Why did we get rid of Glass-Steagall?

[The spartan]

No, really, why did we?

Glass-Steagall Act

The term Glass–Steagall Act, however, is most often used to refer to four provisions of the Banking Act of 1933 that limited commercial bank securities activities and affiliations between commercial banks and securities firms.[2] Starting in the early 1960s federal banking regulators interpreted these provisions to permit commercial banks and especially commercial bank affiliates to engage in an expanding list and volume of securities activities.[3] By the time the affiliation restrictions in the Glass–Steagall Act were repealed through the Gramm-Leach-Bliley Act in 1999 by President Bill Clinton, many commentators argued Glass-Steagall was already “dead.”[4] Most notably, Citibank’s 1998 affiliation with Salomon Smith Barney, one of the largest US securities firms, was permitted under the Federal Reserve Board’s then existing interpretation of the Glass-Steagall Act.[5] Clinton publicly declared, "The Glass-Steagall Act is no longer relevant."[6]

What exactly were the objections to this bill, and how did we let lobbyists repeal it? Doesn't it make sense to separate commercial and investment banking? Better yet, why are we not trying reinstate a similar act currently?

I apologize I am speaking only in questions, but to me, it is surprising that people aren't talking about this more. Any thoughts?

[chilon]

Because the financial services industry wanted access to more capital in order to fuel more financial services products that were created in the early 2000s due to the FSMA and CFMA and the changing of mortgage rules that allowed companies like Countrywide to sell ARMs to people and then quickly sell off the repackaged ARM debt into MBSs that got rated AAA.

[Denny Crane!]

Because no matter how good the regulation there are people with all the money and all the power to either get around the regulations or use their muscle to get them removed.

[The spartan]

Because no matter how good the regulation there are people with all the money and all the power to either get around the regulations or use their muscle to get them removed.

Isn't that the truth. But the one power people have is public outrage and we can scare politicians into not giving into to such lobbyists. But the public was strangely silent on Glass-Steagall, and even now there isn't really much pressure on congress to put another bill like it through.

[Denny Crane!]

Isn't that the truth. But the one power people have is public outrage and we can scare politicians into not giving into to such lobbyists. But the public was strangely silent on Glass-Steagall, and even now there isn't really much pressure on congress to put another bill like it through.

I always get a strong suspicion that answers on the crisis are a lot more complicated than just one piece of legislation. This thought comes from economists on both sides of the fence and from moderates and extremists.

I've listened to quite a few economists who discuss the fact that unusual company structures that effectively created a shadow banking industry that effectively sidestepped any regulation that had been in place that was occurring even before the repeal of Glass Steagal and would have even if it had been in existence. Lehman Brothers, Merrill Lynch, Bear Stearns, and Goldman Sachs were not owned Lehman Brothers, Merrill Lynch, Bear Stearns, and Goldman Sachs were not divisions of commercial banks. RBS is a good UK example.

Is limiting the size of any one operation a good idea? What about banning excessive liabilities (125% mortgages)? But then again I'd suggest that banning excessive borrowing from a government whilst easy to say but incredibly complicated in practice is also something but all of this is great with hindsight and seemingly impossible to implement.

Rambling - off to work. Fix the world without me if I can contribute from the confines of an iPhone I shall.

[chilon]

I always get a strong suspicion that answers on the crisis are a lot more complicated than just one piece of legislation. This thought comes from economists on both sides of the fence and from moderates and extremists.

I've listened to quite a few economists who discuss the fact that unusual company structures that effectively created a shadow banking industry that effectively sidestepped any regulation that had been in place that was occurring even before the repeal of Glass Steagal and would have even if it had been in existence. Lehman Brothers, Merrill Lynch, Bear Stearns, and Goldman Sachs were not owned Lehman Brothers, Merrill Lynch, Bear Stearns, and Goldman Sachs were not divisions of commercial banks. RBS is a good UK example.

