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In 1999 Congress eliminated all the fail-safe mechanisms put in place after the Great Depression of 1929. It was the Gramm-Leach-Bliley Act and the cause of our next Great Depression. This act enabled mortgage banks for the first time since the Great Depression to get back in bed with the securities industry. Banks could now just originate home loans - regardless of their soundness- and pass off the risk to people who bundled the mortgage into a securities to sell to pension funds and foreign investors. Hence easy mortgage credit to all, and the cause of the current housing price bubble. Today we are on the threshold of the consequence of eliminating 1930's failsafe controls. Hearing Prelude. Today, we will be considering the Gramm-Leach-Bliley Act, one of the most significant laws to come out of this Committee in many years. The Act made profound changes to the laws governing the affiliation of banking, securities, and insurance firms in an attempt to promote the modernization of the financial services sector." Welcome to the next Great Depression.
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