"Boy the way Glen Miller played, songs that made the hit parade, guys like us we had it made, those were the days. And you know where you were then, girls were girls and men were men, mister we could use a man like Herbert Hoover again.

Didn’t need no welfare state, everybody pulled his weight, gee our old LaSalle ran great, those were the days!" Theme Song from All in the Family.

In 1932 the Hoover Administration induced Congress to charter an independent quasi-governmental agency, the Reconstruction Finance Corporation, to bail out the tottering American financial system.  The RFC was to function as a lender of last resort, taking non-performing loans off the banks hands and making new loans to banks, railroads, and industry.  Congress initial appropriation for the RFC was $1.5 Billion at a time when total Federal spending was $4.3 Billion.  Congress insisted that a list of the recipients of RFC largess be published.

Almost immediately the agency was bogged down in bureaucracy.  It failed to disburse much of its funding.  In August 1932 the first list of borrowers was published and it revealed that many of the loans were politically motivated.  When the Roosevelt Administration took office in March 1933 the agency had not succeeded in its mission to stem the tide of bank failures and reverse the trend toward mass unemployment.  Roosevelt retained the RFC as part of his New Deal, but added a layer of banking regulation that took the banking industry out of stock brokerage and insurance businesses.  Only then did the RFC, along with the other Alphabet Soup Agencies, begin to have an uplifting effect on the broader economic health of the nation.

Deregulation of the banking industry in the 1980s and 90s let the bankers back into the investment and insurance sectors and permitted the creation of the exotic financial instruments, poorly understood by even the most sophisticated of investors, that precipitated first the housing boom and then the housing bust that led to the present financial crisis.  President Bush was right when he told the nation that its whole economy was at risk but his Hooveresque one man RFC solution, like Herbert Hoover’s solution is both insufficient and over simplistic in its approach to the crisis.

The genius of the New Deal was its Three Rs, Relief, Recovery, and Reform.  Hoover’s RFC was just a first step.  It took the PWA and CCC to rebuild America’s decaying infrastructure.  It took the SEC and FDIC to protect investors and depositors from the abuse of fraud and manipulation and restore confidence in the financial sector of the economy.  It took the FHA to stimulate the construction industry. The Great Depression taught our fathers that the unregulated economic engine was bound to speed over the next cliff.  The frenzy of privatization and deregulation that infected both political parties in the last two decades removed the signal lights that might have kept the economic engine on the tracks.

Yes, Archie, those were the days but with a man like Herbert Hoover at the controls that engine is speeding to disaster again.