Sure, it is more complicated than just one piece of legislation. But it not any more complicated than tracing the incentive structures and seeing how things played out.

The problem was in the incentive structures that were created through a combination of several pieces of legislation, the way investment houses operated with high leverage and the general moves from the late 1990s tech and early 9/11 response by profit seekers in finance who were jealous of tech millionaires (oh and shady scumbags like Angelo Mozilo).

Glass-Steagall alone would not have stopped the recession because of how the incentives were structured but it certainly exacerbated the problem.

The incentive problems start with allowing mortgage houses like Countrywide to make home loans that were Adjustable Rate Mortgages. Then allowing the mortgage houses to repackage that debt into Mortgage Backed Securities and offload the debt as fast as possible. This created an incentive structure where the mortgage lenders (like Countrywide) had absolutely no incentive to truly qualify the home buyers since they were repackaging and selling the mortgage. Angelo Mozilo and Countrywide were not making these loans because government told them to (the disingenuous or naive Thomas Sowell explanation). They made the loans because they had every personal financial incentive to make these junk ARM loans since they would not be holding the debt. As economists (Nouriel Roubini), finance journalists (Roger Lowenstein), fund managers (Barry Ritholtz) and even Lehman VPs in other departments (Lawrence McDonald) all recognized, the financial incentives quickly became so enticing that many former sales people looking to make a quick buck jumped into the mortgage lending business.

Traditionally banks were the ones making home loans and banks held that mortgage debt over the course of the entire loan. So banks had an incentive to not make bad loans. Mortgage houses like Countrywide on other hand had every incentive to make bad loans. This is why ARMs were tricky because they just had to make sure the borrower could make the low teaser rate payment. Then, since Countrywide and others were selling the debt ASAP they didn't have any incentive to ensure the borrower could actually afford the balloon rate which would kick in after 2-3 years.

The buyers of the MBS didn't care either since they used the new loophole in financial service product deregulation (FSMA, CFMA) to create new financial services products based on derivatives of MBS' and they would sell these new financial products to institutional investors. The rating houses at this point (2002-2006) were basically just rubber stamping what the top investment houses wanted them to rubber stamp without due diligence because again, the ratings houses had a big financial incentive to just pass on Triple A ratings that Bear, Lehman and others insisted were the appropriate rating for their new financial services products (that didn't even exist in the 1990s and earlier).

What made the financial crisis was not simply the fact that some people made bad loans to people that couldn't pay it back. It was the fact that this debt was broken up, derivatives were created and passed along to soo many institutional investors that collapse of the false rated MBS would not just affect the lender but anyone that held the MBS which turned out to be a whole lot of large institutional investors from insurers like AIG to pension funds like CalPERS to foreign investors like "Dusseldorf" (a German city where apparently a lot of junk MBS ended up).

An argument could be made that all of these investors should have done more due diligence but two factors worked against them:
1. They had every incentive to belief Bear and Lehman about the reliability of these MBS because they could get then get Triple A securities cheaper than they could otherwise
2. Most people during 2002-2006 were either not digging deep enough to really see this house of cards structure or they simply did not know enough about financial services to even identify the issues.

Some of the insightful investors on Wall Street did see the problem but they either
1. Took advantage of the instability to make massive profits for themselves (its how John Paulson made his name in the investment community)
or
2. Tried to stop the process (like Lehman VP Larry McDonald) but didn't have enough pull inside their companies to override the hardcore MBS people who were making bucket loads of profit and not adequately calculating the true risk of holding so much MBS debt.

[barbarossa pasha]

One of the benefits of finance is that it is too arcane and too boring for the vast majority of the population to get riled up about. We need to keep things simple, stupid.

[DarthShizNit]

Watching some Daily Show land Colbert Report recently eh . I approve.

Anyway, yeaeh basically greed and human stupididty replealed it, and even greater human stupididty in the form of a bush/tea party aligned goverment has kept it from coming back in any meaningful way.

