What kind of impact will the regulatory overhaul have? Ask us in 2020
By David Cho
It's hard to know what impact the regulatory overhaul passed by Congress on Thursday will have on the markets and the economy. The legislation's supporters hailed it as a landmark bill that will protect consumers, rein in risky activity and allow the economy to get back on track. Its critics say it either doesn't go far enough or puts too many onerous regulations on corporate America that will choke growth.
It's impossible to know who's correct right now. But it may be instructive to look back at the comments from the last big regulatory overhaul in 1999 called the Gramm-Leach-Bliley Act. This law not only deregulated the banking industry, it specifically avoided oversight over the trading of exotic instruments such as derivatives. Some of its key backers included Clinton administration Treasury Secretaries Robert Rubin and Lawrence Summers. Summers had a big hand in crafting the bill that was approved this week.
In 1999, Summers hailed Gramm-Leach-Bliley as "a system for the 21st century" that "will better enable American companies to compete in the new economy."
Other Democrats at the time decried that bill. Sen. Byron L. Dorgan (D-N.D.) hauntingly warned: "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 . . . of safety and of soundness."
That was quite a prediction from Dorgan. Sometimes it takes a decade to prove a prophet's prediction.
July 15, 2010; 7:58 PM ET
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