Clinton and the Great Recession

 IN AN INTERVIEW AIRED YESTERDAY ON CBS BY KATIE COURIC, PRESIDENT CLINTON BLAMED THE RECESSION ON BUSH AND THE REPUBLICANS;

WHY DID COURIC LET HIM GET AWAY WITH THAT????

The seeds of the Great Recession were planted by the Clinton Administration with bi-partisian support from the Congress

1. On November 12, 1999, President Clinton signed the repeal of the Glass-Steagall Act  [the Gramm-Leach-Bliley Act] permitting commercial banks to merge with investment banks and therefore to issue securities such as collateralized debt obligations. The Republicans were in control of the House and Senate but the Repeal passed with    

most members of both parties voting for it [Citigroup was the lead bank in lobbying for this legislation because it had just merged with an investment bank and an insurance company.]

Days after the Clinton Administration stated that they would support the repeal of Glass-Steagall, Clinton’s Secretary of the Treasury, Robert Rubin, announced he was leaving to take a top position at Citigroup as the second in command. ....was there a quid-pro-quo for making this deal?....we don’t know.

2. On December 21, 2000, President Clinton signed into law the Commodity Futures Modernization Act which made issuing over-the-counter derivatives legal without any accompanying regulations, not even the requirement to report derivatives that were sold.

He signed this law despite the fact that the head of the Commodity Futures Trading Commission, Brooksley Born, had warned that some day these instruments would bring down the banks and it would cost the American taxpayers a huge amount of money; famously, a hedge fund named Long-Term Capital Management already had nearly brought down the financial industry by betting on derivatives.

This was a bi-partisian bill, agreed to by Democrats as well as Republicans

3. Despite promising in his campaign for President not to enter into NAFTA [the North American Free Trade Agreement], President Clinton signed  NAFTA in 1994 after adding some labor and environment provisions that unfortunately had no strong provisions for enforcement.

During Clinton’s term in office, he entered into ~300 trade agreements [according to Wikipedia] which some claim were so one-sided in favor of the other country that more than 2 million jobs left the U.S. (an average of 45 thousand jobs a month from 1997 to 2001) during Clinton’s second term in office [see The Economist, The Clinton Shuffle: Free Trade; U.S. Jobs Shipped Abroad:  A New Measure by Erica L. Groshen, Bart Hobijn and Margaret M. McConnell]