[★Bandiera Rossa☭]

It's always funny when I end up agreeing with Denny...Chilon is correct about the reasons that bankers wanted the restrictions removed..and of course, Denny is right - when there is a dollar (or billion) there is a way.

[Celsius]

Lobbyists can do a lot with a few thousand dollars and some baseball tickets.

Without it, it took 10 years for the financial system to nearly tank completely.
With it, the financial system was considerably smaller, though never tanked due to investments and over reach.

Common sense says to reinstate it, but Washington isn't known for common sense.

[Matthias]

A failed conservative economic ideology that has held the US in a death grip the last four decades, and continues to do so. That's why Glass-Steagall isn't being reinstituted, and why we are still at as great a risk for another financial crisis even after 2008.

[motiv-8]

...Hasn't economic 'ideology' in the US been largely neo-liberal? A conservative economic policy would involve lots of protectionism, for one, and yet we have NAFTA and other agreements living large.

[Matthias]

...Hasn't economic 'ideology' in the US been largely neo-liberal? A conservative economic policy would involve lots of protectionism, for one, and yet we have NAFTA and other agreements living large.

It's just a matter of American political terminology. Conservatives here support neo-liberal economics of the laissez faire sort. It was American conservatives that repealed the Glass Steagal act. Republicans are almost wholly conservative ideologically, especially economically. Democrats have a substantial number of economic conservatives among them.

I understand the terminology is confusing. Liberals here are generally for more state intervention in economics and more regulation. They also have significantly less to no power and far fewer numbers, which is why we have had these policies for 40 years and continue to have them even as they cause financial crisis.

[Lord Thesaurian]

It's just a matter of American political terminology. Conservatives here support neo-liberal economics of the laissez faire sort. It was American conservatives that repealed the Glass Steagal act. Republicans are almost wholly conservative ideologically, especially economically. Democrats have a substantial number of economic conservatives among them.

I understand the terminology is confusing. Liberals here are generally for more state intervention in economics and more regulation. They also have significantly less to no power and far fewer numbers, which is why we have had these policies for 40 years and continue to have them even as they cause financial crisis.

I was wondering whether I should bother to join this discussion, but I suppose I will. The term Glass-Steagall actually literally refers to two separate pieces of legislation in 1932 and 33. The 1932 acts allowed federal reserve branch banks wiggle room on what was left of the gold standard. The Glass bills gave greater centralization to the US banking system and allowed the Fed to more directly bail out financial institutions. The Steagall bills laid the groundwork for the FDIC. The final Banking Act of 1933 is what has come to be called Glass-Steagall. The modern discussion only discusses a small part of the legislation, the separation of commercial and investment banking.

Just as they built they built their own money machine, the Federal Reserve, twenty years earlier, the most powerful financial institutions told their pet Congressmen to paint Glass-Steagall as a triumph of consumer protection. In reality this legislation only further bound the smaller banks and S&Ls to the interests of Wall Street and created a miniature bailout fund, the FDIC, which has conducted dozens of bailouts since its creation disguised as "insurance claims."

Hence the last century of Progressive economic policies, from the Federal Reserve to Glass-Steagall to the recent TARP and "Recovery" Acts have hopelessly inflated and destroyed the dollar for the sake of the wild power orgies of the elite few, leaving the taxpayer with trillions in debt. There are thousands upon thousands of federal mechanisms billed as "consumer protection," yet the cost of living perpetually rises and massive boom-bust cycles persist. There are really no liberals and conservatives anymore, only taxpayers working their lives away to feed the federal government/bank.

I say all this to point out the foolishly limited scope of the modern terminology addressed when one refers to "Glass-Steagall," and to challenge your assessment of liberals and conservatives. There are few true classical, laissez-faire liberals left. The Progressive movement moved the goal posts and now all that liberal and conservative denotes is a difference between leftist and rightist authoritarianism; a difference of means, not end. Ron Paul libertarians are more anti-federalist than Constitutionalist.

