Bankruptcy

How Depression Era Entities are Still Used Today to Save Companies and Banks

By J. Michael McBride

Here is a great little article on the subject of how the quasi governmental entities set up by President Roosevelt in the 1930's are still being used today to save companies like Countrywide Financial. Now of course, the question remains: why do we want to save such a company when it is simply reaping the losses it sowed in bad loans? In any event, here are some quotes from this brief and yet interesting article:

“Despite sustained efforts to tear down the New Deal—from the repeal of the Glass-Steagall Act in 1999 to President George W. Bush's ill-fated 2005 efforts to dismantle Social Security—the 1930s-vintage infrastructure has proved remarkably durable. And this crisis has elicited new experiments in policy, just as the Great Depression did. The Federal Reserve has been systematically lowering its standards for what it will accept as collateral for loans. This week, Hillary Clinton called for a national panel to recommend solutions to the housing morass. (She said the group should include former Federal Reserve Chairman Alan Greenspan, which is a little like Chicago appointing a cow to a panel on preventing disastrous fires.) But as the nation once again confronts a systemic failure in housing and housing-related credit, the Bush administration is going back to the future, using New Deal-era agencies as the cornerstone of its response.”

Here is a link to this article from Slate.com: http://www.slate.com/id/2187039/

Michael

Full post as published by Texas Lawyer Blog on March 27, 2008 (boomark / email).