Since the 1980s, in answer to Mr. Sarver’s letter (Courier-Herald, Dec. 18), the U.S. has made very big mistakes. We deregulated the financial industries and, after deregulation, our country has had one financial crisis after another, each one worse than the one preceding it.
This insanity has been going 30 years now; don’t expect it to get better.
Problems started in the 1980s when financial institutions went public, taking in huge amounts of money. In 1982 President Reagan deregulated savings and loans, allowing risky investments to be made. By the end of the ‘80s, hundreds of S&Ls had failed. This cost taxpayers $124 billion, not to mention people who lost their life savings.
Thousands of S&L executives went to jail. In 1985 while being investigated about his S&L, Charles Keating hired an economist by the name of Alan Greenspan to say the risky investments were safe. Greenspan said they were great. He was paid $40,000 by Keating. Keating later was hauled off to jail. Alan Greenspan, of course, was made chairman of the Federal Reserve by President Reagan, but also by Clinton and George W. Bush.
In the ‘90s, deregulation continued and out popped something called derivatives, letting you bet on anything (oil, bankruptcies, the weather, etc.). By the end of the ‘90s, derivatives were a $50 trillion unregulated market. When people tried to regulate them, Clinton said no. Under Clinton, like Reagan, more deregulation led to Greenspan, Larry Summers, a Harvard economic professor, and Robert Rubin, a former CEO of Goldman Sacks, all Republicans.
In 1998, Citicorp merged with Travelers, forming Citigroup, which violated the Glass-Steagal Act that kept banks from making risky investments. Greenspan did nothing to stop the merger. A year later, 1999, backed by Clinton, Greenspan, Summers and Rubin, the Gramm-Leach-Bliley Act repealed Glass-Steagal. By the end of the ‘90s, only a few really big financial firms were left. If one failed they would all go. They would have the U.S. taxpayer to bail them out, just like they planned.
The late ‘90s, next crisis. Investment banks fueled a huge bubble in internet stocks with led to a crash in 2001 with $5 trillion in investment loss. It seems stock brokers were selling junk. Cow poop in a field was worth as much as a lot of these stocks. Reagan, Bush Sr., Clinton, Bush W., Obama are all at fault.
Deregulation – bah, humbug. Merry Christmas.