Who Said This, When, and About What?

| “I think we will look back in 10 years’ time and say we should not have done this, but we did because we forgot the lessons of the past, and that that which is true in the 1930’s is true in 2010.” That’s Sen. Byron Dorgan (D.-North Dakota), from a 1999 Times article on the repeal of the Glass-Steagall Act. The repeal was a major step toward deregulating the banking industry, which probably helped germinate our current financial mess, and (unintentionally) contained the damage somewhat as the meltdown began. (HT: GOOD) [%comments]


Hunter

Wow, prescient.

How's his NCAA bracket looking?

frankenduf

so much for all the baloney about how everybody thought the free market was best, Greenspan being shocked, etc etc

hindsight

And I'm sure there were some people who said a meltdown would happen in 2005, some people 2015, and most thought it wouldn't happen at all. It's very convenient to look back ten years and say, "aha, this guy told you so" while neglecting to mention all the other points of view from that time.

Cory

Ironically, however, it has also been the repeal of the Glass-Stengall act that has helped us through this mess as well -- allowing Bear Stearns and Merill Lynch to be acquired by J.P. Morgan Chase and Bank of America and for Goldman Sachs and Morgan Stanley to convert into bank holding companies.

C. Larity

That's nothing. I predicted World War 3 back in '95.

davidj

While Phil Gramm is not my favorite person, I believe that more damage has been done by unregulated credit swaps than by merely speculating bankers. Specifically, the trading of credit swaps among larger institutions created the potential for the cascade of failure that we have seen. The fact that some of those banks were over-leveraged and became insolvent due to poor investment decisions may have _precipitated_ this situation, but it is the domino-like succession of failures that made it a crisis.

shun-CMS

I agree – though, we're suppose to learn from our mistakes, and that is the only reason why we are allowed to make them, we, most of the time, forget that. Hence, re-make the mistake over and over. The scale can rage, but recent major mistakes faced serious consequences. The bankruptcy of Lehman Brothers, GM CEO resigning (pressured by the govt), AIG giving back their bonuses etc. – so they all assumed that the government will save them despite the results of the risks they take. So other solutions proposed now will be debated later on.

Rian Stockbower

While the repeal of Glass-Steagall was clearly a net negative for our economy, bear in mind that other developed nations did not have G-S-like laws in place, and yet did not have banking sectors that bubbled and collapsed wholesale over the years.

So while Glass-Steagall is an important piece of regulation, I don't think it is the only piece we need.

Also given the fluidity of capital flows, an international system of financial regulation will be more effective than single nations doing it piecemeal. Capital will tend to flow to places where it is most effective, and short-run profits are notoriously poor at determinants of long-run prosperity and profitability, even though these concepts are often conflated.

David Chowes, New York City

'THose who do not know history will live to repeat it.'