The two photos above, from today’s New York Times, present a fascinating juxtaposition.
The photo on the left shows FDR signing legislation — known as The Glass-Steagall Act — separating the nation’s investment banks from its commercial banks. It was the latter that held ordinary Americans’ savings deposits, and it was the former’s plundering of same that played a big role in causing The Great Depression.
The photo on the right shows Bill Clinton signing legislation in 1999 dismantling Glass-Steagall.
Study in Contrasts
But for the fact that the people in the two photos are exclusively older, white males, the contrasts couldn’t be more startling.
The Congressmen and senior government officials surrounding FDR look sombre, if not grim. Their demeanor suggests that they had just witnessed a horrific financial accident (if not crime) — one which they are determined not to ever let happen again.
Of couse, they had, and they (mostly) did. To their credit, their efforts to safeguard the nation’s financial system succeeded for more than three-quarters of a century.
By contrast, Bill Clinton and the officials around him — luminaries such as Fed Chairman Alan Greenspan, SEC Chairman Arthur Levitt, Texas Senator Phil Gramm, and Treasury Secretary Robert Rubin — look like they’re re-filling the punch bowl at an especially raucous party.
Which of course, they were.
Less than 2 years later, the stock market cratered.
Less than a decade later, a lethal combination of investment bank risk and leverage — just like in The Great Depression — created the greatest financial crisis since the 1930’s.