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article imageClinton notes that Obama 'inherited a deeply damaged economy'

By Victoria N. Alexander     Sep 8, 2012 in Politics
In his speech at the DNC, Bill Clinton noted that six weeks before Obama's election, the economy suffered "the biggest collapse since the Great Depression." Ironically, it is Clinton whom many economists blame for the 2008 collapse.
When Clinton repealed the Glass-Seagall Act in 1999, “everyone got involved in the high-risk gambling mentality,” according to Joseph Stiglitz, a Nobel Prize winning economist. Others noting the bi-partisan origins of the financial crisis in 2008 include William Kaufman and Timothy Canova. The Daily News, Truth-Out and Huffington Post duly noted that Clinton's statements "stretched" the truth.
The Glass-Seagall Act was introduced in 1933 to regulate banks and prevent speculation. Before 1929, banks had used citizens' savings deposits as collateral in high-stake speculation schemes which failed. Predictably with the repeal of Glass-Seagall--which allowed banks, securities firms and insurance companies to merge--the speculative behavior returned, but this time, when the speculations failed, the Federal Reserve bailed out the hybrid banks.
Congressman Ron Paul, known for advocating deregulation and "free markets," voted against repealing Glass-Steagall. He explained that investment banks would be able to pass losses onto the taxpayer since the federal government would provide FDIC insurance. Neither the Republican Party nor the Democratic Party includes a reinstatement of Glass-Steagall in their platforms.
On the day following the now infamous repeal of the Glass-Steagall, The New York Times reported:
"This legislation is truly historic," President Clinton told a packed audience of lawmakers and top financial regulators. "We have done right by the American people."
A full transcript of Clinton's speech can be found here.
More about glass steagall, Federal reserve, President Bill Clinton, Obama
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