Nominee For Treasury’s Number Two Helped Draft Legislation Deregulating Banks
Hmmm. This isn’t exactly confidence inspiring.
Tim Geithner’s new nominee for number two at the Treasury Department, Neal Wolin, played a key role in drafting legislation in the late 1990s deregulating the banking system, a former Treasury Department official confirms to us.
The law that Wolin helped draft has been blamed by some critics, many of them Democrats, for easing up regulatory pressure on huge financial institutions, tangentially helping create today’s mess — and his role drafting it could come under questioning at his upcoming confirmation hearings.
Our reporter, Ryan Derousseau, came across Wolin’s role in researching our big profile of Wolin at WhoRunsGov.com. Stuart Eizenstat, a deputy Treasury secretary under Bill Clinton, confirmed that as Treasury’s general counsel at the time, Wolin “provided the technical and legal drafting” for the Gramm-Leach-Bliley Act.
As Ryan writes, the Act hasn’t been directly blamed for today’s meltdown. But it did pave the way for the birth of huge financial companies like Citigroup that were deemed “too big to fail” when their mortgage bets went belly-up and the credit market evaporated. The government, of course, had to bail out these institutions with billions in taxpayer dollars.
Wolin — who was picked after several other candidates passed on the slot — did the legal work under then-Treasury Secretary Larry Summers, who is now Obama’s head of the National Economic Council. The difference here is that Summers’ post, unlike Wolin’s, is a non-confirmable one, so he hasn’t been pressed publicly on Gramm-Leach-Bliley. The question now is whether Wolin will come under sharp questioning over his role in creating it.
The Treasury Department has yet to comment. In other Treasury news — first reported this morning by The Huffington Post — the department is launching an interesting new interactive website today that is intended to bring transparency to he Obama administration’s recovery programs.
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“As Ryan writes, the Act hasn’t been directly blamed for today’s meltdown.”
Oh, but it has. Not by informed people, but every last liberal in my office (obviously not a representative sample, but still) seems to think GLB was not only a cause of the meltdown, but the primary cause.
Not that they know how it caused the unpleasantness, but they just know it did.
huh, interesting, thanks Thomas. that makes it worse, obviously…
Thomas
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Actually if you go on most “liberal” blogs you will see that the Gramm Act gets blamed A LOT as does Clinton, the only difference being is that we ALSO blame the provision Phil Gramm put into a bill during Bush’s time in office that authorized derivatives. You know, the things that brought down our financial system? But hey since you know so much more than those silly libs in your office, why don’t YOU explain to the rest of us what led to the meltdown.
And he did a helluva job with the de-regulating. Now if he’s there to write new regulations I don’t see an issue. He has experience with “technical and legal drafting” of legislative bills.
Does a defense lawyer only take cases he believes in?
One of the reasons it has been so hard to fill these vacancies is that there is hardly anyone with the requisite knowledge and skills who is not in some way connected with the now discredited policies of the past ten years or so. Add this to the draconian “vetting” process (would you want your tax returns for the last ten years gone over with a fine tooth comb?) and the need to divest assets in a down economy, and its a wonder they can get anyone from the financial sector to step up for these jobs.
sick of this ****- this has to stop.
Virginia’s right. The politicization of the nomination/vetting process is getting out of hand.
We are now blaming legal counsels for legislation? The guy didn’t invent the law, or vote for it, he provided legal advice according to this commentary. Does that constitute culpability?
Anyone know where I can score some hope dust?
Does anyone understand what a lawyer does? A policy maker–not the lawyer if he’s general counsel–TELLS the lawyer what product they want and the lawyer produces the language needed for the product. So Seriously, unless you knew that Wolin was in a POLICY position dictating the terms of Gramm-Leach-Bliley rather than implementing them, just get over it and talk about something relevant. (P.S. I don’t know or care about Wolin; this is just stupid reporting.)
You state that Wolin “provided the technical and legal drafting” for the Gramm-Leach-Bliley Act. That was his job as general counsel for the Treasury, right? Technical and legal drafting. He was called upon to draft a piece of legislation conforming to the designs of Gramm, Leach & Bliley, and he did it. Right? There’s nothing in that to “de-inspire” confidence in Wolin as nominee for the #2 slot at Treasury. Now, if he’d been in a policy position at Treasury (or with any of the three named legislators) and had personally advocated for deregulation like the G-L-B Act, THEN I’d be concerned.
