With nine days left before Election Day, "60 Minutes" aired a segment Sunday evening addressing a complex investment tool at the heart of the current financial crisis without fully explaining the presidential campaign ramifications behind the laws that made the market meltdown almost inevitable.
Despite accurately calling credit default swaps "The Bet That Blew Up Wall Street," CBS didn't properly inform viewers that George W. Bush had absolutely nothing to do with the Clinton-signed legislation that deregulated them, and that frequent campaign statements by Barack Obama and Joe Biden blaming the current financial crisis on Bush economic policies are therefore completely false.
The producers also chose not to expose the key Democrats -- most notably House Speaker Nancy Pelosi (D-Cali.) and House Financial Services Committee Chairman Barney Frank (D-Mass.) -- that voted in favor of this legislation back in 2000 but have in recent weeks dishonestly blamed President Bush for the current crisis.
Instead, CBS's Steve Kroft offered viewers a very general and nonpartisan political background to the passage of the Commodity Futures Modernization Act of 2000 (video embedded right):
STEVE KROFT, CO-HOST: The world's financial system teetered on the edge again last week, and anyone with more than a passing interest in their shrinking 401(k) knows it's because of a global credit crisis. It began with the collapse of the US housing market and it's been magnified worldwide by what Warren Buffett once called "financial weapons of mass destruction." They're known as credit derivatives or credit default swaps, and we did a story on the multitrillion-dollar market three weeks ago. But there's a lot more to tell. Essentially they are side bets on the performance of the US mortgage markets and the solvency of some of the biggest financial institutions in the world, a form of legalized gambling that allows you to wager on financial outcomes without ever having to actually buy the stocks and the bonds and the mortgages. It would have been illegal during most of the 20th century, but eight years ago Congress gave Wall Street an exemption. And it's turned to have been a very bad idea. [...]
KROFT: (Voiceover) The vehicle for doing this was an obscure but critical piece of federal legislation called the Commodity Futures Modernization Act of 2000. And the bill was a big favorite of the financial industry it would eventually help destroy. It not only removed derivatives and credit default swaps from the purview of federal oversight; on page 262 of the legislation, Congress pre-empted the states from enforcing existing gambling and bucket shop laws against Wall Street.
It makes it sound like they knew it was illegal.
ERIC DINALLO, SUPERINTENDENT NEW YORK DEPARTMENT OF INSURANCE: I would agree. They did know it was illegal, or they knew it was prosecutable.
(Helicopter; city skyline; cars; sunset; buildings; Capitol building; Senate floor)
KROFT: (Voiceover) In retrospect, giving Wall Street immunity from state gambling laws and legalizing activity that had been banned for most of the 20th century should have given lawmakers pause. But on the last day and the last vote of the lame duck 106th Congress, Wall Street got what it wanted, the Senate passed the bill unanimously.
Unidentified Man #3: The Senate stands adjourned. Sine die.
Mr. HARVEY GOLDSCHMID: There was an awful lot of, trust us, leave it alone. We can do it better than government, without any realistic understanding of the dangers involved.
(Harvey Goldschmid and Steve Kroft; Washington monument; President Clinton and group of people; Alan Greenspan)
KROFT: (Voiceover) Columbia University law professor, Harvey Goldschmid, is a former commissioner and general counsel of the Securities and Exchange Commission. He says the bill was passed at the height of Wall Street and Washington's love affair with deregulation, an infatuation that was endorsed by President Clinton at the White House and encouraged by Federal Reserve chairman Alan Greenspan.
Mr. GOLDSCHMID: That was the wildest and silliest period in many ways. Now, again, that's with hindsight, because the argument at the time was these are grown-ups, they're institutions with a great deal of money. Government will only get in the way. Fears it will be taken overseas. Leave it alone. But it was a wrongheaded argument and turned out to be, of course, extraordinarily unwise.
Extraordinarily unwise seems an understatement in retrospect. As such, why didn't CBS delve deeper into this pivotal piece of legislation, and expose to viewers how it actually came to pass as well as who was indeed responsible?
