The Politics of Bank Reform

The Fed established invigorated guidelines for capitalization, and slowly but surely, America rebuilt its banking system (Campagna, 1987, p. 113).

Fast beforehand to the 1990s, where a bull market had pushed the stock market to inconceivable highs and confidence in the economy has never been greater. None of the grizzly rules seemed to apply in a searing economy based on technology. But those rules still applied to banks, which watched their profitability suffer as they were denied entry into other sectors of the economy.

Commercial banks, insurance companies, and securities firms, which had been pushing for Glass-Steagall's face-lift since the 1970s, intensified that safari. A lucrative world beckoned if they could tear slew the walls of Glass-Steagall and build pecuniary services firms offering one-stop shopping. So lucrative that they spent $300 million lobbying Congress, the most expensive lobbying weigh ever (Scheer, 1999, p. B7). The banks believed that they had to secure this legislation or they "were going to melt down" (Brinkley, 1999, p. A1).

Only consumer advocacy groups arrayed against bank reform, at least(prenominal) for the long haul. Ralph Nader, head of Public Citizen summarized his group's opposition in tribute before Congress on February 11, 1999. He argued that the repeal of Glass-Steagall would clear to the formation of corporate combinations "which will dominate the delivery of financial products and fuel the already alarming trend

Bank lobbyists were waiting for that day, and their patience was about to pay off. At this point, Congress only had to apply the coup de grGce to Glass-Steagall, because "[f]or years, market innovations, juridical rulings and regulatory decisions [had] eroded the legal walls that bar[red] banks, securities firms and insurance companies from elbowing into all(prenominal) other's straines" (Brownstein, 1997, p. A5). The initial effort fell short and House leadership pulled the bill from the floor in the spring of 1997. A heed sign put up by Alan Greenspan, the well-respected Chairman of the national Reserve Board, helped put a damper on the effort ("Greenspan backs two-stage reform of U.S. banking laws," 1999, p. C4).

Nonetheless, the issue still received little perplexity from g everywherenment, at least before 1997. The republican Party fictional a majority in Congress after the 1994 elections and situate about enacting their "Contract With America." The boring issue of bank reform did not enjoy priority status while the Republicans diligent in an all-out political war with President Clinton over the government shutdown. The Washington political scene did not take to normal until after Clinton won re-election in 1996. At that time, the Republican leadership gave up its grandiose plans and set about conducting the business of government.

Oppel, R.A. (1999, October 23). "Big gains by Gramm in diluting lending act." The unused York Times, p. A8.

Scheer, R. (1999, November 16). " covert issue bubbles beneath the photo op." Los Angeles Times, p. B7.

Campagna, A.S. (1987). U.S. national economic policy, 1917-1985. New York: Pr'ger.

Mierzwinski, E. (1999, February 11). "Testimony of Edmond Mierzwinski." U.S. House of Representatives, Committee on Banking and Financial Services, www.house.gov/banking/21199mie.htm.

" pedigree rallies behind banking reform bill." (1999, February 11). Los Angeles Times, p. C3.

Clinton signed the bill on November 12, 1999, a
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