This story originally appeared at Truthdig. Robert Scheer is the author of The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Nation Books).
Bill Clinton bears as much responsibility as any politician for the worst economic crisis since the Great Depression, and the wild applause for his disingenuous speech at the Democratic National Convention last week is a sure sign of the poverty of what passes for progressive politics.
Do those convention delegates, and the fawning media that were wowed by the former president’s rhetorical seductions, not recall that just before he left office Clinton signed off on the game-changing legislation that ended the sensible rules imposed on Wall Street during the Great Depression? It was Clinton who cooperated with the Republicans in reversing the legacy of FDR’s New Deal, opening the floodgates of unfettered avarice that almost drowned the world’s economy during the reign of George W. Bush.
How convenient to ignore the Financial Services Modernization Act, which Clinton signed into law to summarily end the Glass-Steagall barrier against the commingling of investment and commercial banking. Do the Democrats not remember that Citigroup, the first too-big-to-fail bank made legal by the law Clinton signed, became the $15 million employer of Robert Rubin, the Clinton treasury secretary who led the fight for the law that legalized the creation of Citigroup? Or that Citigroup—led by Sanford Weill, to whom Clinton gave one of the souvenir pens he used to approve that onerous legislation—went on to be a major player in the subprime mortgage swindles and had to be bailed out with more than $50 billion of taxpayer funds?
Those scams were based on bundling suspect mortgages into collateralized debt obligations (CDOs), backed by the phony insurance of credit default swaps (CDSs), all of which were given “legal certainty,” to quote Lawrence Summers, who replaced Rubin as Clinton’s treasury secretary. It was Summers who encouraged Clinton to sign the Commodity Futures Modernization Act, which declared CDOs and CDSs immune to any existing regulatory law and the purview of any regulatory agency.
Timothy Geithner, a protégé of Rubin and Summers in the Clinton Treasury Department, was appointed, with Rubin’s enthusiastic endorsement, to be head of the New York Fed while Bush was president. Geithner happily partnered with the Bush administration in saving AIG and funneling trillions of dollars to the banks that had caused the crisis. When Barack Obama appointed Geithner as treasury secretary, the new president committed to the Bush strategy of saving the bankers rather than those in the middle class who had much of their life savings tied up in the vanished equity in their homes.
The Democrats who boast so much about their inclusion of black and brown people have not seemed to notice that the accumulated wealth of both groups has declined by more than half since the onset of this crisis, wiping out much of the economic gains of the civil rights movement.