“Oh, but it has. Not by informed people, but every last liberal in my office (obviously not a representative sample, but still) seems to think GLB was not only a cause of the meltdown, but the primary cause. ”
You are right sir. How about lack of oversight by regulators (SEC under the Bush Administration) who believed that the free market is infallible and there were no need for efficient regulations. Republicans and their cronies who believe CEOs are too smart ( actually they are not ) to cheat, lies and deserve to steal hundreds of millions of dollars from shareholders. A corrupted system that permited rating agencies to give AAA ratings to toxic assets. A revolving door system that made republicans in the pockets of bankers and lobbyists. A flawed phylosophy and a party (Republicant) who hate government and yet want to run the very government they loathe. What else do you want? George Bush’s Strategerie, the village idiot Harvard MBA, Morons running Wall Street. I’ve figured not.
Still pisses me off Obama passed over Stiglitz for Summers. He could have had a progressive at the helm that would have made damn sure regulations were being implemented but instead we get the same effers that are partly responsible for this nightmare brought on by their selling the nation this fairy tale of deregulation.
BTW Thomas, I’m a liberal and as you can see I don’t blame Bush completely but the guy did pretty much oversee the complete downfall of the economy and did nothing about it his entire 8 years. His buddy Chris Cox at the SEC ignored both the Madoff and Stanford whistleblowers. What little regulation on the books was completely ignored by the Bush Admin. He put an industry fox in every agency (i.e. henhouse) of our government and let them go nuts The mess Bush left Obama and the rest of us to clean up is beyond comprehensible.
Not the best of circumstances but there is no better person to tell you how to make your bank safe than the guy that used to rob it. I say give the guy some room. Sleep with your eyes open but still give him a chance.
I take slight issue with this:
“But it did pave the way for the birth of huge financial companies like Citigroup that were deemed “too big to fail””
From C’s wiki:
“The remaining provisions of the Glass-Steagall Act – enacted following the Great Depression – forbade banks to merge with insurance underwriters, and meant Citigroup had between two and five years to divest any prohibited assets. However, Weill stated at the time of the merger that they believed “that over that time the legislation will change…we have had enough discussions to believe this will not be a problem”.[2] Indeed, the passing of the Gramm-Leach-Bliley Act in November 1999 vindicated Reed and Weill’s views, opening the door to financial services conglomerates offering a mix of commercial banking, investment banking, insurance underwriting and brokerage.”
Sandy Weill and Citi paved the way for GLB. Not the other way around.
And Bill Clinton said no problemo Sandy ol’ buddy.
And of course Clinton soon followed that up by signing The Commodity Futures Modernization Act of 2000, which is another giant piece of the **** puzzle we find ourselves in.
I’ve said it before and I’ll say it again; the best move the Republicans ever made was to infiltrate the Democratic Party through the DLC with DINOs like Clinton. We will be paying the price for generations.
What got us in this mess was that Reagan, BushI and Clinton weakened financial regulations to the point of near uselessness and Bush II simply ignored what little were left.
Another f’ing rubinite! Why the hell are these people that were so complicit in creating this wild west system of finance that their pals on wall street used to loot this country seem to be the only people qualified to fix it?
And another thing, is being jewish mandatory to get a job in the economic side of obama’s administration? Becoz just about every damn one of them is jewish … damn near everyone. It seems like there’s a jewish mafia that runs wall street, the federal reserve and damn near every job in the economic side of this administration. I guess it’s just a coincidence becoz they’ve done such a great f’ing job lead by their don robber rubin.
rubin, emanuel, summers. geithner, furman, gensler, bernanke, greenspan, blankfein, greenberg, rubin’s son, sperling, wolin, pritzker, orszag, axelrod, kohn, rattner, etc., etc., etc.
This level of favoritism for everything and anything jewish is disgusting … especially when you look at these people’s histories and all the damage to our economy these jackasses have helped to facilitate.
Z
None of Obama’s picks surrounding “the money” represent change. They have a very different agenda nfor this country and the world.
I’ve seen way more than enough!
Whether or not the guy was instrumental in repealing the glass-steagal act is irrelevant in some ways becoz he’s a member of the same echo chamber that brought us to this situation.
where are the team of rivals on the economic side of obama’s team? There is one, he is jewish too but he’s not a corrupt self-centered person like so many of these jackasses that obama invites into their government to assist wall street interests that have looted this country. he is a team of rival and his name is Paul Volker and summers has him locked into a corner office far far away from any policy decisions becoz Volker don’t get it like the rest of these scumbags do: they’re here to serve wall street not the people.
obama is a fraud.
Z
Drafters don’t set policy. The question is, did he support the bill as a matter of policy? On this subject, I would be interested in knowing which currently sitting Senators and congresspeople voted for GLB. (Bill Clinton signed it, of course, which was a big reason I didn’t want to vote for Hillary in the primaries.)
I think Obama should approach the financial sector as he has with the automobile industry. A firm hand, no, no-strings-attached type hand outs and clear and concise explanation to the top dogs what the government expects of them if we are to bail them out.
