Did Clinton cause the banking crisis?

On Wall Street and Main Street they call William Jefferson Clinton the "Comeback Kid," but it's not because of some Election Day surprise. It's because almost everything he did regarding financial-services regulation has come back to haunt us.

Clinton created a fertile environment for home-lending charlatans and hiding places for Wall Street swindlers, and upset a regulatory structure that had served the financial marketplace so well for more than six decades.

3 big mistakes

The first, in 1997, was a change to the amount of taxes a homeowner had to pay on the sale of his or her home, up to $500,000. That change effectively made buying and selling a home for profit the most compelling investment in America by tax standards. It shifted our housing market from one of supply and demand to one of rampant speculation.

The second mistake was one of inaction. In 1998, Long-Term Capital Management's use of derivatives and leverage required a massive $3.6 billion hedge fund bailout organized by the New York Federal Reserve Bank. After the fiasco rocked the markets, the administration still oppossed tighter regulation of this new form of 'investment vehicle' .

But perhaps the biggest mistake of the Clinton years regarding Wall Street and the one that rings loudest today was the 1999 repeal of the Glass-Steagall Act of 1933, which effectively erased the division between investment banking and brokerages from commercial banks...

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