Bill Clinton sat down with Fareed Zakaria last week on CNN for a typically wide-ranging interview that touched on chemical weapons, big data and privacy, whether Chelsea Clinton should run for office, etc.
You know, the usual Bill Clinton interview. But Clinton’s comment about his record on regulation is an actual newsmaker, because it’s a giant whopper:
What happened? The American people gave the Congress to a group of very conservative Republicans. When they passed bills with the veto proof majority with a lot of Democrats voting for it, that I couldn’t stop, all of a sudden we turn out to be maniacal deregulators. I mean, come on. I know Senator Warren said the other day, admitted when she introduced a bill to reinstate the division between commercial and investment banks, she admitted that the repeal of Glass-Steagall did not cause one single solitary financial institution to fail.
This is, to be kind, bullshit. Memory is a hazy thing, but I have a hard time believing Clinton doesn’t know full well he’s not telling the truth here (and with his record, he doesn’t get the benefit of the doubt).
Let’s go to the tape. Clinton installed Robert Rubin and Larry Summers in the Treasury, which resulted in the Gramm-Leach-Bliley Act, which officially did in Glass-Steagall and the Commodity Futures Modernization Act, which left the derivatives market a laissez-faire Wild West (not to mention a disastrous strong dollar policy that was a critical and underrated factor in the bubble). He also reappointed Ayn Rand-acolyte Alan Greenspan, who has as much responsibility as anyone for creating the crisis, as Fed chairman—twice.
Now it’s true that Clinton faced an extremely hostile Republican Congress for the last six years of his presidency. But his administration actively encouraged the big deregulatory legislation, and squashed its own dissenters, like Brooksley Born, who saw disaster ahead.
Clinton would have you believe that he signed those bills because his administration was forced to by a GOP that was beholden as usual to Big Business, but then what about the deregulatory legislation he signed in 1994, before Gingrich & Co. took Congress?
Riegle-Neal hasn’t got a tenth of the press that the CMFA and Gramm-Leach-Bliley have, but it was a milestone in the creation of Too Big to Fail, allowing banks to cross state lines, effectively gutting state regulation of banking. The Christian Science Monitor that year quoted a Wall Street analyst saying that, “‘It also didn’t hurt that NationsBank president Hugh McColl has a working relationship with President Clinton or that the comptroller of the currency, Eugene Ludwig, was a successful lawyer at Covington & Burling and NationsBank had been a major client.’” Hugh McColl gave us Bank of America.
From across the pond, The Independent wrote in a piece that was prescient in more ways than one:
“In effect, Congress has said let the merger mania begin. There is virtual consensus that the legislation will allow both the big US banks and their foreign rivals in America - British banks among them - to grow much bigger.
Nor was that the only thing the banks got that year. The American Banking Association wrote about Riegle-Neal, the Bankruptcy Reform Act of 1994, and the Community Banking Development Act that “the 103rd will be remembered as the first Congress in recent memory to pass “clean” pro-banking legislation.”
Clinton, on signing Riegle-Neal, praised McColl and the head of Chase Manhattan, and said, ” It represents another example of our intent to reinvent Government by making it less regulatory and less overreaching and by shrinking it where it ought to be shrunk and reshaping it where it ought to be reshaped.”
Again, this was before the Republicans took over Congress.
In 1999, on signing Gramm-Leach-Bliley into law, Clinton said, “This is a day we can celebrate as an American day” and that ” the Glass-Steagall law is no longer appropriate for the economy in which we live” and “today what we are doing is modernizing the financial services industry, tearing down these antiquated laws and granting banks significant new authority” and “This is a very good day for the United States.”
His Treasury Department pushed for the Commodity Futures Modernization Act after squashing Brooksley Born’s fervent attempts to have her Commodity Futures Trading Commission regulate derivatives.
The bottom line is: Bill Clinton was responsible for more damaging financial deregulation—and thus, for the financial crisis— than any other president. He may want to rewrite history to protect his wife’s 2016 presidential hopes, but the press shouldn’t let him.
But we’re off to a bad start there. Zakaria didn’t call Clinton out. Nor did The New York Times, which flagged Clinton’s CNN quote in a piece on Elizabeth Warren, but simply said Clinton “defended his administration’s approach to bank regulation” and left it at that.
When someone’s spouting obvious and provable falsehoods, you have got to call that out, even if it’s in quote marks.
This was no one-off comment, either. Charles Ferguson, director of the phenomenal “Inside Job” documentary, writes this in a column on why he canceled his planned documentary of Hillary Clinton:
In June, I attended a dinner for Bill Clinton, which was educational. Clinton spoke passionately about his foundation, about African wildlife, inequality, childhood obesity, and much else with enormous factual command, emotion, and rhetorical power. But he and I also spoke privately. I asked him about the financial crisis. He paused and then became even more soulful, thoughtful, passionate, and articulate. And then he proceeded to tell me the most amazing lies I’ve heard in quite a while.
For example, Mr. Clinton sorrowfully lamented his inability to stop the Commodity Futures Modernization Act, which banned all regulation of private (OTC) derivatives trading, and thereby greatly worsened the crisis. Mr. Clinton said that he and Larry Summers had argued with Alan Greenspan, but couldn’t budge him, and then Congress passed the law by a veto-proof supermajority, tying his hands. Well, actually, the reason that the law passed by that overwhelming margin was because of the Clinton Administration’s strong advocacy, including Congressional testimony by Larry Summers and harsh public and private attacks on advocates of regulation by Summers and Robert Rubin.