--- In FairfieldLife@yahoogroups.com, Bhairitu <noozguru@...> wrote: > > Wow CNBC has a bunch of dunderheads for anchors. Watch Senator > Elizabeth Warren school them on economic regulation 101. I wonder how > many perks the CNBC pressitutes get from big banking? Forget Hillary, > Warren should be our first woman president. > > http://www.huffingtonpost.com/2013/07/17/elizabeth-warren-cnbc-anchors_n_3610893.html >
In the clip, one of the dunderheads attempted to rewrite history arguing that the failure of Continental of Illinois in the 1980s means that Glass-Steagall was ineffective and that regulation doesn't work. Warren points out that New Deal banking regulation created fifty years of uneventful banking in this country, compared to the preceding long history of boom and bust. I checked out the back story on Continental. http://en.wikipedia.org/wiki/Continental_Illinois What went wrong is simple. The bank got "greedy" and made large investments in energy at a time of falling oil prices. Executive John Lytle received kickbacks when he arranged for the bank to hand out massive, iffy loans to energy concerns. When the financial crisis of 1984 hit, Continental was the first bank deemed "too big to fail." Uncle Sam owned the bank for the next ten years, until it was sold to Bank of America. Such a move would now be deemed socialism. I guess that makes Ronald Reagan a socialist. By the way, John Lytle went to jail. That's another difference between then and now. The Lytle conviction underlines an important truth: Continental's failure was not due to regulation. The failure occurred because regulations were broken.
