Hello everybody

I hope your doing well. As you are aware, the stock market
has had a major crash. A lot of people with 401K retirement
plans have taken a dive. We may see unemployment go
even higher in 2009.

If you want to know in detail of what cause this, please check
out the link shown below. It is very well detail to the actions of
the 109th Congress back in 1999. The repeal was lead by a
one "Senator Phil Gram". He is currently John McCain economic
adviser during his presidential quest.

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FROM:
http://www.investopedia.com/articles/03/071603.asp

In 1933, in the wake of the 1929 stock market crash and
during a nationwide commercial bank failure and the Great
Depression, two members of Congress put their names on
what is known today as the Glass-Steagall Act (GSA). This
act separated investment and commercial banking
activities. At the time, "improper banking activity", or
what was considered overzealous commercial bank involvement
in stock market investment, was deemed the main culprit of
the financial crash. According to that reasoning, commercial
banks took on too much risk with depositors' money.
Additional and sometimes non-related explanations for the
Great Depression evolved over the years, and many questioned
whether the GSA hindered the establishment of financial
services firms that can equally compete against each other.
We will take a look at why the GSA was established and what
led to its final repeal in 1999.

Reasons for the Act - Commercial Speculation

Commercial banks were accused of being too speculative in
the pre-Depression era, not only because they were investing
their assets but also because they were buying new issues
for resale to the public. Thus, banks became greedy, taking
on huge risks in the hope of even bigger rewards. Banking
itself became sloppy and objectives became blurred. Unsound
loans were issued to companies in which the bank had
invested, and clients would be encouraged to invest in those
same stocks.

Effects of the Act - Creating Barriers

Senator Carter Glass, a former Treasury secretary and the
founder of the U.S. Federal Reserve System, was the primary
force behind the GSA. Henry Bascom Steagall was a House of
Representatives member and chairman of the House Banking and
Currency Committee. Steagall agreed to support the act with
Glass after an amendment was added permitting bank deposit
insurance (this was the first time it was allowed).

As a collective reaction to one of the worst financial crises
at the time, the GSA set up a regulatory firewall between
commercial and investment bank activities, both of which
were curbed and controlled. Banks were given a year to decide
on whether they would specialize in commercial or in
investment banking. Only 10%% of commercial banks' total
income could stem from securities; however, an exception
allowed commercial banks to underwrite government-issued
bonds. Financial giants at the time such as JP Morgan and
Company, which were seen as part of the problem, were
directly targeted and forced to cut their services and,
hence, a main source of their income. By creating this
barrier, the GSA was aiming to prevent the banks' use of
deposits in the case of a failed underwriting job.

The GSA, however, was considered harsh by most in the
financial community, and it was reported that even Glass
himself moved to repeal the GSA shortly after it was
passed, claiming it was an overreaction to the crisis.

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