4 ms·

I have no idea what you think happened under the Clinton era to cause the financial crash of 2009. Most of the immediate things, such as the housing boom drive

by btilly 4y ago

I have no idea what you think happened under the Clinton era to cause the financial crash of 2009. Most of the immediate things, such as the housing boom driven by easy lending policies, happened under Bush. So I'd need a reference to support that idea. However I'll give you another one. Most people's impression is that Carter destroyed the economy and Reagan's deregulation saved the day. But actually the facts are almost exactly reversed - Carter did the deregulating but the benefits were not seen until Reagan was in power. See https://noahpinion.substack.com/p/much-of-what-youve-heard-about-carter https://noahpinion.substack.com/p/much-of-what-youve-heard-a... for a reference.

winstonewert 4y ago
The post you are responding to is probably referring to the Gramm–Leach–Bliley Act. According to some, that act (signed by Clinton) was (somewhat) responsible for the financial crash. But this is certainly a matter of dispute.
- godelski 4y ago
  To expand, this law allowed investment banks (e.g. Goldman) and commercial banks (e.g. Washington Mutual) to do what the other could. Effectively this allowed the mortgage backed securities that were a major player in the financial crisis to be created. There were a lot of other issues that contributed to the crisis, but (as far as I'm aware) the main mechanism used would not have been possible without this deregulation.
  - arkis22 4y ago
    Eh. It allowed banks to have in house investment banks. They still needed to have walls that dealt with conflicts of interest between the two. Whether the walls work all the time can be disputed. But you seem to have offered no substantial link to the existence of MBS securities and the repeal of Glass-Steagall. so your conclusion, that arbitrary deregulation, lead to the existence of MBS securities should be even more disputed. MBS are probably more clearly linked to the complete takeover of the mortgage market by the government. if you turn debt into a commodity you can divide it up however you want. and you turn debt into a commodity by guaranteeing it.
dredmorbius 4y ago
Not OP, but the Glass-Steagall Act was repealled in 1999, under then-president Bill Clinton, and is posited as a substantial contributor to the 2007-8 Global Financial Crisis. <https://en.wikipedia.org/wiki/Aftermath_of_the_repeal_of_the_Glass%E2%80%93Steagall_Act https://en.wikipedia.org/wiki/Aftermath_of_the_repeal_of_the...> <https://web.archive.org/web/20111019192852/http://prospect.org/cs/articles?article=the_alarming_parallels_between_1929_and_2007 https://web.archive.org/web/20111019192852/http://prospect.o...>
- slavik81 4y ago
  Canada had no equivalent of the Glass-Steagall Act, but its banks didn't suffer like the US banks did. Why would the seperation of commercial and investment banks only be important in the United States and not in other countries?
  - godelski 4y ago
    Other banks were also buying US based securities. But you also seem to be assuming that there was a single causal factor or that people are claiming there is a single causal factor. Neither of these are true. There were many factors at play. My only claim with Clinton was that he did things that helped lead to the events and people do not attribute that to him because he was not the acting head of state. My claim was not about a singular causality, and that would be a pretty bad faith read.
  - dredmorbius 4y ago
    Fair question. Canada did suffer during the 2007-8 crisis, though its banking system didn't collapse as the US system did. The reasons suggested are various. I'm not an expert on either the US or Canadian experiences, though some quick searches suggest a few explanations, including an overall different regulatory and banking environment in Canada (far more centralised to the Federal government rather than distributed to numerous states). NBER and a few other sources look promising.
- btilly 4y ago
  So there are things that happened under Clinton that have been posited as contributing to the financial crash, so the guy who was President for the last 8 years leading up to the crash must be blameless. Yeah, not buying it. There are lots of things that happened under Bush that are also posited as contributing to the crash. And 8 years is more than long enough for Bush's policies to have contributed.

by btilly 4y ago

winstonewert 4y ago

The post you are responding to is probably referring to the Gramm–Leach–Bliley Act. According to some, that act (signed by Clinton) was (somewhat) responsible for the financial crash. But this is certainly a matter of dispute.

godelski 4y ago
To expand, this law allowed investment banks (e.g. Goldman) and commercial banks (e.g. Washington Mutual) to do what the other could. Effectively this allowed the mortgage backed securities that were a major player in the financial crisis to be created. There were a lot of other issues that contributed to the crisis, but (as far as I'm aware) the main mechanism used would not have been possible without this deregulation.
- arkis22 4y ago
  Eh. It allowed banks to have in house investment banks. They still needed to have walls that dealt with conflicts of interest between the two. Whether the walls work all the time can be disputed. But you seem to have offered no substantial link to the existence of MBS securities and the repeal of Glass-Steagall. so your conclusion, that arbitrary deregulation, lead to the existence of MBS securities should be even more disputed. MBS are probably more clearly linked to the complete takeover of the mortgage market by the government. if you turn debt into a commodity you can divide it up however you want. and you turn debt into a commodity by guaranteeing it.

dredmorbius 4y ago

Not OP, but the Glass-Steagall Act was repealled in 1999, under then-president Bill Clinton, and is posited as a substantial contributor to the 2007-8 Global Financial Crisis. <https://en.wikipedia.org/wiki/Aftermath_of_the_repeal_of_the_Glass%E2%80%93Steagall_Act https://en.wikipedia.org/wiki/Aftermath_of_the_repeal_of_the...> <https://web.archive.org/web/20111019192852/http://prospect.org/cs/articles?article=the_alarming_parallels_between_1929_and_2007 https://web.archive.org/web/20111019192852/http://prospect.o...>

slavik81 4y ago
Canada had no equivalent of the Glass-Steagall Act, but its banks didn't suffer like the US banks did. Why would the seperation of commercial and investment banks only be important in the United States and not in other countries?
- godelski 4y ago
  Other banks were also buying US based securities. But you also seem to be assuming that there was a single causal factor or that people are claiming there is a single causal factor. Neither of these are true. There were many factors at play. My only claim with Clinton was that he did things that helped lead to the events and people do not attribute that to him because he was not the acting head of state. My claim was not about a singular causality, and that would be a pretty bad faith read.
- dredmorbius 4y ago
  Fair question. Canada did suffer during the 2007-8 crisis, though its banking system didn't collapse as the US system did. The reasons suggested are various. I'm not an expert on either the US or Canadian experiences, though some quick searches suggest a few explanations, including an overall different regulatory and banking environment in Canada (far more centralised to the Federal government rather than distributed to numerous states). NBER and a few other sources look promising.
btilly 4y ago
So there are things that happened under Clinton that have been posited as contributing to the financial crash, so the guy who was President for the last 8 years leading up to the crash must be blameless. Yeah, not buying it. There are lots of things that happened under Bush that are also posited as contributing to the crash. And 8 years is more than long enough for Bush's policies to have contributed.