During the Clinton administration de-regulation continued under Treasury Secretary Robert Rubin, former CEO of Goldman Sachs, and Harvard economics professor Larry Summers. In 1998 Citicorp merged with Travelers to form City Group, making them the largest financial service industry in the world.
Robert Rubin later would receive $126 million from City Group. Mergers continued until a few giants controlled the whole system, knowing that one failure would threaten all. The mergers violated the Glass Siegel Act which prevented banks with consumer deposits from making risky investments activities. The Federal Reserve under Greenspan gave these giants a one year exemption. In 1999 Congress passed the Gramm-Leach-Bliley Act giving investment banks the right to merge William Buiter from City Group said banks knew if they failed they would be bailed out by the federal government.
Glen Hubbard, dean of Columbia business school, credited derivatives as an important element that protects bank lending portfolios against loss and distributes risk. Hubbard was George Bush’s chief economic adviser when the president took office in 2001. Bush said taxes are too high so he cut taxes on investment gains, stock gains and eliminated the estate tax, which helped only the wealthy. Frederic Mishkin returned to Columbia University after his stint in the Federal Reserve, his net worth in between $6 and $17 million dollars.
Larry Summer’s net worth is between $16.5 and $39.5 million. Morgan Stanley has 50,000 workers around the world and capital of several billion dollars. After our 2009 bailout of Morgan Stanley they gave employee bonuses of $14 million.. Goldman Sachs paid out bonuses of $16 million. When Congressman Barney Frank was asked if he thought Larry Sumners had any remorse in his actions, Frank said, “I don’t hear confessions.”