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The Dumbest ‘Bipartisan’ Move Since Repealing Glass-Steagall
Here we go again. Once again the 'bipartisan' consensus in Washington, fueled by an intoxicating brew of conventional wisdom laced with campaign cash, has repealed some of those 'cumbersome regulations' that do nothing of value - nothing, that is, except prevent catastrophes. There will be celebrating on both sides of the aisle when the President signs this bill.
And when disaster strikes a few years from now, as it inevitably will, they'll all say "Nobody could have seen it coming." Plus ça change, plus c'est la même crap. Creationism can't disprove the theory of evolution - but a little time in Washington will make you think twice.
Here we are, surrounded by still-smoldering financial wreckage, and almost everyone in Washington is falling over themselves to repeat exactly the same kinds of actions that got us into this mess. Last time around it was the repeal of Glass-Steagall, introduced by Republican Sen. Phil Gramm and enthusiastically signed by President Clinton in the presence of Treasury Secretary Larry Summers.
This time it's the deceptively named "JOBS Act," introduced by the far-right Republicans in Congress and passed overwhelmingly by members of both parties. The President indicated his eagerness to sign the bill early on. Once again basic protections for investors, including individuals and families, are being recklessly overturned in a deregulating frenzy. Some of those protections were enacted in the wake of the Enron scandal, in which sociopathically unscrupulous business people conducted a hoax that ruined thousands of families and deprived many of their life's savings.
We haven't learned a damn thing.
The hype that led Washington honchos to name this tragic bill the "JOBS Act" is the same brand of patented b.s. that inspired lawmakers to call Gramm-Leach-Bliley, the law that overturned Glass-Steagall, the "Financial Services Modernization Act." That act of "modernization" actually turned the clock back - from 1999 all the way back to 1929, stripping away some of the common-sense measures that prevented the formation of too-big-to-fail banks that could gamble with their customers' money or bring the economy to the brink of ruin - which they promptly did, less than a decade later.
What did our wise leaders say when that bill was signed? "The world changes, and Congress and the laws have to change with it," said Phil Gramm. "In the 1930s ... it was believed that government was the answer ... We have learned that government is not the answer. We have learned that freedom and competition are the answers."
''This legislation is truly historic,'' said Bill Clinton. ''We have done right by the American people.''
''With this bill,'' said Larry Summers, ''the American financial system takes a major step forward toward the 21st Century -- one that will benefit American consumers, business and the national economy.''
Actually that bill helped crash the economy, costing trillions and leaving millions of people un- or underemployed. They, on the other hand, all got rich. No wonder they look so happy in this picture.
And they weren't done. Phil Gramm then passed something called the Commodities Futures Modernization Act, which Bill Clinton signed, opening the floodgates for Enron's abuses. Gramm's wife was then appointed to the Board of Directors of Enron, making him even richer. Later, after Enron's fraud caused so much tragedy, a shell-shocked nation passed Sarbanes-Oxley. But the Commodities 'modernization' act wasn't done with its worked: It enabled a division within my former employer, AIG, to gamble in a way that helped trigger the crisis of 2008.
Now we have the "JOBS" Act, which undoes Sarbanes-Oxley's key provisions. In a typically cynical move, the corrupt dealmakers of DC have appropriated two good ideas - "crowdfunding" by individuals, as is done on Kickstarter, and the need to find investment capital for small and medium-sized businesses that are the engines of job growth.
But this bill will actually hurt both those efforts. Kickstarter finances creative projects, where it's fairly easy for investors to decide whether they feel a project has artistic merit. But this bill will unleash a torrent of unscrupulous scam artists onto the public, leaving them unable to decide which project has merit and which doesn't. Since these ventures won't be required to provide some basic financial data, many of them will bilk their investors - drying up the pool of available capital for truly worthwhile startups.
Besides, why have we been pumping capital into the nation's banks through the Fed? Wasn't the purpose of all that support - including TARP - to prop them up so that they would lend to American businesses?
Worse, the bill is designed so that even billion-dollar corporations can be considered "startups," leaving the door open for a dozen Enrons of tomorrow to shaft the unwary. The common-sense protections proposed by Sen. Jeff Merkley were rejected, while the equally rational protections of Sens. Scott Brown and Jack Reed, which were passed, will be fairly easy for clever sharks to swim around. We've seen this play before, and it never has a happy ending. That will no longer be required of them, thanks to the "JOBS" Act.
Even that phony name - "JOBS Act" - isn't new. Republican Sen. Chuck Grassley used the same acronym for an equally cynical bill in 2004, the "Jumpstart Our Business Strength" Act. Then, as now, the bill was supposed to create jobs. What it really did was provide $39 billion in tax cuts for overseas earnings by US corporations. Create jobs? Not so much.
Now can look forward to another signing ceremony, filled with smiling and happy bipartisan faces. None of the people at that ceremony will pay the price when the bill for their actions comes due a few years from now. But you and I will.
And unless we change our political system, soon after that the whole process will begin again. When will we ever learn?