Financial Deregulation: Our Failed 30 Year Experiment.

Financial Deregulation: Our Failed 30 Year Experiment.

 Financial deregulation taken to the extreme creates extreme greed and extreme risk taking by the unsuspecting middle class.

 The inevitable crash of the deregulation bubble caused a reduction of the middle class and a recession / depression i.e. when the middle class loses their savings, 401k value and buying power our economy suffers to the same degree of their loss. A large, employed, financially sound and prosperous middle class it the foundation of a stable free market society.

 The financial and housing bubble of this decade was fueled by the implied assurance of great short term gain by people who could not afford and were ill-equipped to take such a financial risk. The end result of this crash is an extreme accumulation of wealth by the small percentage of our society who perpetrated the stock, financial and loan scams on the rest. Stock and financial scams that appear to create instant wealth create herd mentality i.e. everyone ignores logic and does what everyone else is doing which gives the illogical act creditability.  This may be the 21^st century version of a legal Ponzi scheme enabled by Washington.

 I am reminded of a famous quote by Joe Kennedy (JFK's Father) I read somewhere a long time ago. He was getting a shoe shine in the summer of 1929 and the shoe shiner was telling him about all the money he was making in the stock market. He said to a friend "when the shoe shine boy is in the market its time for me to get out." He pulled out of the market and did not loss his fortune when the market crashed in Oct 29.

 Joe Kennedy was appointed the first chairman of the newly created SEC in 1934 which formulated the regulation of investment banks/wall street etc that help keep our financial system safe for the next 50 years.

 The Glass-Steagall Act of 1933 became the foundation of protection for our consumer banking and financial system. It created a firewall between consumer banks and investment banks. In 1980 Washington/Congress began to dismantle that firewall and we had the Savings and Loan crash/bailout in 1988. In 2000 Washington completely gutted Glass-Steagall and 7 years later we have the worst financial crash since 1929.

 This experiment in deregulation has proven that a free market works best with a reasonable amount of regulation. We need a new and improved Glass-Steagall Act to protect our children from a repeat.

Larry A. Whited, Sr., CRB, CRS, GRIPresident / Founder
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