Monday, March 1, 2010

Financial Reforms

The seed of the financial crisis were sowed during the Clinton administration with the repeal of Glass-Steagall Act which had separated commercial & investment banking and was proven effective for decades. Further the Commodity Futures Modernization Act signed by Bill Clinton had exempted all derivatives, including the credit-default swaps, from federal regulation. Alan Greenspan added fuel to fire by keeping interest rates artificially low thus creating the real estate bubble.

If we want to bring the sanity back, start with the re-imposition of Glass-Steagall Act and bring all derivatives under federal regulations.

1 comment:

  1. Thanks for this information....I will dig in deeper on the repeal of Glass-Steagall Act....reasons for this