LaFalce played a big role in global economic crisis
Sam Beard’s July 28 Viewpoints article heaping praise on former Rep. John LaFalce as a job creator was a startling example of selective memory. Beard is correct in one sense. As he states, LaFalce’s leadership in Congress “changed the landscape and unleashed systems that remain today.”
LaFalce was the driving force behind landmark bank deregulation that tore down the walls between commercial and investment banks. As an architect of the 1999 Gramm-Leach-Bliley Act that repealed the Glass-Steagall Act of 1933, LaFalce helped create “too big to fail” megabanks that nearly brought down the U.S. financial system in 2008 with the worst economic crisis since the Great Depression.
He helped to draft the final legislation that President Bill Clinton signed into law in 1999 as the Financial Services Modernization Act. For his leadership in killing Glass-Steagall and ushering in a new era of giant U.S. banking conglomerates, LaFalce was given an award by the Financial Services Roundtable, which represents the largest banks.
Today, the Financial Services Modernization Act is widely criticized as the statute that repealed the safeguards of the Depression-era Glass-Steagall Act and precipitated the 2008 global economic crisis. This legislation ultimately put American taxpayers on the hook for billions of dollars to bail out these firms. Not surprisingly, when LaFalce retired from Congress at the end of 2002 after a 28-year career, tributes for the Western New York congressman poured in from the financial services industry.
Beard’s version of LaFalce’s accomplishments ignores his role in the global economic crisis of 2008, which resulted in tens of millions of people losing their homes, jobs and savings. Five years later, the ripple effects of this man-made financial crisis are still being felt. So, let’s give credit where it’s due.