The Causes of the Financial Meltdown - aided and abetted by the Congress for decades
Part One of the causes of the financial melt-down:
The United States Supreme Court Case of “Marquette National Bank v. First of Omaha Service Corp., 439 U.S. 299 (1978)” I must give due credit here to Justia and Oyez for their succinct synopsis of the United States Supreme Court wrongful decision which allowed credit card companies to export their high rates from other States and and allowed the State’s usury laws to be impaired. The court concluded that any correction of the impairment of State’s usuary laws, though taken as implicit in the National Bank Act, COULD BE CORRECTED LEGISLATIVELY (Pp. 439 U.S. 318-319). Instead for the last 31 years I have watched as the lobbyists for the big banks and insurance companies have their had their way with our whorish congressmen. The small equity holders and the little people get the shaft while the fat cats walk away with golden parachutes, engineered to game the “safe harbor” provisions. of the law. I printed out a number of articles on the Marquette decision, FDIC Bank Trends tying Credit Card rates to the foreclosure rate, on the Graham-Leach-Bliley Act and the Commodities Futures Trading Act back in February. The case was argued 10/31/1978 and decided 12/18/1978 You can check out http://www.supreme.justia.com/us/439/299/case.html or leave off the case.html for the Case Preview. THIS IS JUST THE APPETIZER: THE FDIC DIVISION OF INSURANCE Bank Trends Analysis of Emergency Risks in Banking was done by the FDIC (DIANE ELLIS (208) 898-8978 firstname.lastname@example.org. ) She had a 14 page FDIC report documenting and graphing out the OUT OF CONTROL rise in personal bankruptcy and credit card debt started shortly after interest rate Deregulation let out of pandora’s box by the Marquette Decision. So where were your Senators and Representatives while the banks were ghost-writing the legislation to screw you? That 14 Page FDIC Document entitled”The Effect of Consumer Interest Rate Deregulation on Credit Card Volumes, Charge-Offs, and the Personal Bankruptcy Rate” was prepared by the FDIC and available at the government at the following URL: “http://www.fdic.gov/bank/analytical/bank/bt_9805.html” The graphs in this document are illuminating.
So for Steps one, two and three, Credit Card loan-sharking could have been skotched at any time and hasn’t been, The minimum wage has been kept artificially low, and while the robber barrons seat their friends on each other’s boards of Directors, cook the books, take risks, and run off with your money. We knew it was coming. But the greed was only just getting under way.
One would think that lessons would have been learned with respect to excessive leverage and gambling with other people’s money after the “Long Term Capital Management” fiasco masterminded by John Meriwether et al, but that was not the case. He was eager to do it again, insisting that the mathematical model was sound, despite the fact that the Federal Reserve had organized a rescue by getting large banks to take over all the huge risky bets.
Part Two of the causes of the financial meltdown: The Gramm-Leach-Bliley Act which helped eviscerate the depression era safeguards of the Glass-Steagal Act was reportedly pushed in part at the behest of Sandy Weill in order to retroactively legitimize the merger of Citibank and Travelers Insurance Company. During the mark-up of this bill before the Senate Banking Committee chaired by Phil Gramm, Alan Greenspan issued the following succinct warnings: He emphasized the importance of the quality of collateral, the danger of excessive leverage, that it was like walking a tightrope without an net, that no bank was too big to fail, and that the FDIC and the Federal Reserve couldn’t bail all of them out if something went wrong. I watched it on C-Span. There was not a word of it in the news, and from the financial reporter’s questions it was apparent that everything he had testified about had gone right over their heads. It was enacted November 12, 1999. There is a fairly good and thorough report on it on Wikipedia at “http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act” .
Part Three of the causes of the financial meltdown: The Commodity Futures Modernization Act (H.R. 5660 and S.3283): Wikipedia covers this “Act” well too. It was “incorporated by reference” into H.R. 4577. It was this legislation which created, among many other crooked things, the ability for companies to play a shell game with their assets and to cook up bizzarre derivatives (such as credit default swaps) and gamble with the world’s ecomomy.. and lose it. It’s much better explained in three of the four books written by Nomi Prins: “It Takes a Pillage: Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street” (Wiley, 09/09) , “Other People’s Money: The Corporate Mugging of America (the New Press, October, 2004, and “Jacked: How Conservatives are Picking your Pocket (whether you voted for them or not) Polipoint Press, Sept. 2006. It’s worth a quick visit to her site (and to most of the other links on this page). Good luck in the rest of this recent economic mess.
Part Two of the causes of the financial meltdown entitled ‘The looting of the banks - First the Savings and loans, then the Commercial Banks’ is at http://www.sissypantybuns.com/wordpress/?page_id=78 and comments may be left at http://www.sissypantybuns.com/wordpress/?cat=6 which is entitled ‘Congress Aids the Greedy’ - ‘Congress has been aiding and abetting the avaricious for decades’