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Forum Post: London/Wall Street Bankers on Glass Steagall

Posted 11 years ago on Aug. 4, 2012, 11:29 p.m. EST by arturo (3169) from Shanghai, Shanghai
This content is user submitted and not an official statement

The following list of senior bankers calling for complete separation of retail from investment banking, on the Glass-Steagall model, reflects the sea change which has occurred on this vital matter since early July, moving from London to the United States.

Sandy Weill, former CEO Citigroup and a principal driver behind repeal of Glass-Steagall in 1999. “What we should probably do is go and split up investment banking from banking, have banks be deposit takers, have banks make commercial loans and real estate loans, have banks do something that’s not going to risk the taxpayer dollars, that’s not too big to fail.” (July 25, 2012, CNBC, U.S.A.)

Andrea Leadsom, British Conservative Member of Parliament, and former senior banker at Barclays. “The issue of a complete separation of retail and investment banking should also return to the agenda. It is right that the government should be the ultimate guarantor of retail deposits but that guarantee should not extend to high-risk transactions.” (July 20, 2012, www.andrealeadsom.com)

Nikolaus von Bomhard, CEO of Munich Re “Ich bin Anhanger des Trennbankensystems” [I’m a fan of a separated banking system] (July 17, 2012, Der Spiegel, Germany)

Peter Hambro, chairman of Petropavlosk and scion of the Hambros Bank family. “They should never have been together and now they should be split, completely.” (July 6, 2012, Evening Standard, U.K.)

Lord (Paul) Myners, former British Labour MP and City Minister, former CEO Gartmore Group. “We need to go to what is known as a Glass-Steagall model, which is a complete separation. . . .” (July 4 , 2012, Channel 4 News, U.K.)

Terry Smith, CEO Tullet Prebon. “The UK and the US must enact a Glass-Steagall Act and separate retail and investment banks. The only people who seem to have lobbied against such separation are bankers. Why are we listening to them?” (July 1, 2012, Guardian, U.K.)

John Reed, former Citigroup chairman. “There is no societal benefit from integrating them [investment and retail banks].” (December 2011, Financial World, U.K.)

Stanislas Yassukovich, former chairman Merrill Lynch Europe. “The megabank business model is indefensible.” (Nov. 24, 2011, CSFI “Views on Vickers,” U.S.A.) Lord (Nigel) Lawson, former British Conservative MP and Chancellor of the Exchequer during the “Big Bang” (the U.K.’s period of rapid deregulation in the 1980s).

“. . .investment bank taking risks on the back of the taxpayer guarantee is a great scandal. I myself would have liked to see a complete separation between retail banking and investment banking.” (April 11, 2011, BBC, U.K.)

Sir Brian Pitman, former LloydsTSB chairman. “The arguments in favour [of Glass-Steagall] are compelling.” (Oct. 24, 2009, Daily Telegraph, U.K.)

Mervyn King, governor of the Bank of England. “There are those who claim that such proposals [for full separation] are impractical. It is hard to see why.” (Oct. 20, 2009, speech, U.K.)



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[-] 5 points by francismjenkins (3713) 11 years ago

Back to basics, why OWS won so much support in the first place, banking deregulation (a/k/a repeal of GS) has had catastrophic consequences. This was the principle everyone rallied around, this was the driver of our initial momentum, the name occupy "Wall Street" embodies this grievance, nuff said.


[-] 4 points by beautifulworld (23771) 11 years ago

This is not magnanimous of them. It is merely practical because the repeal of Glass-Steagall has proven to be an abject failure.

[-] 4 points by funkytown (-374) 11 years ago

Finally, something I can wholly and completely agree with.

[-] 2 points by shadz66 (19985) 11 years ago

That's NOT actually saying much because the urgent and immediate re-introduction of "Glass Steagall" is really a 'Total Non Brainer' for anyone wth a basically functioning head and heart.

IF you want to stretch your brain with the realisation of a core hidden truth, then try :

The sole purpose of this story is to explain the simple maths of reality and the current Banking System – that is – 100 plus NOTHING does NOT equal 105 – and that charging interest on something that is created out of nothing, makes it impossible to repay, giving great power to those who do create money out of nothing – ie the Banks. This story was written by Larry Hannigan in 1971 and uses a fictional character (Fabian) in the narrative.

