Important Legislation

• 2004 – Consolidated Supervised Entities Program

  This little known program allowed banks to police themselves and create their own rules. Lenders stopped asking for income verification (among other things) and started approving loans for anyone who could sign their name on a mortgage.

• 2003 – Jobs and Growth Tax Relief Reconciliation Act of 2003

  The Jobs and Growth Tax Relief Reconciliation Act of 2003 (“JGTRRA”, Pub.L. 108-27, 117 Stat. 752), was passed by the United States Congress on May 23, 2003 and signed by President Bush on May 28, 2003.

  Among other provisions, the act accelerated certain tax changes passed in the Economic Growth and Tax Relief Reconciliation Act of 2001, increased the exemption amount for the individual Alternative Minimum Tax, and lowered taxes of income from dividends and capital gains.

  Before the tax cuts were signed President Bush was urged by 450 economists, including 10 Nobel Prize Laureates, in the Economists’ statement opposing the Bush tax cuts not to implement his tax cuts[7]. Economists Peter Orszag and William Gale described the Bush tax cuts as reverse government redistribution of wealth, “[shifting] the burden of taxation away from upper-income, capital-owning households and toward the wage-earning households of the lower and middle classes.”

• 2000 – Commodity Futures Modernization Act of 2000

  The Commodity Futures Modernization Act of 2000(CFMA) is United States federal legislation that clarified that most ‘over-the-counter derivatives’ would not be subject to regulation by barring the Commodity Futures Trading Commission (CFTC), the U.S. Securities and Exchange Commission (SEC), and the states from regulating these products. It enacted into law, but also went beyond, the recommendations of a Presidential Working Group on Financial Markets (PWG) Report titled “Over-the Counter Derivatives and the Commodity Exchange Act.” (the “PWG Report”).

  Although hailed by the PWG on the day of congressional passage as “important legislation” to allow “the United States to maintain its competitive position in the over-the-counter derivative markets”, by 2001 the collapse of Enron brought public attention to the CFMA’s treatment of energy derivatives in the “Enron Loophole.” Following the Federal Reserve’s emergency loans to “rescue” American International Group (AIG) in September, 2008, the CFMA has received even more widespread criticism for its treatment of credit default swaps and other over-the-counter derivatives (“OTC derivatives”).

  In 2008 the “Close the Enron Loophole Act” was enacted into law to regulate more extensively “energy trading facilities.” On August 11, 2009, the Treasury Department sent Congress draft legislation to implement it proposal to amend the CFMA and other laws to provide “comprehensive regulation of all over-the counter derivatives.”

• 1999 – Financial Services Modernization Act of 1999

  The Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, (Pub.L. 106-102, 113 Stat. 1338, enacted November 12, 1999) is an act of the 106th United States Congress (1999-2001) which repealed part of the Glass-Steagall Act of 1933, opening up the market among banking companies, securities companies and insurance companies. The Glass-Steagall Act prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and/or an insurance company.

  The Gramm-Leach-Bliley Act allowed commercial banks, investment banks, securities firms and insurance companies to consolidate. For example, Citicorp (a commercial bank holding company) merged with Travelers Group (an insurance company) in 1998 to form the conglomerate Citigroup, a corporation combining banking, securities and insurance services under a house of brands that included Citibank, Smith Barney, Primerica and Travelers. This combination, announced in 1993 and finalized in 1994, would have violated the Glass-Steagall Act and the Bank Holding Company Act of 1956 by combining securities, insurance, and banking, if not for a temporary waiver process. The law was passed to legalize these mergers on a permanent basis. Historically, the combined industry has been known as the “financial services industry”.

• 1996 – Telecommunications Act of 1996

  The Telecommunications Act of 1996[1] was the first major overhaul of United States telecommunications law in nearly 62 years, amending the Communications Act of 1934.

  In the 1970s and 1980s, a combination of technological change, court decisions, and changes in U.S. policy permitted competitive entry into some telecommunications and broadcast markets. In this context, the Telecommunications Act was designed to further open up markets to competition by removing unnecessary regulatory barriers to entry. However, the deregulations have led to a concentration of media ownership with fewer broadcasters competing in regional markets and the elimination of many local, independent and alternative media outlets.

• Reagan’s Tax Cuts and Increases

  1981 – the Economic Recovery Tax Act of 1981. The biggest tax cuts in U.S. history.
  1982 – The Tax Equity and Fiscal Responsibility Act of 1982. Repealed much of the tax cuts of 1981, raised unemployment taxes, doubled taxes on cigarettes, tripled taxes on telephone service.
  1982 – Highway Revenue Act of 1982 increased the gas tax through 1988
  1983 – Social Security Amendments of 1983. Increased Social Security taxes.
  1984 – Deficit Reduction Act of 1984. Increased taxes on exports and business expenses.
  1986 – Tax Reform Act (TRA) of 1986. Decreased individual taxes but increased corporate taxes.