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An act passed by Congress in 1933 that prohibited commercial banks from collaborating with full-service brokerage firms or participating in investment banking activities.
The Glass-Steagall Act was enacted during the Great Depression. It protected bank depositors from the additional risks associated with security transactions. The act was dismantled in 1999.
Following the merger announcement on April 6, 1998, Weill immediately plunges into a public-relations and lobbying campaign for the repeal of Glass-Steagall and passage of new financial services legislation (what becomes the Financial Services Modernization Act of 1999). One week before the Citibank-Travelers deal was announced, Congress had shelved its latest effort to repeal Glass-Steagall. Weill cranks up a new effort to revive bill.
Weill and Reed have to act quickly for both business and political reasons. Fears that the necessary regulatory changes would not happen in time had caused the share prices of both companies to fall. The House Republican leadership indicates that it wants to enact the measure in the current session of Congress. While the Clinton administration generally supported Glass-Steagall "modernization," but there are concerns that mid-term elections in the fall could bring in Democrats less sympathetic to changing the laws.
Bernanke Urges Flexibility in Mortgage Regulation
Bernanke to Propose Stricter Mortgage Regulation
Wall Street firms are stumbling and markets around the globe are nervous. Economists worry the mortgage bust may lead to a recession.
NOW connects the dots to see the extent to which recklessness, corruption and greed created this subprime mess that now threatens to undermine our entire economy. David Brancaccio talks to Rep. Keith Ellison, who grew up in North Minneapolis and who has pushed legislation to address the crisis. He also talks to Ameriquest whistleblower Mark Bomchill, who explains the competitive "boiler room" culture that encouraged brokers to aggressively push mortgage products they knew clients would be unable to repay.
Nancy Olland's application for a mortgage said that she made $6,900 a month. She needed that much income to qualify for her loan. Her pay stub shows that Olland, 48, a mental health therapist from Cleveland Heights, Ohio, makes $3,286.
She said she had not been asked to document her income. She signed the application without reviewing it and discovered the discrepancy months later. "I don't know where the information came from," Olland said. "I didn't give it to my mortgage broker. Was it literally fabricated out of thin air?"
New Century Financial, a leading U.S. subprime lender last year, was Olland's lender. Laura Oberhelman, a spokeswoman at New Century, which is based in Irvine, California, said that the company only approved loan applications "that evidence a borrower's ability to repay the loan." To stem fraud, she said, New Century uses electronic and manual systems "designed to detect red flags like inflated appraisal values, unusual multiple borrower activity or rapid loan turnover."
New Century filed for bankruptcy on April 2.
All of which means the housing boom is being fueled by the willingness of lenders to let borrowers get behind—and stay behind—on their payments. Homeowners go deeper and deeper in debt and become less and less home "owners," but they get to keep the roof over their heads. It used to be that only gigantic banks and corporations like Citigroup and Chrysler were regarded as too big to fail. Today, the humble homeowner enjoys that status as well.
Originally posted by infolurker
Meanwhile, our corrupt rich executives fund our esteemed politicians political campaigns and wow... no accountability for fraud!