Changes

===Repeal of Glass-Steagall Act===

===Repeal of Glass-Steagall Act===

President Clinton signed into law the Financial Modernization Act of 1999 in November of the same year. The Act repealed parts of the [[Great Depression|Depression era]] Glass-Steagall Act. In signing President Clinton remarked, "It is true that the Glass-Steagall law is no longer appropriate for the economy in which we live."<ref>[http://www.treasury.gov/press-center/press-releases/Pages/ls241.aspx STATEMENT BY PRESIDENT BILL CLINTON AT THE SIGNING OF THE FINANCIAL MODERNIZATION BILL,] 11/12/1999, [[U.S. Department of the Treasury]] Press Center.</ref>The Glass-Steagall Act regulated Bank Holding Companies (BHCs) and strictly regulated the types of assets banks could hold as part of their capitalization. The formal repeal allowed for large banks, such as Goldman Sachs, to form newly created [[Financial Holding Companies]] (FHCs) and merge with insurers and other financial institutions with potentially much riskier liabilities. By 2008, the result of the repeal of Glass-Steagall was "too big to fail" behemoths like Goldman Sachs and Citigroup. The repeal of Glass-Steagall is considered to be among one of the larger contributing factors to the [[Financial crisis of 2008]].<ref>[http://www.usnews.com/opinion/blogs/economic-intelligence/2012/08/27/repeal-of-glass-steagall-caused-the-financial-crisis Repeal of Glass-Steagall Caused the Financial Crisis,] By James Rickards, USNews, August 27, 2012.</ref>

President Clinton signed into law the Financial Modernization Act of 1999 in November of the same year. The Act repealed parts of the [[Great Depression|Depression era]] Glass-Steagall Act. In signing President Clinton remarked, "It is true that the Glass-Steagall law is no longer appropriate for the economy in which we live."<ref>[http://www.treasury.gov/press-center/press-releases/Pages/ls241.aspx STATEMENT BY PRESIDENT BILL CLINTON AT THE SIGNING OF THE FINANCIAL MODERNIZATION BILL,] 11/12/1999, [[U.S. Department of the Treasury]] Press Center.</ref>The Glass-Steagall Act strictly regulated Bank Holding Companies (BHCs) and the types of assets banks could hold as part of their capitalization. The formal repeal allowed for large banks, such as Goldman Sachs, to form newly created [[Financial Holding Companies]] (FHCs) and merge with insurers and other financial institutions with potentially riskier liabilities. By 2008, the result of the repeal of Glass-Steagall was "too big to fail" behemoths like Goldman Sachs and Citigroup. The repeal of Glass-Steagall is considered one of the larger contributing factors to the [[Financial crisis of 2008]].<ref>[http://www.usnews.com/opinion/blogs/economic-intelligence/2012/08/27/repeal-of-glass-steagall-caused-the-financial-crisis Repeal of Glass-Steagall Caused the Financial Crisis,] By James Rickards, USNews, August 27, 2012.</ref>

The repeal of Glass-Steagall also was recognition of other changes that had taken place, such as the [[Federal Reserve]]s' revision of Regulation Y in 1997, making it easier for Bank Holding Companies with a satisfactory [[Community Reinvestment Act]] (CRA) rating to receive quicker approval for new acquisitions and engage in other activities. [[Alice Rivlin]], Clinton's Budget Director whom he later appointed to the Federal Reserve, said it would make the banking system "operate better as a result."<ref>[http://www.frbsf.org/publications/community/investments/cra97-3/regy.html Regulation Y Revised - Changes to the Federal Reserve Application Process,] Community Investments, Volume 9; No. 3; Summer 1997, By Mike Johnson, Applications Officer, Federal Reserve Bank of San Francisco.</ref>

The repeal of Glass-Steagall also was recognition of other changes that had taken place, such as the [[Federal Reserve]]s' revision of Regulation Y in 1997, making it easier for Bank Holding Companies with a satisfactory [[Community Reinvestment Act]] (CRA) rating to receive quicker approval for new acquisitions and engage in other activities. [[Alice Rivlin]], Clinton's Budget Director whom he later appointed to the Federal Reserve, said it would make the banking system "operate better as a result."<ref>[http://www.frbsf.org/publications/community/investments/cra97-3/regy.html Regulation Y Revised - Changes to the Federal Reserve Application Process,] Community Investments, Volume 9; No. 3; Summer 1997, By Mike Johnson, Applications Officer, Federal Reserve Bank of San Francisco.</ref>