The Glass-Steagall Act, which regulated financial institutions and separated commercial banking from investment banking, was repealed in 1999.
This allowed investment banks to gamble with derivatives and credit default swaps. Credit default swaps were insurance side bets that bankers made on the U.S. mortgage market, which was built on shaky subprime mortgages.
In 1900, credit default swaps were illegal and considered a form of gambling. In 2000, Congress gave Wall Street the green light to gamble with our deposits. The nation's largest financial institutions made bad bets, which they couldn't afford to pay. The demise of Lehman Brothers, the selling off of Bear Stearns for pennies on the dollar and the bailing out of AIG could have been avoided if Democratic and Republican leaders were watching out for us and not selling out to the lobbyists.
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