And could you please tell me how a century of Square Deal, Wilsonian democracy, New Deal, Fair Deal, New Frontier, and Great Society policies, globalism, the UN, the unimaginably massive federal government, and the left's ownership of the media remotely indicate a lack of power for the left?

[Matthias]

The modern discussion only discusses a small part of the legislation, the separation of commercial and investment banking.

Right, that is the topic.

Just as they built they built their own money machine, the Federal Reserve, twenty years earlier, the most powerful financial institutions told their pet Congressmen to paint Glass-Steagall as a triumph of consumer protection. In reality this legislation only further bound the smaller banks and S&Ls to the interests of Wall Street and created a miniature bailout fund, the FDIC, which has conducted dozens of bailouts since its creation disguised as "insurance claims."

Uh, are you kidding me? The FDIC is all about stopping the occurance of "bank runs", which have destroyed the financial system in the past and lead to long lasting recessions and depressions. The amount of wealth, efficiency, etc. lost to a long lasting recession or depression far outweighs by many times over having an insurance policy in place. The existence of a modern economy with bank runs happening as often as they did in the past would be hard to imagine.

As for seperating risky investments from commercial banking, uh yeah, that's good consumer protection. If I want to invest my money in risky investments, I will, and reap the massive losses or benefits that result.

Hence the last century of Progressive economic policies, from the Federal Reserve to Glass-Steagall to the recent TARP and "Recovery" Acts have hopelessly inflated and destroyed the dollar for the sake of the wild power orgies of the elite few, leaving the taxpayer with trillions in debt. There are thousands upon thousands of federal mechanisms billed as "consumer protection," yet the cost of living perpetually rises and massive boom-bust cycles persist. There are really no liberals and conservatives anymore, only taxpayers working their lives away to feed the federal government/bank.

Hmm, inflation really hasn't been an issue at all. You are correct that the Federal Reserve and Glass-Steagall etc. are all there to save capitalism from itself. We couldn't have a modern economy without a regulated market. None of those things left the taxpayer trillions in debt. What leaves taxpayers in debt are weakly/poorly regulated markets causing long recessions and too much spending with not enough revenue, and there are lots of things that can be blamed on that. I suppose it depends on your priorities as well. If you're cool with another depression and the destruction of the financial system every 10 years or so, then I guess it's not worth it to you.

I say all this to point out the foolishly limited scope of the modern terminology addressed when one refers to "Glass-Steagall," and to challenge your assessment of liberals and conservatives. There are few true classical, laissez-faire liberals left. The Progressive movement moved the goal posts and now all that liberal and conservative denotes is a difference between leftist and rightist authoritarianism; a difference of means, not end. Ron Paul libertarians are more anti-federalist than Constitutionalist.

Liberals think the market should be regulated so that it is fair and stable. If you think that's authoritarain, that's your opinoin.

And could you please tell me how a century of Square Deal, Wilsonian democracy, New Deal, Fair Deal, New Frontier, and Great Society policies, globalism, the UN, the unimaginably massive federal government, and the left's ownership of the media remotely indicate a lack of power for the left?

Wow, where to start. First, I was talking about American liberals. So listing a bunch of legislation that is all more than 40 years old makes no sense. We are talking about the present. Liberals used to have more power in the US, more than 40 years ago, yeah.

Globalism and the UN are just irrelevant to American political power and are not kept going by liberal political muscle in the US.

The "massive federal government" is a relative term, it's your opinion in other words, and it also has nothing to do with liberal ideology. Liberals don't require a "massive" federal government, they just think goerment has certain roles to play in society. Liberals don't agree, for example, with the massive size of the military the US has, especially relative to the rest of the world. But they do think that the government should provide universal health coverage, like every other developed nation does, at less cost and with better results, and the happy fact that no one dies because they lack money.

