Forum Post: Is the tide turning on Glass Steagall?
Posted 11 years ago on May 20, 2012, 1:29 p.m. EST by arturo
(3169)
from Shanghai, Shanghai
This content is user submitted and not an official statement
There were two new signers to Rep. Marcy Kaptur's H.R. 1489 today, Edward J. Markey (D-MA), and Karen Bass (D-CA), in addition to Dale Kildee (D-MI) who was added yesterday.
Support for Glass-Steagall continues to be coupled with ridicule of Dodd-Frank and the Volcker Rule as intentional failures, meant to serve Wall Street. The widely-read Business Insider today ran a piece by Sy Harding which noted that after the 2008 crash, "The reinstatement of the Glass-Steagall Act was debated. Although it had been proven to work well for many decades, it was beaten down. A watered-down Dodd-Frank reform bill was eventually passed. The so-called Volcker Rule was adopted.... But under pressure from Wall Street, regulators decided to delay implementing most of even the watered-down new regulations.
"However," the article continues, the JP Morgan mega-losses were a "wake-up call. Congress and regulators have been oddly quiet in reaction, since the news potentially throws a monkey wrench into their plans to scuttle even the Dodd-Frank financial regulations after the elections. Come on people! Wall Street has been ranting for three years about the excess regulations that were being proposed. The truth is that even the harshest of the proposals would be far short of the regulations that were in effect, and working very well, right up to the 1999 repeal of Glass-Steagall."
I think it's simply a matter of self preservation by those who can no longer duck their head in the sand. They now see that the recover thus far has only been by numbers on Wall Street and there is no other supporting data to show any signs of a recovery in the economy as a whole. What this means is that the Wall Street numbers were in fact not a recovery at all but merely the shifting of the money from TARP, the Stimulus, and QE1+2, and maybe a little money from the now defunct MF Global. That money has run out, there is not enough revenue from sales to support the markets and they are running out of investors to sucker. The ruse is coming to a close and the few politicians that now support reform, do so only to preserve their own wealth as they now see the impending crisis ahead. I do not feel this is sufficient in the way of support nor has anyone actually woken up. I believe allowing the full weight of the collapse to be felt is the only way to force a moral shift in policy. This sounds nihilistic but the only people that will feel it are the 1% because the rest of the country has been and still is feeling the full weight of the collapse and this is supported by personal income and employment growth or lack there of.
If it crashes completely, there could be a crisis in which food and other necessities become unavailable for a period of time, some people say a month or two. Whatever savings that people, common people, have in the banks could be lost. An orderly bankruptcy reorganization would prevent these things from happening.
Anything short of full collapse will simply lead to more half stepping. You have to understand that these people are completely disconnected from the suffering of the people. They only understanding they have is the empathy based on what they imagine it to be like and that type of relationship cannot convey the emotions of the reality. They must personally be impacted. Will people go without as a result? Absolutely not. Under president Reagan, the economy became a priority of national security as detailed in EO:12333 and as such, the banks would be seized by the government in the event of a total collapse and the smaller banks would kick in to fill the void. With the lack of competition and potential for profit, the small banks wouldn't think twice about providing loans to a farmer for example that has moved over from a sized bank as there would be no serious credit risk in this. Not to mention the government would also look to small banks and credit unions to fill the void. I am sure of this because seizing the banks would be the only way to shut the system down in order to save the dollar itself from collapse. The big banks have the population fooled that they are necessary and the government allows this because they also make a killing from the arrangement, take that away and the 1%s psychological stronghold will hold no weight.
Glass Steagall would bankrupt all financial institutions not meeting the Glass Steagall standard. That is, if they are not worthy of government insurance, they will be on their own and allowed to go bankrupt.
This would probably wipe out much of Wall Street, which would have an immense impact on the wealthy. Much of the money, and power, that they thought they had would be gone.
Then we could establish a national bank to finance economic development projects, as an alternative to Wall Street, that would provide good paying jobs to millions of people who want to work, while improving our class C and D infrastructure.
Excellent
Glad you think so.
If indeed a national bank was set up, I think that would be a major achievement. I hadn't considered the impact on wealth by reinstating Glass Steagall but my overall concern with Wall Street isn't wealthy people but rather the willful absentmindedness is fosters among our political system. I can see however that you are probably correct about the impact of Glass Steagall on wealth and by proxy our politicians. Good call.
Thanks. Much of today's "wealth" came from nothing. It was borrowed into existence, leveraged to many time its original value, then was invested in gambling, and when lost, it was turned into debt, and we the American people were asked to pay that debt. Glass Steagall would just return that "wealth" to its original source of nothingness.
Then, we would be able to start over. We could create money from nothing once again, but this time, the key would be to invest it in things of real value, that would benefit all the people.