Here’s a good example of what I mean:
http://whatpercent.com/opinion/the-obama-administration-should-treat-wall-street-the-same-as-it-has-detroit/109
We did not vote for Hillary . But somehow we got a Clinton administration. Go figure. Bill likes for the banks to be unregulated. ..so that is what we have gotten. Deregulation is a euphemism for trust us. ….we don’t need laws.
In the restroom at my local wal mart , I am advised that if I take any of their stuff….I will go to jail for 2 years and have a 5,000 fine. Corporations and banksters don’t have the rules to start with that us poor folks have. If they steal millions , it is a mistake.They get millions in bonuses.
Two Americas. Where is the change I can believe in?
Relax! SIFMA will provide cookies and punch. Together, reminisce about the old days when the United States had a sound reputation. Now, think of all the history to share – crony capitalism, oligarchy, malfeasance. Ah, memories, there is the good ol’ commodity futures modernization act, enron, citibank, bank of america, the jpmorgan/bears siv, aig. 2007 and 1908 what great years.
I wonder if Thomas would be willing to ive up all those things HE benefits from that we “libs” have fought for over the years. Course, in is conservative ignorance he doesn’t think there are ANY. What a fool!
Wow….isn’t that wonderful?! Ceberus is leaving a dead auto company and some banks are returning TARP money because they come with terms and may be forced to except regulatory reform?
There was good news coming if we just waited. Now they can blame themselves, rightfully so, when the fail, again.
Second opinion
“We are now blaming legal counsels for legislation? The guy didn’t invent the law, or vote for it, he provided legal advice according to this commentary. Does that constitute culpability?:
he didn’t just provide legal advise, he drafted legislation. There is a big difference. Even I know that and I am nor=t a lawyer. Drafting legislation means that he authored parts of the bill.
I’ll start by saying that I was a Series 7 guy (stockbroker) for almost 20 years, ran my own shop (independent). I was a State RIA for 2 years. In all those years my U4 was squeaky clean and didn’t even have one complaint.
In 1999 I gave up my S7 license and the main reason was I got tired of having to fire clients. Well not fire but telling them they need to find another broker, I won’t do your trades because I feel the Dot Com market is a false market.
For a long, long time I watched the banks constantly trying to get the Glass-Steagall Act quashed and to allow them to enter other businesses like the insurance business. Whenever I would see them trying to quash Glass-Steagall Act, I would mail my obligatory letters to my elected officials telling them it was not a good idea to end Glass-Steagall Act.
The Glass-Steagall Actkept big walls up to keep the banks and brokerage companies from getting too cozy with each other, to keep them from conjuring up ideas about products, marketing and trading. Although Glass-Steagall Act wasn’t the main cause the financial house of cards to fall, I could easily say it was a proximate cause.
The big wire houses are too comfortable and familiar with the SEC and FINRA. I am not even going to attempt to define the swampy mess but in my opinion the market would be better served if:
Do away with FINRA, it is not fulfillment the original role. Originally the idea was to have SRO’s that would compete with each other. FINRA is the only SRO and acts as a monopoly.
Have the State Securities Departments rule over the securities industry. It would take the power away from the centralized rule and possible manipulation of the Federal SEC.
The most recent move that was promomoted by FINRA and the wire houses was to ask the SEC the make rule 151a. The wire houses saw a lot of people moving out of equities into Fixed Indexed Annuities (FIA) and they didn’t want that to happen. So they used a Dateline Show as an example of why the FIA needs to be a security. Dateline isn’t exactly an investigative TV program and is often more about (through good editing) sensationalizing their story. Out of the $billions of money that moved into FIA’s they have an extremely low complaint rate. Dateline presented two negative examples. FINRA’s own site has misleading information about Fixed Index annuities. The SEC used the Dateline show as a reason to make rule 151a.
So with the 151a rule, the wire house will have control of FIA’s . FIA’s don’t offer a stream of buying and selling equities. The wire house’s need a moving stream to make money. I would guess that they will hide the FIA under their desk and will let them die on the vine.
The SEC is again dancing to the tune of FINRA and the wire houses. A side from surrender charges that all annuities have, people in FIA’s have not lost a dime. I ask, how well did people make out that had their money in equities?
Here is the one dissenting vote:
http://www.sec.gov/news/speech/2008/spch121708tap.htm
I think people would get fired up, if they knew all the ruling’s that take place behind the curtain that are not in the people’s best interest.
The more I watch what’s going on, the more I think Obama pulled a fast one on us. No lobbyists when he gets elected? WTH? More than ever, the Treasury Department needs people who understand that BANKS MUST BE REGULATED.
Instead, we’re getting a bunch of lobbyist-bankers at treasury who supplied gasoline to this bonfire, escept they’re being repackaged and sold to us as ‘regulators’. Well, I think their ‘regulation’ won’t work.
