Time ticks off names: who’s to blame for financial crisis
April 8, 2009
1982 Household debt in the U.S. — the money owed as individuals was c. 60% of income in 1982.
1995- 2000 Phil Gramm was chairman of the Senate Banking Committee; he was “Washington’s most prominent and outspoken champion of financial deregulation (Time 2009-04-07).”
1998 Powerful lobby groups comprising hedge funds and the banking sector including investment banks defeated Commodity Futures Trading Commission proposal to regulate the burgeoning derivatives market (Kiviat 2008-09-23).
1999 Phil Gramm “played a leading role in writing and pushing through Congress the 1999 repeal of the Depression-era Glass-Steagall Act, which separated commercial banks from Wall Street (Time 2009-04-07).”
2000 Phil Gramm “inserted a key provision into the 2000 Commodity Futures Modernization Act that exempted over-the-counter derivatives like credit-default swaps from regulation by the Commodity Futures Trading Commission. Credit-default swaps took down AIG, which has cost the U.S. $150 billion thus far (Time Special 2009-04-07).”
Early 2000s Alan Greenspan, Federal Reserve chairman, brought in “super-low interest rates”. His assertive insistence on deregulation along with the easy access to credit are now considered to be leading causes of the mortgage crisis (Time Special 2009-04-07).
2005 Christopher Cox became chairman of Securities and Exchange Commission (SEC). Under his direction the SEC did not insist on greater disclosure of big investment banks like Lehman Brothers and Merrill Lynch.
2006 Hank Paulson left the top job at Goldman Sachs to become Treasury Secretary. In 2008 during the last year of the Bush Administration, he single-handedly ran the country’s economic policy. Time argued that he was late in battling the financial crisis; he let Lehman Brothers fail; he pushed the big bailout bill through Congress (Time Special 2009-04-07).
2007 Household debt in the U.S. increased to more than 130% of income in 2007. Time magazine special report on the financial crisis lays blame on American consumer enjoyed living beyond their means and becoming dependent on credit.
Kiviat, Barbara. 2008-09-23. “How Much is the SEC’s Cox to Blame?” Time Magazine.