Certainly in that scenario the national bank could lend money(@ near 0%) for manufacturing co-ops where american workers can make a living wage, infrastructure jobs, Nat bank can lend money (at near 0% like we do now for banks!) for college ed, to allow consumers to pay down debt. ( unless those cr card banks go bankrupt even better). All these can even be done BEFORE the massive collapse. If only the pols had backbones, or really represented the people and not the 1%.
The situation may be turning, an increasing number of politicians and mainstream media are beginning to advocate Glass Steagall. Not enough yet, but a good sign.
More peaceful protest/pressure on all pols. Grow the movement. Support OWS Vote out anti Glass Steagall politicians
Yes, I'm glad there is one issue here that most people can agree on.
The only people who think the repeal of the Glass Steagall Act in 1999 is a good thing are the bankers and their government enablers. The words "Glass Steagall" mean nothing to most Americans. If you walk into the branch of a big bank and speak with one of the office managers, most of them couldn't explain what the Glass Steagall Act did, assuming they ever heard of it. A more succinct catchphrase or slogan is needed that conveys the problem with the repeal of Glass Steagall Act. Basically, the vast majority of Americans intuitively know the risk and want, in fact, they demand that banks gamble with their own money. Keep our savings deposits separate from risky speculative trading that could result in more bailouts, unemployment, and suffering. The Glass Steagall Act protected us well for 65 years. We want that protection back and we want it back now. This is not a difficult thing to enact, or should I say re-enact. Only bought-off elected officials would find it to be a problem. The huge trading loss of $2 billion-plus by JPMorgan recently highlighted the problem for all to see. Now is the time to capitalize on JPMorgan's fiasco and drive the issue home by eliminating the risk to bank depositors and taxpayers by out-of-control banksters, who think is alright to privatize profits and socialize their losses in casino banking. Americans should demand that any politician who accepts campaign funding from Wall Street return the dirty money and that includes President Obama and Mitt Romney. Perhaps, then and only then will they listen to their constituents on Main Street instead of a handful of well-heeled insiders. We don't need Wall Street flunkies in the White House, in the Congress, or in the halls of justice. Fumigate the place. There is a silent code among politicians: once bought, they stay bought.
Yes, its surprising the number of professionals in finance who don't understand these issues of economics.
As far as a catch phrases go, perhaps something like "The New, New Deal", because there needs to be an economic development program as well as bankruptcy reorganization.
well if we have a total economic calapse then things are going to get a whole lot uglier for the rest of us. and the 1% to be sure will be hurt. they might have to takes their kids out of private school. I feel their pain.
as for the rest of us things might change or not or total revolution. or anything in between
Seriously, Larouche may occasionally make a good prediction, but a movement so centered on one man (in the way the Larouche movement is) can only be described as a cult (and any man who would encourage this sort of quasi-deification of himself, can only be described as a meglomaniac).
We all agree with you on Glass Steagall Arturo, but we have good news for you. You don't need to align yourself with a bizarre cult in order to fight for these things, just join occupy wall street (and fuck Larouche). Anyone who builds an organization centered around himself, is an ass hole (pure and simple). Anyone who follows such an ass hole, can be fairly characterized as sheepish and misguided.
We have five candidates running for congress, can't see how that is overly centered on one person. Lot's of successful people are self centered.
If you could provide me with some evidence of the bizarre qualities you attribute to Larouche, I might take you a little seriously.
When Larouche stops being such a self centered megalomaniac, then he might have more credibility. I mean, just by caveat of naming a group after yourself, you define yourself in this way (I don't need to know all the personal details of Larouche's personality, this fact alone is enough). I suppose Larouche isn't as bad as something like the John Birch Society, but that ain't saying much :)
Larouche has credibility with important political figures around the world, but I didn't come here to discuss him personally, why not stick to the issues?
And by the way, haven't you ever noticed those business names like "Johnson and Son". Its not uncommon for people to use their personal names as part of their business names. Call it egotistical if you want, but that's part of the free enterprise system.
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Glass Stegall is not the silver bullet that can rid world financial system of all maladies. In fact, in the 2008 sub prime mortgage crisis, Glass Stegall would not been much useful or effective.
And anyone who cites Larouche is an idiot.
Attacking the man is an ancient philosophical fallacy, discredited by Socrates over two thousand years ago. I suggest you update your methods. Try to stay focused on the issues.
Glass Steagall would prevent the wealthy from gambling with our bank deposits. Concerning the world financial system, a return to the Bretton Woods fixed exchange rate system would help to prevent financiers from jerking around international currencies, allowing developing countries to make the investments they need to develop.
some men are stupid.
I fully agree, the intellectual midgets on the right should face character attacks, aggressively and often.
