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It's because most everything he did regarding financial services regulation has come back to haunt us.
That's because we had weakly regulated markets when Clinton took office. When he left, they were an invitation to lawless dealing where, for the ease of it, Willie Sutton would have traded his gun and mask for a briefcase and necktie.
During his final three years in office, Clinton created a fertile environment for home-lending charlatans, hiding places for Wall Street swindlers and a regulatory structure that had served the financial marketplace so well for more than six decades.
Clinton bashing -- like Bush bashing -- is often a cop out, but he made some critical mistakes when it came to dealing with the financial industry. Three poor decisions stand out.
The first was a change in 1997 to the amount of taxes a homeowner had to pay on the sale of his or her home on up to $500,000. This change effectively made buying and selling a home for profit the most compelling investment in America by tax standards. It changed our housing market from one of supply and demand to one of rampant speculation.
The second mistake was one of inaction. In 1998, Long-Term Capital Management's use of derivatives and leverage required a massive $3.6 billion hedge fund bailout organized by the New York Federal Reserve Bank. After the fiasco rocked the markets, the administration was on the spot. Would it require tighter regulation of this new form of investment vehicle? Would it rein in the derivatives markets?
Federal Reserve Chairman Alan Greenspan and Securities and Exchange Commission Chairman Arthur Levitt and Treasury Secretary Robert Rubin counseled against it to varying degrees and Clinton relented.
But perhaps the biggest mistake of the Clinton years regarding Wall Street and the one that rings loudest today was the repeal of Glass-Steagall, a 1933 law that effectively split investment banking and brokerages from commercial banks. [/B]
Last edited by NEPatriot; 06-24-2009 at 02:41 PM..
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