In 1999, the NYT published this prophetic article about the repeal of the Glass-Steagall Act, which founded this economic crisis. It is incredible, how a minority of critics saw exactly what could happen and ignored the lessons of the past yet again. Mainstream was sure, that mainstream could only be rational, irrespective of the past:
“The decision to repeal the Glass-Steagall Act of 1933 provoked dire warnings from a handful of dissenters that the deregulation of Wall Street would someday wreak havoc on the nation’s financial system. The original idea behind Glass-Steagall was that separation between bankers and brokers would reduce the potential conflicts of interest that were thought to have contributed to the speculative stock frenzy before the Depression.
Today’s action followed a rich Congressional debate about the history of finance in America in this century, the causes of the banking crisis of the 1930’s, the globalization of banking and the future of the nation’s economy.”
By the way, Lawrence Summers, who was Secretary of Finance in those days that led the legaslative changes, was part of the Clinton Administration and is now a senior advisor to President Obama.