Ten years ago, the Republican-controlled Congress - egged on by that champion deregulator, former Texas Sen. Phil Gramm - passed legislation that arguably did more to plunge the United States into our crippling great recession than anything else: It repealed the Great Depression era's Glass-Steagall Act.
Then on Nov. 12, 1999, an acquiescent Democratic president, Bill Clinton, signed the repeal into law.
Glass-Steagall stood as a firewall between commercial banks and Wall Street since 1933, when the country's leaders heeded the lessons of the 1929 stock market crash and set in place strict regulations in an attempt to prevent such an economic calamity from happening again.
But the country's financial institutions chafed for decades under Glass-Steagall's restrictions. If only commercial banks could merge with investment banks and insurance companies, they argued, it would be so much better for the nation's economy. Gramm, who infamously insisted that the U.S. had become a nation of whiners when the economy started to tank in the fall of 2008, fought for years to repeal Glass-Steagall and finally got his way. Get government out of the way of the free marketplace, he argued, ignoring the fact that historically conservative banks would be joining the high-risk investment community and all the pitfalls it represents.
The repeal sanctioned the formation of the conglomerate Citigroup, for example, permitting commercial bank Citicorp's merger with Travelers insurance corporation. Citigroup, which now included Citibank, Smith Barney, Primerica and Travelers, combined banking, securities and insurance services under one giant and, as we painfully learned, "too big to fail" financial institution.
That's how we got today's Bank of America, JPMorgan Chase and the many other giants that participated in dicing and slicing subprime mortgages, and traded in complicated hedge funds, derivatives and other financial manipulations, which commercial banks were forbidden to do for more than 65 years.
Now some of the biggies are coming to recognize the peril they and the country are in as a result. Last week, JPMorgan CEO James Dimon called the idea that any bank is too big to fail "ethically bankrupt" and added that regulators should have the power to let them fail.
Even Citigroup's co-founder, John Reed, said earlier this month that he's sorry for creating the monster and that it was a big mistake when the bank merged with Travelers, opening the door to massive risk.
Indeed, Reed said Glass-Steagall should be restored, joining former Federal Reserve Chairman Paul Volcker, who has been trying to convince the Obama administration of the need to return to the act's strict regulation. That would mean breaking up the "too big to fail" institutions and restoring banks to being banks and investment houses to their own businesses.
Breaking up the biggies would go a long way toward returning stability to the broken system, in which taxpayers are asked to save the conglomerates from their own bad behavior and then forced to sit by while the behemoths return to big profits and obscene bonuses.
U.S. Sen. Bernie Sanders, the Vermont independent, has introduced legislation that would require the Treasury Department to identify the so-called "too big to fail" conglomerates and force them to break up within a year.
Meanwhile, the Madison-based Center for Media and Democracy has started a new project called BanksterUSA to rally support for Sanders' legislation and advocate for prosecution of Wall Street executives who purposely manipulated markets for their private gain. Its motto is: "Too big to fail, but not too big for jail!" More information is on its website at www.BanksterUSA.org.
After what we've gone through and what millions of innocent out-of-work Americans are still going through, it truly is time to restore Glass-Steagall and rid ourselves of these "too big to fail" conglomerates.