Might it be due to the overwhelming bipartisan support this bill received in both chambers of Congress, and that its genesis had absolutely nothing to do with President Bush?
As NewsBusters reported in June:
[I]t was the House that got CFMA through the legislative process by initially passing H.R. 4541 with almost unanimous support. In fact, the final vote cast on October 19, 2000, was 377-4. 180 Democrats, including current Speaker Nancy Pelosi (D-Cali.), voted in favor of this bill.
Yep. Only four members of the House voted against the initial version of CFMA. Only two Democrats said "Nay." And, counter to Kroft's claim, this occurred BEFORE Election Day 2000, therefore NOT in the lame duck session.
Maybe more important, besides Pelosi, Barney Frank also voted in favor of this bill.
Why wasn't this addressed by "60 Minutes" Sunday night? Isn't it newsworthy that the current Speaker of the House as well as the current House Financial Services Committee Chairman BOTH voted in favor of this pivotal piece of legislation so at the heart of today's crisis?
Please bear in mind that in recent weeks, as the stock market has collapsed, and Congress has approved almost a trillion dollars to bail out failing financial institutions, both Pelosi and Frank have repeatedly pointed fingers at President Bush for being responsible for the current crisis.
Of course, so have Obama and Biden, this despite the latter not raising an objection to the passage of CFMA when it was approved as part of a larger appropriations bill by voice vote in the Senate in December 2000.
Clearly, CBS must have felt there was no political hay to be gained by bringing any of this up, nor did the producers think it important to inform viewers about the Financial Services Modernization Act of 1999 which was also key to setting the wheels in motion for our current crisis.
For those unfamiliar, the Glass-Steagall Act of 1933, in response to the 1929 stock market crash and subsequent collapse of most financial institutions, erected barriers between banks, brokerage firms, and insurance companies. The restrictions in this bill began to be removed as long ago as 1980, with the last of its regulations eliminated by FSMA -- or what many refer to as Gramm-Leach-Bliley -- on November 12, 1999.
Such deregulation was key to the eventual malfeasance and negligence that has brought down banks, insurance companies, and brokerage firms in the midst of the current crisis.
Much like CFMA, Gramm-Leach-Bliley passed with overwhelming bipartisan support in both chambers of Congress. The House vote was 362 to 57; the Senate 90 to 8. Pelosi voted for this bill. So did Biden.
While we're investigating the record, there are other prominent Democrats that have blamed the current crisis on President Bush that also voted for Gramm-Leach-Bliley, in particular the current Majority Leader Harry Reid (D-Nev.), the current Banking Committee Chairman Chris Dodd (D-Conn.), and Chuck Schumer (D-NY).
Interestingly, McCain was one of two senators that didn't cast a vote.
Could that have been why this critical piece of legislation wasn't even mentioned by CBS?
Readers should be advised that I am by no means pointing fingers at anyone for the enactment of these bills, for they clearly were bipartisan in nature.
Instead, it has been my contention for many weeks that if the media had done a better job of informing the citizenry about the legislative genesis of the current financial crisis instead of disingenuously pointing fingers at the Bush adminstration as well as not challenging Democrats when they dishonestly did the same, the polls concerning the upcoming elections would look much different.
CBS had an opportunity to set the record straight on Sunday evening, and though it did a decent job of educating viewers about credit default swaps, it failed miserably to provide proper context concerning which of our political leaders were responsible for the legislation behind our current crisis, and which weren't.
This should have been imperative given the media and Democrat meme that this calamity was all caused by the free market, anti-regulation policies of the current White House.
In the end, nothing could be further from the truth, and America's leading and longest-running investigative television program sadly did nothing to shed any light on what really happened in Washington under President Clinton that eventually brought down Wall Street and could possibly devastate Main Street in the coming months.
Would "60 Minutes" have committed such a glaring oversight if exposing the truth would help Obama and the Democrat Party at the polls eight days from now instead of hurting them?
I highly doubt it.