The left's ownership of the media? Are you kidding me? So corporations are now "the left", right? Look at who owns the media, and tell me which one of those is "liberal". They're all profit-seeking corporations, and in terms of their goal of profit-seeking, conservative economic policy is their best bet. Practically every Republican representative and a large majority of Democratic representatives are conservative economically, so party names don't matter, ideology does. The only thing corporations have to fight about is who to bribe more to get a larger piece of the pie at the expense of the public and other corporations. And thanks to conservative SC justices, all this bribery is perfetly legal "free speech".

Finally, gallup polls have consistently shown that only 20% or so of Americans define themselves ideologically as liberal, 40% as moderate and 40% as conservative. Republicans define themselves around 85% conservative ideologically, with 1 or 2% liberal. The Democratic Party defines itself 40% liberal, 40% moderate, 20% conservative. You can see from these stats that liberals have much less political power or numbers compared to conservatives, and are not even a majority in the Democratic Party. And that's not even taking into account "economic conservatism" specifically.

[Lord Thesaurian]

Right, that is the topic.

I realize that. I was simply amused that the thread title says "Why Did We Get Rid of Glass-Steagall," and then only address one rather minor part of the legislation. The nation's largest financial institutions used Glass-Steagall, the Fed, and other mechanisms of "public protection" when it suited them to gobble up the vast majority of the market, then told men like Nixon and Reagan to deregulate everything when it became clear that the system the big banks had built for themselves would come to the rescue of institutions that were "too big to fail."

Uh, are you kidding me? The FDIC is all about stopping the occurance of "bank runs", which have destroyed the financial system in the past and lead to long lasting recessions and depressions. The amount of wealth, efficiency, etc. lost to a long lasting recession or depression far outweighs by many times over having an insurance policy in place. The existence of a modern economy with bank runs happening as often as they did in the past would be hard to imagine.

Um, do you have anything to support the claim that it strangled small banks into following the interests of Wall Street? And what exactly is your problem with FDIC?

The US was economically the one of the most powerful nations in history by 1890. The nation suffered the periodic "panics" of a free market, but the stability of gold prevented total chaos. Of course this was a long time ago, but the principles of basic economics haven't changed. The markets still suffer equally frequent recessions, only without the accountability of gold, the government can more easily prevent or cushion these panics on paper via bailouts and "recovery" plans. Without gold, the government can plug holes in the markets with massive wads of fiat money and create the illusion of stability where there should have been a natural recession consequential of the failure of a large institution or natural economic factors to allow the markets to reset and adapt to new conditions. Instead, panics are replaced with massive taxpayer debt while the largest banks and corporations reap the huge piles of cash as virtual administrators of quasi-fascist state capitalism.

The FDIC is a bailout fund because all banks are supposedly equally insured regardless of performance. The FDIC is backed up by Fed branch banks which are backed by the Fed itself. The name of the game for the banks is clear: the biggest gambles are the safest, because as long as there is enough leverage the FDIC, Fed, and other "consumer protection" mechanisms will have no choice but to come to the rescue in the off chance of failure in order to "save the public" from recession. Hence the origin of "too big to fail." The problems of the Gilded Age haven't changed a bit. The only difference is that there is no gold accountability and corporations and banks know that the government will bail them out. The FDIC has overseen the failure of thousands of banks, and the federal government has bailed out corporations and banks in 15 different incidents just since 1970 (not counting the FDIC); but you probably haven't heard of most of them because Congress often quietly picked up the tab while the irresponsible and reckless corporate execs involved walked away with a pocketful of cash. So much for preventing market instability.

Read the history of the Federal Reserve and subsequent "consumer protection" financial regulations. The nation's largest financial institutions helped craft every single one of them. Either these regulations have failed miserably or succeeded in freeing the financial industry from gold and objective regulation. Understand that I do not pretend to oppose any and all market regulation, but such regulations must be objective and universal or they will not work; hence the current situation of the global economy.

