Tuesday, December 22, 2009

REALITY CHECK: Is McCollum McKidding?

From FDP:

On Radio Call-In Show, McCollum Continues Attempted Rewrite of His Congressional Record on Banking Deregulation

For the second time in just one week, former Congressman Bill McCollum struggled to rewrite his own record Monday when answering a caller's question on WGUF radio.

McCollum again falsely denied his role in creating the current economic crisis when he co-sponsored and passed banking legislation that most experts and policymakers agree played a major role in causing today's financial mess.

The caller asked if McCollum "had it to do all over again," would he still co-sponsor the legislation that repealed the too-big-to-fail safeguards that once regulated the nation's financial industry?

McCollum jaw-droppingly fictitious answer: "Well, I would still pass the Graham bill, the Gramm-Leach-Bliley bill if that's what you are referring to, which undid the separation between commercial banking and banking for federal banking and [inaudible] things of that nature. ...But what we did in 1999 has little or nothing to do with the crisis we found 10 years later." [WGUF's "The Dave Elliott Show," 12/21/09]

Come on, Congressman McCollum...

Economic Experts" Said The 1999 Legislation "Helped to Create The Current Economic Crisis." "Economic experts say that Gramm and others are to blame for the current crisis that is shaking Wall Street. Gramm's successful effort to pass banking reform laws in 1999, which reduced decades-old regulations separating banking, insurance and brokerage activities, helped to create the current economic crisis. 'As a result, the culture of investment banks was conveyed to commercial banks and everyone got involved in the high-risk gambling mentality. That mentality was core to the problem that we're facing now,'" Joseph Stiglitz, Nobel Prize-winning economist said. (ABC News, 09/19/08)

McCain believes the best way to prevent another economic crisis is to undo what McCollum did. "But on Wednesday, Republican Sen. John McCain proposed reining in Wall Street by resurrecting the Depression-era law that separated commercial and investment banking - the same law McCollum favored repealing as a congressman in 1999. ... As a member of Congress from 1980 to 2000, McCollum served on the committee overseeing financial services and co-sponsored 1999 legislation that tore down the Depression-era firewall between investment banks and commercial banks." (St. Petersburg Times, 12/17/09)

Obama Argued That the 1999 Legislation Led to Deregulation That Helped Caused the Economic Crisis: The Wall Street Journal reported that "President Barack Obama argued on the campaign trail that one bill - the Gramm-Leach-Bliley Act of 1999 - led to deregulation that helped cause the crisis. Among other things, that law allowed for the creation of giant financial supermarkets that could own investment banks, commercial banks and insurance firms, something banned since the Great Depression. Its passage, critics say, cleared the way for companies that were too big and intertwined to fail." (The Wall Street Journal, 03/10/09)

Former Federal Reserve Chairman and Current Head of the U.S. Economic Recovery Advisory Board Paul Volcker Supports Reintroducing Aspects of the 1933 Glass-Steagall Act. Supporters of reintroducing aspects of the 1933 Glass-Steagall Act that would split commercial and investment banking include: "Bank of England Governor Mervyn King and former Federal Reserve Chairman Paul Volcker, now head of the U.S. Economic Recovery Advisory Board". (Bloomberg, 12/14/09)

Hoyer Says McCollum's Policy, 'Maybe That Was a Mistake.' "As someone who voted to repeal Glass-Steagall, maybe that was a mistake," U.S. House Majority Leader Steny Hoyer said. (BusinessWeek, 12/15/09)

Co-Director Of The Center for Economic & Policy Research Said Resurrecting Glass-Steagall Would Reduce The Need For The Taxpayer Bailouts. Resurrecting Glass-Steagall would reduce the need for the taxpayer bailouts that added between 9 percent and 49 percent to the profits of the 18 biggest U.S. banks in 2009, according to Dean Baker, co-director of the Center for Economic & Policy Research in Washington." (Bloomberg, 12/15/09)

Even those in the who advocated for and profited from the repeal now recant it. "Former Citibank Chairman John S. Reed apologized in a Nov. 6 interview for helping engineer the bank's merger with Travelers and for his role in building a company that took $45 billion in U.S. assistance. Reed also recanted his advocacy of the repeal of Glass-Steagall. The 1998 merger depended on Congress repealing Glass- Steagall before a five-year deadline that otherwise would have required Travelers to sell its insurance underwriting business. "We learn from our mistakes," Reed said in the interview. (BusinessWeek 12/15/2009)

President of the Community Bankers of America Supports Reinstating Glass-Steagall. "President of the Community Bankers of America, Camden Fine, was strongly behind the idea of reinstating of Glass-Steagall, saying it wasn't an accident that less than ten years after repealing Glass-Steagall that we're facing the economic and banking crisis we are." (American Banking News, 12/17/09)

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