October 26, 1999
AUSTIN, Texas — I feel vaguely like Henry Higgins in "My Fair Lady," announcing with gleefully inhumane relish: "She'll regret it, she'll regret it! Ha!"
"I can see her now, Mrs. Freddy Eynsford-Hill, in a wretched little flat above the store!
"I can see her now, not a penny in the till, and the bill collectors knocking at the door!"
Which is to say, the new banking bill is a thoroughly lousy idea, and the party most likely to regret it is us.
The 1999 Gramm-Leach Act is about to replace the 1933 Glass-Steagall Act, with the result that bankers, brokers and insurance companies can all get into one another's business. It's a done deal except for the final vote on the conference-committee agreement. The inevitable result will be a wave of mergers creating gigantic financial entities.
"Too Big to Fail" will be the new order of the day. And guess who gets left holding the bag when they're too big to fail? One of these monsters goes down, and it will cost as much as the whole S&L debacle.
And Molly also warned us about Gramm's Commodity Futures Trading Act, a 262-page amendment which he slipped into an omnibus appropriations bill moving toward passage as Congress was preparing to head home for the Christmas recess in 2000.
December 24, 2000
Just before it left town last week, Congress passed a little horror called the Commodity Futures Modernization Act of 2000, brought to us courtesy of heavy lobbying by Wall Street banks and investment brokers.
Frank Portnoy, writing in The New York Times, describes the bill thusly: "First, it lifts a long-standing ban on futures trading in individual stocks, thus allowing investors to buy shares through brokers with very little money down. Second, it protects a lucrative business for bankers — the private financial contracts known as swaps — from being regulated. ... Investors are affected by swaps because they are ... used by many mutual funds and publicly traded companies."