Bill to Reinstate Glass-Steagall...

[GlassSteagallfan]

Bill to Reinstate Glass-Steagall Reintroduced in 113th Congress

January 4, 2013 • 11:36AM

Reps. Marcy Kaptur (D-OH) and Walter B. Jones (R-NC) moved immediately within the opening hours of the 113th Congress, to reintroduce legislation to revive Franklin D. Roosevelt's Glass-Steagall act. The new bill, H.R. 129, replaces Kaptur's H.R. 1489, which had 84 cosponsors, but expired with the 112th Congress.

The official Library of Congress website on legislation identifies the purpose of the bill thus: "To repeal certain provisions of the Gramm-Leach-Bliley Act and revive the separation between commercial banking and the securities business, in the manner provided in the Banking Act of 1933, the so-called 'Glass-Steagall Act', and for other purposes." More

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Related:

New Senators Elizabeth Warren (Mass.) and Angus King (Maine) Coming Together for Glass-Steagall, As Seen on The Hill

January 4, 2013 • 9:31AM

A 6:30 pm posting yesterday in the Huffington Post covers an instance of the new mood for Glass-Steagall on Capitol Hill, which LPAC knows in depth, at large, from leading the charge to bring it about. The Huff Post article is titled, "Angus King, Senate Newcomer, Joins Elizabeth Warren in Fight To Reform Financial System," which reports specifically on what the reporters call, the Senators' "affinity," for, among other things, re-instituting Glass-Steagall.

Their coverage begins with quotes from King, from an interview given to the Portland Press-Herald earlier this week, in which King explained his view of the necessity for Glass-Steagall. The views of Warren, in support of Glass-Steagall, are reprised.

The reporters, Zach Carter and Ryan Grim, then cover the scene today at the time the new Senate convened. They write: "A political affinity between supporters of King and Warren was on display at Thursday's swearing-in ceremony, where both senators officially started their jobs.

"One man told Warren about King's comments as the senator went into her ceremonial swearing-in ceremony, and suggested Warren partner with him. Warren promised she'd look into it. After her ceremony, a woman who said she was King's sister spoke with Warren." They report, she expressed gladness for Warren's election, and that she knew they would enjoy working together. link

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And more:

Leading British Think Tank IPPR Calls for Glass-Steagall

January 4, 2013 • 9:12AM

The Institute for Public Policy Research (IPPR) issued a report this week, saying that ringfencing won't solve the problem and the need is for full banking separation.

From the report:

"In fact, the obvious solution is a complete separation of retail and investment banking activities. After the 1930s crash and depression, the Glass-Steagall Act was passed in the U.S. to prevent financial institutions from carrying out both retail and investment banking. It was not repealed until 1999 and it is probably no coincidence that the U.S. has since experienced a repeat of the events of the 1920s and early 1930s. The clear message from history is that the financial system is safer when retail and investment banking are separate. Governor of the Bank of England Mervyn King indicated in June 2012 that he is in favor of this solution: 'There is real merit in pursuing the separation of this utility-type banking from investment banking.'"

EIR [Executive Intelligence Review] spoke to Tony Dolphin, chief economist at IPPR and author of the report. Briefed on our campaign for Glass-Steagall, he said, "I am with you all the way." He said Glass-Steagall was in 1933, but a reform today should be based "on the same principle."

He said, however, that he sees no chance in the short-term to have it passed in the U.K., because the current government opposes it. He said even the 6:4 majority in the Parliament won't affect the government, although Cameron/Osborne must take into account what the Tyrie Commission [Treasury Select Committee, chaired by Conservative MP Andrew Tyrie] recommended.

"You are right with your view of the Commission work," he said. "They have toughened their line, but their final report sticks to an 'electrified' ringfencing proposal."

Despite the fact that there is very favorable public opinion now, due to all of the banking scandals (LIBOR, etc.), he said, the current coalition government won't shift.

However, the issue is "not completely cut and dry." Andrew Tyrie and the other members of the Committee are very influential, and the government will have to respond.

Dolphin also agreed on Glass-Steagall as the most elegant way of disposing of financial debt, eliminating government guarantee for anything which is not related to commercial and deposit banking. "I am completely on this line," he said. He then said that the government has two main concerns: that through a separation, retail banks should not be in a weaker position. Credit to the economy has been already strained. "Secondly, and this is not 'just a U.K. problem', there is a sense that investment banks are important for the U.K. economy. They still make 30% of GDP and employment levels (maybe these figures are exaggerated). So, the government is very sensitive not to damage a sector which is a major source of income for the economy."

Unfortunately, Dolphin does not see the immediate danger of hyperinflation and therefore the urgency of Glass-Steagall. He does recognize the potential for a blowout because of the increasing financial debt and debt monetization, and the shrinking physical economy, but believes that "in the near-term the money is going to stay in the financial circuit." He therefore looks at a chance for a policy shift in two years, when Labour might win the elections.
Source

[grannyfranny100]

Hooray, this is a start for needed reform. I hope that it will be the beginning of charges against the Wall Street criminals, too!

[Lost Soul]

It should include language to the effect that the debts of the investment branch should not be brought to bear on the savings branch. That way when they separate any losses aren't absorbed by the taxpayer. BoA transferred over $100 million in derivative losses to their savings branch. The FDIC (we the peepul) will take a big bite of fecal sammich.

[grannyfranny100]

Good point!