Money is NOT a commodity, it is a system of debit-credit bookkeeping – nothing more. Banks create credit. It is a mistake to suppose that bank credit is created to any extent by the payment of money into the banks. A loan made by a bank is a clear addition to the amount of money in the community.

The issue which has swept down the centuries and which will have to be fought sooner or later is the People v. The Banks.

None of our problems will disappear until we correct the creation, supply and circulation of money. Once the money problem is solved, everything else will fall into place.

fiat lux ...

[-] 2 points by funkytown (-374) 11 years ago

I've already viewed a lot of the documentaries at this site but I don't think I've seen this one, thanks.

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

Glass - Steagall it's an oldy but a goody!

That's Funny.

Funny that modern money people would only be recognizing it's value - just now.

Where did these individuals attend school?

Did they teach anything of value at those schools?

[-] 1 points by arturo (3169) from Shanghai, Shanghai 11 years ago

My impression is that most money guys, financiers, don't understand economics, in terms of economic development. They are taught to rip off the economy, rather than to develop it.

[-] 0 points by conservatroll (187) 11 years ago

Didn't Clinton go to an Ivy Leauge College?

[-] 1 points by TitusMoans (2451) from Boulder City, NV 11 years ago

Yes, among other impressive educational achievments: Georgetown University,Oxford on a Rhodes Scholarship, and Yale.

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

Slick Willie? Off Hand I couldn't say where He went to school - suppose I could search it real quick. Your point perhaps being(?) that Ivy League schools are somewhat lacking in their educational achievements to excellence?

[-] 1 points by OccupyNews (1220) 11 years ago

I'd like to see the U.S. go to a voluntary flat tax system for small business owners who want to eliminate all the IRS tax rules and regulations by just paying a flat percentage rate of their gross income. Of course what that percentage is is definitely open to discussion.

Then, the banks could actually work with these small business owners and receive just a tiny percentage, probably less than 1%, to act as a tax collector for the IRS.

The idea being that many small business owners just want to know what percent they owe in total, and then they can run their business accordingly, and they save what is so precious to them, their time.

The small business owner makes their deposits into the bank, and a pre agreed portion of IRS tax charges are taken out, and the rest is the business person's to do with as they see fit.

Suddenly the banks have something to do and they have guaranteed income so they can move away from any involvement in crazy investment schemes.

[-] 0 points by VQkag2 (16478) 11 years ago

Sounds ok except flat tax is usually regressive, and sounds like forbes/republican talking point.

Small businesses should certainly have tax benefits and ease of use of the tax system, so I support the concept. I definitely do not trust the criminal banks with running any IRS govt services.

Good luck in all your good work.

[-] 1 points by OccupyNews (1220) 11 years ago

Even if a flat tax is regressive, it lets people know exactly where they stand at all times, which is extremely helpful in avoiding banking tricksters whose goal it is to run up consumer debt.

Credit card loans are considered income, yet most people don't know that because they are not forced to report it.

[-] 0 points by VQkag2 (16478) 11 years ago

IRS doesn't consider cr card loans income. Do they?

How about a flat tax/no deductions for the wealthy. no tax for the working poor, no cr card interest over 10 & poor people getthe lowest rate.

[-] 2 points by francismjenkins (3713) 11 years ago

No, a loan (regardless of type) is "never" considered income. The only time a loan could ever be considered a part of gross income is in the discharge of indebtedness (see IRS code Section 61(a)(12)). The logic is simple enough, you took a loan, the debt was discharged (and therefore you did not have to pay back a portion of the loan), so the portion that was not paid back results in a net gain to the borrower (and thus is considered taxable).

[-] 1 points by VQkag2 (16478) 11 years ago

Thank you. THAT makes sense. I've been paying taxes for 32 years and I've some level of debt probably every year.

Never had to deal with IRS. I do recall getting to deduct cr card interest paid many years ago. (I also remember that the rates were never this crazy high.)

