Glass-Steagall Theory (GST)
From iGeek
~ Aristotle Sabouni |
The idea is the Financial Crisis of 2007-2008 was caused by:
- Bill Clinton lifted the Glass-Steagall act (under pressure from Republicans) and signed the bipartisan Gramm-Leach-Bliley Act (GLBA)
- This allowed banks/investment houses to merge and over-leverage themselves (using Credit-Default Swaps, and MBS’s) and rampant predatory capitalism of evil bankers caused them to oversell loans to people that people couldn't afford them (subprime mortgages) and get into over-leveraging themselves
- The bankers knew they were risking all (and going to crush the economy), thus they were actively defrauding the people by selling/making the loans (criminal activity to get their bonuses), and they should go to prison.
- The bubble popped, and everything came down (as expected), but they all got bail-outs / cash from Uncle Sam and consumers paid the bills ($700 billion for TARP AND $831B for ARRA / American Recovery Reinvestment Act / Stimulus), and they walked away scott-free with big bonuses.
To these folks, it was collusion between the the Fed and Banks that allowed crimes to be committed and not punished, the little guy got screwed and got their homes taken away, and because Big-Government did nothing, thus we need Bigger-Government and wealth-redistribution to fix it and go after these crooks and evil 1%’ers. (This is the Occupy Wall Street theory).
It's a great theory to appeal to emotions (it lets the politicians blame everyone but themselves), but none of it makes sense or fits the facts/evidence, or really explains anything. And it's been discredited by the evidence.
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Tags: Financial crisis of 2007-2008/all Glass-Steagall/all
