Is it Time to Bring Back Glass-Steagall?
Carter Glass (left) developed an impressive resume during his nearly 50 years in public life – Congressman, Secretary of the Treasury under Woodrow Wilson, architect of the Federal Reserve System and U.S. Senator. If he’s remembered at all more than 60 years after his death it for the financial services regulation he authored – the Glass-Steagall Act – and pushed through the Senate in 1933.
A key provision of Glass-Steagall regulated for the first time the speculative activities of banks and mandated the eventual separation of commercial banking from investment banking. Bankers would have to chose under Glass’ legislation to accept deposits and make loans – commercial banking – or invest and trade in securities and other instruments – investment banking. There is general agreement that the legislation stablized banking in the 1930’s and provided a solid platform on which to build a strong and sustainable system for the rest of the 20th Century.
Wall Street was never satisfied, however, and after years of lobbying to end the separation and “reform” and modernize banking for the 21st Century, Congress repealed provisions of Glass-Steagall in 1999. President Bill Clinton signed the legislation.
The final Senate vote was a lopsided 90-8. Still, there were some voices back in 1999 expressing concern about doing away with the Depression-era legislation. When you go back and read the comments of North Dakota Senator Byron Dorgan, one of the no votes, you almost feel he had a crystal ball allowing a look into the future.
”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 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,” Dorgan went on, “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.”
The late Sen. Paul Wellstone of Minnesota called Glass-Steagall a “stabilizer” during the Great Depression “designed to keep a similar tragedy from recurring.”
The fears were discounted by the proponents who, after all, had the votes. Then-Sen. Bob Kerrey of Nebraska said: ”The concerns that we will have a meltdown like 1929 are dramatically overblown.”
Now, in the wake of the greatest financial crisis since 1929, a host of people think the repeal was a bad idea and even some who originally supported it, like Arizona’s John McCain, are supporting a return of Glass-Steagall. Even an ex-Merrill Lynch executive said he regretted supporting repeal.
The great financial meltdown of 2008 had roots deep in the fertile soil of a wild and unsustainable real estate market, unregulated and unintelligible exotic investment tools and regulators at the federal level who were too often asleep at the switch. Someday we may know the full story that is still unfolding thanks primarily to good reporting and post-disaster analysis.
One could make the argument, and more and more are making it, that the great collapse really began when Washington wiped from the books a Depression-era law written by the long forgotten senator from Virginia – Carter Glass.
Is it Time to Bring Back Glass-Steagall?
Pennsylvania: A Foretaste of What’s to Come in Idaho
One of the most interesting – and toughest – primary elections in the country is nearing an end in Pennsylvania. Party-switcher Arlen Specter, supported by the White House and most heavyweight D’s, is trying to hold off Rep. Joe Sestak and preserve a chance to win his sixth term in the U.S. Senate.
Sestak has put up one of the most effective ads I’ve seen in a while reminding Democratic primary votes in Pennsylvania that Specter was a Republican until two years ago. Sestak, a retired three-star Navy Admiral, has now taken a tiny lead in the race. While Snarlin’ Arlen tries to hold on against charges that he is a conniving opportunist, Sestak is fighting off demands that he release his Navy records against a backdrop that includes the allegation that he was relieved of his command forcing his retirement.
The race shows how tough a primary election can become when candidate are scrapping over the base voters in a party.
The Republican primary races in Idaho’s First District has taken on a similar tone as Vaughn Ward, a Marine Corps reserve major and the favorite of many establishment Republicans, tries to hold off the challenge of very conservative state legislator Raul Labrador. The race could turn in the final days and makes the Tuesday head-on-head debate on Idaho Public Television really important.
Both candidates have roots in the southern part of the huge district making populous Canyon County the battleground and both candidates are clearly trying to out appeal the other with the Tea Party crowd.
Last week, Labrador gained the endorsement and help of long-time conservative activist Dennis Mansfield who claims the momentum in the race is moving Labrador’s direction. Labrador also picked up endorsements in Canyon County. Again, like the Pennsylvania race, the GOP primary battle in the First District reflects the fault lines in the increasingly conservative Republican Party.
