Guest post by Slider from SliderOnTheBlack.com
Did you happen to catch Mid South Bank President and CEO R.J. “Rusty” Clouthier on CNBC’s Squawk Box a few weeks ago?
This 5 minute and 21 second clip may contain more practical wisdom about the roots of the banking crisis than would an entire semester at the Wharton School of Business.
Clouthier who served six years on the Fed’s board, said that unless we break up the big banks that pose systemic risk and get back to sound banking, we’re just going to re-live this again.
CNBC’s Joe Kernen asked Clouthier if he had any of these esoteric mortgage, or derivative products and problems in his bank, and asked him if he saw this banking crisis coming?
Clouthier replied that he did not have any toxic mortgage products, and added that he knew the banking crisis was coming as soon as Gramm-Leach-Bliley was passed in 1999.
Clouthier went on to place much of the blame for this crisis squarely on the shoulders of Alan Greenspan. He went on to say that Greenspan actually approved the Citi - Travelers merger when it was illegal and told them to just go and get the law changed, which they did by repealing key components of Glass-Steagall with Gramm Leach Bliley.
Thank you Rusty Clouthier for speaking the truth.
Nobel Prize winning economist Joseph Stiglitz has also gone on record as citing the roots of the crisis with Gramm Leach Bliley. And another Nobel Prize winner, Paul Krugman, went as far as to call Senator Phil Gramm “the father” of the financial crisis.
And let’s not forget the role that Wendy Gramm played in Gramm Leach Bliley. Here’s a great article on the “Mother of Enron” Wendy Gramm…
http://www.dailykos.com/story/2008/9/15/114017/631/577/599447
It amazes me that Alan Greenspan has not had to go into hiding in exile, or that another “Father” of the crisis - Hank “The Extortionist” Paulsonhasn’t been run out of the country, all the way to China.
Paulson of course, was the architect and chief lobbyist while CEO at Goldman, instrong-arming the SEC to allow the investment banks to self-regulate and to lift the SEC’s limits on their leveraging of capital from 12:1 to 30-40-50:1.
You can thank Hank for the resulting failures of Lehman and Bear Stearns, the rescue of Merrill, and the bailout of Goldman and Morgan Stanley.
Here’s two excellent articles detailing Paulson’s role as one of the chief architechts of the financial crisis.
http://www.tinyrevolution.com/mt/archives/002602.html
http://www.nysun.com/business/ex-sec-official-blames-agency-for-blow-up/86130/
Break up the banks now too big to fail. Limit the leveraging of capital. Get rid of unregulated derivatives. And return to the sound banking principles of the Rusty Clouthier’s of the banking world.
Almost too simple isn’t it?
Of course it is. So now we’re turning over near “dictatorial” powers to the privately owned Federal Reserve, and expanding it’s powers outside the banking system.
Instead of sending the looters to prison and reforming the system, we’ve just handed them the keys to the entire US economy.
America - WAKE UP!
This isn’t reform, this is the final Coup d’Etat.
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