RISKY BUSINESS…. (Re-posted from Tuesday) Long-time readers of the Monthly may recall that Sen. Byron Dorgan (D-N.D.) wrote an important cover story for us in 1994 on financial deregulation and the dangers of derivatives. Dorgan’s prescient piece is available online.
Dorgan deserves a lot of credit for getting this exactly right, especially when nearly everyone in the political establishment was completely wrong about deregulation.
On Thursday, Dorgan will discuss the issue, and the renewed efforts at re-regulation, at an event at the New America Foundation, co-sponsored by the Washington Monthly.
Long before the complete meltdown of the financial industry last fall, Senator Byron Dorgan warned us about the risks posed by one of the key ingredients in that catastrophe: the complex financial packages known as derivatives. In a Washington Monthly cover story, “Very Risky Business” (October 1994), the North Dakota Democrat predicted with uncanny precision what actually happened in September 2008 — the cascading failures of large lending institutions, the collapse of Fannie Mae, taxpayer-funded bailouts — and speculated that a derivatives-driven financial crisis would eventually leave Americans “nostalgic for the days of the $500 billion savings-and-loan collapse.”
In 1999, Dorgan was one of eight senators to vote against the Gramm-Leach-Bliley Act, which repealed Depression-era banking regulation, cautioning at the time that deregulation “would raise the likelihood of future massive taxpayer bailouts.”
Ten years and trillions of taxpayer dollars later, Sen. Dorgan is one of Congress’ leading voices for financial re-regulation. Please join Sen. Dorgan at the New America Foundation for a conversation on how we arrived at the crisis and what common-sense regulations are needed to make sure it never happens again.
If you’re in the area, the event begins Thursday morning, at the NAF offices in D.C., at 8 a.m. The discussion will be moderated by the New America Foundation’s Michael Lind.
To RSVP, follow the link. For those outside D.C., there will be a live webcast at the same site.