Expect some tough shots in the final days. These guys, like Specter and Sestak back east, are battling for the heart and soul of their party and it’s winner take all.
The winner in Idaho goes against first term Democrat Walt Minnick who has had the luxury of not facing a primary challenge allowing him to build his ample war chest for the fall.
Passing the Litmus Test
With apologies to Reed Smoot – the Smoot of the Smoot-Hawley tariff – a once powerful U.S. Senator from Utah, by the weekend an even more powerful U.S. Senator from Utah may join Smoot in the history books.
If the tea leaves are correct, three-term Senator Bob Bennett is close to being history. He’s having trouble passing the litmus test.
The popular Republican governor of Florida is no longer a Republican. The leading candidate for governor in Rhode Island is an independent. Idaho’s lone Democratic office holder is too conservative for some of the puny band that call themselves Idaho Democrats.
What’s going on here? Think of it as the further polarization of American politics. The far right dominates the GOP, the far left the Democratic Party and the broad middle ground is increasingly becoming no candidate land.
What do Republicans like Bennett, Gov. Charlie Crist in Florida and former Senator Lincoln Chafee have in common? Each is apparently too liberal for the GOP in their states. Calling Bennett a liberal is a little like calling Babe Ruth a good singles hitter. The label doesn’t fit the man, yet Bennett may well not survive this weekend’s Republican convention in Utah where the party insiders pick the candidates.
Polls indicate Bennett’s standing is OK with most Utahans, but not the very conservative majority that will attend the convention this weekend. The Salt Lake Tribune recently quoted a delegate, Kristina Talbott, as saying: “We need some new blood. Most of it is anger toward Washington and the Republican Party … because people think our party has been letting us down lately. And a lot of people think Bob Bennett is back there and he’s not stepping up to the plate like he should be.”
Crist has abandoned the Republican Party in Florida and will seek the senate seat there as an independent. Chafee is taking the same path in Rhode Island.
Litmus tests go down the ballot, too. In Idaho’s most populous county, the Republican Central Committee recently took the unprecedented step of endorsing candidates in a contested primary for, of all things, two county commission seats. The challengers to two incumbents were not deemed Republican enough even though current Boise City Council member Vern Bisterfeldt and former GOP commissioner Roger Simmons have been elected in the past as Republicans. Simmons even served in an appointed position in Gov. Dirk Kempthorne’s administration. Bisterfeldt and Simmons sin, apparently, was that they have had the independence a time or two to actually support Democrats, thereby failing the litmus test. Oh, and they haven’t shown up for Central Committee meetings.
Some of this reminds me of the storm kicked off in 1986 when my old boss, Cecil Andrus, rolled out a list of “Republicans for Andrus,” including the then-GOP Senator from Washington State Dan Evans.
Andrus’ GOP supporters also included, among others, Harry Magnuson of Wallace, often referred to by the press as a “mining magnate,” wood products operator Dick Bennett of Princeton and former GOP legislator and gubernatorial candidate Larry Jackson of Boise. Some may remember Jackson from his 14-year Major League baseball pitching career with the Cardinals, Cubs and Phillies. He had an impressive career in politics, too, including serving as Chairman of the Idaho House Appropriations Committee and seeking the governorship in 1978.
Andrus won that election only because he was able to appeal to moderate Republicans and independents who, I still believe, appreciated the fact that he, too, was an independent spirit often at odds with his national party. Former Sen. Steve Symms walked into my office in the Statehouse in 1991 and remarked upon seeing the framed newspaper ad of the Republicans for Cecil hanging on the wall, that the “ad elected him governor.”
Republicans certainly smarted from the fact that some of their own had abandoned the party’s candidate in 1986 and the GOP-controlled State Senate subsequently refused to confirm Jackson to the state tax commission or several other of the GOP turncoats to other state boards or commissions.
There is an old saying in politics: Don’t get mad, get even. But, in this case the “getting even” only served to cement the Andrus reputation as a Democrat who could attract Republican support. The Republicans who publicly supported him were denied some jobs, but that hardly hurt the governor who continued to enjoy a lot of Republican support.
