This may be the first lesson we learn: The most elemental obligation of a parent, beyond feeding and clothing a child, is to teach and, when she or he gets older, send them to be taught by others. There is a lot to learn, more every day, and it seems to be a waste of valuable time for a child to have to discover, for instance, what wheels do or how pulleys work if someone else already did that.

For some reason, the same rule does not apply to government. Each generation is required to have a rendezvous with destiny, it seems, disregarding the lessons of their elders on the ground, which sounds right but is almost always wrong, that that was then and this now.


And so we were told throughout the 1980s and 1990s, particularly, that the New Deal resulted in the over-regulation of business and banking and that the continuation of these ancient practices, no longer necessary, were retarding our economic growth and needed to be revised. As is typical of the "that was then; this is now" crowd, there was no discussion of why the rules existed in the first place, what evils they were supposed to prevent and exactly why they were said to be no longer needed. Any such comment was considered to be from the hidebound, hopelessly tied to the past.

Hence, people who ought to know better say things like:

Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century ... This historic legislation will better enable American companies to compete in the new economy.

but do not explain why, simply because of the arbitrariness of the calendar, "the rules that have governed financial services since the Great Depression" should be discarded. They just say it figuring that most of us don't know or care about this kind of stuff. They are right about our interest level, but they have led us into a wilderness without apology, remorse, or even an acknowledgment that what they said in 1999 was wrong, nonsensical and dangerous.

The Barth version of Gramm-Leach revisted was posted here (and elsewhere) last week (in the second half of a post, which required a correction of the first half) and the great Rachel Maddow gave that issue some badly needed air time on Wednesday interviewing the Jor-El of his time, Sen Byron Dorgan. (I do not, as last week's post explains, agree that only eight Senators voted against it. That was the vote on the conference report which was after the die was cast, but Rachel's point was well made nevertheless).

While the Clinton administration certainly deserves blame for not standing up for a regulatory process that protected us for well over half a century, they are not the real villains, though. They are the banks themselves, which tried to prevent Glass-Stegall from becoming law in 1934 (Senator Glass thought they funded a filibuster led by Huey Long that threatened the bill's passage even in the midst of the worst economic crisis the nation has ever seen) and spent the next sixty years trying to get it watered down and ultimately repealed.

It took almost exactly the ten years forecast by Sen Dorgan for the consequences of repeal to be realized. As it turns out, just because something was enacted 70 years ago does not render it superfluous. It is time for those who believed otherwise to look back at what Senator Glass and Congressman Steagall were trying to prevent, and what Senator Gramm and Congressman Leach managed to get repealed 65 years later.

The New York Times archives are invaluable for this purpose, of course, but you need to be a Times subscriber to take full advantage of them and, as I write this, they are having some problem even for those of us entitled to 100 free archived articles a month. I found this last week, though, which, written on the day it was enacted, gives some flavor to how hard it was to get Glass-Stegall in the first place, and something that should have served as a warning to those who thought we no longer needed it.

The men who had sponsored the bills that became law today were happy, although most of them seemed tired and nerve-wracked by the turmoil through which they had passed in the closing days of Congress.

Senator Glass, who was co-author of the Federal Reserve Act, admitted that he had almost sent himself to the hospital in behalf of the banking reform legislation. He said that he would do it again, and declared he experienced a great thrill when the President signed it.

"The bank reforms provided in the act," Senator Glass said, "are almost as important to the banks and the public as the Federal Reserve Act itself. It supplements and strengthens the Federal Reserve Law."

The Glass-Steagall Act is directed toward a unified banking system, provides a limited deposit guarantee, requires divorcement of security affiliates from banks under government supervision, compels private bankers to give up either the deposit or security business, and requires stricter regulation of national banks.

Remembering that the Time magazine of Henry Luce was bitterly opposed to the New Deal, however, their web site, which is free, is almost as revealing, including, for instance, this and a comment of Senator Glass during the 1932 campaign:

Republican administrations, he declared, encouraged an "orgy of stock speculation" and President Coolidge "figuratively jumped into the stockpit and cheered on the gamblers." Billions of dollars of foreign securities "now practically worthless" were dumped on the U. S. market.

.

The antipathy toward Glass-Steagall from the banks and their acolytes comes through loud and clear here, too.

And so the onslaught began. Despite saving the nation, the New Deal had its opponents from day one, and they finally got their chance to try to destroy it starting in 1981. They were never able to get rid of social security, whough they sure tried, and fortunately many of the protective devices installed during those first hundred days after March 4, 1933 survived since, otherwise, the mess we are in would be so much messier.

But, alas, Glass-Steagall was not one of them.

What I know about high finance you could fit in a thimble, which explains my meager financial resources, I suppose, and I am sure that as times change, the law must, too. But laws should not be changed simply because of their age. Just because enough people say something is true does not make it so. Sometimes, just reading a few pages can cause a thoughtful person to reconsider. We need a few more thoughtful people, I think.

Change is good and laws, just as other things, should be examined every so often to see whether they are doing what they were designed to do. But change is not warranted simply because of the passage of time. If something has happened that makes it a good idea to reconsider a law enacted under different circumstances, then it should be amended. That is not the case with Glass-Steagall. Nobody explained why the world had changed enough that banks and investment forms should be able to operate as one entity and, hence, once they were allowed to do what they was forbidden in the aftermath of the Depression, the same thing that Senator Glass and Congressman Steagall tried to protect us from happened again as it did in the 1920s. This was not change we should have believed in.


There is a postscript to all of this, having nothing to do with high finance, Glass-Steagall or Gramm-Leach, but it it also about changing what should not be changed.
I spent much of the first part of my professional life in 2 WTC (a/k/a "The South Tower" --- a phrase I never heard until September, 2001) and am more than just pleased to see the jingoistic, childish, absurd "Freedom Tower" is now being marketed by its much more hopeful, defiant, and actual name: "One World Trade Center." Now, if we could find a better name for "Homeland Security" which seems to be an homage to the Fuhrer than the proper name of an agency of the government of the United States, we can move forward without these overtones of doom.