About damn time! Bill to restore Glass-Steagall Act to be introduced in the House

Posted by AzBlueMeanie:

Representatives Maurice Hinchey of New York, John Conyers of Michigan, Peter DeFazio of Oregon, Jay Inslee of Washington, and John Tierney of Massachusetts, want to restore the Glass-Steagall Act of 1933, which prohibited commercial banks from underwriting stocks and bonds. The act was repealed in 1999 at the urging of, among others, Larry Summers, now President Barack Obama's chief economic adviser. Congressmen To Call For Break-Up Of Biggest Banks The Obama administration reportedly opposes the measure – damn you to hell, Summers!

[The] Depression-era law that separated Wall Street investment banking from Main Street commercial banking.

If adopted, the measure would give banks one year to choose between being commercial banks or investment banks. The nation's biggest — those now commonly referred to as "too big to fail" — would be broken up.

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Former Federal Reserve Chairman Paul Volcker is one of a number of financial luminaries calling for at least a partial return to Glass-Steagall. The Wall Street Journal's editorial page also endorsed the concept in a recent editorial as a way to "reduce moral hazard" and "limit certain kinds of risk-taking by institutions that hold taxpayer-insured deposits."

The law's repeal ushered in an era marked by big banks getting even bigger. The country's four largest — Bank of America, JPMorgan Chase, Citigroup and Wells Fargo – now control more than half of the nation's mortgages, two-thirds of credit cards and two-fifths of all bank deposits.

And because their deposits are taxpayer-insured, there's a growing concern that they will feel overly confident about making risky bets through their investment arms because they know that should they suffer huge losses, taxpayers will ultimately be there to bail them out.

The five Democrats face big obstacles, including their own leadership and the Obama administration.

Three weeks ago on Capitol Hill, Treasury Secretary Timothy Geithner said: "I would not support reinstating Glass-Steagall. And I don't actually believe that the end of Glass-Steagall played a significant role in the cause of this crisis."

WTF? (shaking my head in total disbelief at this utter nonsense.) The Gramm–Leach–Bliley Actof 1999 repealed the firewalls of Glass-Steagall and permitted the consolidation of banking, investment, and insurance into financial services behemoths that were "too big too fail" and the subsequent TARP bailout to save their sorry asses and prevent a total financial and economic collapse.

I agree with Former governor of New York, and attorney general, Eliot Spitzer who back in October criticized the White House for being "the only institution that doesn't get" the continuing danger of having massive banks that are 'too big to fail.' Spitzer On Breaking Up Big Banks: White House Just Doesn't Get it.

Rep. Hinchey said that "some of the people around our president are not giving him the appropriate advice." He added: "And contrary to that, the wrong advice is coming forward — and being implemented."

Rep. DeFazio has previously called for Geithner to resign. You and me both, Pete!

I have been disappointed and angry ever since Larry Summers and Timothy Geithner's names first surfaced for consideration in an Obama administration. It was a mistake then, and it is a mistake now. Both should be replaced with all deliberate speed in early January. (Professor Elizabeth Warren, currently serving as chair of the Congressional Oversight Panel of the TARP fund has proved herself to be an exceptional consumer advocate and champion for accountability ad transparency. She is exactly what is needed at Treasury right now to restore public confidence.)

The nomination of Ben Bernanke currently before the Senate for confirmation to a six year term as chairman of the Federal Reserve Board should be withdrawn. (I would have much greater confidence in Paul Volcker who previously served as Fed Chairman from 1979-1987.)

Rep. Hinchey points to Volcker, among others, as being on the right side of this debate. In response to reports that the administration is marginalizing Volcker and disregarding his recommendations, Hinchey lashed out: "He's someone we should be listening to. It's very discouraging and annoying and angering to me that someone like him is not being listened to."

On the Senate side, the Senate's only avowed "socialist," Bernie Sanders of Vermont, previously introduced a bill to end "socialized risk" for the casino capitalists on Wall Street. Exclusive: Sanders Tackles Too Big To Fail In Two Pages:

The Vermont Democrat-Socialist unveiled the "Too Big to Fail, Too Big to Exist Act" — which he billed as a succinct remedy for tackling financial risk and avoiding a repeat of the taxpayer-funded bailouts that occurred just one year ago.

The act is straightforward. It would require that 90 days after its passage, [the] Treasury Secretary [is to] "submit to Congress a list of all commercial banks, investment banks, hedge funds and insurance companies that the Secretary believes are too big to fail."

Subsequently, one year after the law is enacted, the Treasury Secretary would be required to "break up entities included on the Too Big To Fail List, so that their failure would no longer cause a catastrophic effect on the United States or global economy without a taxpayer bailout."

Repeal of the Gramm-Leach-Bliley Act and restoration of a modern Glass-Steagall Act would accomplish this goal, as the House bill proposes.

President Obama – and certain Democrats in Congress – had better rediscover the economic populist roots of the Democratic Party soon. It is their job to rein in the casino capitalists who turned Wall Street into the biggest Ponzi scheme in the history of man and to protect average Americans from the voracious greed of these white collar criminals. As I've said before, someobody needs to go to emergency, somebody needs to go to jail.