In any event, it’s clear that both parties are finding it harder and harder to put up with anything other than political orthodoxy as defined by the extremes on the Republican right and the Democratic left. The broad middle is up for grabs, but few dare venture there – its a political minefield these days.
And we wonder why there is so little bipartisanship.
Harwell – A Voice of the Boys of Summer
It was a cold, wet night at Safeco Field in Seattle on Tuesday and the Mariners played like they would rather have been sitting by a fire sipping a toddy. Their shortstop made three errors, their clean up hitter proved again he is an expensive mistake and, like I said, the raw wind off Elliott Bay was cold.
It was cold for another reason. Ernie Harwell’s mellifluous, calming baseball voice has been silenced. What little bit of warmth I felt on Tuesday at Safeco was the moment of silence baseball fans observed before the first pitch in memory of the 42 summers Ernie called Detroit Tigers games. Harwell died on Tuesday after a battle with cancer. He was a very young 92.
Harwell once said of baseball, “I love the game because it’s so simple, yet it can be so complex. There’s a lot of layers to it, but they aren’t hard to peel back.”
I’ve been a Tiger fan since 1968 when the boys from the Motor City beat the great Bob Gibson to become one of the few teams to recover from being down 3-1 in the World Series. Harwell said his greatest thrill in those 42 seasons behind the mike was Jim Northrup’s two-run triple in Game Seven of that series. That’s a good memory, but even better is sense of place that Harwell could create in even the most routine baseball game, sort of like Tuesday’s game in Seattle.
“On radio,” says Jon Miller, my choice for the best of the new breed of broadcasters,”we could tell a story about a player’s house in Scottsdale, Arizona, and the listener goes to that house. On television, you tell that story and you don’t go anywhere, because you see things that don’t match the story–the third base coach flashing signs, the pitcher getting ready. On TV, I caption what’s being shown. On the radio, it’s my story. As Ernie Harwell says, on TV, you get the movie version. The game on the radio is the novel.”
“Baseball is Tradition in flannel knickerbockers,” Harwell once wrote. “And Chagrin in being picked off base. It is Dignity in the blue serge of an umpire running the game by rule of thumb. It is Humor, holding its sides when an errant puppy eludes two groundskeepers and the fastest outfielder. And Pathos, dragging itself off the field after being knocked from the box.”
I only saw Harwell once in the flesh. It was the last season of old Tiger Stadium. When I showed up at the corner of Michigan and Trumbull to see a game on that piece of hallowed baseball ground there he was. Seated just outside the stadium, signing autographs and copies of his book and talking baseball with the fans – his fans. You couldn’t talk to Ernie Harwell, or listen to him, and not smile and think of the complexity of life and baseball and how marvelous he could make a simple game on a summer afternoon.
Good call, Ernie.
Tea Partiers Want to Do Away With Direct Election of Senators? Come on…
The fellow to the left should be the poster boy for why repealing the 17th Amendment to the U.S. Constitution is a really, really nutty idea.
William Andrews Clark was one of the original robber barons of the American West, a Montana Copper King, a genuine scoundrel and a United States Senator thanks to the money he spent buying a few state legislators and his ticket into the world’s greatest deliberative body.
Now – brace yourselves – the Tea Party movement is advocating, you can’t make this stuff up, doing away with direct election of U.S. Senators. Even more off the wall, the two top candidates for the GOP nomination for Congress in Idaho’s First Congressional district have endorsed the idea as has Idaho’s governor. These folks must be drinking something stronger than tea.
William Edgar Borah, one of the greatest United States Senators, lead the charge in the early 1900’s to amend the Constitution to take away from state legislators the power to elect United States Senators. Borah was a progressive – that would be a dirty word for many Tea Partiers – who believed that the power to make Senators ought to reside with the people, not a tiny group of elected officials (legislators) subject to the influence and money of special interests, raw politics, deal making and close door decision making. He fought for the amendment for years before it was finally passed.
Now, apparently harboring the misguided notion that letting legislators elect U.S. Senators would somehow strengthen states rights, the Tea Party movement is all over repealing Borah’s historic handiwork.
Borah’s biographer Marian McKenna writes this about the Idahoan’s effort to put the American people in charge of deciding who serves in the U.S. Senate.