Ok, but just don't expect me to stoop to your level.
I think arturo has made a valid point that your type of rhetoric is counterproductive. The lifespan of Occupy gives us a window to address the issues plaguing our country, economy, and society. That lifespan will not be infinite and the time you spend touting moral supremacy, is time you loose to ask for what you want.
Good points, people waste way too much time bickering and insulting each other here, not the greatest strategy for accomplishing anything politically.
What can I say, between law school and ten years in the army, I've accumulated a certain debate technique. This is after all ... intellectual warfare. Some people have a more passive style, and I'm certainly not endorsing the idea that everyone should become an aggressive debater, but I think there is a valid and useful place for heated discussion and aggressive debate. In fact I'll go one further. The media loves to disparage people on the basis that they're just too tough, too course around the edges. They want to treat every idea (no matter how fucking retarded) as if it should have intellectual parity with good ideas (and I think that's just bullshit). We should not be afraid to call stupid, stupid. If people find that offensive, then they can either stop being an idiot, or suck it up (but don't expect me to weep for people who are ruining our country).
You do understand the word "Counterproductive" I assume. All the experience in the world won't change the definition.
Is it counterproductive? Don't get me wrong, I can have reasoned discussions with reasonable people, even if I disagree with them (do it every day). But I see no reason to afford those who are obviously trolls, this sort of deference. Plus, I'm not going to disingenuously pretend to have intellectual respect for a complete fucktard.
Yes, but that doesn't mean they have to resort to philosophical fallacies in their arguments.
but apparently they can resort to quoting idiots, eh? nice talking to you dude but i dont talk to people with a sub 100 IQ
Then I suggest you get over the habit of talking to yourself.
What is the most critical single safeguard you would propose to insure the health of the financial system?
I don't know. Anything I say will be a nothing more than a slightly educated guess. I doubt if even economists would hazard an answer. Also I m not sure if their is such a single safeguard.
Unlike other ppl here I know the limits of my intellect and I don't like to talk about things I don't fully understand. I don't like to bluff around.
I'd do away with the revolving door syndrome, regulate the derivatives market and tax the shit out of over sea investments. Those are just three of the problems that need to be addressed, while we also try to re-institute Glass Steagall
Furthermore, in the mortgage crisis, mortgages for loans that shouldn't have been made were sold as derivatives. This isn't the kind of activity commercial banks should be involved in. If investors want to risk their money on that kind of scheme, they should be allowed to do it without the government guarantees that only commercial banks should receive.
The crisis happened not because of derivatives but because of sub prime lending. and commercial banks do invest in derivatives, there is nothing in glass stegall that says commercial banks cannot do derivatives.
Under Glass Steagall, commercial banks cannot own investment banks, that is, Wall Street firms that issue stocks, speculate and engage in very risky behavior. Derivatives are leveraged speculations on the movements of stocks. I don't see how commercial banks could own companies that engage in such speculations under Glass Steagall.
but for the fun of let me blow my holes through your above statements.
leveraged speculation = leverage in financial parlence means 'debt'. You don't necessarily have to raise debt to speculate. Frankly, the term 'leverage speculation' has no meaning. It looks like something that has come out of a BS generator. Those kind of words can fool your average OWS guy, but I have a MBA from Columbia and I did study a bit of finance there.
Commercial banks do not have to own i-banks. Commercial banks can very easily start their own trading division or ibanks can start their own retail side.
"Wall st firms that issue stocks"- Investment Banks do not issue stocks (other than their own, like Goldman issues Goldman stocks) companies do. When when a company goes for an IPO, it is still the company issuing stock with one or more i-bank as underwriter(s).
Speculation isn't risky provided I hedge my speculations.
Also define risky behavior? In a strict sense, every financial asset has risks, other than treasury bonds and bills (of perfectly solvent country). So anything that does not involve buying or selling treasury instruments, can be termed risky.
"on movement of stocks" - Wrong again. Derivatives do not necessarily have to deal with stocks, they can deal with pretty much anything that has value, including other derivatives.
Your last line is jsut wrong. Giving out a loan to a sub prime borrower is as risky as it gets. And commercial banks, under Glass stegall, can absolutely do it.
I'm not a financial person, I don't claim any expertise at it, but people are catching on that derivatives are a scam. I've even heard bankers admit it.
Derivatives provide leverage (or gearing), such that a small movement in the underlying value can cause a large difference in the value of the derivative (Wikipedia)
Investment banks should not have their funds insured by the government so that we citizens do not have to bail them out when they loose money.
Speculation isn't risky? The folks at JP Morgan are beginning to realize otherwise.
The kinds of investments traditionally made by commercial banks would not be considered risky.
That's right, bets on top of bets, on top of speculation, with no productive investment.
