Hey, 1999. What the fuck?

Back in the late 1990s Citicorp and Travelers Insurance merged to form Citigroup, currently known as Citi. Citycorp was the successor of the long line of banks started by City Bank of New York in 1812, and Travelers a consortium of insurers and creditors. The merger was unprecedented in its time because those two financial animals—bankers and creditors—were prohibited from sharing assets by the Glass-Steagall Act of 1933. That act separated bankers and brokers in order to prevent the wild speculation that inflated the stock markets leading to the crash of 1929 and the Great Depression.

The act was repealed in 1999 by the Gramm-Leach-Bliley Act, in large part to allow for mergers such as Citigroup to stand. Well guess what:

The repeal enabled commercial lenders such as Citigroup, which was in 1999 then the largest U.S. bank by assets, to underwrite and trade instruments such as mortgage-backed securities and collateralized debt obligations and establish so-called structured investment vehicles, or SIVs, that bought those securities. It is believed that the repeal of this act contributed to the Global financial crisis of 2008–2009.

You can actually go back and read the coverage from the New York Times, including former Treasury Secretary and current White House National Economic Council director Larry Summers's pronouncement that "this historic legislation will better enable American companies to compete in the new economy." But the most significant part of the report is this small prognostication:

"I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010," said Senator Byron L. Dorgan, Democrat of North Dakota. "I wasn't around during the 1930's or the debate over Glass-Steagall. But I was here in the early 1980's when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness."

Now here we are.