I agree with that take, DC. I was wondering how you'd wrap that up. At first, I thought it was just a kind of alarmist bulletin, but the final argument is sound.

Was Albright doing a little war profiteering recently?

G-20? Is Barack dissing the group?

I guess every politician has their baggage but both of these two are an odd choice indeed.

Or, perhaps, the problem had much more to do with Government Sponsored Entities pooling weak loans secured by shaky mortgages and selling them as AAA investments to foreign governments, pension plans, banks, etc. There are no longer any investment banks, because they were doing the same thing - assisted, of course, by Fitch, Moodys and Standard & Poors, the three government licensed exclusive sources of those AAA ratings.

Gramm-Leach-Bliley has become the scapegoat of choice for those who want to deflect the actual culprit: Irresponsible lending mandated and underwritten by Congress via Fannie Mae and Freddie Mac. If you want to assign "blame" for Gramm-Leach-Bliley, you should also note that it was approved overwhelmingly by Congress (with majority Democrat support) and enthusiastically signed by President Clinton, who still defends it to this day. But that would sort of undermine the carefully constructed demagoguery, wouldn't it?

Gramm-leach-Bliley has very little to do with the current economic crisis. In fact, JP Morgan could not have saved Bear Stearns and BofA could not have saved Merrill if Glass Steagall was in effect.

Today's crisis is all about deleveraging. Negative savings rates, that is to say consumption greater than income, is not sustainable. Banks relaxed lending standards too much, partly at the urging of government. So now we have to pay off our debts and live within our means, which means reducing consumption below income. It's sort of that simple and everything else is a corollary.

But it has nothing to do with the "deregulation" spin peddled by politicians. This will be a painful, but necessary restructuring, and government intervention to prevent it will be futile and, ultimately, more costly.

I'm no fan of Barack Obama, but I agree completely with the statement you quote here. You misread it though. It's not saying that repealing Glass Steagal was misguided, it is saying that our goverment's failure to effectively regulate 21st century financial markets has had catastrophic consequences. Tough to argue with that no matter what your politics are.

"21st century financial markets" would have been fine had it not been for the gross distortions caused by Fannie Mae and Freddie Mac, jealously guarded from regulation by Democrats Chris Dodd and Barney Frank. This blather about the repeal of Glass-Steagall is manufactured for the Democratic narrative.

Gramm-Leach-Bliley had nothing to do with the financial crisis. In fact, Lehman Bros. and Bear Stearns did not avail themselves of the ability to play both sides. JPM and Chase did. Guess who's still standing.

The real cuprit in the crisis of course is 1995 admendments to the Community reinvestment act, cheap money by the Fed and the HUD and the Justice department tag teaming carots (using Fannie and Freddie to back bad loans and repackaging them as securities for sale) and stick (suing banks for not making bad loans.

I have yet to see anything remotely convincing on why the repeal of Glass-Steagall caused the current crisis. I can think of a number of other regulatory failures (reserve requirements ?) that could be the cause, though reporting on this topic has been superficial at best. I just cannot see why allowing banks to both investment banks and commerical banks, as is allowed in the rest of the world, was a bad idea. While JPM, BofA and Citi have troubles, these post-Glass Steagall entities are in much better shape than the old-stype pure I-Banks.

i think this was a piece of pure demagogary on the part of the Dems and they know it - hell, even Bill Clinton came out during the campaign and specifically defended GLB.

As an Iowan from Rep. Leach's district, I can tell you he always referred to himself as a foreign policy progressive and an economic conservative. Sure enough, he opposed the war from the beginning - while taking the economic positions you mention. His "fit" with Obama is in temperament and foreign policy, not economics.

The real cuprit in the crisis of course is 1995 admendments to the Community reinvestment act, cheap money by the Fed and the HUD and the Justice department tag teaming carots (using Fannie and Freddie to back bad loans and repackaging them as securities for sale) and stick (suing banks for not making bad loans.

"In the two years before Glass-Steagall was repealed in 1999, financial service industries gave $58 million to congressional campaigns; $87 million to political parties; and spent $163 million lobbying Washington."

You might be interested to know that according to opensecrets.org Obama's campaign received (in thousands $) 229 from Merrill-Lynch, 582 from Citigroup, 425 from Morgan-Stanley, 874 from Goldman-Sachs, and 581 from J P Morgan (=2.7 million). In contrast McCain's campaign recieved 360 from Merrill-Lynch, 296 from Citigroup, 263 from Morgan-Stanley, 229 from Goldman-Sachs, and 215 from J P Morgan (=1.4 million).

Pretty audacious huh?

Repeal of Glass-Steagall had nothing to do with the current problems. Also, it's worth noting that the "connection" between campaign donations and Leach is much more than spurious, at least for his part, as Leach has never accepted PAC donations or even donations from individuals outside of Iowa.