Sunday’s Presidential Democratic Debate on the issue of Wall Street was pretty intense by the three candidates.
To do it, Clinton had to go back more than 15 years, and shine a light on a decision that her husband, by his own admission, would come to regret.
“You’re the only one on this stage that voted to deregulate the financial market in 2000,” Clinton said, making reference to his support for former President Bill Clinton’s Commodity Futures Modernization Act.
The law effectively gave bankers, or “sophisticated traders,” free rein from pre-existing oversight mechanisms when they wanted to make deals on the sidelines of the major stock exchanges, in “over-the-counter” trading.
Clinton himself would later cop to having made a serious mistake in signing the bill, saying he didn’t understand the extent to which these deals, if they went bad, could ripple across the global economy.
“Even if less than 1% of the total investment community in derivative exchanges, so much money was involved that if they went bad, they could effect 100% of the investments,” he told ABC’s “This Week” in 2010.
And now, let’s set the record on why Bernie Sanders voted for the Commodity Futures Modernization Act in 2000 and how the change in the language tucked in the bill ended all government oversight on derivatives thanks to then Sen. Phil Gramm. From Huffington Post:
When Sanders voted for the House version of the CFMA in October 2000, the bill was not yet a total debacle for Wall Street accountability advocates. The legislative textSanders supported was clearly designed to curtail regulatory oversight. The GOP-authored bill was crafted as a response to a proposal from ex-Commodity Futures Trading Commission Chair Brooksley Born to ramp up oversight of derivatives. But the version Sanders initially voted for was more benign than the final, Gramm-authored version, and it didn’t draw any of the protests that the 1999 repeal of Glass-Steagall did. In October 2000, the bill passed the House by a vote of 377 to 4 (51 members didn’t vote), and then sat on the shelf for weeks.
But in December, Gramm — after coordinating with top Clinton administration officials — added much harder-edged deregulatory language to the bill, then attached the entire package to a must-pass 11,000-page bill funding the entire federal government. After Gramm’s workshopping, the legislation included new language saying the federal government “shall not exercise regulatory authority with respect to, a covered swap agreement offered, entered into, or provided by a bank.” That ended all government oversight of derivatives purchased or traded by banks. He also created the so-called “Enron Loophole,” which barred federal oversight of energy trading on electronic platforms.
This was an era in which voting against funding the federal government was considered a major governance faux pas. The bill sailed through both chambers of Congress, with few lawmakers even aware of the major new deregulatory changes.
Interesting that a 11,000 page bill funding the entire federal government was attached to the CFMA bill. There was no mention of that in the Presidential Democratic Debate. On a side note: The Gramm–Leach–Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999 (this bill was to repeal the Glass Steagall Act of 1933) was signed into law by President Bill Clinton on November 12, 1999. On November 4, 1999, the final bill resolving the differences was passed by the Senate 90–8 and by the House 362–57. Sanders voted no to repeal Glass Steagall Act of 1933. From the roll call House vote:
—- NAYS 57 —