Brief of the Week October 13

BILL LIKES PHIL: At a time when many Democrats are calling for restoration of the 1933 Glass-Steagall Act whose 1999 repeal removed the barrier between commercial and investment banks, the Democrat who signed the repeal staunchly defended his doing so. In fact, Bill Clinton last week went out of his way to praise the father of Glass-Steagall’s overhaul and the Republican most identified with banking deregulation, former Texas Sen. Phil Gramm, until recently a top economic adviser to John McCain. “You know, Phil Gramm and I disagreed on a lot of things, but he can’t possibly be wrong on everything,” Clinton told Business Week’s Maria Bartiromo. “On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I’d be glad to look at the evidence. But I can’t blame them [the Republicans]. That wasn’t something they forced me into. I really believed that given the level of oversight of banks and their inability to have more patient capital, if you made it possible for [commercial banks] to go into the investment banking business as Continental European investment banks always do, that it might give us a more stable source of long-term investment.” Clinton went on to say that “I don’t see that signing that bill had anything to do with the current crisis. Indeed, one of the things that has helped stabilize the current situation as much as it has is the purchase of Merrill Lynch by Bank of America, which was much smoother than it would have been if I hadn’t signed that bill.”