Sounds incredible, doesn't it? One guy?
Bill Clinton was arguably the major force behind the repeal of Glass-Steagall, now allowing commercial banks to package and sell mortages to the big investment banks. So commercial banks were no longer responsible for their mortgages. So they would loan without credit checks because they could get rid of the bad loans this caused.
Thus, indirectly, Bill Clinton created Lloyd Blankfein, as Goldman-Sachs and others bought these mortgages.
The credit ratings agencies found these deals impossible to evaluate so they made up ratings.
In fact, the financial crisis might not have happened at all but for the 1999 repeal of the Glass-Steagall law that separated commercial and investment banking for seven decades. If there is any hope of avoiding another meltdown, it's critical to understand why Glass-Steagall repeal helped to cause the crisis. Without a return to something like Glass-Steagall, another greater catastrophe is just a matter of time.
In 1999, Democrats led by President Bill Clinton and Republicans led by Sen. Phil Gramm joined forces to repeal Glass-Steagall at the behest of the big banks. What happened over the next eight years was an almost exact replay of the Roaring Twenties. Once again, banks originated fraudulent loans and once again they sold them to their customers in the form of securities. The bubble peaked in 2007 and collapsed in 2008. The hard-earned knowledge of 1933 had been lost in the arrogance of 1999.
Yet another big bank spokesman says that nonbanks such as Lehman and Bear Stearns were more to blame for the crisis. This ignores the fact that nonbanks get their funding from banks in the form of mortgages, repurchase agreements, and lines of credit. Without the big banks providing easy credit on bad collateral like structured products, the nonbanks would not have been able to leverage themselves.Just sayin'.