Regulate the Banks or Die

In less than a century, this nation has suffered three huge economic shocks that have been the direct result of Republicans' hostility to regulation, and on Democrats' inability to stand against the forces of money and corruption.

In the 1920s, the Harding, Coolidge and Hoover Administrations loosened every regulation that they could on business and banking. The thinking was then, as it has been since, that if government got out of the way of business and banking, then prosperity would trickle down to everyone. The result, of course, was the 1929 stock market crash, followed by the Great Depression during which nearly ten thousand banks failed. The Great Depression, it is worth remembering, did not end until the mother of all government spending programs began: World War II.

In 1980 and 1982, the financial lobbyists managed to "persuade" Congress to lift almost all Federal regulations on savings and loans. The S&Ls began operating in a free-wheeling manner and, beginning in 1985, they started failing. There were at least five senators who took large amounts of "campaign contributions" from one S&L operator.* The collapse of the S&Ls sucked in huge amounts of Federal money to fix. The stock market mini-collapse of 1987 and the subsequent recession was in large measure due to the S&L crisis. The S&L crisis consumed the "peace dividend" from the end of the Cold War.

One would think that two bad results would have shown the politicians of the GOP that the bankers cannot be trusted to operate without regulation. But you would be wrong to think that. In 1999, the Gramm-Leach Act, which had been pushed for years by Sen. Phil Gramm (R, UBS Bank), dismantled virtually all of the banking laws that had been enacted in 1933. Nine years later, the banking system in this country nearly collapsed as a result of the reckless actions of the banksters and their cronies on Wall Street.**

Three acts to deregulate banking, three economic catastrophes. You would think that maybe the Republicans might have broken the code by now. But you would be so wrong.

If a classic definition of insanity is to "keep doing the same thing and hoping for a different result", then please explain to me why most of the Republican politicians today aren't locked up in padded cells and being shot up with large doses of olanzapine.

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* The Keating Five, who were all lucky that they didn't get indicted.
** Idiotic real estate lending was, in part, to blame for both the current mess and the S&L crisis.