Bill Clinton

In 1995 Clinton loosened housing rules by rewriting the Community Reinvestment Act, which put added pressure on banks to take a more sympathetic approach to poor borrowers trying to get onto the housing ladder in low-income neighborhoods. All this played a role in creating a permissive lending environment

He was also responsible for the Gramm-Leach-Bliley Act 1999, which repealed the Glass-Steagall Act, a cornerstone of Depression-era regulation, and removed barriers in the market among banking companies, securities companies and insurance companies that prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and an insurance company. The Act also failed to give to the SEC or any other financial regulatory agency the authority to regulate large investment bank holding companies.

He also signed the Commodity Futures Modernization Act in 2000, which modernised regulations dealing with financial products known as over-the-counter derivatives (OTCs). It clarified the law so that most OTC derivatives transactions between “sophisticated parties” would not be regulated as “futures” under the Commodity Exchange Act of 1936 (CEA) or as “securities” under the federal securities laws. By exempting credit-default swaps from regulation, it heralded the birth of super banks and the sub-prime boom.

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