One small but telling example is the fact that a century ago, your money in the bank would represent actual money in a safe. Now its just numbers on a computer screen, because your money has been lent to other banks and customers ten or twenty times over. In a nation of laws this would not be permissible, and commercial banks used to only be able to work with the actual money in the accounts of their customers, and always had to keep enough money in the safe to pay their customers' accounts "on demand." This required careful accounting and skillful loan policies, and resulted, on paper, in a smaller economy than that of today, but it was honest, real value.

The downside was of course the possibility of currency drains and bank runs, but under this system the financial industry still made handsome profits and small start-up banks and S&Ls were popping up everywhere in the early 20th century to loan money to new industries. The largest banks like the Bank of New York and JP Morgan were losing market share to these newcomers, and thus concocted ideas like the Federal Reserve to solidify the dominance of the big banks. So these big banks and corporations made the government their own personal checkbook in the name of "protecting the consumer."

As for seperating risky investments from commercial banking, uh yeah, that's good consumer protection. If I want to invest my money in risky investments, I will, and reap the massive losses or benefits that result.

And? If you're suggesting that we bring this one component of Glass-Steagall back, then of course, it seems like a good idea. The point is that you don't have the money to tell Congress to get it done, especially when there's a trillion-dollar industry that doesn't seem to have use for it anymore. If, however, you're suggesting that the piece of Glass-Steagall is a genuine piece of consumer protection and designed as such, I would question that based upon the track record of these kinds of legislation.

Hmm, inflation really hasn't been an issue at all.

That's because the Fed artificially controls inflation. When your money is worth whatever the Fed says it is, inflation can be zero or a hundred percent if the Fed wants. It's all market manipulation. For example, the amount of silver that used to be in two dimes in the 1940s could still purchase a gallon of gasoline based upon objective commodity values, but those values no longer exist.

You are correct that the Federal Reserve and Glass-Steagall etc. are all there to save capitalism from itself.

Liberals and often conservatives as well commonly fail to distinguish between laissez-faire capitalism, which technically no longer exists, and state capitalism, which is the current engine of the global economy. So if you mean to say that the Federal Reserve and Glass-Steagall were enacted to preserve the system of state capitalism, then I completely agree.

We couldn't have a modern economy without a regulated market.

Again I have never argued against the principle of a regulated market, but such regulations must universal and tied to objective comodity values, not to the whim of government regulators who are often on the payroll of the institutions they regulate.

None of those things left the taxpayer trillions in debt.

Really? Those fifteen bailouts I mentioned alone cost over 2 trillion, and that's just those direct bailouts in the last 40 years, including over a trillion in just the last 4 years. These bailouts took place under every administration on the right-left spectrum from Reagan to Obama. Why would two administrations as ideologically "different" as Reagan and Obama respond in the same way under pressure? Because at the end of the day, it's all about preserving the status quo. As I said, there is no real right and left, only different means to the same end. This is democracy in action, not the Republic, and this is what populism and ignorance brought us. All these lofty regulations did nothing to stop these crises or alleviate them. Regulations only allowed the financial industry to save face while the government hid the damage with massive debt injection face lifts. The FHA is supposed to make homes more affordable. The FDIC is supposed to make you more confident with your money. The FSLA is supposed to protect small S&Ls and promote diversity in investment and commercial banking. The Federal Reserve is supposed to prevent economic instability and uncertainty. Ask your grandparents if their cost of living was lower 40 and 50 years ago, or now. Obviously something or someone has failed miserably, or succeeded in making you, the American taxpayer, the bread winner and insurance policy of the entire planet. The government has regulated and taxed everything into the ground promising "a chicken in every pot and a house on every block." While there are plenty of empty, foreclosed houses on every block, I must admit I haven't had chicken in quite a while.

What leaves taxpayers in debt are weakly/poorly regulated markets causing long recessions and too much spending with not enough revenue, and there are lots of things that can be blamed on that.