[-] 1 points by francismjenkins (3713) 11 years ago

Right, taxation of consumer debt, anyone who has a modicum of familiarity with real life (or even a rudimentary familiarity with our tax laws) should know this is an absurd claim. We have a lot of problems in this world, credit card debt among them, but let's not invent imaginary problems :)

[-] 1 points by OccupyNews (1220) 11 years ago

yes, all credit card purchases are considered income. However, you don't have to report it as long as you payback the debt. If however, one doesn't pay back, or can't, and the credit card company offers a discount, the IRS will extract the difference from what was owed, and what paid, and declare it income.

It depends where the flat tax is collected. If it is collected by retail businesses, it should probably be the same rate for all. If it is declared at the end of the year, one runs into the problem of the threshold point where making a few thousand more could result in paying back well more than if one had made just under the threshold amount.

The problem with credit card debt is that the lower the interest rate, the more one can borrow and still afford the minimum payment. Many people don't realize that the interest rate sometimes matters less than the percentage one can pay back every month.

Example: if a person can afford to pay back 10% to 15% every month, even a higher interest rate won't affect them as badly as having a very low interest rate but barely being able to pay the mininum due, aka 2% of the total due, that is where the deception of credit cards enter in.

Simplest rule of all, if one can't pay back 10% of what is do every month without flinching, they have probably borrowed too much already.

[-] 1 points by francismjenkins (3713) 11 years ago

But in that case (default or discharge of indebtedness) it's not really a loan anymore (since you don't have to pay it back). So, respectfully, you're original point was very misleading.

[-] 1 points by OccupyNews (1220) 11 years ago

But if the debt is not discharged, as one pays back the credit card debt, it's not a deduction. Non deductible credit card debt is in essence income, and should be viewed as such.

[-] 1 points by francismjenkins (3713) 11 years ago

Ummm, hmmmm, no. If I buy a TV with cash; that cash would have been from taxable income (and thus I would have paid taxes on the value of the television), if I buy it with a credit card, I don't pay taxes on the value of the television. Sure, we can't deduct credit card payments, but we're still paying the same taxes on the value of the television set (at least eventually). I can't believe this needs to be explained. Oh, I'm not endorsing credit cards, but you're simply incorrect in your claims (and I have no idea how you hatched this scheme) :)

[-] 1 points by OccupyNews (1220) 11 years ago

The credit card extends the amount of money one has to spend.

If a person makes 40 grand every year, but runs up 5 grand in credit card debt, the next year, they could only spend 35 grand if they tried to pay off the card, however they are still paying taxes on 40 grand.

This is really not an arguable point.

Here is an article t to read. http://jaundicejames.com/2011/11/25/radical-idea-2-allow-personal-debt-to-be-paid-on-a-pre-tax-basis/

If one pays off the same credit card debt that was borrowed in the same year, then of course it's not income. If the debt is carried over onto the next year, then it becomes income because the act of paying it down is not deductible.

[-] 1 points by francismjenkins (3713) 11 years ago

Right, but they bought 5 grand worth of shit the year before, therefore they effectively earned 45 grand, while only paying taxes on 40 grand. Is the math straight now?

[-] 1 points by OccupyNews (1220) 11 years ago

Nope, because by not paying the debt off that same year, the borrower is paying interest rate charges every month which are at best just slightly lower than paying taxes on making 5 grand more.

And the next year, not only did they pay interest the prior year on the five grand, now the borrower has to really cut back 5 grand back AND still pay the same tax amount on what is in essence 35 grand of income instead of 40 grand.

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

The credit card allows people to fall further and further behind until they are so far behind they will not catch up again.

[-] 1 points by OccupyNews (1220) 11 years ago

yes, and the simplest rule to follow, if one can't pay back 10% of the total owed each month without flinching, one is too far in debt.

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

I have always lived by the concept of - Cash & Carry. Don't got it? ( cash ) - then don't get it ( whatever ).

[-] 1 points by VQkag2 (16478) 11 years ago

Credit card loans or any loans for that matter are NOT income. Nor does the IRS consider it so. Sorry we disagree on that.

Flat tax is regressive right wing talking point and falls heaviest on the low income working americans. We disagree again.

Low interest cr card debt is better than high. If you agree great. I did not understand your statement in this regard.

