Forum Post: Elizabeth Warren Calls on Congress to Pass a New Glass-Steagall Act

Posted 11 years ago on May 14, 2012, 4:29 p.m. EST by SparkyJP (1646) from Westminster, MD
This content is user submitted and not an official statement

We’ve seen all the headlines: JP Morgan Chase took risky bets and lost two billion dollars in a matter of weeks.

CEO Jamie Dimon called the bets “poorly reviewed" and even "sloppy." He added, "We will learn from it, we will fix it, and we will move on."

Frankly, I don’t think we should just trust Wall Street banks to regulate themselves. Because as we learned during the 2008 financial crisis, they are not just taking risks with their own money -- they are taking risks with the whole economy.

That's why today, with the Progressive Change Campaign Committee, I'm calling on Congress to put Wall Street reform back on the agenda and to begin by passing a new Glass-Steagall Act. This was the law that stopped investment banks from gambling away people's life savings for decades -- until Wall Street successfully lobbied to have it repealed in 1999.

Will you join us in calling on Congress to hold Wall Street accountable and pass a new Glass-Steagall Act? Click here to stand with us!

http://act.boldprogressives.org/go/8071?akid=7784.392714.HFwUHU&t=2

A new Glass-Steagall would separate high-risk investment banks from more traditional banking. It would allow Wall Street to take risks, but not by dipping into the life savings and retirement accounts of regular people.

And by making banks smaller, a new Glass-Steagall could also help put an end to banks that are "too big to fail" -- further avoiding costly taxpayer bailouts. Wall Street's risky bets nearly brought the economy to its knees in 2008. But instead of taking responsibility, Wall Street lobbied to water down the Dodd-Frank financial reforms of 2010 and fought to weaken the reforms Congress passed. It has become clear over time -- and made even clearer this past week -- that additional Wall Street reforms are needed.

http://act.boldprogressives.org/go/8071?akid=7784.392714.HFwUHU&t=4

Thousands of Progressive Change Campaign Committee members have stood with me in my campaign for the Senate -- and many were with me before that when I was fighting for the Consumer Financial Protection Bureau. I thank you from the bottom of my heart.

If I'm elected to the U.S. Senate from Massachusetts, I promise this difference from my Republican opponent Scott Brown: I will be a reliable and strong champion for commonsense Wall Street reform. But we don't have a moment to waste. Together, we must urge Congress to act now.

http://act.boldprogressives.org/go/8071?akid=7784.392714.HFwUHU&t=4

Thank you, Elizabeth Warren

14 Comments

Read the Rules

[-] 3 points by DKAtoday (33802) from Coon Rapids, MN 11 years ago

Anyone looking for silver linings in last week's announcement from JPMorgan that it had lost $2 billion with synthetic credit default swaps this quarter could be excused for thinking that now, finally, maybe there will be a real push to get banks regulated beyond a milquetoast way. Hope springs eternal. With the news from JPMorgan's supremely confident, profoundly anti-regulatory CEO Jamie Dimon that the bank could perhaps lose another $1 billion, some people might be tempted to imagine that maybe even the diehards would now move away from Dimon's history of attacking bank regulation as "infantile" and "non-factual":

While JPMorgan has long been regarded as one of the nation’s strongest banks, the circumstances surrounding its $2 billion trading loss look depressingly familiar. Once again, a bank with large trading operations allowed a mixture of incompetence, risk-taking, hubris and complexity lead to an embarrassing and costly blowup.

“This underscores the fallacy of thinking the best-managed banks are somehow infallible,” said Sheila C. Bair, the former chairwoman of the Federal Deposit Insurance Corporation, a bank regulator.

Even Dimon himself said Sunday that JPMorgan's losses would provide ammunition to those who want more regulations. But that hardly means he now believes there actually should be more regulations.

You see, the buck doesn't stop with some underlings in the JPMorgan second tier, one of whom has already lost her post, nor with Dimon himself, who is still running the $2.3 trillion bank as of today. From the mind-set of right-wing politicians, this mess is all the government's fault. On Meet the Press Sunday, David Gregory asked Republican National Committee chief Reince Preibus, "In light of the losses on Wall Street this week, you think we need less financial regulation rather than more?" Preibus didn't skip a beat: "I think we need less." New rules added by Democrats in the wake of the financial crisis that took down several big banks and brought about a gigantic taxpayer bailout of other banks have "made things worse," he said.

A stunning assessment considering just how gutted the implementation of the law imposing new regulations actually is. Matt Taibbi at Rolling Stone provided a 7000-word look at that just a day before JPMorgan announced its giant losses:

Two years later, Dodd-Frank is groaning on its deathbed. The giant reform bill turned out to be like the fish reeled in by Hemingway's Old Man—no sooner caught than set upon by sharks that strip it to nothing long before it ever reaches the shore. [...]

The fate of Dodd-Frank over the past two years is an object lesson in the government's inability to institute even the simplest and most obvious reforms, especially if those reforms happen to clash with powerful financial interests. From the moment it was signed into law, lobbyists and lawyers have fought regulators over every line in the rule-making process. Congressmen and presidents may be able to get a law passed once in a while—but they can no longer make sure it stays passed. You win the modern financial-regulation game by filing the most motions, attending the most hearings, giving the most money to the most politicians and, above all, by keeping at it, day after day, year after fiscal year, until stealing is legal again. "It's like a scorched-earth policy," says Michael Greenberger, a former regulator who was heavily involved with the drafting of Dodd-Frank. "It requires constant combat. And it never, ever ends."

As usual Taibbi does not let Democrats off the hook in the matter. The White House and powerful Democrats in Congress helped make Dodd-Frank what it isn't, he writes.

No kidding.

But there would have been no Dodd-Frank at all had Republicans been in control. And certainly no Consumer Financial Protection Bureau, the best thing to come out of the financial crisis. Elizabeth Warren, the person whose idea that was, and who guided it through its crucial first months, and is now a Democratic candidate for Senate in Massachusetts, called Sunday for Dimon to step down from his position on the New York Federal Reserve. As part of its oversight role, the Fed is right now making decisions, among other things, about how exactly the new financial regulations will be implemented. It will advise who will get rescued if when there is another meltdown. No way should Dimon—who opposes regulations and is in charge of a too-big-to-fail bank still obviously engaging in risky behavior—be on the board.

However, this isn't about just one person or a handful of them. It's a system. To add just a smidgen of sanity into that system, just sensible not even slightly radical, Sen. Sherrod Brown (D-OH) and Reps. Brad Miller (D-NC) and Keith Ellison (D-MN) have introduced the The Safe, Accountable, Fair & Efficient (SAFE) Banking Act of 2012. The bill was first introduced by Brown and Miller in 2010. It would impose limits on the size of bank deposits so that none could hold more than 10 percent of the total deposits of all insured banks in the United States. It would also impose an absolute size for a bank holding company of no more than $1.3 trillion. No non-bank financial company could exceed $436 billion.

Getting Dimon off the Fed and imposing size limits on financial institutions aren't all that needs to be done by a long shot. But they are moves in the right direction.

•••

Join us in calling for JPMorgan CEO Jamie Dimon to resign from the board of the Federal Reserve Bank of New York.

http://campaigns.dailykos.com/p/dia/action/public/?action_KEY=146

•••

There's more discussion in bobswern's diary.

http://www.dailykos.com/story/2012/05/14/1091484/-Elizabeth-Warren-Calls-For-Jamie-Dimon-To-Resign-From-NY-Fed-Board