Don’t blame Clinton for financial crisis

I am responding to Myron Dudek’s letter of Dec. 8, where Dudek implied that it was President Clinton and the Democratic Congress mostly to blame for the current financial crisis. To think that Wall Street and the Republicans had no part to play is incorrect.

According to Bloomberg Businessweek, 2008: “Better targets to blame in government circles might be the 2000 law (Republican controlled Congress) which ensured that credit default swaps would remain unregulated, the SEC’s puzzling 2004 decision to allow the largest brokerage firms to borrow upward of 30 times their capital and that same agency’s failure to oversee those brokerage firms in subsequent years, as many gorged on subprime debt.”

Washington Post Business reported, “There were many reasons that led up to the crisis. Our economy is a complex and intricate system: Ÿ Derivatives (an investment tool) has become a uniquely unregulated financial instrument, allowing AIG to write $3 trillions in derivatives while reserving precisely zero dollars against future claims. Ÿ The SEC changed the leverage rules for just five Wall Street banks in 2004. Thus allowing unlimited leverage for Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns. Extreme leverage leaves very room for error.”

To put it simply, the crisis was caused by risky business practices, deregulation and greed.

C.J. Moran Wheaton