The list might be shorter than you think. In 1910, the ten largest US banks controlled 20% of total market share, and that was shrinking due to new startups and industries, as I discussed. In 2010, after a century of "regulation" and glorious Progressive democracy, the Big Ten controlled 73% and counting. What leaves taxpayers in debt is the fact is that they are ultimately on the hook for every single one of Washington and Wall Street's shenanigans.

I suppose it depends on your priorities as well. If you're cool with another depression and the destruction of the financial system every 10 years or so, then I guess it's not worth it to you.

As opposed to? As I said, it is the system of "regulation" that is responsible for the decenniel market hiccups. Thanks to Progressive economics, there is no tether to the gambles the financial industry can make, so the hiccups will get worse and worse until one day the last great hiccup will tear our innards out, and Uncle Sam and the Monopoly Man will walk away with the cash. So what exactly should my "priorities" be? If you're suggesting that the current state capitalist system is a necessary evil, I beg to differ, though I would agree that it can't be fixed.

Liberals think the market should be regulated so that it is fair and stable. If you think that's authoritarain, that's your opinoin.

I think its "authoritarian" of liberals to brandish red flags and demand proletarian revolution when they are on the same "authoritarian" payroll as the GOP. I think its "authoritarian" of liberals to demand market regulation to funnel money to their pet projects while decrying the GOP for deregulating markets to funnel money to theirs. I think its "authoritarian" of liberals to peer down from their ideological soapboxes and talk about the "little man" when true liberalism is virtually nonexistent.

Wow, where to start. First, I was talking about American liberals. We are talking about the present.

I realize that. I was reminding you of what real liberalism is, not this statist montage we have now.

So listing a bunch of legislation that is all more than 40 years old makes no sense. Liberals used to have more power in the US, more than 40 years ago, yeah.

You mean listing all the legislation that built the system we have today? You mean the Great Society policies that are still alive and well though they have failed miserably? You mean that huge social safety net we have, the EPA that has openly expressed its desire to kill the coal industry and reverse the industrial revolution? You're right, almost nothing remains of modern liberal policies in the US. There are no market regulations and the federal government is so small its almost an afterthought. There was a monumental national healthcare bill I seem to remember something about, but because liberals are such a persecuted minority I doubt it got anywhere. There was a very liberal presidential candidate named Barrack Obama who supposedly won the presidency by a landslide in 2008 as the Democrats swept the Congress, but that can't be because there is virtually no support for liberalism in this country anymore. Obama will probably legalize same sex marriage in his second term, but because the liberal power structure is so weak it probably won't happen either. You're right, liberalism has accomplished nothing since the glory days of Camelot.

[/quote]Globalism and the UN are just irrelevant to American political power and are not kept going by liberal political muscle in the US. [/quote]

Globalism and the UN were the pet projects two of liberalism's heroes, Wilson and FDR.

The "massive federal government" is a relative term, it's your opinion in other words, and it also has nothing to do with liberal ideology. Liberals don't require a "massive" federal government, they just think goerment has certain roles to play in society.

A pillar of modern American liberalism states that the purpose of the federal government is the welfare of the people, which requires a large federal government. As the people demand more and more welfare, the federal government gets larger and larger. What liberals (as well as many conservatives who demand a quasi-theocracy) have forgotten is Jefferson's word to the wise: "A government strong enough to give you everything you want is strong enough to take everything you have."

Liberals don't agree, for example, with the massive size of the military the US has, especially relative to the rest of the world.

A pillar of modern liberalism states that the world must be made "safe for democracy." This requires a large military. However, the entire world can never be safe enough for democracy, so the military gets bigger and bigger, until it gobbles up more and more of the US GDP and "terrorists" multiply.

But they do think that the government should provide universal health coverage, like every other developed nation does, at less cost and with better results, and the happy fact that no one dies because they lack money.

Yes, because Europe, the liberal utopia, is doing so well economically. Modern liberals also want the government to grow flowers in the snow and turn lead to gold. That doesn't make modern liberalism practicable. No government, no matter how Arthurian, can guarantee outcomes. What can be guaranteed is opportunity. The Constitution accomplished the latter, but I guess that wasn't good enough.