“The feeble and corrupt, he wrote,will always be found in personal government, but in a true democracy neither incompetence nor dishonesty will long remain unexposed. ‘What judgment is so swift, so sure and so remorseless as the judgment of the American people?'” Indeed.
The founders wrote the state legislature election process into the Constitution because they wanted to ensure one house of the national legislature would be dominated by an elite. The House of Representatives would be for the common people, the Senate for the new American nobility. The provision stayed in the Constitution for so long, in part, because southerners worried that African-Americans would influence the popular vote for members of the Senate.
Borah disliked the lack of direct election for the same reason William Andrews Clark loved the idea. Borah knew he could stand a chance getting elected if the people were passing judgment, if a bunch of small-time pols in the legislature did the selecting they would often be subject to deals, pressure and money. Clark used all three to seal – or steal – his election in Montana at the turn of the 20th Century.
Do candidates like those in Idaho who have endorsed this idea really think we ought to disenfranchise the people and let a simple majority of the 105 members of the Idaho Legislature elect our U.S. Senators? If they do, they haven’t read any history. They need to.
Can you imagine the wheeling and dealing in the state legislature around a U.S. Senate seat? I’ll vote for your guy if you support the appropriation for my community college? You want your bill to see the light of day, better support my guy for the Senate?
The state legislature – any state legislature – is capable of more than enough mischief, thank you, without trusting them to elect our U.S. Senators. I really hope the otherwise serious people who are supporting this idea are merely guilty of pandering to the movement of the moment. If they are serious, the tea they’re drinking has fermented.
Andrus Conference Considers A Better Way
If you want a sense of how often public policy in the American West regarding land use or the environment is made in a courtroom, just Google the name of any one of the last half dozen Secretaries of the Interior.
You’ll get lots of hits: Alaska v. Babbitt or Defenders of Wildlife v. Kempthorne or Andrus v. Shell Oil Company. Much of the litigation results from a legitimate need to sort out claims to competing rights. My right to use the land or drill for oil versus some other right to protect a species or complete a process.
But a good deal of the litigation over what we might broadly call “the environment” comes about because legitimate competing interests can’t find a basic level of trust in the other side to try and sit down and hash out a compromise that leaves the lawyers advising rather than suing. That may be changing a little as so called “collaborative processes” produce significant win-win situations in various places in the West.
Last Saturday’s Andrus Center conference in Boise highlighted two successful and very different collaborations in Idaho.
One – the Owyhee Initiative – resulted in legislation that both protects some of the most spectacular river canyon country in the U.S. and helps preserve a rural way of life in the rugged ranching country of southwestern Idaho. Fred Grant, a property rights lawyer who worked for eight years on the collaboration, told the conference his willingness to come to the table with the once-hated enviros had cost him friends, but the payoff had been worth all the heartburn and hard work.
The second collaboration has been underway in eastern Idaho in the Henry’s Fork drainage where irrigators, environmentalists and federal agencies meet regularly to work through water and habitat issues. They’re not looking for legislation, but rather a constructive forum to work on problems. With the Henry’s Fork Watershed Council they seem to have found the forum.
The Idaho Statesman’s Rocky Barker covered the conference that also featured Forest Service Chief Tom Tidwell and BLM Director Bob Abbey. Rocky’s piece today offers more insight into how the collaborative process is working in the Henry’s Fork basin.
Over the next few weeks the Andrus Center – I serve as the Center’s volunteer president – will distill the innovative thinking from the conference, produce a “white paper” and engage a working group in an attempt to create more forward progress focused on collaboration rather than litigation. Look for more follow up.
Collaboration that solves problems and builds trust has to gain more traction in an American West where fundamental values – open space, wildlife habitat, clean air and water, working landscapes that support ranching and resource utilization – are in danger in a changing economy and a changing climate.
To some, as former Idaho Governor Cecil Andrus likes to say, the word “compromise” is an unclean concept. But, if you believe as I do, that personal relationships built on trust are what ultimately make the world go round, then finding a way to collaborate and not litigate really is the path to a better future in the often contentious American West.