Writing in the
Guardian newspaper on Saturday, journalist Dan Roberts
details
how newly released documents from inside the Clinton adminstration
reveal how the president's economic advisors at the time downplayed the
possible negative impacts of deregulating Wall Street as they pushed for
measures that many critics say ultimately led to the financial crash of
2008.
A Financial Services Modernization Act was passed by Congress in 1999. (Photo: Steve Helber /AP) An
additional and troubling aspect of what the documents show is that many
of the key players involved with championing the repeal of important
laws like the
Glass-Steagall Act—passed in the wake of the
Great Depression to separate investment services from commercial
banking—continue to hold sway and influence inside the Obama White
House.
Released by the Clinton Library on Friday as part of
a large declassification of presidential documents,
Roberts' reporting shows how these specific internal memos reveal how
top-level advisors tried to pressure Clinton to follow their advice on
Wall Street deregulation. In addition, read carefully, portions of the
hand-written notes show the pro-active manner by which the Clinton team
kept aspects of their motivations—which included providing preferential
treatment to large financial firms like Citigroup—out of the public
record.
As Roberts
reports:
A Financial Services Modernization Act was passed by Congress in
1999, giving retrospective clearance to the 1998 merger of Citigroup and
Travelers Group and unleashing a wave of Wall Street consolidation that
was later blamed for forcing taxpayers to spend billions bailing out
the enlarged banks after the sub-prime mortgage crisis.
The White House papers show only limited discussion of the risks of
such deregulation, but include a private note which reveals that details
of a deal with Citigroup to clear its merger in advance of the
legislation were deleted from official documents, for fear of it leaking
out.
“Please eat this paper after you have read this,” jokes the
hand-written 1998 note addressed to Gene Sperling, then director of
Clinton's National Economic Council.
(Document: Clinton Library)
Earlier, in February 1995, newly-appointed Treasury secretary Robert
Rubin, his deputy Bo Cutter and senior advisers including John Podesta
gave the president three days to decide whether to back a repeal of
Glass-Steagall.
The reporting goes on to point out the prominent role these Clinton
advisors—Rubin, Sperling, and Podesta—played and continue to play in the
Obama administration.
"The closeness of Obama's team to the deregulation policies of the
late 1990s is well known and has been criticized by campaigners as a
reason for the current administration's reluctance to institute more
aggressive Wall Street reforms after the banking crash," writes Roberts.
"But the new documents cast fresh light on the way the White House was
first ushered toward deregulation by the tight group of Rubin allies."
Whether it reflects poorly or favorably on the legacy of Bill
Clinton, the nature of some of Rubin's advice on the issue makes it
appear that the president was urged to stand aside so that the Treasury
Secretary himself could take the lead on the reforms.
“Should you approve our recommendation to move forward, the proposal
would be a Treasury initiative, and would not require a significant time
commitment from the White House,” writes the Treasury secretary in one
memo.
“I and my staff will manage the process of advancing the proposal,” Rubin wrote.
After leaving the White House, Rubin went on to work for Citigroup as
advisor and then chairman for which, according to records, he was
compensated more than $120 million in cash and stock for his services.
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