90% tax rate on income over a million (& cut military budget by 50%) to pay down the national debt.

Cut tax/debt for working/middle class. to kick start consumer demand/increase hiring.

It's the only way.

[-] 1 points by throaway (57) 11 years ago

i think he means debt forgiveness is income.

[-] 1 points by elf3 (4203) 11 years ago

if you settle for example on a past due car loan - the amount between what you owed and what you paid is forgiven and the IRS considers that debt forgiveness income - so all that money you though you saved in settling comes back to bite you. All of this is ridiculous a flat tax no deductions no exemptions on land and land alone would solve a lot - the codes are written to the advantage of the wealthy who can afford lawyers to figure it all out. The rest of us can spend a summer reading the codes and will still not have an understanding of what we are reading if we can even retain it whilst working our full time jobs and settling the kids into bed and worrying about downsizing at work and about paying the mortgage. And when we finally do get to the bottom we will see there was no tootsie roll written into the codes for us working schmoes anyway and all that time was wasted bothering to decipher them.

[-] 1 points by VQkag2 (16478) 11 years ago

Oh. I guess when the credit card companies do that I'll deal with it. Not a big risk of that though huh?

[-] 1 points by throaway (57) 11 years ago

Nope and there's no reason why there should be.

[-] 1 points by OccupyNews (1220) 11 years ago

Credit card loans ARE INCOME. When they are paid back, they are NOT deductible, and if not paid, the IRS considers the amount not paid back a income. That's just the way it is.

Even low income americans still pay several forms of tax. The idea of a flat tax is to replace sales tax, FICA, and other taxes that are automatically deducted.

As taxes are simplified for small businesses, the can spend MORE money on their business while also knowing where they stand financially at all times. This could actually lead to a small rise in wages.

Low interest is NOT better at the beginning because it allows people to run up bigger debts. Lower interest IS better once a debtor decides they realize how stupid debt is and they want off.

But if they had low interest rates running up the debt, their debt could be two or three times as much.

90% income tax is insane.

People should be able to more realistically work their way out of debt if they no longer have to pay interest rates, penalties or fees on existing debt. And because they pay down their debt by actually working, their own job may create more job opportunities for others in their own community.

[-] 1 points by VQkag2 (16478) 11 years ago

We had 90% rate during our best economic time (1950's) Not as crazy as you would have us believe.

You plan sounds like a republican plan that would hurt working/middle class Americans. S "Low interest rate are NOT good"? LMFAO THAT is crazy! Sorry we disagree.

90% tax rate on income over a million (& cut military budget by 50%) to pay down the national debt.

Cut tax/debt for working/middle class. to kick start consumer demand/increase hiring.

It's the only way.

[-] 1 points by OccupyNews (1220) 11 years ago

Your not repeating my comments the way they were explained. Low credit card interest rates lure people into borrowing more money than they can afford to pay back. What matters more than interest rate charges is the ability to pay back at least 10% every month of what is due.

If one owes 5,000 dollars on a credit card, being able to pay back 500 dollars every month matters much much more than if the interest rate being charged is 10% versus 15%

A person is much better off paying 10% of what they owe every month at 15% interest than paying back 2% of what they owe every month at 10% interest.

The trap is having too small of a monthly minimum payment, that is how the consumer gets indebted for life.

Now when it comes to paying DOWN a debt, for those who cannot afford to make a 10% payment every month, then yes, the lower interest rate is critical.

[-] 1 points by VQkag2 (16478) 11 years ago

Ok. So low interest rates ARE good.? We agree. And I agree the monthly minimum payment should be higher in order to minimize the trap you speak of.

We should also change the bankruptcy laws back to what they were before Gingrich had them changed in the 90's for the cr card corps.

It should be easier to get rid of that debt. in bankruptcy. Businesses have better bankruptcy laws than the people.

[-] 1 points by OccupyNews (1220) 11 years ago

I think that people should be able to get bankruptcy terms without filing for bankruptcy. I'm not sure about this but sometimes the debt is turned into a fix amount and paid off over time.

[-] -3 points by salta (-1104) 11 years ago

want to pay down the debt? CUT the spending. you can take all the money of the so called wealthy and you couldnt run the govt for more than a few weeks. It s govt spending is the problem.

