2012-02-23 / Letters
Banking system was built to fail
How did we miss this?
The U.S. banking system that failed in 2008 was only eight years old, it’s true. In 1999, both houses of Congress using the supermajority vote passed the Financial Services Modernization Act, overriding President Clinton’s decision to veto this bill, virtually re-creating the same banking system that caused the Great Depression.
We’ve had two banking systems since the Great Depression, both signed into law by Democratic presidents, the first signed by FDR in 1933 and the second by President Clinton on Nov. 12, 1999, but Congress owns this one.
FDR’s system ran for 66 years; Congress’ ran for eight. FDR divided commercial and investment banks; Congress allowed them to merge. FDR’s banks were too small to matter; Congress gave us banks too big to fail.
FDR’s brought us out of the Great Depression and into prosperity; Congress’ started in prosperity and gave us the Great Recession. FDR’s gave us the strongest banks in the world; Congress’ one of the weakest. FDR’s created the FDIC; Congress’ didn’t change it.
Starting in 1933 through 1999, the FDIC lost approximately $200 billion, that’s $3.3 billion a year. By 2008, the FDIC could only guess, when Congress asked, of between a $2.5 trillion and $3.5 trillion worst case scenario. That’s $287.5 billion a year.
Remember the FDIC is funded by your tax dollars. So the truth is both the Democratic and Republican parties share the responsibility for attempting to make our banks better but in reality making them worse.
There are 38 senators and 111 representatives—including the vice president— who are still in office who voted for this change. They refuse to accept responsibility and divide these banks.
They continue to try and make a failed system work, the same system that failed America before. Now that it’s falling apart they say our country is on the wrong tracks. They ought to know. They laid them.