President Bill Clinton has said in an interview that deregulation of banks during his administration was wrong. Clinton said that especially the lax of regulation on derivatives was a huge mistake. Clinton signed legislation on November 12, 1999, which was called the Gramm–Leach–Bliley Act. This bill repealed the Glass–Steagall Act of 1933.

Clinton admits that he was wrong in doing so. During certain interviews he initially defends his economic team, but he eventually comes clean and says that this was not the right thing to do. It’s probably extremely rare for a politician to admit to anything, much less that a bad decision was made.

“I think what happened was, the SEC and the whole regulatory apparatus after I left office was just let go,” Clinton told a reporter. He also exclaimed, “Now on derivatives, I think they were wrong and I think I was wrong to take it, because the argument on derivatives was that — these things are expensive and sophisticated, and only a handful of investors will buy them.”

“The flaw in that argument was that, first of all, sometimes people with a lot of money make stupid decisions, and make it without transparency. And secondly, the most important flaw was, even if less than one percent of the total investment community is involved in derivates exchanges, so much money was involved that if they went bad, they could affect 100% of the investments and indeed 100% of the citizens in countries, not investors. I was wrong about that.”

In other words, they were guilty and they knew what was going to happen if the banks were not regulated, but they did it anyhow. And this did indeed happen.