

[KillTheMessenger]

If we still had that separation, a lot of the current acquisitions would not be possible, thus leaving any hope for a bailout in the ashes of regulations.

[RoloTomassi]

And such would be an excellent thing. Free market dogma will not prevail; it has been found morally and fiscally wanting, and will be down-graded accordingly.

[FalconerHK]

I believe the point of the article is that if Glass-Steagall had been left alone we wouldn't be in this situation, much less worrying about bailout difficulties.

You would do yourself a favor by finding Thom Hartmann's recent post to this site. The similarities between 1929 and now are nearly the same.