Monetarist, I've been listening to your pompous presumptions for the last month and have to say that you illustrate to me the dangers of people who are highly educated. Education breeds hubris, and you, my friend, got to be the most arrogant little twit to ever have an opinion. Maybe the theoretical underpinnings of high finance are too much for your tiny brain to grasp, but that don't mean you need to project your inadequacies all over this forum. Geez, the way you go around here toting your superiority makes me believe that you are over compensating and lashing out like a scared little bully.
Was it productive to our economy for Wall street to invest in BRIC nations, instead of this nation? Was it productive to our economy for financial institutions to give someone a mortgage then relinquish all financial responsibility to a third party investor? And don't give me that sorry old line that they were forced to do what they did by the government. It is hard to call foul when the lobbyists who championed for financial deregulation were financed by the winners of the housing bubble.
Of course you are going to have a warped perspective about what went down because all your information comes from those who want more of the same.
Poulson coming to the rescue of his surrogate, Goldman Sacks, reeks of corruption.
More rhetoric. What else do you have?
Financiers thow such hissy fits when somebody else tries to understand their business. They think they can hind behind esoteric terminology, but people are catching on.
You should start training for a new job, you'll probably all go they way of Lehman brothers eventually.
And since we are so into giving advice to each other here, let me give you one and for free. Get a job and stop whining.
Why should I get a job? I own a business. I inherited quite a bit of property a while back, and started traveling the world, teaching English in foreign countries. I opened a school in Argentina, and will soon be going back to China where I will probably invest in another school.
What happened to all your talk of not 'attacking the person'? Do such requirements only apply to people who call your bluff? What you consider terminology is finance, but then a dimwit like you would not have read even the most basic book on finance, let alone something on derivatives. And trust me when I say this, you are not catching on at all; you guys are such idiots that even the most incompetent i-banker can take you for a ride.
And I am not a i-banker, I am a product manager. and FYI, ex Lehman people now work at various other banks.
To say that you throw hissy fits is just a description of your behavior. I'm not saying that you are a "dimwit", just that you are, for the moment, misbehaving.
No need for me to read books on finance, I'd never invest with you guys. Just like you admitted, they would try to take me for a ride. Your market is just like the overpriced houses from the mortgage bubble, here today, gone tomorrow.
Please get your definition of derivatives right first. Even wholly commerical (or retail) banks do deal with derivatives. Dude, you don't even know properly what derivatives are and you also quote Larouche, you are a joke. At this point I do not want to discuss the sub prime mortgage crisis with you further because you clearly don't understand a thing of it. It's pointless for me and a criminal waste of my time. Enjoy your ignorance.
Oh, ok, I guess that's a pretty good excuse, if you need one.
yes i do need an excuse to get away from dimwits like you.
Well, then maybe you'd like to go out in the sand box and call names with your other little friends.
Sy Harding hit the nail on the head. The reluctance of Congress, the President, and the regulators to reinstate Glass-Steagall tells you all you have to know. Our government is completely in the tank for Wall Street interests and anyone paying attention knows it. Both political parties are owned by the banksters and do their bidding. We have big bank CEOs sitting at the table of the New York Federal Reserve advising and directing the Federal Reserve on what they should do to serve Wall Street's interests. Wall Street flunkies who dominate our government are trying desperately to ride out this rough patch in our economy because they think we will forget. It ain't happening because too much economic pain and damage has been inflicted on us. Yet our president and his Republican rival are soliciting and scooping up as much Wall Street money as they get their hands on. Therefore, it doesn't matter who gets elected because Wall Street wins. We lose. Pay-to-play rules. This is what happens when a plutocracy takes complete control.
I agree we need to get the Glass Steagall back in place.
Good, please tell your congressional representatives that you think so.
Is there anything OWS supporters could do in the upcoming election that would help to restore Glass-Steagall?
Contact their representatives, maybe they can force the hand of whatever president we end up with.
my reperestive is Trent Franks, might as well contact my dog, but sure I'll give him another call.
Great, mine's the same, hopefully this will do some good.
you're in CA I wouldn't think so
Not the same representative, here in California, but having about the same value as your dog.
oh I see
I, too, will contact your dog. Hope you don't mind. Besides, I like dogs much better than politicians. In fact, I believe dogs are the anti-politicians. They never lie to you.
been our best friend for over 100,000 years
I'm not ashamed to say that my dogs make me smile far more than people do. Most of the time anyway.
These nurses seem to get it, they say the Ds and Rs are too close because they don’t address the fact that there are two sides the 1% have been taking the hard earned money of the 99% for far too long, too bad in the end they are still co-opted by the thought that voting matters.
But at least they haven’t forgotten the 99% like it seems the forum has in many ways.