Summary: In today’s podcast, we’re inspired to look back at a speech Reagan delivered in 1987 at the Annual Meeting of the Boards of Governors of the International Monetary Fund and World Bank Group. "Why," you ask? Well due to the recent bank failures of Silvergate Bank, Silicon Valley Bank and Signature Bank , we thought our listeners would like a closer look. Everyone wants to blame Reagan. Economist Paul Krugman in 2009 claimed that “Reagan Did It.” Yes, he wrote that “the prime villains behind the mess we're in were Reagan and his circle of advisers.” This is perverse thinking by shifting blame from the obvious villains closer at hand. It is disingenuous to ignore the fact that the derivatives scams at the heart of the economic meltdown didn't exist in President Reagan's time. The huge expansion in collateralized mortgage and other debt, the bubble that burst, was the direct result of enabling deregulatory legislation pushed through during the Clinton years. Back in the 1982, 41 years ago, Ronald Reagan's signing off on legislation easing mortgage requirements pales in comparison to the damage wrought fifteen years later by a cabal of powerful Democrats and Republicans who enabled the wave of newfangled financial gimmicks that resulted in the economic collapse. Reagan didn't do it, but Clinton-era Treasury Secretaries Robert Rubin and Lawrence Summers, did. They, along with then-Fed Chairman Alan Greenspan and Republican congressional leaders James Leach and Phil Gramm, blocked any effective regulation of the over-the-counter derivatives that turned into the toxic assets now being paid for with tax dollars. Ok that was one financial crisis…and as another one looms, let’s listen to the President in 1987, who talks about the basics like good management.