The left's ownership of the media? Are you kidding me? So corporations are now "the left", right? Look at who owns the media, and tell me which one of those is "liberal". They're all profit-seeking corporations, and in terms of their goal of profit-seeking, conservative economic policy is their best bet.

Practically every Republican representative and a large majority of Democratic representatives are conservative economically, so party names don't matter, ideology does. The only thing corporations have to fight about is who to bribe more to get a larger piece of the pie at the expense of the public and other corporations. And thanks to conservative SC justices, all this bribery is perfetly legal "free speech".

Are you really attempting to say that the media is not liberally biased? Aside from Fox News, which is obviously conservatively biased, all other major networks are biased to the left by their own admission. A desire for profit does not a conservative make. There are plenty of "Learjet liberals" who decry wealth and privilege while being conspicuously wealthy and privileged themselves. For example, an excerpt from the NY Sun, 09.21.04:

Viacom's chairman and chief executive, Sumner Redstone, is a self-described "liberal Democrat" and a prolific donor to Democratic campaigns. Of the company's 13 board members, eight contribute primarily to Democratic candidates and party committees. Two other members of the board, Joseph Califano and William Cohen, held cabinet posts under Democratic presidents.

I suppose if one is very, very far left, the American media may appear conservative. One would also have to be very, very far left to say that the Democrat Party is economically conservative. Both parties support state capitalism but each favors different industries. I do not consider that economically conservative in the modern, neo-conservative sense, which I assume you refer to. Real conservatism is state-capitalist or economically authoritarian, and real liberalism is laissez-faire, but you have said you are limiting the context to modern definitions.

Finally, gallup polls have consistently shown that only 20% or so of Americans define themselves ideologically as liberal, 40% as moderate and 40% as conservative. Republicans define themselves around 85% conservative ideologically, with 1 or 2% liberal. The Democratic Party defines itself 40% liberal, 40% moderate, 20% conservative. You can see from these stats that liberals have much less political power or numbers compared to conservatives, and are not even a majority in the Democratic Party. And that's not even taking into account "economic conservatism" specifically.

I would bet most Americans don't even know the real difference between liberal and conservative in any sense, and could care less what a poll of a few thousand people says in a country of a quarter billion. If you really want to claim that modern liberalism is dead, I hope you are right. One down, one to go. Here's looking at you, evangelical christian GOP base.

[Big War Bird]

I seem to remember at the time were not big enough to finance mega corporations and were losing out on that business to larger European banks. This move allowed US banks to become larger and do the big deals, IIRC.

It was American conservatives that repealed the Glass Steagal act.

It was a bipartisan effort to repeal the act.

[Lord Golog]

It was a bipartisan effort to repeal the act.

Exactly. Even the nominally liberal branch of the two-party paradigm has lots of relative conservatives in it. It's why Democratic majorities don't push through really liberal legislation; conservative Dems veto it.

[The spartan]

I seem to remember at the time were not big enough to finance mega corporations and were losing out on that business to larger European banks. This move allowed US banks to become larger and do the big deals, IIRC.

Apparently it also makes them severely unstable and bubble-like.

It was a bipartisan effort to repeal the act.

The house was strongly republican at the time. Clinton did sign it rather than veto, but I believe the house could have overruled his veto.

[Denny Crane!]

Lets not forget the points I made earlier. Look at the institutions that ended up in the biggest trouble, they would not have been effected by the Glass Steagal act. Let us also not forget that one of the things at the heart of the crisis were encouraged by the left in both America and the USA though much more strongly in the USA, and that is the availability of cheap and easy credit to people who couldn't afford it to stimulate a housing boom.

No one is innocent in this. One of the daemons particularly in the UK is the unwillingness to allow a recession to happen in order to stave off a recession because of the political damage it can cause to re-election opportunities.