If the heads of AIG and GM had to go, then why haven’t we seen bankers fired yet? Oh yes, I understand, their proteges and ex-lobbyists are all over at Treasury making excuses for them and providing cover for Obama. Now that’s change I can believe in !
The only question is now long will it take to drop 20 points in the polls: http://blogdredd.blogspot.com/2009/03/what-was-rejected-in-election.html
Of course it was all the EVIL Republicans that ruined our ‘Free Market’ society. The big bonuses taken by Franklin Raines, Jamie Gorelick, The ‘Friends of Angelo;’ The mis-adventures od Chris Dodd, Charles Rangel; the huge failings of Freddie and Fannie… This is not a party-specific problem we have. The crooks in DC sit on both sides of the isle. As for regulation, their is no other sector of our economy that is more regulated than the financial! The Fed, SEC, IRS, Fannie & Freddie… We have not had a free market society since 1913!!! The birth of the Fed. Now we have a leader who is doing everything to grab power and expand government. We need responsible people spending the money they take from us. It’s time to clean out DC.
sgwhiteinfla,
At this point, if you still don’t understand what led to this financial crisis, neither Thomas nor anyone else is going to be able to get the facts through to you. But keep reading those lib blogs; it’s always hilarious to hear liberals repeat completely retarded things about economics and finances from their echo chambers.
Neal Wolin’s resume is actually pretty thin. He was a supporting lawyer in the CIA and NSA for the Clinton White House — a back room guy. He was GC at Treasury for a lttle more than a year as the Clintons wound down. He is a Sumner guy with limited financial or leadership experience. He polished his resume with a few years as an insurance exec after serving mostly in a legal capacity at The Hartford.
More importantly, Wolin plays over the line. He and his team, under business and litigation pressure, have destroyed documents, understated reserves, and filed misleading statements in state and federal courts. Some of this is already coming out in pending litigation. It deserves investigation.
The issue is not whether he should be number two at Treasury, but why he is serving in the White House.
Hey, this is Ryan Derousseau, the reporter who came across the Wolin tidbit. I can’t help but notice all the interesting comments. If you have any information so we can further this story, feel free to email me at deroussr@washpost.com. Particularly if you have any information regarding Anonymous’ post at 11:06 a.m. on April 1st.
Thanks for the interest in the story.
The culprits are Gramm & Bliley who were doing the bidding of the Wall Street big boys who wanted to be free of all regulations large and small. And the congress who didn’t know that they let loose the dogs of vicious mindless greed.
How about this … instead of Dem or Repub being blamed. The GOVERNMENT DID THIS!
And most people here want that same government to fix it. Sounds like insanity to me.
Yes, Phil Gramm, yes Bill CLinton, yes Barney Frank, et al. And yet your government (for instance Barney Frank) is going to fix it? THEY BROKE IT!
Don’t worry, it will only take your tax money and more debt to ‘fix’ it. Gramm is gone, Clinton too. Frank needs to be FIRED!
The more you blame one side or the other (and believe it), the more the crooks get away with it. They WANT you to blame one side or the other. That way, you vote them back in.
Don’t you see that, people? THAT’S WHAT THEY WANT!! ARGH!
Change will only come when ALL of them are blamed and canned.
Ryan Derousseau- can you be contacted via the main telephone number at the Post?
As a supporter of Obama and Clinton, I am deeply concerned that Obama is making a significant mistake here. Neal Wolin is bad news. The accusations noted above are serious and truthful. Most persons privy to the details are afraid to speak out because of Wolin’s past relationships with the CIA and Justice Department. I reiterate the call for an independent investigation into Wolin’s actions while General Counsel at The Hartford Financial Services.
Anonymous-the best way to contact me is at my email address deroussr@washpost.com. We can connect that way.
No doubt Obama has had one helluva time finding truly qualified and ‘transparent’ nominees. How does a guy like Wolin even get to be in a position to be considered for a high post? Just add to the fact the never-ending string of folks who choose not to pay taxes until they are put under the microscope. The idea Obama has promoted that government is for the people has looked extremely hollow since Day 1, and will probably be that way throughout his tenure at 1600.
I was solidly against eliminating the Glass-Stegal Act at the time Phil Gramm engineered it and Bill Clinton signed it. I knew it would allow banksto acquire business which would eventually make them institutions to become too powereful for the government to “allow them to fail.”We need to reinstate a Glass- Segal type Act only sronger to get rid of this mess. Also re A.I.G. In 1945 Congress enacted legislation to remove insurance companies from the Constitution’s commerce provision (overturning a Supreme Court decision that would have include them), thus leaving states to regulate insurance companies without any Federal interference. I don’t know about other states but during the time I lived in Texas (40 years) the insurance companies ran the Texas Insurance Commission, and together with the utilities, oil & gas industries, and “Beer Loby” ran the states through high profile law firms.