Good People of New Hampshire, I would like each and every one of you to remember the demise of the Glass-Steagall Act. In short, this act was passed during the great depression to help protect the banking industry from excessive speculation. The original act bans commercial banks from underwriting securities. It requires the entity or bank to be one of either a ‘regular’ bank which provides loans to its customers or investment bank which underwrites more risky securities.
In the 1956 the act was expanded with the passage of the Bank Holding Company Act. This would further restrict banks such that bank holding companies cannot own multiple banks and that banks cannot engage in non-banking activities like selling stocks.
Fast forward to the 1998 when Citicorp-Travelers would merge. In order to consummate the bank-investment house marriage, on November 4, 1999 President Clinton sign the repeal of Glass-Steagall. Guess what happened after that, Clinton’s Treasury Secretary Robert Rubin would join the ‘new’ Citigroup.
Now we all know Citigroup would become overleveraged with its credit-default swaps it sold to back the its subprime based Collateralized Debt Obligations.
Now, why isn’t it that anyone would ask President Clinton why he was one of the players who placed our country in the mess it finds itself in today?