Let us make it
simple. I am a lifetime student of
economics and have developed a deep appreciation for the financial innovations
pioneered in the thirties largely under the leadership and influence of Joe Kennedy
in particular. He understood markets
explicitly just as I do from my own experiences in twenty years of broking.
When the Glass – Steagall
was repealed as Clinton left office, I said that it will bring about a
catastrophic collapse around eight years into the next cycle. That was his worst mistake and it was his and
no other. Yet it was through ignorance
and sustained through the ignorance of his successors which is sad.
The collapse came and
has been with us to the present although
we are beginning a new cycle possibly.
Put Glass Steagall back in place and we will avoid a repetition in the
early 2020’s.
Glass-Steagall must be
restored
Aug.
22, 2013
In
“JPMorgan Chase’s CEO sounds off on regulation, growth of institution” (Business,
Aug. 7), Jamie Dimon said we shouldn’t restore the federal Glass-Steagall Act
because Australia and Canada have supposedly done alright without such a law.
I
disagree.
America
is a sparsely developed and grossly underpopulated British former colony; it
became the world’s leading industrial and commercial banking system originated
by George Washington’s treasury secretary, Alexander Hamilton. The 1933
Glass-Steagall Act was a return to Hamilton’s principles of national banking
after Wall Street had taken the country astray in the 1920s, leading to
collapse.
Dimon
and fellow bankers did that again after Glass-Steagall’s repeal in 1998, with
the catastrophic result. Re-enactment of the “American System” Glass-Steagall
legislation should have been accomplished by now. It prevented
government–insured commercial bank deposits from being used by speculation by
investment firms.
Three
bills to restore Glass-Steagall are pending in Congress. Glass-Steagall
memorial resolutions are pending in 26 state legislatures; consideration of it
has gone worldwide (including four such bills in Italy’s parliament.
Congressman Rodney Alexander, R-Ruston, is co-sponsor of said legislation.
Today,
nearly five years after the bailout, Dimon says his firm — which just agreed to
a $500 million fine for California electricity price manipulation — doesn’t
need Glass-Steagall. Dodd–Frank works for him, comparing the fine to what Enron
and its chief executives ultimately faced.
Glass-Steagall
didn’t allow banks to own and speculate with commodities, power plants, oil
tankers and metals warehouses. It would have prevented JPMorgan Chase’s
electricity ventures. Detroit, Philadelphia and other cities are being
bankrupted by interest-rate “swaps” based on banker-rigged LIBOR rates. Banks
could not have sold those swaps under Glass-Steagall.
If
they had not been sold by a bank floating it municipal bonds, what city would
have bought swaps?
Fred
Huenefeld
Monroe
How It Works
Since
1999, banks have been allowed to use commercial deposits and assets as fuel for
securities trading on the derivatives market.
Because
commercial and speculative assets are so heavily comingled, the government is
forced to protect the assets of banks making risky bets through near perpetual
bailouts and purchasing of toxic debt.
It
was the derivatives bubble that blew up the system and bankrupted the US banks
in the 2007-2008 crash.
1.
Commercial Banking institutions have one year to divest themselves of all
non-commercial banking units, with no cross management or ownership between
commercial and non-commercial units.
2.
Commercial Banks are barred from using more than 2% of its capital for the
creation, sale, or distribution of securities (certain bank-qualified
securities are exempted)
3.
Prevents Commercial Banks from loaning their commercial deposits into such
vehicals as would support the creation and circulation of securities.
4.
No securities of low or potentially low value can be placed by a bank into its
insured commercial bank units.
*
Adds provision stating Glass-Steagall is the preeminant regulator of the banks,
limiting banks from putting its depositors and shareholders at risk.
Glass-Steagall
forces separation of commercial from investment banks, it ends Too Big To Fail,
bars government bailouts, and will stop the onset of hyperinflation.
Elizabeth Warren
Pushing to Break Up Big Banks With Glass-Steagall Revival
By Jennifer Calonia • July
12, 2013
Elizabeth
Warren has had her share of controversy, but her latest move is a clear
indication that the Massachusetts Senator isn’t backing down from the spotlight
anytime soon. On Wednesday, Warren proposed a bill that called for the return
of certain protections from the now-repealed Glass-Steagall Act, causing banks and
lobbyists to bristle.
What
Is the Glass-Steagall Act?
The
Glass-Steagall Act of 1933 was put into law in an effort to safeguard
federally-insured bank deposits from being used by commercial institutions for
high-risk investment banking. It was a response to the financial fallout
of the Great Depression, but was repealed in 1999 with the full support of Wall
Street during the Clinton administration.
Elizabeth
Warren Guns for Big Banks
In
addition to Elizabeth Warren, Senator John McCain, Democrat
Maria Cantwell and Independent Agnus King have joined forces in support of the
21st-century version of the Glass-Steagall Act.
An
official statement from Warren’s office states that the bill “reduces risk for
the American taxpayer in the financial system and decreases the likelihood of
future financial crises.”
Senator
John McCain also expressed his stance on the topic of banks deemed “too big to
fail:”
“Since
core provisions of the Glass-Steagall Act were repealed in 1999, shattering the
wall dividing commercial banks and investment banks, a culture of dangerous
greed and excessive risk-taking has taken root in the banking world.”
On
her official twitter account, Warren shared her overarching philosophy —
“banking should be boring.”
