Bill Clinton & Bob Rubin Caused Our Current Financial Mess

Last spring, I wrote this post regarding Bob Rubin's role in the dismantling of the Glass-Steagall legislation which provided some firewalls in financial services for some 60 years.

As various legislators, Presidential candidates and media pundits search for a place or person whom to blame for the current upheaval in the financial services sector, you need look no further than Bob Rubin and his old boss, Bill "Bubba" Clinton.

Thanks to them, as I noted in this post on my companion blog,

"If this has been only limited to a few mortgage banks, then the damage might have been lessened. But, thanks to Bob Rubin's and Bill Clinton's tacit removal of the firewall between commercial and investment banking, and insurance, with their explicit approval of Sandy Weill's merger of Citibank with Travelers Insurance (which also owned an investment banking operation), commercial banks and insurance companies co-mingled their normal businesses with these securities underwriting businesses, and related swaps trading.

So, in truth, much of the damage wrought in these past few weeks and months is directly traceable to Federal government lapses. The removal of Glass-Steagall, and the feeding and growth of Fannie Mae and Freddie Mac were direct causes of all of this mess.

Despite what John McCain, Barack Obama, the business media and others will tell you, 'greed' is not the cause."

We'll always have greed, or opportunism, and stupidity. But Rubin convinced the rest of Washington's political establishment, due to his stature as ex-Goldman Sachs co-head, that removing Glass-Steagall was a smart idea.

Nice work, Bob. You not only screwed up the firm whose chairmanship you appear to have been given in exchange for greasing the skids for Sandy Weill's proposed merger. You set in motion a chain of events that directly led to this past year's entire financial services sector reckoning with reckless excess.

Oh, and you, too, Bubba. Your acquiesence to Rubin laid the non-regulatory foundation for the biggest, quickest restructuring of the financial services sector in forty years.