October 11th, 2011 1:33 am EST
The Story Behind Clinton and the Glass-Steagall Act
Q: Did Bill Clinton Repeal the Glass-Steagall Act?
A: No, but he signed into law the Gramm-Leach-Bliley Act, which repealed some of the provisions of the Glass-Steagall Act.
On November 12th, 1999, Bill Clinton signed into law the Gramm-Leach-Bliley Act, which repealed SOME of the provisions of the Glass-Steagall Act.
According to Wikipedia.org, "the repeal of provisions of the Glass-Steagall Act of 1933 by the Gramm-Leach-Bliley Act effectively removed the separation that previously existed between investment banking which issued securities and commercial banks which accepted deposits. The deregulation also removed conflict of interest prohibitions between investment bankers serving as officers of commercial banks."
"…The Glass-Steagall Act prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and an insurance company."
So, as a result of the Gramm-Leach-Bliley Act, a commercial bank would be able to buy an insurance company, or a commercial bank would be able to buy an investment bank, etc.
The three co-sponsors of the Gramm-Leach-Bliley Act were:
Sen. Phil Gramm - R
Rep. Jim Leach - R
Rep. Thomas J. Bliley, Jr. - R
In 1999, the Republicans held a majority in both the Senate and the House of Representatives.
The final version of the Gramm-Leach-Bliley Act passed the House by a vote of 362-57 and the Senate by a vote of 90-8. This made the bill "veto proof", meaning that if Clinton had decided to veto, the bill would have been passed anyways. Having said that, if Clinton truly didn't want the bill to become law, he could have vetoed the bill in a symbolic gesture, but this did not happen.
Many people point to the Gramm-Leach-Bliley Act as a major reason why the financial sector imploded in 2008.
When it comes to pointing fingers, both parties get the blame. The Gramm-Leach-Bliley Act was co-sponsored by three Republicans, signed into law by a Democratic president and had the overwhelming support of both parties when it was eventually passed.