Ex-CITIGROUP CEO Blames Glass-Steagall Repeal for Financial Crisis

[Octafish]

25. Brooksley Born warned us.

"I think it could include thousands of financial services industry participants and other large institutions all over the world. And I think that's what happened. As the market continued to grow, with even less oversight and regulation, until it reached more than $680 trillion in notional value, an enormous potential for disaster had grown.

"What happened after I left the agency in June 1999 was the President's Working Group did come out with an over-the-counter derivatives report (PDF) to Congress that strongly suggested that ... there was no need for regulation.

"And as a result of that report, a statute was passed in 2000 called the Commodity Futures Modernization Act (CFMA) that took away all jurisdiction over over-the-counter derivatives from the CFTC. It also took away any potential jurisdiction on the part of the SEC, and in fact, forbids state regulators from interfering with the over-the-counter derivatives markets. In other words, it exempted it from all government oversight, all oversight on behalf of the public interest. And that's been the situation since 2000."

CONTINUED...

http://www.pbs.org/wgbh/pages/frontline/warning/interviews/born.html