Written by John Griffin Miller   

Had a chat with Rachel Maddow the other night, or at least I tried to.

The topic was economics, which she doesn’t do enough of, and I was on some sort of a panel. I suppose that’s why I was on: My friend and I have a website called Glass-SteagallNow.com. I need to spend more time updating it, because Glass-Steagall could solve the nation’s, and indeed the world’s, economic problems.

There were several economists and big shots on the program, all answering Rachel’s questions about their cockamamie theories about why we were in such a mess and how it was this group’s fault or that group’s fault. I raised my hand several times to get Rachel’s attention, but she just kept calling on the others. It was like I wasn’t even there.

If you don’t know, and you probably don’t, Glass-Steagall is the common name for the Banking Act of 1933. Named after its chief sponsors, Henry Steagall and Carter Glass, it was passed into law as soon as Roosevelt got into office, and stopped the crazy Wall Street speculators who caused the crash and depression of the 30’s. Just like now, you see, there was no real reason for the depression, other than banks that gambled with their depositor’s money, and, just like now, lost it all. Glass-Steagall said that if you took deposits, you were a regular or commercial bank. You had to be conservative and safe with their money, or you went out of business. And, if you behaved yourself, the deposits could be government insured, by a brand new thing called the FDIC.

But if you were the ‘other’ kind of bank, the ones that gambled on risky investments to make huge returns (or mammoth losses), you were an investment bank, and the people who gave you money knew what they were getting into. And no insurance, thank you very much. Rich people liked to invest with investment banks, ‘cause they had the extra cash to lose, and could reap big benefits if they were careful. Because they knew the risks, investment banks were kept pretty small—rich people didn’t get to be rich by being stupid.

I was assuming that Rachel wanted me to explain how this all worked great until the larger banks, having already screwed the public in a number of ways (health maintenance organizations, airlines, savings & loans, energy, education loans, others) began to systematically undermine the banking system. They messed with Glass-Steagall in the 80’s (now known as the Savings & Loan scandal), but, undeterred by that fiasco continued to whittle away at the 56-page law that had kept banking system safe and reliable for 66 years. Investment banks were where the big profits were, if they could just combine with commercial banks and get their greedy little hands on all that cash they would have it made. Mountains and mountains of insured cash. Then, in 1999, with Bill Clinton’s Wall Street cronies in charge of the Treasury, and the Republicans in charge of the congress, they finally ‘shattered’ Glass-Steagall and opened the floodgates for major craziness.

They turned their attention to the real estate market—huge, safe, reliable and so vulnerable for exploitation. The banks immediately went to work getting their hands on these huge amounts of money that they could use to that make more money. And as long as the banking and real estate systems worked in cahoots they could make lots and lots and lots of money. All they really needed to do was to make sure that the real estate business just kept getting bigger and bigger and bigger. Everybody needs a house! Everybody needs a loan!

I really wanted to explain to Rachel that that’s not how the real estate business works. Real estate is based on something real and tangible. It grows at a steady regular, conservative pace. And if it doesn’t then it creates a bubble and when there’s a bubble then all hell breaks loose. And this bubble just grew and grew and grew for seven or eight years! Houses cost more and more and there was so much money and people would use their house as an ATM and everybody got a loan if they wanted one. Even if they didn’t!

Until 2007 when everybody realized the houses weren’t worth what they were paying for them and suddenly the bubble burst.

I kept holding my hand up, hoping that Rachel would call on me so that I could explain that all of these guys just had more and more complicated and unnecessary changes that need to be made when really the only problem was that Glass-Steagall shouldn’t have been repealed in 1999.

I was getting very, very angry. “Glass-Steagall”, “Glass-Steagall”, “Glass-Steagall” was all I wanted to say. But she wouldn't call on me. Rachel, please!

Finally reaching extreme heights of anger, I sat up in my bed and looked around.

I turned off the TV and went back to sleep.

They’ll never get it, I remember thinking.