NPR logo

Past Financial Crises Spurred Laws, Agencies

  • Download
  • <iframe src="https://www.npr.org/player/embed/94771330/94771307" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
Past Financial Crises Spurred Laws, Agencies

Past Financial Crises Spurred Laws, Agencies

Past Financial Crises Spurred Laws, Agencies

  • Download
  • <iframe src="https://www.npr.org/player/embed/94771330/94771307" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

The current calls for new financial regulation has some historical precedent. Business scandals and financial turmoil in the past have not only sparked legislation, but entire new agencies.

MICHELE NORRIS, host:

Google this: Financial crisis and regulation. You'll get more than three million hits. Scroll down, and you'll see "Congress Eyes Tough New Regulations" or "Crisis Exposes Need for Regulation." NPR's senior news analyst Daniel Schorr says it all reveals the swing of the American pendulum.

DANIEL SCHORR: In a Wall Street Journal-NBC poll last July, 53 percent of respondents said that Americans want government to do more to solve problems. Thus America entered one of its periodic swings between deregulation and regulation. In the wake of the Wall Street crisis, congressional committees will hold hearings to consider what government action is needed. If history is any guide, that may lead to demands for new laws and perhaps new agencies to police the behavior of financial giants.

In the 1900s, President Theodore Roosevelt carried out his philosophy of the Square Deal. He reacted to a series of business scandals using the Sherman Antitrust Act of 1890 and other measures to regulate the economy. In the 1930s, President Franklin Roosevelt, amid a depression, followed with the New Deal. The New Deal, among other things, established the Securities and Exchange Commission and the Federal Deposit Insurance Corporation.

The 1980s witnessed a period of rollback of regulation under President Ronald Reagan. That was followed by the savings and loans scandals that gave us the Savings Association Insurance Fund and the Resolution Trust Corporation in 1989. Then the next turn of the century and the Enron and WorldCom accounting scandals brought legislation called Sarbanes-Oxley.

Now the investment bank meltdown. But even with Wall Street in shambles, those ideologically opposed to regulation are not ready to give up. A briefing paper of the conservative American Enterprise Institute warns against a rush to regulate, saying that an ambitious agenda of reform in the midst of a financial crisis is an invitation to bad regulation. House Speaker Nancy Pelosi says that Americans have had it. With the calendar running out, this is likely to be a major issue for the next Congress. This is Daniel Schorr.

Copyright © 2008 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

We no longer support commenting on NPR.org stories, but you can find us every day on Facebook, Twitter, email, and many other platforms. Learn more or contact us.