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Forgetting the Past

Posted: 10/07/08 01:52 PM ET

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