By Dave Lindorff

George Santayana once famously said, “Those who cannot learn from
history are doomed to repeat it.” But what about those who don’t just
ignore history, but who hire and take counsel from those who committed
historic follies in the past?

Back in November 1999, Congress passed legislation pushed by then
Sen. Phil Gramm (R-TX), rescinding the Depression-era Glass-Steagall
Act. The measure, backed by the Clinton administration, and
overwhelmingly passed by the Senate (90-8) and the House (362-57),
opened the way for banks to merge with investment banks and insurance
companies, and led directly to the current financial cataclysm.

A report on that Congressional action written by reporter Stephen
Labaton and published in the New York Times on Nov. 5, 1999 under the
headline “Congress Passes Wide-Ranging Bill Easing Bank Laws,” includes some remarkable quotes from key players in that sellout to the financial sector.

Here’s Larry Summers, a chief architect of the current financial
industry multi-trillion-dollar bailout giveaway being orchestrated by
the Obama administration, where he serves as director of President
Obama’s National Economic Council:

''Today Congress voted to update the rules that have governed
financial services since the Great Depression and replace them with a
system for the 21st century. This historic legislation will better
enable American companies to compete in the new economy.''

And here’s what Sen. Charles Schumer (D-NY), awash in Financial
industry campaign donations but currently in high dudgeon over the Wall
Street’s bonus payments to executives, speaking about the ’99 measure
eliminating Glass-Steagall:

''If we don't pass this bill, we could find London or Frankfurt
or years down the road Shanghai becoming the financial capital of the
world. 'There are many reasons for this bill, but first and foremost is
to ensure that U.S. financial firms remain competitive.”

The article quotes the Clinton administration and Summers’ Treasury
Department as predicting that revoking Glass-Steagall and permitting
banks to expand into investment banking and insurance would save
consumers “$18 billion a year” through economies of scale—a figure that
seems rather quaint as taxpayers now pony up trillions of dollars to
rescue those same institutions. (The article notes that critics of
deregulation argued that even those paltry savings, probably
overstated, would flow to financial sector investors, not to consumers.)

The old Times clip (brought to my attention by alert
veteran radical writer and activist Bert Schultz of Philadelphia), does
highlight a couple of prophetic heroes, too.

Sen. Byron Dorgan (D-ND), one of seven Senate Democrats who voted against revoking Glass-Steagall, said:

“I think we will look back in 10 years' time and say we should not
have done this but we did because we forgot the lessons of the past,
and that that which is true in the 1930's is true in 2010. I wasn't
around during the 1930's or the debate over Glass-Steagall. But I was
here in the early 1980's when it was decided to allow the expansion of
savings and loans. We have now decided in the name of modernization to
forget the lessons of the past, of safety and of soundness.''

And then there’s the late Sen. Paul Wellstone (D-MN), who died in a
tragic and still unexplained plane crash during his campaign for re-election in 2002. Congress, he
said, seemed:

“…determined to unlearn the lessons from our past mistakes.
Scores of banks failed in the Great Depression as a result of unsound
banking practices, and their failure only deepened the crisis.
Glass-Steagall was intended to protect our financial system by
insulating commercial banking from other forms of risk. It was one of
several stabilizers designed to keep a similar tragedy from recurring.
Now Congress is about to repeal that economic stabilizer without
putting any comparable safeguard in its place.''

For the record, also voting against Glass-Steagall repeal in the
Senate were lone Republican Richard Shelby of Alabama, and six other
Democrats: Barbara Boxer (CA), Richard Bryan (NV), Russ Feingold (WI),
Tom Harkin (IA), and Barbara Mikulski (MD). 51 Democrats, 5 Republicans
and 1 independent voted against the measure in the House.

Treasury Secretary Tim Geithner, a key player in the current bailout
scheme, isn’t mentioned in the Times article about Glass-Steagall, but
at the time was a protégé of Summers, working as undersecretary of the
treasury for international affairs.

While they are thankfully well out of the loop in the current
scramble in Washington to both reverse the economic collapse
and try and help financial companies and financiers profit from it,
it’s worth reading too in this 10-year-old clip what Phil Gram and then
Sen. Bob Kerrey (D-NE and now embattled president of the New School in
New York City) had to say about ending Glass-Steagall.

Sen. Gramm:

'The world changes, and we have to change with it. We have a new
century coming, and we have an opportunity to dominate that century the
same way we dominated this century. Glass-Steagall, in the midst of the
Great Depression, came at a time when the thinking was that the
government was the answer. In this era of economic prosperity, we have
decided that freedom is the answer.''

And then Sen. Kerrey, with a line that should probably be etched someday on his tombstone as his most memorable line:

“The concerns that we will have a meltdown like 1929 are dramatically overblown.”
__________________
DAVE LINDORFF is a Philadelphia-based journalist. His latest book
is “The Case for Impeachment” (St. Martin’s Press, 2006). His work is
available at www.thiscantbehappening.net