[-] 1 points by VQkag2 (16478) 11 years ago

We have the smallest govt since 1968!. Pres Obama has already cut spending, and has added the smallest amount to the annual budget since 1970's.

Military spending is almost 60% of discretionary spending! We can cut that by 1/2! Another 20% is interest on the debt of old wars.

You can not cut spending to fix this debt. The problem is the revenue shortfall.

We must create a 90% tax rate on all income over $1 million. Like we had during the best economy ever (1950's). This we could use to pay down the debt.

Also we need to cut taxes/debt for working/middle class. To increase consumer demand then hiring. This will grow economy and also increase revenues to keep deficit down & pay down the debt.

It's the only way.

[-] -2 points by salta (-1104) 11 years ago

obamacare adds 16,000 NEW irs agents. the govt is growing , NOT shrinking. defeat obama, get rid of the epa, hud ,dept of energy, dept of education, and the economy will will greatly improve.

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

Provide a news link or something for those 16,000 IRS agents - but then also stop and ask yourself - why would we need 16,000 new IRS agents? You think perhaps to go after the accounts of the major population? Or perhaps to go after individuals hiding money off shore?

Hhmmmm interesting.

Wonder if it has anything to do with the wealthy RATs giving up their citizenship and moving away?


[-] 1 points by VQkag2 (16478) 11 years ago

ACA will cut the deficit.


[-] 1 points by shadz66 (19985) 11 years ago

Consider : They speak with fork tongues & with self-preservation in mind !

Further consider : Nationalise / Mutualise / Break Up --- TBTF Banks !!

I sincerely hope that re. 'OWS', 'Banking and Banksterism' are THE Key Issues around which almost everyone from Anarchists, Socialists, Liberals, Conservatives and Libertarians & many points in between can unite around ... and .. 'The 0.01% Parasite Class' know it !!!

When money drives almost all activity on the planet, it's essential that we understand it. Yet simple questions often get overlooked - questions like : Where does money come from ? Who creates it ? Who decides how it gets used ? And what does that mean for the millions of ordinary people who suffer when money and finance breaks down ?

People should have an opportunity to bank with ethical and perhaps publicly owned banks. The very best ethical practices should be present in the 'market place' and should be encouraged, incentivised, promoted and rewarded 'in the market place' so we the people - The 99% - can make informed choices and arguably only 'Publicly Owned Banks' can do this - which is exactly why The Infernal Banksters will fight this idea tooth and nail !!!

Further, some other points on the matter of 'Publicly Owned Banks', which would allow :

1) The Democratic Accountability & Oversight over such behaviour as led to The 2008 Financial Crisis ;

2) Prevention of a culture of short-termism, 'moral-hazard', 'perverse incentives' and 'regulatory capture' ;

3) Profits to be ploughed back into "Society" rather than to 'private shareholders' (Foreign or otherwise) ;

4) Driving out 'bad banking practice rewarding greed' and favour & instil 'ethical' practices and behaviour ;

5) Genuine rewarding of savers - NOT fleecing them and driving them towards 'sharks' ;

6) A far more fair, rational, longer-term & more socially responsible outlook for lending ;

7) Reigning in dubious practices ("Innovative Financial Products" - CDOs, CDS's, 'Mortgage Backed Securities', et al) & fraudulent behaviour - Bernie Madoff, Jon Corzine/MF Global, PMF, 'LIBOR' etc ;

8) Re-instilling Public Confidence by Accepting / Realising that Banking & Financial Services can NOT just be left to 'Selfish Short-Term Profit Motives' & Banking to be seen as a 'Strategic Public Utility' ;

9) Have you ever heard of 'The State Owned "Bank Of North Dakota" ? & IF NOT, then why not d'you think ? ( http://en.wikipedia.org/wiki/Bank_of_North_Dakota and http://banknd.nd.gov/ ) ;

10) The urgent reintroduction of 'Glass Steagal' AND a Financial Transaction / 'Tobin Tax'.

There is some degree of overlap in my points and almost guaranteed that one could argue the toss, so I end with something more substantial to read, reflect and ruminate upon :

radix omnium malorum est cupiditas ...