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by Mitchell Bard
"You would think from listening to the rhetoric that we have two choices in this country: Either you adopt the right's notion of deregulation and an unfettered free market, or you are a socialist. There is no in-between. Which is, of course, patently false, but also maddeningly ignorant of recent American history. Taking the financial industry as an example, after the election of Franklin Roosevelt, Congress quickly enacted legislation, like the Securities Act of 1933, the Banking Act of 1933 (Glass-Steagall), and the Securities Exchange Act of 1934, meant to curb the excesses of an unfettered financial system, which had led to the stock market crash of 1929 and the depression that ensued. And for the next 45 years, the country was able to avoid any mass financial collapses.
Then, beginning with Reagan, and continuing through George H.W. Bush and Bill Clinton, and reaching its peak with the ultimate deregulation messiah, George W. Bush, the government took down the post-Depression financial regulation structure brick by brick, following a mantra that deregulation helped the market to function freely, and a free market will produce the best results.
What did we get? The savings and loan scandal, the Enron-induced power outages in California, corporate fraud (Enron, etc.) and, ultimately, a financial industry run amok (arcane financial instruments, insanely risky investments that banks profited from regardless of their success, and credit rating agencies handing out AAA ratings like candy to keep customers, just to name some examples), all leading to a near financial collapse that plunged the country (and the rest of the world) into a job-sapping, deep recession."